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1. Nature of Business

Kingstone Companies, Inc. (referred to herein as "Kingstone" or the “Company”), through its subsidiary Kingstone Insurance Company (“KICO”), underwrites property and casualty insurance to small businesses and individuals exclusively through independent agents and brokers. KICO is a licensed insurance company in the State of New York. In February 2011, KICO’s application for an insurance license to write insurance in the Commonwealth of Pennsylvania was approved; however, KICO has only nominally commenced writing business in Pennsylvania. Kingstone, through its subsidiary, Payments, Inc., a licensed premium finance company in the State of New York, receives fees for placing contracts with a third party licensed premium finance company.

2. Accounting Policies and Basis of Presentation

12 Months Ended

Dec. 31, 2012

2. Accounting Policies and Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Principles of Consolidation

The consolidated financial statements consist of Kingstone and its wholly-owned subsidiaries. Subsidiaries include KICO and its subsidiaries, CMIC Properties, Inc. (“Properties”) and 15 Joys Lane, LLC (“15 Joys Lane”), which together own the land and building from which KICO operates. All significant inter-company transactions have been eliminated in consolidation.

Revenue Recognition

Net Premiums Earned

Insurance policies issued by the Company are short-duration contracts. Accordingly, premium revenue, net of premiums ceded to reinsurers, is recognized as earned in proportion to the amount of insurance protection provided, on a pro-rata basis over the terms of the underlying policies. Unearned premiums represent premium applicable to the unexpired portions of in-force insurance contracts at the end of each year.

Ceding Commission Revenue

Commissions on reinsurance premiums ceded are earned in a manner consistent with the recognition of the costs of the reinsurance, generally on a pro-rata basis over the terms of the policies reinsured. Unearned amounts are recorded as deferred ceding commission revenue. Certain reinsurance agreements contain provisions whereby the ceding commission rates vary based on the loss experience under the agreements. The Company records ceding commission revenue based on its current estimate of subject losses. The Company records adjustments to the ceding commission revenue in the period that changes in the estimated losses are determined.

Premium Finance Placement Fees

Premium finance placement fees are earned in the period when contracts are placed with a third party premium finance company. Premium finance placement fees are included in “Other income” in the consolidated statements of operations and comprehensive income.

Liability for Loss and Loss Adjustment Expenses (“LAE”)

The liability for loss and LAE represents management’s best estimate of the ultimate cost of all reported and unreported losses that are unpaid as of the balance sheet date. The liability for loss and LAE is estimated on an undiscounted basis, using individual case-basis valuations, statistical analyses and various actuarial procedures. The projection of future claim payment and reporting is based on an analysis of the Company’s historical experience, supplemented by analyses of industry loss data. Management believes that the reserves for loss and LAE are adequate to cover the ultimate cost of losses and claims to date; however, because of the uncertainty from various sources, including changes in reporting patterns, claims settlement patterns, judicial decisions, legislation, and economic conditions, actual loss experience may not conform to the assumptions used in determining the estimated amounts for such liability at the balance sheet date. As adjustments to these estimates become necessary, such adjustments are reflected in expense for the period in which the estimates are changed. Because of the nature of the business historically written, the Company’s management believes that the Company has limited exposure to environmental claim liabilities. The Company recognizes recoveries from salvage and subrogation when received.

Reinsurance

In the normal course of business, the Company seeks to reduce the loss that may arise from catastrophes or other events that cause unfavorable underwriting results by reinsuring certain levels of risk in various areas of exposure with other insurance enterprises or reinsurers.

Reinsurance receivables represents management’s best estimate of paid and unpaid loss and LAE recoverable from reinsurers, and ceded losses receivable and unearned ceded premiums under reinsurance agreements. Ceded losses receivable are estimated using techniques and assumptions consistent with those used in estimating the liability for loss and LAE. Management believes that reinsurance receivables as recorded represent its best estimate of such amounts; however, as changes in the estimated ultimate liability for loss and LAE are determined, the estimated ultimate amount receivable from the reinsurers will also change. Accordingly, the ultimate receivable could be significantly in excess of or less than the amount indicated in the consolidated financial statements. As adjustments to these estimates become necessary, such adjustments are reflected in current operations. Loss and LAE incurred as presented in the consolidated statement of operations and comprehensive income are net of reinsurance recoveries.

The Company accounts for reinsurance in accordance with GAAP guidance for accounting and reporting for reinsurance of short-duration contracts. Management has evaluated its reinsurance arrangements and determined that significant insurance risk is transferred to the reinsurers. Reinsurance agreements have been determined to be short-duration prospective contracts and, accordingly, the costs of the reinsurance are recognized over the life of the contract in a manner consistent with the earning of premiums on the underlying policies subject to the reinsurance contract.

In preparing financial statements, management estimates uncollectible amounts receivable from reinsurers based on an assessment of factors including the creditworthiness of the reinsurers and the adequacy of collateral obtained, where applicable. The allowance for uncollectible reinsurance as of December 31, 2012 and 2011 was approximately $-0- and $103,000. The Company did not expense any uncollectible reinsurance for the years ended December 31, 2012 and 2011. Significant uncertainties are inherent in the assessment of the creditworthiness of reinsurers and estimates of any uncollectible amounts due from reinsurers. Any change in the ability of the Company’s reinsurers to meet their contractual obligations could have a detrimental impact on the consolidated financial statements and KICO’s ability to meet their regulatory capital and surplus requirements.

Cash and Cash Equivalents

Cash and cash equivalents are presented at cost, which approximates fair value. The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

The Company maintains its cash balances at several financial institutions. The Federal Deposit Insurance Corporation (“FDIC”) secures accounts up to $250,000 at these institutions. In March 2010, the Company was notified by the FDIC that a bank in which the Company had deposits totaling approximately $497,000 had failed and were written off in 2009 (see Note 3). In August 2011, the Company received a partial recovery of approximately $133,000 from the FDIC, which has been recorded as realized gain on cash and short term investments.

Investments

The Company accounts for its investments in accordance with GAAP guidance for investments in debt and equity securities, which requires that fixed-maturity and equity securities that have readily determined fair values be segregated into categories based upon the Company’s intention for those securities.

In accordance with this guidance, the Company has classified its fixed-maturity securities as either held to maturity or available-for-sale and its equity securities as available-for-sale. The Company may sell its available-for-sale securities in response to changes in interest rates, risk/reward characteristics, liquidity needs or other factors. Fixed maturity securities that the Company has the specific intent and ability to hold until maturity are classified as such and carried at amortized cost.

Available-for-sale securities are reported at their estimated fair values based on quoted market prices from a recognized pricing service, with unrealized gains and losses, net of tax effects, reported as a separate component of comprehensive income in stockholders’ equity. Realized gains and losses are determined on the specific identification method and recognized in the statement of operations and comprehensive income.

Investment income is accrued to the date of the financial statements and includes amortization of premium and accretion of discount on fixed maturities. Interest is recognized when earned, while dividends are recognized when declared. As of December 31, 2012 and 2011, due and accrued investment income was $343,521 and $305,103, respectively.

Impairment of investment securities results in a charge to operations when a market decline below cost is deemed to be other-than-temporary. The Company regularly reviews its fixed-maturity and equity securities portfolios to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of investments. In evaluating potential impairment, management considers, among other criteria, the following: the current fair value compared to amortized cost or cost, as appropriate; the length of time the security’s fair value has been below amortized cost or cost; management’s intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value to cost or amortized cost; specific credit issues related to the issuer; and current economic conditions. Other-than-temporary impairment (“OTTI”) losses result in a permanent reduction of the cost basis of the underlying investment. As of December 31, 2012 and 2011, none of the Company’s investments were deemed to be OTTI.

