Unless subject to exemption, all surplus line policies that have certain property coverages (see applicable coverages) are assessed fire marshal tax (as well as surplus line tax and stamping fee). The fire marshal tax imposed by the State of Illinois is currently 1% of the applicable premium, rounded to the nearest whole dollar.

Taxes and stamping fees are assessed against premium only. Do not include any broker fees, inspection fees or other items when calculating taxes and fees – just what is shown as “premium” on the policy or endorsement.

By February 1st of each year, fire marshal tax statements for the previous calendar year must be filed and any taxes due must be paid. Taxes are paid to the “Illinois Department of Insurance” and mailed to the address shown on the tax statement. The SLAI prepares the tax statements, based on the policies and endorsements reported, and mails them to licensees well ahead of the due date.

Taxes and fees are levied upon the surplus line producer who is permitted by law to pass them on to the insured.  If the taxes and stamping fee are charged to the insured, they must each be shown as separate line items on the declarations page.  Attaching the EFS filing confirmation page is an acceptable substitute for this requirement.

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The fire marshal tax imposed by the State of Illinois is 1% of the fire premium, as described below. Like the surplus line tax, the fire marshal tax is rounded to the nearest whole dollar and is assessed against premium only. Fire marshal tax statements are due annually on February 1st, regardless of whether there are any taxes due. Taxes are paid to the State of Illinois and the taxes and statements should be mailed to the address shown on the tax statement.

Code #

Coverage

Fire Marshal Tax Is … *

1001

Property: Fire (1)

1% of

100% of the Premium

1002

Property: Allied Lines

1% of

25% of the Premium

1003

Property: Excess of Loss

1% of

55% of the Premium

1004

Property: Earthquake

1% of

25% of the Premium

1006

Property: Terrorism (Property)

1% of

100% of the Premium

1500

Crop Hail: All

1% of

1% of the Premium

2001

Multi-Peril: Farmowners (2)

1% of

40% of the Premium

2002

Multi-Peril: Homeowners (2)

1% of

40% of the Premium

2003

Multi-Peril: CMP / SMP (2)

1% of

40% of the Premium

2004

Multi-Peril: Multi-Line (2)

1% of

40% of the Premium

2005

Multi-Peril: Terrorism (Prop & Liab) (2)

1% of

40% of the Premium

2200

All Risk: Real Property

1% of

50% of the Premium

3001

Inland Marine: Jewl/Fur Block, Floaters

1% of

15% of the Premium

3002

Inland Marine: Other

1% of

15% of the Premium

3003

Inland Marine: Watercraft

1% of

15% of the Premium

3200

Aviation: Physical Damage

1% of

10% of the Premium

7701

Auto Phys Dam: Private

1% of

5% of the Premium

7702

Auto Phys Dam: Commercial

1% of

5% of the Premium

7703

Auto Phys Dam: Taxicabs

1% of

5% of the Premium

7704

Auto Phys Dam: TNC

1% of

5% of the Premium

* Rounded to the nearest whole dollar

  1. Fire premiums that include allied lines are assessed the full 100%. If the premiums are separate and distinct (fire and allied) the allied lines portion may be assessed at 25%.
  2. For policies covering multiple perils, if the premium charged for each peril is shown separately on the declarations page or elsewhere in the policy, compute the fire marshal tax on the premium for each peril separately using the chart above (with each computation rounded to the nearest dollar).

If the premiums are not broken out, compute the tax by charging the 1% tax rate against 40% of the entire policy premium.

Click here to see an example of these calculations.

Fire Marshal Tax & Terrorism Coverage

As reported in our Bulletin 22, the Illinois Department of Insurance has issued guidance regarding the applicability of Fire Marshal tax to TRIA premiums on surplus line policies as follows:

  1. For a stand-alone terrorism property policy (coverage code #1006), the 1% Fire Marshal tax is charged against the full premium. For a stand-alone terrorism liability policy, there is no FM tax. For stand-alone terrorism policies that cover both property and liability (coverage code #2005), the Fire Marshal tax is charged against 40% of the premium.

  2. For terrorism coverage attaching to a policy covering other lines, one should consider how Fire Marshal tax would be charged if the policy did not include the TRIA coverage and apply the same rule to the terrorism premium.

    For instance, if terrorism coverage is added to a general liability policy, Fire Marshal tax should not be charged since general liability coverage is not subject to the tax. If terrorism coverage is added to an all-risk, real property policy, the terrorism premium would be subject to the Fire Marshal tax at the same rate as the rest of the premium for the policy (i.e. 50% of the premium is subject to the 1% Fire Marshal tax).

Obviously, surplus line tax and stamping fee apply to TRIA premium just as they do to any other surplus line premium.

The Calendar Year Surplus Line Producer Fire Marshal Tax Statement together with any associated tax payment is due February 1st for policies and endorsements filed during the previous calendar year (see tax statement due dates).

Submitting Statements is Required No Matter What

Just like with your personal IRS 1040 form, licensees must file their surplus line and fire marshal tax statements, on time, even if no money is owed and even if there was no activity.  Although the SLAI prepares and mails tax forms to members, if for some reason you do not receive them, it is still your responsibility to hunt them down and get them filed on time. Statements can be download from the EFS, or you can contact us for copies.

Never Alter the Forms that the SLAI Prepares for You

By law, tax statement forms and payments are based on filings with the Association during the preceding six month period (for Surplus Line tax) or twelve month period (for Fire Marshal tax). If you feel something needs to be changed, it MUST be coordinated through the SLAI.  Never manually alter these forms. Instead, contact the Association and we will figure it out.

Send them to the DOI

Do not send tax forms and tax payments to the SLAI.  Tax forms and payments are sent to the Department of Insurance in Springfield.  The address is on your tax forms. On the flipside, do not send your SLAI document filings or stamping fee payments to the Department of Insurance!

Have Proof of Mailing

By law the statements are deemed received by the DOI as of the date mailed, provided you have acceptable proof of mailing. Always use a service that provides proof of mailing and delivery. Since online proof of mailing and deliver is often removed after several months, you should download and save that proof from the service provider. Disputes about whether statements were sent and taxes were paid can often arise months or even years after the due date.

Multi-line FM Tax Calculation Examples – Method #1

If the premium charged for each peril is shown separately on the declarations page or elsewhere in the policy, compute the fire marshal tax on the premium for each peril separately. Look up the applicable portion of the premium using the fire marshal tax chart in the Procedures Manual. Then apply the 1% fire marshal tax to the Applicable Portion of the premium.

PerilPremiumApplicable % PortionPremium Subject to FM TaxFM Tax RateFM Tax
Liability Portion$15,0000%$0x 1%$0
Property Portion5,000100%5000x 1%
50
Inland Marine Portion3,00015%450x 1%5
Total$23,000$55

Note that the calculation for each peril is made separately and that each calculation is rounded to the nearest whole dollar before summing.

Multi-line FM Tax Calculation Examples – Method #2

If the breakout of premium by peril is not shown on the declarations page or elsewhere in the policy, charge the 1% tax rate against 40% of the entire policy premium.

PremiumApplicable % PortionPremium Subject to
FM Tax		FM Tax
Rate		FM Tax
Combined Premium$23,00040%$9,200x 1% =$92
Fire Marshal Tax, FM Tax Statement, Tax Statements