How are taxes applied to Independently Procured Coverage (IPC)?

When dealing with Independently Procured Coverage (IPC), the correct understanding is that taxes are applied directly to the transaction itself. This means that when an insured person or entity purchases coverage on their own without going through a licensed broker, they are responsible for paying applicable taxes on that transaction.

In the context of surplus lines insurance, these taxes can vary based on the state's regulations and may include surplus lines taxes or other relevant fees. It's essential for the insured to recognize that engaging in IPC means they assume the responsibility for these tax obligations at the point of the transaction.

This approach ensures that the state collects revenue on these types of insurance purchases, mirroring the system in place for traditionally purchased policies via licensed agents or brokers, while also maintaining oversight of insurance coverage placements within the state.