Fair Value

The fair value hierarchy in GAAP prioritizes fair value measurements into three levels based on the nature of the inputs. Quoted prices in active markets for identical assets or liabilities have the highest priority (“Level 1”), followed by observable inputs other than quoted prices, including prices for similar but not identical assets or liabilities (“Level 2”) and unobservable inputs, including the reporting entity’s estimates of the assumptions that market participants would use, having the lowest priority (“Level 3”).

For investments in active markets, the Company uses quoted market prices to determine fair value. In circumstances where quoted market prices are unavailable, the Company utilizes fair value estimates based upon other observable inputs including matrix pricing, benchmark interest rates, market comparables and other relevant inputs. The Company’s process to validate the market prices obtained from the outside pricing sources include, but are not limited to, periodic evaluation of model pricing methodologies and analytical reviews of certain prices.

Premiums Receivable

Premiums receivable are presented net of an allowance for doubtful accounts of approximately $85,000 and $92,000 as of December 31, 2012 and 2011, respectively. The allowance for uncollectible amounts is based on an analysis of amounts receivable giving consideration to historical loss experience and current economic conditions and reflects an amount that, in management’s judgment, is adequate. Uncollectible premiums receivable balances of approximately $54,000 and $57,000 were written off for the years ended December 31, 2012 and 2011, respectively.

Deferred Acquisition Costs

The Company retrospectively adopted new accounting guidance for deferred acquisition costs effective January 1, 2011. Acquisition costs represent the costs of writing business that vary with, and are primarily related to, the successful production of insurance business (principally commissions, premium taxes and certain underwriting salaries). Policy acquisition costs are deferred and recognized as expense as related premiums are earned.

Intangible Assets

The Company has recorded acquired identifiable intangible assets. In accounting for such assets, the Company follows GAAP guidance for intangible assets. The cost of a group of assets acquired in a transaction is allocated to the individual assets including identifiable intangible assets based on their relative fair values. Identifiable intangible assets with a finite useful life are amortized over the period that the asset is expected to contribute directly or indirectly to the future cash flows of the Company. Intangible assets with an indefinite life are not amortized and are subject to annual impairment testing. All identifiable intangible assets are tested for recoverability whenever events or changes in circumstances indicate that a carrying amount may not be recoverable. Based on the results of our annual impairment testing, no impairment losses from intangible assets were recognized for the years ended December 31, 2012 and 2011.

Property and Equipment

Building and building improvements, furniture, leasehold improvements, computer equipment, and software are reported at cost less accumulated depreciation and amortization. Depreciation and amortization is provided using the straight-line method over the estimated useful lives of the assets. The Company estimates the useful life for computer equipment, computer software, automobile, furniture and other equipment is three years, and building and building improvements is 39 years.

The fair value of the Company’s real estate assets was based on an appraisal dated August 31, 2009. The Company believes that recent improvements made to the building would mitigate any negative market changes since the date of the appraisal. The fair value of the real estate assets is estimated to be in excess of the carrying value.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company files a consolidated tax return with its subsidiaries. The Company follows the relevant provisions of GAAP concerning uncertainties in income taxes and through December 31, 2012, the Company had no material unrecognized tax benefits and no adjustments to liabilities or operations were required.

Assessments

Insurance related assessments are accrued in the period in which they have been incurred. A typical obligating event would be the issuance of an insurance policy or the occurrence of a claim. The Company is subject to a variety of assessments.

Concentration and Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk are primarily cash and cash equivalents, investments and accounts receivable. Investments are diversified through many industries and geographic regions based upon KICO’s Investment Committee’s guidelines, which employs different investment strategies. The Company believes that no significant concentration of credit risk exists with respect to investments. As of December 31, 2012 and 2011, the Company had cash deposits in excess of the FDIC secured limit of $250,000 at one financial institution of approximately $4,162,000 and $-0-, respectively. At December 31, 2012, the outstanding premiums receivable balance is generally diversified due to the number of insureds comprising the Company’s customer base, which is largely concentrated in the area of New York City and adjacent Long Island. To reduce credit risk, the Company often makes use of credit scores. The Company also has receivables from its reinsurers. Reinsurance contracts do not relieve the Company from its obligations to policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company periodically evaluates the financial condition of its reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. Management’s policy is to review all outstanding receivables at period end as well as the bad debt write-offs experienced in the past and establish an allowance for doubtful accounts, if deemed necessary.

Direct premiums earned from lines of business that subject the Company to concentration risk for the years ended December 31, 2012 and 2011 are as follows:

	Years ended December 31,
	2012			2011
Personal Lines		68.4	%		65.9	%
Commercial Lines		16.2	%		14.2	%
Commercial Automobile		11.6	%		15.6	%
Total premiums earned subject to concentration		96.2	%		95.7	%
Premiums earned not subject to concentration		3.8	%		4.3	%
Total premiums earned		100.0	%		100.0	%

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions, which include the reserves for losses and loss adjustment expenses, are subject to considerable estimation error due to the inherent uncertainty in projecting ultimate claim amounts that will be reported and settled over a period of several years. In addition, estimates and assumptions associated with receivables under reinsurance contracts related to contingent ceding commission revenue require considerable judgment by management. On an on-going basis, management reevaluates its assumptions and the methods of calculating its estimates. Actual results may differ significantly from the estimates and assumptions used in preparing the consolidated financial statements.

Net earnings per share

Basic net earnings per common share is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings per share reflect, in periods in which they have a dilutive effect, the impact of common shares issuable upon exercise of stock options. The computation of diluted earnings per share excludes those with an exercise price in excess of the average market price of the Company’s common shares during the periods presented.

Advertising Costs

Advertising costs are charged to operations when the advertising first takes place. Included in other underwriting expenses in the accompanying consolidated statements of operations and comprehensive income are advertising costs approximating $35,000 and $32,000 for the years ended December 31, 2012 and 2011, respectively.

Stock-based Compensation

The Company records compensation expense associated with stock options and other equity-based compensation in accordance with guidance established by GAAP. Stock option compensation expense in 2012 and 2011 is the estimated fair value of options granted amortized on a straight-line basis over the requisite service period for the entire portion of the award less an estimate for anticipated forfeitures.

Comprehensive Income

Comprehensive income refers to revenue, expenses, gains and losses that under GAAP are included in comprehensive income but are excluded from net income as these amounts are recorded directly as an adjustment to stockholders' equity, primarily from unrealized gains/losses from marketable securities.

Recent Accounting Pronouncements

Accounting guidance adopted in 2012

In June 2011 (and as amended in December 2011), the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2011-05, “Presentation of Comprehensive Income” (“ASU 2011-05”). ASU 2011-05 provides amendments to ASC No. 220 “Comprehensive Income”, which require an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The amendments in this update are effective retrospectively for fiscal years and interim periods within those years, beginning after December 15, 2011, with early adoption permitted. The Company adopted this guidance effective January 1, 2012.

The Company has determined that all other recently issued accounting pronouncements will not have a material impact on its consolidated financial position, results of operations and cash flows, or do not apply to its operations.

Accounting guidance not yet effective

In July 2012, the FASB issued ASU 2012-02, Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment, to simplify the guidance for testing the decline in the realizable value (impairment) of indefinite-lived intangible assets other than goodwill. Under this update, an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of an intangible asset is less than its carrying amount. If such a determination is not reached, then performance of further impairment testing is not necessary. The new guidance is effective for annual and interim goodwill tests performed for fiscal years beginning after September 15, 2012. However, early adoption is permitted. The adoption of ASU 2012-02 is not expected to have a material effect on the Company’s consolidated financial condition or results of operations.

