Vermont Property Study Guide

Vermont’s property material rewards precision in two places: the label you put on its rate-regulation system, and what the state does — and does not — provide when the admitted market says no. Both are routinely taught wrongly, and both are easy marks once you have read the actual sections.

Rate regulation — not quite file-and-use

Vermont is commonly labelled a file-and-use state. Read 8 V.S.A. § 4688(a) and that label does not survive: rates, supplementary rate information and supporting information “shall be provided to the Commissioner not later than 30 days prior to the effective date.” A thirty-day wait before use is not use-and-file, and it is not pure file-and-use either.

The deemer that makes it workable sits on the other track. § 4688(c)(1), which governs noncompetitive prefilings, provides that “a filing shall be deemed to meet the requirements of this chapter and become effective, unless disapproved” before the waiting period expires — and lets the Commissioner give written notice within 30 working days that more time is needed, “not to exceed 30 days.” § 4689 is not the deemer: its heading is “Approval or disapproval of rates”, and its first rule is that “a rate may be disapproved at any time subsequent to the effective date.”

For a market the Commissioner has found noncompetitive, the filing must be made for approval at least 30 working days before the proposed effective date — and it is that track, not the competitive one, that carries the deemer quoted above.

The standard is the familiar one, at § 4685: rates “shall not be excessive, inadequate, or unfairly discriminatory.”

And note the scope. § 4682 takes six things outside the chapter entirely: life insurance, annuities, accident and health insurance, ocean marine, reinsurance, and aircraft liability and hull insurance. A question about rate filing for an accident and health product is testing whether you know the chapter does not reach it.

The residual market — and the careful version of “no FAIR Plan”

Vermont has no FAIR Plan. It has no beach plan and no windstorm pool either — unsurprising in a landlocked state, though it is the absence of any enacted plan rather than the geography that settles it. If a question asks whether Vermont operates a FAIR Plan, the answer is no.

But do not extend that into “Vermont has no residual market authority,” because it does. § 4696 provides that if the Commissioner “finds that there is no voluntary market in which buyers of any line of property and casualty insurance may obtain such insurance, the Commissioner may initiate proceedings to establish a joint underwriting association for that market under chapter 137.” Chapter 137 (§§ 4981–4992) is the enabling machinery. The authority is standing; it simply has not been used to create a property plan.

Water, not wind

Vermont’s signature catastrophe exposure is flooding, and the recent record is worth carrying because it is unusually well documented.

Tropical Storm Irene, in August 2011, is the benchmark event. It was matched and in places exceeded by the flood of 9–12 July 2023: the USGS found that 20 of 45 continuously recording streamgages recorded greater peak flows in July 2023 than during Irene, and that 32 of 103 surveyed sites showed higher flood elevations. A year later, on 10 and 11 July 2024, DFR recorded that “Vermont experienced torrential rains and flooding from the remnants of Hurricane Beryl.”

Two floods worse than the benchmark in consecutive Julys is the market context every Vermont property producer now works in. Flood is written through the NFIP or the private flood market rather than under a homeowners policy, and both are live here: DFR reported 3,534 NFIP policies alongside 2,676 private flood policies in force in 2023.

That is also why Vermont attaches a one-time three-hour NFIP course to every property and casualty licensee’s continuing education — counted inside the 24 hours, not on top of them.

Surplus lines — Vermont did not adopt the trimmings

Surplus lines is easy to over-learn, and Vermont is a useful corrective: several of the requirements candidates memorise are NAIC model provisions Vermont never enacted.

Who may hold the licence: 8 V.S.A. § 5031 — “any licensed producer who is deemed by the Commissioner to be trustworthy and competent may be licensed as a surplus lines broker.” Note what it does not say. It does not require property and casualty authority specifically. It does not require a bond — and no bond requirement appears anywhere in chapter 138 or in the fee section. The licence costs $400 for the initial 24-month term and $400 on each renewal.

The search requirement: § 5024(a) — coverage may not be placed with a surplus lines insurer “unless the full amount of insurance required is not reasonably procurable from admitted insurers actually transacting that kind and class of insurance in this State; and the amount of insurance exported shall be only the excess over the amount procurable from admitted insurers.”

What § 5024 does not require: no affidavit, no signed declinations statement, and no minimum number of declinations. It also carries two exceptions candidates rarely learn — § 5024(b) lets the Commissioner declare classes eligible for export where the admitted market is not adequately competitive, and § 5024(c) puts exempt commercial purchasers outside the search requirement entirely, on written disclosure and request.

What Vermont requires instead is a record and a return. § 5033 obliges the broker to keep “a full and true record of each surplus lines insurance contract,” open to examination for three years after the contract terminates. And § 5034 requires a verified quarterly report of all surplus lines business transacted in the preceding calendar quarter, filed with the Commissioner of Taxes with the 3% premium tax under § 5035(b). So there is no diligent-search filing — but there is certainly a filing.