6.02 State Taxes on Insurance

Insurance is one of the major costs of aircraft ownership. Where an aircraft is insured by a company which is not admitted in the state (e.g. Lloyds of London), many states charge a "surplus lines" tax. However, the tax is not necessarily due on the entire premium. The tax applies only to the insurance of risks in the state. To the extent that the aircraft is located outside of the state, an argument can be made that the tax should not apply. This is particularly true where the insurance is for the risks associated with travelling outside of the United States, such as war risk insurance.