3. Investments

12 Months Ended

Dec. 31, 2012

3. Investments

Available for Sale Securities

The amortized cost and fair value of investments in available for sale fixed-maturity securities and equities as of December 31, 2012 and 2011 are summarized as follows:

	December 31, 2012
													Net
	Cost or		Gross		Gross Unrealized Losses								Unrealized
	Amortized		Unrealized		Less than 12			More than 12			Fair		Gains/
Category	Cost		Gains		Months			Months			Value		(Losses)

Fixed-Maturity Securities:
Political subdivisions of States,
Territories and Possessions	$	5,219,092	$	257,298	$	(1,574	)	$	-		$	5,474,816	$	255,724

Corporate and other bonds
Industrial and miscellaneous		19,628,005		1,123,392		(43,553	)		(722	)		20,707,122		1,079,117
Total fixed-maturity securities		24,847,097		1,380,690		(45,127	)		(722	)		26,181,938		1,334,841

Equity Securities:
Preferred stocks		1,475,965		19,512		(11,130	)		-			1,484,347		8,382
Common stocks		3,598,012		353,782		(145,899	)		-			3,805,895		207,883
Total equity securities		5,073,977		373,294		(157,029	)		-			5,290,242		216,265

Total	$	29,921,074	$	1,753,984	$	(202,156	)	$	(722	)	$	31,472,180	$	1,551,106

	December 31, 2011
													Net
	Cost or		Gross		Gross Unrealized Losses								Unrealized
	Amortized		Unrealized		Less than 12			More than 12			Fair		Gains/
Category	Cost		Gains		Months			Months			Value		(Losses)

Fixed-Maturity Securities:
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies	$	499,832	$	50,356	$	-		$	-		$	550,188	$	50,356

Political subdivisions of States,
Territories and Possessions		5,868,743		301,559		-			-			6,170,302		301,559

Corporate and other bonds
Industrial and miscellaneous		15,846,616		338,284		(228,792	)		(107,666	)		15,848,442		1,826
Total fixed-maturity securities		22,215,191		690,199		(228,792	)		(107,666	)		22,568,932		353,741

Equity Securities:
Preferred stocks		1,428,435		36,762		(76,969	)		(4,893	)		1,383,335		(45,100	)
Common stocks		2,429,306		274,538		(21,969	)		-			2,681,875		252,569
Total equity securities		3,857,741		311,300		(98,938	)		(4,893	)		4,065,210		207,469

Total	$	26,072,932	$	1,001,499	$	(327,730	)	$	(112,559	)	$	26,634,142	$	561,210

A summary of the amortized cost and fair value of the Company’s investments in available for sale fixed-maturity securities by contractual maturity as of December 31, 2012 and 2011 is shown below:

	December 31, 2012				December 31, 2011
	Amortized				Amortized
Remaining Time to Maturity	Cost		Fair Value		Cost		Fair Value

Less than one year	$	546,952	$	560,162	$	1,063,493	$	1,079,924
One to five years		9,031,248		9,569,943		6,899,892		7,045,774
Five to ten years		12,605,798		13,306,033		12,547,046		12,680,441
More than 10 years		2,663,099		2,745,800		1,704,760		1,762,793
Total	$	24,847,097	$	26,181,938	$	22,215,191	$	22,568,932

The actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without penalties.

Held to Maturity Securities

The amortized cost and fair value of investments in held to maturity fixed-maturity securities as of December 31, 2012 and 2011 are summarized as follows:

December 31, 2012

Cost or

Gross

Gross Unrealized Losses

Net

Unrealized

Amortized

Unrealized

Less than 12

More than 12

Fair

Gains/

Category

Cost

Gains

Months

Value

(Losses)

U.S. Treasury securities

606,281

172,745

779,026

172,745

	December 31, 2011
					Gross Unrealized Losses
Category	Cost or Amortized Cost		Gross Unrealized Gains		Less than 12 Months		More than 12 Months		Fair Value		Net Unrealized Gains/ (Losses)


U.S. Treasury securities	$	606,234	$	171,719	$	-	$	-	$	777,953	$	171,719

All held to maturity securities are held in trust pursuant to the New York State Department of Financial Services’ minimum funds requirement.

Contractual maturities of all held to maturity securities are greater than ten years.

Investment Income

Major categories of the Company’s net investment income are summarized as follows:

	Years ended
	December 31,
	2012		2011
Income:
Fixed-maturity securities	$	951,895	$	748,046
Equity securities		268,034		168,813
Cash and cash equivalents		134		5,248
Other		23,857		11,974
Total		1,243,920		934,081
Expenses:
Investment expenses		228,764		179,451
Net investment income	$	1,015,156	$	754,630

Proceeds from the sale and maturity of fixed-maturity securities were $4,322,120 and $3,532,245 for the years ended December 31, 2012 and 2011, respectively.

Proceeds from the sale of equity securities were $1,726,345 and $2,771,631 for the years ended December 31, 2012 and 2011, respectively.

The Company’s net realized gains and losses on investments are summarized as follows:

	Year ended
	December 31,
	2012			2011

Fixed-maturity securities
Gross realized gains	$	233,299		$	190,855
Gross realized losses		(52,933	)		(1,983	)
		180,366			188,872

Equity securities
Gross realized gains		137,271			292,687
Gross realized losses		(29,569	)		(90,876	)
		107,702			201,811

Cash and short term investments (1)		-			133,211

Net realized gains	$	288,068		$	523,894

(1) Realized gain on cash and short term investments is a partial recovery from the FDIC of an amount previously written off in 2009 due to the failure of Waterfield Bank.

Impairment Review

The Company regularly reviews its fixed-maturity securities and equity securities portfolios to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of investments. In evaluating potential impairment, management considers, among other criteria: (i) the current fair value compared to amortized cost or cost, as appropriate; (ii) the length of time the security’s fair value has been below amortized cost or cost; (iii) specific credit issues related to the issuer such as changes in credit rating, reduction or elimination of dividends or non-payment of scheduled interest payments; (iv) management’s intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in value to cost; and (v) current economic conditions.

OTTI losses are recorded in the condensed consolidated statement of operations and comprehensive income as net realized losses on investments and result in a permanent reduction of the cost basis of the underlying investment. The determination of OTTI is a subjective process and different judgments and assumptions could affect the timing of loss realization. There are 33 securities at December 31, 2012 that account for the gross unrealized loss. The Company determined that none of the unrealized losses were deemed to be OTTI for its portfolio of fixed maturity investments and equity securities for the years ended December 31, 2012 and 2011. Significant factors influencing the Company’s determination that unrealized losses were temporary included the magnitude of the unrealized losses in relation to each security’s cost, the nature of the investment and management’s intent and ability to retain the investment for a period of time sufficient to allow for anticipated recovery of fair value to the Company’s cost basis.

