Cost

When determining premium, the following factors are considered:

1. The limits/coverage the agent selects

2. Agents prior 12 months’ gross income received from State Farm Insurance Companies

The table below represents examples of the premium based on these two factors.

*NOTE: These numbers are used as an example of premiums based on income listed in the table.  Premium will be based on agent’s actual prior 12 months’ gross income received from State Farm Insurance Companies subject to a $75,000 minimum and a $450,000 maximum.

Sample premiums are annualized for illustrative purposes.  Actual premiums will be prorated for the number of months you are an active agent during the calendar year.

For agents located in Alabama:

Effective Jan. 21, 2014, the Alabama Insurance Underwriters Association (AIUA) requires E&O coverage with an “A” rated carrier with limits of no less than $1 million per occurrence for its authorized producers. Carrying a lower level of E&O coverage may affect your eligibility to represent AIUA as an authorized producer.

For agents located in KY, NJ and WV:

Regulatory requirements KY, NJ and WV stipulate a premium surcharge is payable by the resident insured agent. This surcharge is based on a rate factor applied to the agent’s E&O premium and will be added to the total amount due for each agent. AIG will make payments directly to the appropriate payee. The surcharge amounts will be collected in the month-end February compensation payment. 

Please contact Marsh at (800) 538-7802 with questions about state specific surcharges that apply to the annual premium in the following states:

• Kentucky State Surcharge 

• Kentucky Municipal Tax -- Varies by municipality -- view 2023-2024 Tax Schedule

• New Jersey Property/Liability Insurance Guaranty Association Surcharge 

• West Virginia Fire and Casualty Policy Surcharge 

To calculate the Kentucky Municipal Tax, access the KY DOI website where the Commonwealth of Kentucky Local Government Premium Tax Schedule is located. This schedule is effective as of the dates indicated. 

For agents located in Texas:

Texas Insurance Code 2201.259 mandates wherein written annual notice is to be provided to members of Group Purchasing arrangements such as SF Risk Management Group, LLC, concerning the Purchasing Group’s participation in insolvency guaranty fund is prohibited and the exception afforded by the code.

As members of the SF Risk Management Group, LLC, the group::

• May not have protection by an insolvency guaranty fund coverage written through the purchasing group and

• The insurer is not subject to all the insurance laws and regulations of Texas.

Important notice: under Texas Insurance Code 2201.258 it states these rules apply unless the policy is underwritten by an insurer authorized to engage in business in this state that, at the time of the policy’s issuance:

• Has capital and surplus of at least $25 million; or

• Is a member of a company group that has combined capital and surplus of at least $25 million.

The Agents’ E&O policy is underwritten by National Union Fire which is an admitted insurer in Texas. As such, National Union is subject to the insurance laws and regulations in Texas. National Union Fire Insurance has excess of $2 billion in combined capital and surplus.

Marsh fully expects to continue to offer your Agents’ E & O coverage with companies that are admitted in Texas and meet the financial guidelines established under Texas Insurance Code 2201.258. Marsh shall advise annually members of the SF Risk Management, LLC of the current situation.

Deductible

All E&O Liability claim payments are subject to a $1,000 deductible.

All Employment Practice Liability (EPL) claims payments are subject to a $5,000 deductible.

Premium Deduction Processing

The payment selection you make during open enrollment will determine how State Farm will take the E&O premium deductions from commissions.

New agents are only eligible for a full payment by compensation deduction (February). Current enrolled agents may select to have payment deductions from commissions in Full (February) or in 4 monthly installments.  If you choose 4 monthly installments, payment deductions will be made at the end of the following months: February, March, April, and May.

Once the automatic deduction is set up, this process cannot be stopped. If you choose the four equal deduction option and subsequently terminate your Agent's Agreement before May 1, we are not able to stop the E&O premium deductions. If you choose the single deduction option and terminate before March 1, we are not able to stop that deduction either. We will process a pro-rated refund of your premium based on your Agent's Agreement termination date. If you chose the single deduction process and terminate before March 1, your pro-rated refund will be processed in late March. If you are on the four equal deduction option and terminate before May 1, your pro-rated refund will be processed in late May once the last automatic deduction is processed on the month-end April payment. If you terminate after May 1, your pro-rated refund will be processed approximately 30 days following your termination date.

If you selected, to purchase the additional $1 million of EPL (for a total of $2 million EPL limit), Premium for this optional EPL will be a one-time deduction from Agent compensation on the month-end February payment, regardless of the deduction option elected.