Did the $2 residential or $4 commercial surcharge apply to a forced-placed dwelling fire master policy and its certificates?

Subject

Insurance Policy Surcharge

Plain-English summary

The residential-only master policy was subject to the $2 surcharge when issued to a Florida mortgagee. The policy did not cover multifamily or commercial property on the stated facts, and the premiums were reported as residential dwelling fire coverage.

Each individual certificate covering residential property in Florida also carried the $2 surcharge. A certificate covering commercial Florida property carried the $4 surcharge. Certificate surcharges applied regardless of where the master policy was issued, while the master-policy surcharge applied only when the mortgagee was in Florida.

What this means for you

The ruling applied the surcharge separately by policy or certificate and by the residential or commercial character of the covered Florida property.

Common questions

Q: What surcharge applied to the residential master policy? $2, when issued to a Florida mortgagee.

Q: What surcharge applied to each Florida residential certificate? $2.

Q: What if a certificate covered commercial property? The ruling applied the $4 commercial surcharge.

Citations and references

• Fla. Stat. § 252.372 — residential and commercial property-policy surcharges
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93B8-001

Original ruling text

Sep 27, 1993

Re: Technical Assistance Advisement No. 93(B)8-001
Insurance Policy Surcharge

Dear:

XXX has requested a technical assistance advisement
pursuant to Section 213.22, Florida Statutes.

Issue

Whether the insurance policy surcharge of $2 or $4 applies
to their Forced Placed Residential Dwelling Fire Policy
which is a Master Policy.

Background

Your letter provided that the forced placed residential dwelling
fire policy was a master policy issued to the mortgagee and that
under the master policy individual certificates of coverage are
issued to the homeowner of the property. You also provided that
the master policy does not cover multifamily dwellings even
though the endorsement provides for that coverage. Further, the
premiums received from the mortgagee are reported on the annual
statement under residential dwelling fire and not as commercial
coverage.

Discussion and Law

The Florida Legislature enacted legislation to impose the
surcharge on every policy issued or renewed on or after May 1,
1993, covering residential and commercial property in Florida.
The $2 surcharge applies to residential coverage and $4
surcharge applies to commercial coverage.

Specifically, section 252.372, F.S., provides that a $2 per
policy surcharge shall be imposed on every homeowner's, mobile
homeowner's, tenant homeowner's and condominium owner's policy,

and a $4 surcharge on every commercial fire, commercial multiple
peril, and business owner's property insurance policy, issued or
renewed on or after May 1, 1993.

Department's Position

Therefore, the $4 surcharge applies to a master policy issued to
the mortgagee if the coverage includes commercial property
located in Florida. The $2 surcharge applies to a master policy
that covers only residential property located in Florida. The
$2 surcharge applies to each certificate issued that covers
residential property located in Florida. If the certificate
covers commercial property located in Florida, the $4 surcharge
applies. The $2 or $4 surcharge will be due only if the master
policy is issued to a Florida mortgagee. The $2 or $4 surcharge
would be due on every certificate issued for property in Florida
regardless of the location of the master policy.

Therefore, since your master policy covers only residential
property, the $2 surcharge applies to all master policies where
the mortgagee is located in Florida.

This response constitutes a Technical Assistance Advisement
under s. 213.22, F.S., which is binding on the Department only
under the facts and circumstances described in the request for
this advice as specified in s. 213.22, F.S. Our response is
predicated on those facts and the specific situation summarized
above. You are advised that subsequent statutory or
administrative rule changes or judicial interpretations of the
statutes or rules upon which this advice is based may subject
similar future transactions to a different treatment than
expressed in this response.

You are further advised that this response and your request are
public records under Chapter 119, F.S., which are subject to
disclosure to the public under the conditions of s. 213.22, F.S.
Your name, address. and any other details which might lead to
identification of the taxpayer must be deleted by the Department
before disclosure. In an effort to protect the confidentiality
of such information, we request you notify the undersigned in
writing within 15 days of any deletions you wish made to the

request or the response.

Sincerely,

James E. Silvey
Tax Law Specialist
Technical Assistance

JES/jes