The Company held securities with unrealized losses representing declines that were considered temporary at December 31, 2012 and 2011 as follows:

	December 31, 2012
	Less than 12 months							12 months or more							Total
						No. of							No. of		Aggregate
	Fair		Unrealized			Positions		Fair		Unrealized			Positions		Fair		Unrealized
Category	Value		Losses			Held		Value		Losses			Held		Value		Losses

Fixed-Maturity Securities:
Political subdivisions of
States, Territories and
Possessions	$	202,798	$	(1,574	)		1	$	-	$	-			-	$	202,798	$	(1,574	)

Corporate and other
bonds industrial and
miscellaneous		4,025,551		(43,553	)		19		128,125		(722	)		1		4,153,676		(44,275	)

Total fixed-maturity
securities	$	4,228,349	$	(45,127	)		20	$	128,125	$	(722	)		1	$	4,356,474	$	(45,849	)

Equity Securities:
Preferred stocks	$	387,925	$	(11,130	)		3	$	-	$	-			-	$	387,925	$	(11,130	)
Common stocks		1,536,860		(145,899	)		9		-		-			-		1,536,860		(145,899	)

Total equity securities	$	1,924,785	$	(157,029	)		12	$	-	$	-			-	$	1,924,785	$	(157,029	)

Total	$	6,153,134	$	(202,156	)		32	$	128,125	$	(722	)		1	$	6,281,259	$	(202,878	)

	December 31, 2011
	Less than 12 months							12 months or more							Total
						No. of							No. of		Aggregate
	Fair		Unrealized			Positions		Fair		Unrealized			Positions		Fair		Unrealized
Category	Value		Losses			Held		Value		Losses			Held		Value		Losses

Fixed-Maturity Securities:
Corporate and other
bonds industrial and
miscellaneous	$	4,849,378	$	(228,792	)	$	26	$	1,483,425	$	(107,666	)	$	7	$	6,332,803	$	(336,458	)

Total fixed-maturity
securities	$	4,849,378	$	(228,792	)		26	$	1,483,425	$	(107,666	)		7	$	6,332,803	$	(336,458	)

Equity Securities:
Preferred stocks	$	368,350	$	(76,969	)		12	$	189,364	$	(4,893	)		5	$	557,714	$	(81,862	)
Common stocks		397,268		(21,969	)		14		-		-			-		397,268		(21,969	)

Total equity securities	$	765,618	$	(98,938	)		26	$	189,364	$	(4,893	)		5	$	954,982	$	(103,831	)

Total	$	5,614,996	$	(327,730	)		52	$	1,672,789	$	(112,559	)		12	$	7,287,785	$	(440,289	)

Tabular disclosure of investment income derived from investments in debt and equity securities consisting of interest income earned from investments in debt securities and on cash and cash equivalents, dividend income from investments in equity securities, and income or expense derived from the amortization of investment related discounts or premiums, respectively. This item does not include realized or unrealized gains or losses on the sale or holding of investments in debt and equity securities required to be included in earnings for the period or for other than temporary losses related to investments in debt and equity securities which are included in realized losses in the period recognized.

4. Fair Value Measurements

4. Fair Value Measurements

12 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

The Company follows GAAP guidance regarding fair value measurements. The valuation technique used to fair value the financial instruments is the market approach which uses prices and other relevant information generated by market transactions involving identical or comparable assets.

This guidance establishes a three-level hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the assets or liabilities fall within different levels of the hierarchy, the classification is based on the lowest level input that is significant to the fair value measurement of the asset or liability. Classification of assets and liabilities within the hierarchy considers the markets in which the assets and liabilities are traded, including during period of market disruption, and the reliability and transparency of the assumptions used to determine fair value. The hierarchy requires the use of observable market data when available. The levels of the hierarchy and those investments included in each are as follows:

Level 1—Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities traded in active markets. Included are those investments traded on an active exchange, such as the NASDAQ Global Select Market, U.S. Treasury securities and obligations of U.S. government agencies, together with corporate debt securities that are generally investment grade.

Level 2—Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and market-corroborated inputs. Municipal and corporate bonds that are traded in less active markets are classified as Level 2. These securities are valued using market price quotations for recently executed transactions.

Level 3—Inputs to the valuation methodology are unobservable for the asset or liability and are significant to the fair value measurement. Material assumptions and factors considered in pricing investment securities and other assets may include appraisals, projected cash flows, market clearing activity or liquidity circumstances in the security or similar securities that may have occurred since the prior pricing period.

The availability of observable inputs varies and is affected by a wide variety of factors. When the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires significantly more judgment. The degree of judgment exercised by management in determining fair value is greatest for investments categorized as Level 3. For investments in this category, the Company considers prices and inputs that are current as of the measurement date. In periods of market dislocation, as characterized by current market conditions, the observability of prices and inputs may be reduced for many instruments. This condition could cause a security to be reclassified between levels.

The Company’s investments are allocated among pricing input levels at December 31, 2012 and 2011 as follows:

	December 31, 2012
($ in thousands)	Level 1		Level 2		Level 3		Total

Fixed-maturity investments available for sale
Political subdivisions of
States, Territories and
Possessions	$	-	$	5,475	$	-	$	5,475

Corporate and other
bonds industrial and
miscellaneous		11,600		9,107		-		20,707
Total fixed maturities		11,600		14,582		-		26,182
Equity investments		5,290		-		-		5,290
Total investments	$	16,890	$	14,582	$	-	$	31,472

	December 31, 2011
($ in thousands)	Level 1		Level 2		Level 3		Total

Fixed-maturity investments available for sale
U.S. Treasury securities
and obligations of U.S.
government corporations
and agencies	$	550	$	-	$	-	$	550

Political subdivisions of
States, Territories and
Possessions		-		6,171		-		6,171

Corporate and other
bonds industrial and
miscellaneous		8,465		7,168		215		15,848
Total fixed maturities		9,015		13,339		215		22,569
Equity investments		4,065		-		-		4,065
Total investments	$	13,080	$	13,339	$	215	$	26,634

A reconciliation of the beginning and ending balances of assets measured at fair value using Level 3 inputs is as follows:

	Years ended
	December 31,
	2012			2011

Beginning balance, January 1	$	215		$	237
Total unrealized (losses)
included in other comprehensive income		-			(22	)
Net transfers out of Level 3		(215	)		-
Ending balance, December 31	$	-		$	215

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
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Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 8: http://www.xbrl.org/2003/role/presentationRef
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Reference 9: http://www.xbrl.org/2003/role/presentationRef
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Reference 10: http://www.xbrl.org/2003/role/presentationRef
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5. Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2012

5. Fair Value of Financial Instruments

GAAP requires all entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized in the balance sheet, for which it is practicable to estimate fair value. The Company uses the following methods and assumptions in estimating its fair value disclosures for financial instruments:

Equity and fixed income investments: Fair value disclosures for investments are included in “Note 3 - Investments.”

Cash and cash equivalents: The carrying values of cash and cash equivalents approximate their fair values because of the short maturity of these instruments.

Premiums receivable, reinsurance receivables: The carrying values reported in the accompanying consolidated balance sheets for these financial instruments approximate their fair values due to the short term nature of the assets.

Notes receivable: The carrying amount of notes receivable related to the sale of businesses approximates fair value because of the recently negotiated interest rates based on term of the loan, risk and guaranty.

Real Estate: The fair value of the land and building included in property and equipment, which is used in the Company’s operations, approximates the carrying value. The fair value was based on an appraisal prepared using the sales comparison approach, and as such, is a Level 3 asset under the fair value hierarchy.

Reinsurance balances payable: The carrying value reported in the consolidated balance sheets for these financial instruments approximates fair value.

Notes payable (including related parties): The Company estimates that the carrying amount of notes payable approximates fair value because of the recently negotiated interest rates based on term of the loan, risk and guaranty.

