6.2 Independently Procured Coverage (s. 626.938)

Not every Florida risk insured by an unauthorized insurer goes through a surplus lines agent. Sometimes the insured deals directly with an out-of-state or foreign insurer. Section 626.938 governs this independently procured coverage (IPC). The Surplus Lines Law itself does not apply to IPC (s. 626.913(3)), but s. 626.938 is on the outline under Reporting and Filing. It shifts the reporting and tax duties from the agent to the insured.

Who Must Report: s. 626.938(1) and (2)

The duty applies to every insured who, in Florida, procures, continues, or renews insurance from another state or country with an unauthorized foreign or alien insurer legitimately licensed in that jurisdiction, and to any self-insurer that procures excess loss, catastrophe, or other insurance this way, on a subject of insurance resident, located, or to be performed in Florida.

It does not apply to:

• insurance procured through a surplus lines agent under the Surplus Lines Law; or
• insurance exempt from tax under s. 626.932(4), meaning vessels, cargo, and aircraft under s. 626.917, and government risks.

Insurance on a Florida risk procured through solicitations, negotiations, or an application outside Florida is still deemed procured in Florida (s. 626.938(2)). Flying to London to buy a policy does not avoid the reporting duty.

The Report

Within 30 days after the insurance is procured, continued, or renewed, the insured files a report with the FSLSO, on FSLSO forms or in its computer-readable format, showing:

• the name and address of the insured and of the insurer;
• the subject of the insurance;
• a general description of the coverage;
• the premium currently charged; and
• any other pertinent information the FSLSO reasonably requests.

The Tax and Fee: s. 626.938(3) to (7)

Additional rules:

• If the insured fails to withhold the tax and fee from the premium, the insured is still personally liable and must pay within the same time (s. 626.938(4)).
• The FSLSO forwards the collected tax, and any interest, to DFS within 10 days.
• Multistate IPC: if Florida is the NRRA home state, the tax and fee are computed on the gross premium, but the tax must not exceed the tax rate where the risk or exposure is located. The FSLSO applies each state's rate and share of exposure to IPC multistate policies.
• The 4.94% rate reduction did not extend to IPC, which remains at 5%.
• FHCF emergency assessments, when in effect, also apply to IPC, and the insured remits them to the FSLSO with the tax (s. 215.555(6)(b)).

What IPC Does Not Authorize: s. 626.938(8) and (9)

• IPC does not modify the prohibitions of ss. 626.901 to 626.903. If anyone solicits, markets, negotiates, or sells the coverage in Florida, it is not lawful IPC. It becomes representing an unauthorized insurer (s. 626.901(4)(d)), and violators become personally liable for the s. 626.938 taxes (s. 626.902(2)).
• IPC does not authorize independent procurement of workers' compensation, life, or health insurance.

Worked Example

A Miami manufacturer buys a $120,000 excess property policy directly from a Swiss insurer licensed in Switzerland. No one solicited it in Florida. The policy is effective August 20, 2026.

• Report to the FSLSO by September 19, 2026, which is 30 days after procurement.
• Tax: 5% x $120,000 = $6,000
• Service fee at the current 0.03% rate: $120,000 x 0.0003 = $36
• The insured withholds $6,036 from the premium it pays the insurer and remits both amounts to the FSLSO by November 14, 2026, the 45th day after the third quarter. The tax is payable to DFS and the fee to the FSLSO.
• If the tax is paid late, interest runs at 6% per year, compounded annually.