What is a Home State?

The Role of the NRRA in simplifying surplus lines regulation

Before the Nonadmitted and Reinsurance Reform Act (NRRA) was enacted, surplus lines policies that provided coverage in multiple states could be a real pain! For example, imagine a policy that provided coverage to locations in 17 states. That same policy would have required a filing in all 17 states — with each state having its own filing requirements, due dates, and tax rates! But, thanks to the NRRA, which was passed in 2010 and went into effect the following summer, that same policy now only requires a single filing in the policy’s home state.

How is the Home State determined?

The NRRA defines Home State as “the state in which an insured maintains its principal place of business or, in the case of an individual, the individual’s principal residence.” In the case of a single insured who has purchased a policy that provides at least a portion of the coverage in the state where that insured’s principal place of business or residence is located, that state would become the home or filing state of the policy.

What if there is no coverage in the state where the agency is headquartered?

But what happens when there is no coverage afforded by the surplus lines policy in the state where the insured’s principal business location or residence is located? The law provides further guidance: “if 100 percent of the insured risk is located out of the state [where the insured’s principal place of business or residence is located], the state to which the greatest percentage of the insured’s taxable premium for that insurance contract is allocated” becomes the home state.

How is Home State determined if there are multiple named insureds?

But how is the home state determined for a policy that has multiple named insureds? The NRRA accounts for this scenario as well. For a policy with multiple named insureds from an affiliated group, the insured “member of the affiliated group that has the largest percentage attributed to it under such insurance contract” would determine the policy’s home state.



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