The estimated fair values of the Company’s financial instruments are as follows:

	December 31, 2012				December 31, 2011
	Carrying Value		Fair Value		Carrying Value		Fair Value

Fixed-maturity investments held to maturity	$	606,281	$	779,026	$	606,234	$	777,953
Cash and cash equivalents		2,240,012		2,240,012		173,126		173,126
Premiums receivable		7,766,825		7,766,825		5,779,085		5,779,085
Receivables - reinsurance contracts		-		-		1,734,535		1,734,535
Reinsurance receivables		38,902,782		38,902,782		23,880,814		23,880,814
Notes receivable-sale of business		323,141		323,141		393,511		393,511
Real estate, net of accumulated depreciation		1,696,924		1,720,000		1,477,639		1,510,000
Reinsurance balances payable		1,820,527		1,820,527		2,761,828		2,761,828
Advance payments from catastrophe reinsurers		7,358,391		7,358,391		-		-
Notes payable (including related parties)		1,197,000		1,197,000		1,047,000		1,047,000

6. Intangibles

12 Months Ended

Dec. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

6. Intangibles

Intangible assets consist of finite and indefinite life assets. Finite life intangible assets include customer and producer relationships and assembled workforce. Insurance company license is considered indefinite life intangible assets subject to annual impairment testing. The weighted average amortization period of identified intangible assets of finite useful life is approximately 6.0 years as of December 31, 2012.

The components of intangible assets and their useful lives, accumulated amortization, and net carrying value as of December 31, 2012 and 2011 are summarized as follows:

			December 31, 2012						December 31, 2011
	Useful		Gross				Net		Gross				Net
	Life		Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
	(in yrs)		Value		Amortization		Amount		Value		Amortization		Amount
Insurance license		-	$	500,000	$	-	$	500,000	$	500,000	$	-	$	500,000
Customer relationships		10		3,400,000		1,190,000		2,210,000		3,400,000		850,000		2,550,000
Assembled workforce		7		950,000		475,042		474,958		950,000		339,328		610,672
Total			$	4,850,000	$	1,665,042	$	3,184,958	$	4,850,000	$	1,189,328	$	3,660,672

Intangible asset impairment testing and amortization

The Company performs an analysis annually as of December 31 to identify potential impairment of intangible assets with both definite and indefinite lives and measures the amount of any impairment loss that may need to be recognized. Intangible asset impairment testing requires an evaluation of the estimated fair value of each identified intangible asset to its carrying value. An impairment charge would be recorded if the estimated fair value is less than the carrying amount of the intangible asset. No impairments have been identified in the years ended December 31, 2012 and 2011.

The Company recorded amortization expense, related to intangibles, of $475,714 for each of the years ended December 31, 2012 and 2011. The estimated aggregate amortization expense for the remaining life of finite life intangibles is as follows:

2013	$	475,714
2014		475,714
2015		475,714
2016		407,816
2017		340,000
Thereafter		510,000
	$	2,684,958

7. Reinsurance

12 Months Ended

Dec. 31, 2012

Insurance [Abstract]

7. Reinsurance

The Company’s reinsurance treaties for both its Personal Lines business, which primarily consists of homeowners’ policies, and Commercial Lines business, other than commercial auto, were renewed as of July 1, 2012. The treaties, which are annual, provide for the following material terms as of July 1, 2012:

Personal Lines

Personal Lines business, which includes homeowners, dwelling fire and canine legal liability insurance, is reinsured under a 75% quota share treaty which provides coverage with respect to losses of up to $1,000,000 per occurrence. An excess of loss contract provides 100% of coverage for the next $1,900,000 of losses for a total reinsurance coverage of $2,650,000 with respect to losses of up to $2,900,000 per occurrence. See “Catastrophe Reinsurance” below for a discussion of the Company’s reinsurance coverage with respect to its Personal Lines business in the event of a catastrophe.

Personal umbrella policies are reinsured under a 90% quota share treaty limiting the Company to a maximum of $100,000 per occurrence for the first $1,000,000 of coverage. The second $1,000,000 of coverage is 100% reinsured.

Commercial Lines

General liability commercial policies written by the Company, except for commercial auto policies, are reinsured under a 40% quota share treaty, which provides coverage with respect to losses of up to $500,000 per occurrence. Excess of loss contracts provide 100% of coverage for the next $2,400,000 of losses for a total reinsurance coverage of $2,600,000 with respect to losses of up to $2,900,000 per occurrence.

Commercial Auto

Commercial auto policies are covered by an excess of loss reinsurance contract which provides $1,750,000 of coverage in excess of $250,000.

Catastrophe Reinsurance

The Company has catastrophe reinsurance coverage with regard to losses of up to $73,000,000. The initial $3,000,000 of losses in a catastrophe are subject to a 75% quota share treaty, such that the Company retains $750,000 per catastrophe occurrence With respect to any additional catastrophe losses of up to $70,000,000, the Company is 100% reinsured under its catastrophe reinsurance program.

The Company’s reinsurance program is structured to enable the Company to significantly grow its premium volume while maintaining regulatory capital and other financial ratios generally within or below the expected ranges used for regulatory oversight purposes. The reinsurance program also provides income as a result of ceding commissions earned pursuant to the quota share reinsurance contracts. The Company’s participation in reinsurance arrangements does not relieve the Company from its obligations to policyholders.

Approximate reinsurance recoverables on unpaid and paid losses by reinsurer are as follows:

	Unpaid		Paid
($ in thousands)	Losses		Losses		Total		Security
December 31, 2012
Maiden Reinsurace Company	$	8,173	$	2,989	$	11,162	$	6,503	(1)
SCOR Reinsurance Company		4,437		1,495		5,932		-
Motors Insurance Corporation		1,550		49		1,599		1,214	(1)
Sirius American Insurance Company		1,406		18		1,424		-
Swiss Reinsurance America Corporation		1,705		756		2,461		-
Allied World Assurance Company		808		372		1,180		-
Others		341		113		454		91	(2)
Total	$	18,420	$	5,792	$	24,212	$	7,808

December 31, 2011
Maiden Reinsurace Company	$	3,534	$	514	$	4,048	$	8,156	(1)
SCOR Reinsurance Company		2,046		272		2,318		-
Motors Insurance Corporation		1,730		228		1,958		1,923	(1)
Sirius American Insurance Company		993		67		1,060		-
Others		1,657		536		2,193		360	(2)
Total	$	9,960	$	1,617	$	11,577	$	10,439

(1) Secured pursuant to collateralized trust agreements.

(2) Guaranteed by an irrevocable letter of credit.

Assets held in the two trusts referred to in footnote (1) above are not included in the Company’s invested assets and investment income earned on these assets is credited to the two reinsurers respectively. In addition to reinsurance recoverables on unpaid and paid losses, reinsurance receivables as of December 31, 2012 and 2011 include unearned ceded premiums of $14,690,683 and $12,304,499, respectively.

The Company received advance payments from catastrophe reinsurers related to Superstorm Sandy. As of December 31, 2012 and 2011, the balance of advance payments from catastrophe reinsurers which will be applied against unpaid losses when paid was $7,358,391 and $-0-, respectively, and are included in “Advance payments from catastrophe reinsurers” in the Consolidated Balance Sheets.

Ceding Commission Revenue

The Company earns ceding commission revenue under its quota share reinsurance agreements based on: (i) a fixed provisional commission rate at which provisional ceding commissions are earned, and (ii) a sliding scale of commission rates and ultimate treaty year loss ratios on the policies reinsured under each of these agreements based upon which contingent ceding commissions are earned. The sliding scale includes minimum and maximum commission rates in relation to specified ultimate loss ratios. The commission rate and contingent ceding commissions earned increases when the estimated ultimate loss ratio decreases and, conversely, the commission rate and contingent ceding commissions earned decreases when the estimated ultimate loss ratio increases.

