Blitz Insurance Surplus Lines FAQ

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Binding Process

FAQ

Blitz Insurance Surplus Lines

Blitz is reimagining specialty insurance with lightning-quick access to a curated suite of commercial E&S products built for real-world business needs. Our digital platform delivers quotes in minutes, binds in under ten, and clears the clutter from the path to policy. Blitz Insurance is where speed meets service. Our platform is backed by dedicated experts available throughout the entire policy lifecycle.

What does it mean to be an E&S (Excess & Surplus) nonadmitted carrier?

Nonadmitted (also called E&S) carriers do not hold a certificate of authority to write insurance in a particular state.

Therefore:

They are allowed to write business through licensed surplus lines brokers.
Policies written by non admitted carriers are not protected by state guaranty funds.
Rates and forms are not filed with the state, giving flexibility for unique, high-risk, or nonstandard business.

Why it matters to agents:

Only surplus lines brokers, not retail agents, can place business with E&S carriers.
Additional state-specific compliance requirements apply including taxes, filings, disclosures, and diligent search.

What do states require of agents and brokers to place E&S business?

Requirements vary by state, but generally fall into two categories; licensing and documentation:

1. Licensing

Retail agents must hold a resident or nonresident P&C license.
E&S business must be placed through a surplus lines broker licensed in that state.
Retail agents typically cannot bind coverage directly with a non admitted carrier.

2. Documentation

Most states require these core items:

Diligence Search (declination) documentation which shows admitted markets declined to write the risk
Taxes and fees outlined by the fees set by the state
Filings--surplus lines brokers file the policy with the state stamping office for review

How are E&S taxes calculated?

E&S premium tax is state-specific, but the general process is:

1. The tax is based on:

Taxable premium, usually including:

Base premium
Fully earned fees that are considered “premium equivalents” in some states

2. Who pays the tax?

The insured ultimately pays the tax.

The surplus lines broker is responsible for:

Calculating the correct tax
Remitting payment to the state
Filing documentation

3. Typical Tax Rates

Commonly 2%–6% of premium, depending on the state
Some states charge additional stamping office fees

What fees are taxable vs. non taxable?

Not all Surplus Lines fees are taxable, and the requirements vary from state to state. However, generally:

1. Taxable (in most states):

Premium
Policy fees charged by the carrier
Inspection fees if required for underwriting
Broker fees (in some states)

2. Non taxable (in many states, but varies):

Risk management or loss control services
Voluntary inspection fees not tied to underwriting
Administrative or technology fees (depending on state treatment)
Broker fees (in some states)

Every state defines “premium” differently. When in doubt, treat fees as taxable unless state regulations say otherwise.

What are Due Diligence / Diligent Search Forms?

A diligent search form is a state required document in the world of E&S insurance placements (Surplus Lines). Surplus Lines insurance is used when coverage is not available in the standard/admitted marketplace in your state. These policies are often needed for unique or high-risk placements (i.e. vacant properties, coastal exposures, new ventures, gaps in coverage, claims history to name a few examples).

Before placing a surplus lines/non-admitted policy, state law requires that the agent first try to find coverage from an admitted carrier before approaching E&S options. The diligent search form is the agent’s way of showing that they made a good-faith effort to do so.

1. It’s not just a form; it’s proof that:

Agents checked with at least three licensed insurers (unless your state says otherwise).
The insurers declined to offer coverage.
Inspection fees if required for underwriting
The agent is not bypassing the standard market without trying to find coverage.

2. Agent Obligations:

Completing the form accurately—list the insurers you contacted and their responses
Submitting it promptly, before or at the time of binding the policy
Keeping recording in case regulators ask for proof later

The agent/insured representative must complete the form, submit it in a timely manner and keep it on file in the event they are ever brought into a legal proceeding with an insured or carrier. Some states require the insured to sign acknowledgements as well, including: AR, CT, DE, FL, MA, NY, OH, and WV. Fines and penalties can be assessed by the state for failure to comply, and it could impact not only their license, but that of the carriers you are placing coverage with.

The diligent search form protects the agent, the client, and the broker by keeping everything above board. It’s a small step that helps us stay compliant and continue offering solutions when the standard market can’t.

It’s important to note

Know your jurisdiction’s requirements as they vary by state and industry.
Document everything including dates, contacts, databases searched, and outcomes.
Use the form as a tool for accountability.
Understand its impact as it can determine whether a case or policy proceeds.

What happens if diligent search documentation is missing or incomplete?

There are serious repercussions for agents who do not comply with diligent search requirements.

Penalties may include:

Fines to the Surplus Lines broker
Rejection of filings
Tax penalties
Re-auditing or mandatory corrections

Agents who fail to complete diligent search steps can expose their agency, broker, and carrier (indirectly) to regulatory fines or scrutiny.

Is Diligent Search always required in order to place Excess & Surplus Lines coverage?

No, Diligent Search requirements do not always apply and are dependent upon the regulations in the insured’s home state.

Exemptions Include:

Federal exemption: The Non-admitted and Reinsurance Reform Act of 2010 created a national exemption for “Exempt Commercial Purchasers” for sophisticated commercial buyers who employ a risk manager, have paid over $100,000 in aggregate commercial P&C premiums in the past 12 months, and meet certain financial thresholds. If your insured qualifies, the diligent search requirement does not apply regardless of state.
State-level exemptions: Many states have their own exemptions, and it is important to become familiar with them. A few states have eliminated diligent search requirements altogether.

Important note:

Price alone is not typically considered a valid basis for declination. Agents cannot move a risk to the E&S market simply because the premium is lower than what is available in the admitted market.

When in doubt check the home state requirements. The wholesale broker or state surplus lines stamping office can help clarify the requirements.

Essential Elements for Exemptions include

Action-Oriented Language: The broker must explain how they reached the conclusion (e.g., contacted admitted carriers, performed online searches, reviewed underwriting guidelines).
Evidence of Research: Mention of outreach (phone calls, emails, online searches) or consultation with other brokers/carriers.

What do you need help with today?

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