Indiana Surplus Lines common mistakes
Indiana Surplus Lines · Understand the traps and how to avoid them.
Submits a surplus lines placement after a single 'no' from one authorized insurer and treats that as a completed diligent search, with no record of who was contacted, when, for what coverage, or why they declined.
Candidates memorize a fixed declination count from other states or from habit and reduce 'diligent search' to a number, so they stop at the first refusal or at the number instead of at a documented effort.
What to do instead
Build the file around evidence, not a count: which authorized insurers were approached, the date, the coverage limits/terms requested, each response, and the specific reason the risk could not be placed in the admitted market. Be able to explain that Indiana requires a documented diligent effort and that the documentation must support the conclusion.
Places a risk with a non-admitted insurer because the authorized insurer's quote was more expensive, and writes in the file that coverage was 'unavailable.'
Candidates and producers conflate 'I can write it cheaper non-admitted' with 'no authorized insurer will write it.' Exam items deliberately use a higher admitted quote as a distractor.
What to do instead
Ask whether an authorized insurer would write the risk with the requested coverage and terms at any lawful premium, not whether it was the cheapest quote. If an admitted market would write it, it does not go surplus; when it does go surplus, record the specific coverage, limit, form, or eligibility gap that kept it out of the admitted market.
Assumes a property and casualty producer license authorizes surplus lines placement, so the producer never obtains or verifies separate Indiana surplus lines authority before binding.
Indiana licenses surplus lines authority separately and the P&C line-of-authority exam is the one candidates just passed, so they assume it covers everything.
What to do instead
Confirm that the producer, and anyone else involved in the placement, holds current Indiana surplus lines authority and that affiliations/appointments are accurate. Verify through the Indiana Department of Insurance license lookup and keep a dated record of the verification in the file.
Keeps no placement file, or keeps only the policy, relying on the retail agent, MGA, or insurer to hold the declinations, disclosure acknowledgment, and eligibility evidence; then cannot produce records when the Department asks.
Duties are split across parties in a surplus lines transaction, and candidates assume that whoever holds the policy holds the compliance record.
What to do instead
The surplus lines producer owns a complete file: policy and declarations, diligent-search documentation, the disclosure and the insured's acknowledgment, proof of insurer eligibility at placement and renewal, and tax/filing records. Know the Indiana retention period, calendar a review date before destruction, and be able to produce the file on Department request.
Computes the surplus lines premium tax using another state's rate, on net premium after commission or fees, or forgets endorsements and policy fees when building the taxable premium.
Candidates study national material and carry over a remembered rate or base; the tax base is defined by Indiana law, not by what the producer remitted to the insurer.
What to do instead
Start from gross premium as defined for Indiana surplus lines tax, apply the current Indiana rate taken from the statute or Department guidance at the time of filing, include endorsements and fees to the extent required, and reconcile the return to the policy register. Do not rely on memory for the rate; verify it each filing period.
Misses the filing or remittance deadline because the producer assumes the insurer, MGA, or wholesale broker files the Indiana return, and there is no calendar entry or proof of filing on hand.
Responsibility for tax and reporting is allocated by contract and by statute, and candidates assume that the carrier that collects the premium also files the return.
What to do instead
Determine at binding who is statutorily responsible for the Indiana return and tax, record that allocation, and put every due date on a calendar when the policy is bound. Reconcile each filing to the list of policies bound in the period and retain confirmation of timely filing.
Places or renews coverage with a non-admitted carrier without checking that the insurer appears on Indiana's current eligible surplus lines insurer list, or checks only at the first placement and never at renewal.
Candidates assume any non-admitted carrier is usable, and eligibility feels like a one-time onboarding step rather than a condition of each placement.
What to do instead
Verify eligibility against the Department's current eligible surplus lines insurer list at placement and again at every renewal, and keep a dated record of the check. If the insurer has been removed, do not place new or renewal business with it, and address the existing policy according to Indiana requirements.
Treats 'export list' as blanket permission to skip the diligent search for every commercial account, or assumes an export-list placement is also exempt from eligibility, tax, filing, and disclosure duties.
Candidates hear 'export' and remember only the shortcut, not the qualifying conditions, and then over-apply it to small or non-qualifying accounts.
What to do instead
Know Indiana's specific conditions for export-list treatment and confirm the account actually meets them; if it does not, perform and document the diligent search. Remember that any search exemption does not excuse insurer eligibility, premium tax, reporting, or the required disclosure to the insured.
Never delivers a written surplus lines disclosure, or delivers it late or incomplete, relying on the carrier name on the declarations page; no acknowledgment from the insured is retained.
Candidates treat disclosure as a sales conversation rather than a required document with required content and timing, or assume the policy itself satisfies the notice requirement.
What to do instead
Deliver Indiana's required written disclosure at the required point in the transaction, stating that the insurer is not licensed by Indiana, that rates and forms are not approved by the Department, and that the insured is not protected by the state guaranty association. Obtain the insured's acknowledgment, record the delivery date, and keep both in the file.
Applies another state's surplus lines machinery to an Indiana placement, such as assuming a stamping office will review and stamp the policy, or following a national study guide's filing sequence instead of Indiana's.
Study material is often national and producers work across state lines, so out-of-state mechanics get imported into Indiana answers.
What to do instead
Anchor every procedural answer on Indiana's own surplus lines statute and Department guidance: know whether Indiana uses a stamping office, who files and pays, and what the Department requires to be submitted. When a national rule conflicts with Indiana's, apply Indiana's.