As of December 31, 2012, the Company’s estimated ultimate loss ratios are attributable to contracts for the July 1, 2011/June 30, 2012 treaty year (“2011/2012 Treaty”) and July 1, 2012/June 30, 2013 treaty year (“2012/2013 Treaty”). As of December 31, 2012, the Company’s estimated ultimate loss ratios attributable to the 2011/2012 Treaty are lower than the contractual ultimate loss ratios at which the provisional ceding commissions are earned. Accordingly, as of December 31, 2012, the Company has recorded contingent ceding commissions earned with respect to the 2011/2012 Treaty. As of December 31, 2012, the Company’s estimated ultimate loss ratios attributable to the 2012/2013 Treaty are greater than the contractual ultimate loss ratios at which the provisional ceding commissions are earned. Accordingly, for the year ended December 31, 2012, the Company has recorded negative contingent ceding commissions earned with respect to the 2012/2013 Treaty.

As of December 31, 2011, the Company’s estimated ultimate loss ratios attributable to contracts for the July 1, 2010/June 30, 2011 treaty year (“2010/2011 Treaty”) and 2011/2012 Treaty are lower than the contractual ultimate loss ratios at which the provisional ceding commissions are earned. Accordingly, for the year ended December 31, 2011, the Company has recorded contingent ceding commissions earned with respect to the 2010/2011 Treaty and 2011/2012 Treaty.

Ceding commissions earned consists of the following:

	Years ended
	December 31,
	2012		2011

Provisional ceding commissions earned	$	8,516,240	$	6,916,027
Contingent ceding commissions earned		1,173,915		3,708,687
	$	9,690,155	$	10,624,714

Provisional ceding commissions are settled monthly. Balances due from reinsurers for contingent ceding commissions on quota share treaties are settled annually based on the loss ratio of each treaty year that ends on June 30. As discussed above, as of December 31, 2012, the Company has recorded negative contingent ceding commissions earned with respect to the 2012/2013 Treaty, which results in ceding commissions payable to reinsurers. Contingent ceding commissions payable to reinsurers as of December 31, 2012 were $807,415 and are included in “Reinsurance balances payable” in the Consolidated Balance Sheets. Contingent ceding commissions due from reinsurers as of December 31, 2011 were $1,734,535 and are included in “Receivables – reinsurance contracts” in the Consolidated Balance Sheets.

The entire disclosure pertaining to the existence, magnitude and information about insurance that has been ceded to or assumed from another insurance company, including the methodologies and assumptions used in determining recorded amounts.

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Reference 9: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
-Number 113
-Paragraph 120
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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8. Notes Receivable-Sale of Business

12 Months Ended

Dec. 31, 2012

8. Notes Receivable-Sale of Business

Retail Business

New York Stores: On April 17, 2009, the Company’s wholly-owned subsidiaries that owned and operated 16 Retail Business locations in New York State sold substantially all of their assets, including their book of business (the “New York Assets”). The purchase price for the New York Assets was approximately $2,337,000, of which approximately $1,786,000 was paid at closing. Promissory notes in the aggregate original principal amount of approximately $551,000 (the “New York Notes”) were also delivered at the closing. In April, 2011 the purchaser of the New York Assets paid in advance the balance of the New York Notes in the amount of $138,762.

Pennsylvania Stores: Effective June 30, 2009, the Company sold all of the outstanding stock of the subsidiary that operated the three remaining Pennsylvania stores included in the former network of retail brokerage outlets (the “Pennsylvania Stock”). The purchase price for the Pennsylvania Stock was approximately $397,000 which is being paid for by the payment of a promissory note with interest at the rate of 8.63% per annum and is payable in equal monthly installments of $5,015.

Franchise Business

Effective May 1, 2009, the Company sold all of the outstanding stock of the subsidiaries that operated the Company’s former DCAP franchise business (collectively, the “Franchise Stock”). The purchase price for the Franchise Stock was $200,000 which was paid by delivery of a promissory note in such principal amount (the “Franchise Note”). The Franchise Note was paid in full during 2012.

Notes receivable arising from the sale of businesses as of December 31, 2012 and 2011 consists of:

	December 31, 2012						December 31, 2011
	Total		Current				Total		Current
	Note		Maturities		Long-Term		Note		Maturities		Long-Term
Sale of Pennsylvania stores		320,833		33,814		287,019		351,861		31,028		320,833
Sale of Franchise business		-		-		-		37,797		37,797		-
		320,833		33,814		287,019		389,658		68,825		320,833
Accrued interest		2,308		2,308		-		3,853		3,853		-
Total	$	323,141	$	36,122	$	287,019	$	393,511	$	72,678	$	320,833

9. Deferred Acquisition Costs and Deferred Ceding Commission Revenue

12 Months Ended

Dec. 31, 2012

9. Deferred Acquisition Costs and Deferred Ceding Commission Revenue

Acquisition costs incurred and policy-related ceding commission revenue are deferred, and amortized to income on property and casualty insurance business as follows:

	Year ended
	December 31,
	2012			2011

Net deferred acquisition costs net of ceding
commission revenue, beginning of year	$	553,374		$	399,488

Cost incurred and deferred:
Commissions and brokerage		8,087,355			6,863,504
Other underwriting and acquisition costs		3,012,611			2,316,928
Ceding commission revenue		(9,410,871	)		(7,678,913	)
Net deferred acquisition costs		1,689,095			1,501,519
Amortization		(1,549,621	)		(1,347,633	)
		139,474			153,886
Net deferred acquisition costs net of ceding
commission revenue, end of year	$	692,848		$	553,374

Ending balances for deferred acquisition costs and deferred ceding commission revenue as of December 31, 2012 and 2011 follows:

	December 31,
	2012			2011

Deferred acquisition costs	$	5,569,878		$	4,535,773
Deferred ceding commission revenue		(4,877,030	)		(3,982,399	)
Balance at end of period	$	692,848		$	553,374

10. Property and Equipment

12 Months Ended

Dec. 31, 2012

10. Property and Equipment

The components of property and equipment are summarized as follows:

			Accumulated
	Cost		Depreciation			Net

December 31, 2012
Building	$	1,648,838	$	(152,976	)	$	1,495,862
Land		153,097		-			153,097
Furniture		138,115		(66,570	)		71,545
Computer equipment and software		336,851		(219,447	)		117,404
Automobile		81,394		(50,880	)		30,514
Total	$	2,358,295	$	(489,873	)	$	1,868,422

December 31, 2011
Building	$	1,457,543	$	(112,001	)	$	1,345,542
Land		132,097		-			132,097
Furniture		132,323		(52,034	)		80,289
Computer equipment and software		212,224		(184,050	)		28,174
Automobile		81,394		(21,155	)		60,239
Total	$	2,015,581	$	(369,240	)	$	1,646,341

Depreciation expense for the years ended December 31, 2012 and 2011 was $120,633 and $126,990, respectively.

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

11. Property and Casualty Insurance Activity

12 Months Ended

Dec. 31, 2012

11. Property and Casualty Insurance Activity

Premiums written, ceded and earned are as follows:

	Direct			Assumed			Ceded			Net

Year ended December 31, 2012
Premiums written	$	49,251,630		$	23,967		$	(29,715,971	)	$	19,559,626
Change in unearned premiums		(4,724,193	)		(5,010	)		2,386,188			(2,343,015	)
Premiums earned	$	44,527,437		$	18,957		$	(27,329,783	)	$	17,216,611

Year ended December 31, 2011
Premiums written	$	40,734,767		$	10,990		$	(24,449,655	)	$	16,296,102
Change in unearned premiums		(4,005,312	)		(516	)		2,578,472			(1,427,356	)
Premiums earned	$	36,729,455		$	10,474		$	(21,871,183	)	$	14,868,746

Premium receipts in advance of the policy effective date are recorded as advance premiums. The balance of advance premiums as of December 31, 2012 and 2011 was approximately $611,000 and $545,000, respectively.

The components of the liability for loss and LAE expenses and related reinsurance receivables as of December 31, 2012 and 2011 are as follows:

	Gross		Reinsurance
	Liability		Receivables
December 31, 2012
Case-basis reserves	$	21,190,141	$	13,284,613
Loss adjustment expenses		2,502,169		1,064,420
IBNR reserves		6,793,222		4,070,661
Recoverable on unpaid losses				18,419,694
Recoverable on paid losses		-		5,792,405
Total loss and loss adjustment expenses	$	30,485,532		24,212,099
Unearned premiums				14,690,683
Total reinsurance receivables			$	38,902,782

December 31, 2011
Case-basis reserves	$	11,467,967	$	6,148,765
Loss adjustment expenses		2,117,242		1,017,983
IBNR reserves		4,895,508		2,793,586
Recoverable on unpaid losses				9,960,334
Recoverable on paid losses		-		1,615,981
Total loss and loss adjustment expenses	$	18,480,717		11,576,315
Unearned premiums				12,304,499
Total reinsurance receivables			$	23,880,814

The following table provides a reconciliation of the beginning and ending balances for unpaid losses and loss adjustment expenses (“LAE”):

	Years ended
	December 31,
	2012			2011

Balance at beginning of period	$	18,480,717		$	17,711,907
Less reinsurance recoverables		(9,960,334	)		(10,431,415	)
Net balance, beginning of period		8,520,383			7,280,492

Incurred related to:
Current year		10,460,000			8,297,998
Prior years		774,713			273,060
Total incurred		11,234,713			8,571,058

Paid related to:
Current year		4,419,000			4,108,010
Prior years		3,270,258			3,223,157
Total paid		7,689,258			7,331,167

Net balance at end of period		12,065,838			8,520,383
Add reinsurance recoverables		18,419,694			9,960,334
Balance at end of period	$	30,485,532		$	18,480,717

Incurred losses and LAE are net of reinsurance recoveries under reinsurance contracts of $21,396,768 and $7,073,026 for the years ended December 31, 2012 and 2011, respectively.

Prior year incurred loss and LAE development is based upon numerous estimates by line of business and accident year. The Company’s management continually monitors claims activity to assess the appropriateness of carried case and IBNR reserves, giving consideration to Company and industry trends.

Loss and loss adjustment expense reserves

The reserving process for loss adjustment expense reserves provides for the Company’s best estimate at a particular point in time of the ultimate unpaid cost of all losses and loss adjustment expenses incurred, including settlement and administration of losses, and is based on facts and circumstances then known and including losses that have been incurred but not yet been reported. The process includes using actuarial methodologies to assist in establishing these estimates, judgments relative to estimates of future claims severity and frequency, the length of time before losses will develop to their ultimate level and the possible changes in the law and other external factors that are often beyond the Company’s control. The loss ratio projection method is used to estimate loss reserves. The process produces carried reserves set by management based upon the actuaries’ best estimate and is the result of numerous best estimates made by line of business, accident year, and loss and loss adjustment expense. The amount of loss and loss adjustment expense reserves for reported claims is based primarily upon a case-by-case evaluation of coverage, liability, injury severity, and any other information considered pertinent to estimating the exposure presented by the claim. The amounts of loss and loss adjustment expense reserves for unreported claims are determined using historical information by line of insurance as adjusted to current conditions. Since this process produces loss reserves set by management based upon the actuaries’ best estimate, there is no explicit or implicit provision for uncertainty in the carried loss reserves.

Due to the inherent uncertainty associated with the reserving process, the ultimate liability may differ, perhaps substantially, from the original estimate. Such estimates are regularly reviewed and updated and any resulting adjustments are included in the current year’s results. Reserves are closely monitored and are recomputed periodically using the most recent information on reported claims and a variety of statistical techniques. Specifically, on at least a quarterly basis, the Company reviews, by line of business, existing reserves, new claims, changes to existing case reserves and paid losses with respect to the current and prior years.

The table below shows the method used by product line and accident year to select the estimated year-ending loss reserves:

		Accident Year
Product Line	Most Recent	1st Prior	All Other

Fire	Loss Ratio	Loss Development	Loss Development
Homeowners	Loss Ratio	Loss Development	Loss Development
Two to Four Family	Loss Ratio	Loss Development	Loss Development
Commercial multiple-peril property	Loss Ratio	Loss Development	Loss Development
Commercial multiple-peril liability	Loss Ratio	Loss Development	Loss Development
Other Liability	Loss Ratio	Loss Development	Loss Development
Commercial Auto Liability	Loss Ratio	Loss Development	Loss Development
Auto Physical Damage	Loss Ratio	Loss Development	Loss Development
Personal Auto Liability	Loss Ratio	Loss Development	Loss Development

Two key assumptions that materially impact the estimate of loss reserves are the loss ratio estimate for the current accident year and the loss development factor selections for all accident years. The loss ratio estimate for the current accident year is selected after reviewing historical accident year loss ratios adjusted for rate changes, trend, and mix of business.

The Company is not aware of any claims trends that have emerged or that would cause future adverse development that have not already been considered in existing case reserves and in its current loss development factors.

In New York State, lawsuits for negligence, subject to certain limitations, must be commenced within three years from the date of the accident or are otherwise barred. Accordingly, the Company’s exposure to IBNR for accident years 2009 and prior is limited although there remains the possibility of adverse development on reported claims.

The Company was previously a one-third participant in a pool arrangement. Effective November 1, 1997, the Company withdrew from its participation in the pool arrangement. Accordingly, the Company will only be participating in losses and allocated loss adjustment expenses that occurred prior to that date.

12. Long-Term Debt

12 Months Ended

Dec. 31, 2012

Debt Disclosure [Abstract]

12. Long-Term Debt

Long-term debt and capital lease obligations consist of:

	December 31, 2012						December 31, 2011
			Less						Less
	Total		Current		Long-Term		Total		Current		Long-Term
	Debt		Maturities		Debt		Debt		Maturities		Debt
Notes payable	$	747,000	$	-	$	747,000	$	747,000	$	-	$	747,000
Bank line of credit		450,000		450,000		-		300,000		300,000		-
	$	1,197,000	$	450,000	$	747,000	$	1,047,000	$	300,000	$	747,000

Notes Payable

From June 2009 through March 2010, the Company borrowed $1,450,000 (including $785,000 from related parties as disclosed below) and issued promissory notes in such aggregate principal amount (the “2009/2010 Notes”). The 2009/2010 Notes provided for interest at the rate of 12.625% per annum through the maturity date of July 10, 2011. During the quarter the ended June 30, 2011, the Company prepaid $703,000 (including $407,000 to related parties) of the principal amount of the 2009/2010 Notes. In June 2011, the remaining note holders agreed to extend the maturity date for a period of three years from July 10, 2011 to July 10, 2014, and, effective July 11, 2011, reduce the interest rate from 12.625% to 9.5% per annum. The remaining 2009/2010 Notes, as extended, can be prepaid without premium or penalty. The reduction in the interest rate and the extension of the maturity date did not significantly change the fair value of the 2009/2010 Notes.

Interest expense on the 2009/2010 Notes for years ended December 31 2012 and 2011 was approximately $71,000 and $120,000, respectively.

Related party balances as of December 31, 2012 and 2011, and principal prepayments as described above for the year ended December 31, 2011 under the 2009/2010 Notes are as follows:


					Balance
			Less Principal Prepayments		December 31, 2012
	Balance		Year Ended		and
	December 31, 2010		December 31, 2011		December 31, 2011

Barry Goldstein IRA (Mr. Goldstein is Chairman of the Board, President
and Chief Executive Officer, and principal stockholder of the Company)	$	150,000	$	60,000	$	90,000
Kidstone LLC, a limited liability company owned by Mr. Goldstein, along
with Steven Shapiro (a director of KICO), and a family member of Sam
Yedid (a director of KICO)		120,000		120,000		-
Jay Haft, a director of the Company		50,000		20,000		30,000
A member of the family of Michael Feinsod, a director of the Company		100,000		40,000		60,000
Mr. Yedid and members of his family		295,000		139,000		156,000
A member of the family of Floyd Tupper, a director of KICO		70,000		28,000		42,000
Total related party transactions	$	785,000	$	407,000	$	378,000

Interest expense on related party borrowings for the years ended December 31, 2012 and 2011 was approximately $36,000 and $64,000, respectively.

Bank Line of Credit

On December 27, 2011, Kingstone executed a Promissory Note pursuant to a line of credit (together, the “Trustco Agreement”) with Trustco Bank (“Lender”). Under the Trustco Agreement, Kingstone may receive advances from Lender not to exceed an unpaid principal balance of $500,000 (the “Credit Limit”). On January 25, 2013, the Credit Limit was increased to $600,000. Advances extended under the Trustco Agreement will bear interest at a floating rate based on the Lender’s prime rate.

Interest only payments are due monthly. The principal balance is payable on demand, and must be reduced to zero for a minimum of thirty consecutive days during each year of the term of the Trustco Agreement. Lender may set off any depository accounts maintained by Kingstone that are held by Lender. Payment of amounts due pursuant to the Trustco Agreement is secured by all of Kingstone’s cash and deposit accounts, receivables, inventory and fixed assets, and is guaranteed by Kingstone’s subsidiary, Payments, Inc.

There were no closing costs or fees paid in connection with the Trustco Agreement. Kingstone received an initial advance of $300,000 on December 27, 2011. As of December 31, 2012 and 2011, the amounts outstanding under the Trustco Agreement were $450,000 and $300,000, respectively. The line of credit is being used for general corporate purposes.

The weighted average interest rate on the amount outstanding as of December 31, 2012 and 2011 was 3.75%. There are no other fees in connection with this credit line. Interest expense on the line of credit for years ended December 31 2012 and 2011 was approximately $10,000 and $-0-, respectively.

13. Stockholders' Equity

12 Months Ended

Dec. 31, 2012

Equity [Abstract]

13. Stockholders' Equity

Dividend Declared

Dividends declared and paid on Common Stock were $533,763 and $230,303 for the years ended December 31, 2012 and 2011, respectively. The Company’s Board of Directors approved a quarterly dividend on February 22, 2013 of $.04 per share payable in cash on March 15, 2013 to stockholders of record as of March 7, 2013.

Preferred Stock

During 2001, the Company amended its Certificate of Incorporation to provide for the authority to issue 1,000,000 shares of Preferred Stock, with a par value of $.01 per share. The Board of Directors has the authority to issue shares of Preferred Stock from time to time in a series and to fix, before the issuance of each series, the number of shares in each series and the designation, liquidation preferences, conversion privileges, rights and limitations of each series. There was no preferred stock issued as of December 31, 2012 and 2011.

Other Equity Compensation

For the years ended December 31, 2012 and 2011, there was no other equity compensation.

Stock Options

Pursuant to the Company’s 2005 Equity Participation Plan (the “2005 Plan”), which provides for the issuance of incentive stock options, non-statutory stock options and restricted stock, a maximum of 550,000 shares of Common Stock are permitted to be issued pursuant to options granted and restricted stock issued. Incentive stock options granted under the 2005 Plan expire no later than ten years from date of grant (except no later than five years for a grant to a 10% stockholder). The Board of Directors or the Stock Option Committee determines the expiration date with respect to non-statutory options, and the vesting provisions for restricted stock, granted under the 2005 Plan.

The results of operations for the years ended December 31, 2012 and 2011 include share-based stock option compensation expense totaling approximately $48,000 and $106,000, respectively. Stock-based compensation expense related to stock options is net of estimated forfeitures of 21% for the years ended December 31, 2012 and 2011. Such amounts have been included in the Consolidated Statements of Comprehensive Income within other operating expenses.

Stock option compensation expense in 2012 and 2011 is the estimated fair value of options granted amortized on a straight-line basis over the requisite service period for the entire portion of the award. The weighted average estimated fair value of stock options granted during the year ended December 31, 2012 was $2.47 per share. No stock options were granted during year ended December 31, 2011. The fair value of options at the grant date was estimated using the Black-Scholes option-pricing method. The following weighted average assumptions were used for grants during the year ended December 31, 2012:

Dividend Yield		0.00	%
Volatility		50.89% - 89.27	%
Risk-Free Interest Rate		.61	%
Expected Life	5 years

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because our stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of our stock options.

A summary of option activity under the Company’s 2005 Plan for the year ended December 31, 2012 is as follows:

	Number of Shares			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value

Outstanding at January 1, 2012		393,865		$	2.32		2.28	$	498,913

Granted		10,000		$	4.81		-	$	600
Exercised		(168,750	)	$	2.12		-	$	515,281
Forfeited		-		$	-		-	$	-

Outstanding at December 31, 2012		235,115		$	2.58		2.24	$	539,485

Vested and Exercisable at December 31, 2012		165,398		$	2.48		2.13	$	395,556

The aggregate intrinsic value of options outstanding and options exercisable at December 31, 2012 is calculated as the difference between the exercise price of the underlying options and the market price of the Company’s Common Stock for the options that had exercise prices that were lower than the $4.87 closing price of the Company’s Common Stock on December 31, 2012. The total intrinsic value of options exercised in year ended December 31, 2012 was $515,281, determined as of the date of exercise.

Participants in the 2005 Plan may exercise their outstanding vested options, in whole or in part, by having the Company reduce the number of shares otherwise issuable by a number of shares having a fair market value equal to the exercise price of the option being exercised (“Net Exercise”). The Company received cash proceeds of $47,075 from the exercise of options for the purchase of 22,500 shares of Common Stock in the year ended December 31, 2012. The remaining 146,250 options exercised in 2012 were Net Exercises.

As of December 31, 2012 and 2011, the fair value of unamortized compensation cost related to unvested stock option awards was approximately $26,000 and $55,000, respectively. Unamortized compensation cost as of December 31, 2012 is expected to be recognized over a remaining weighted-average vesting period of 1.71 years. The total fair value of shares vested during the years ended December 31, 2012 and 2011 was approximately $135,000 and $127,000, respectively.

As of December 31, 2012, there were 143,635 shares reserved under the 2005 Plan.

The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(d),(e))
-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21484-112644

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB TOPIC 4.E)
-URI http://asc.fasb.org/extlink&oid=6228006&loc=d3e74512-122707

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
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-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21488-112644

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.29-31)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 4
-Subparagraph (SAB TOPIC 4.C)
-URI http://asc.fasb.org/extlink&oid=6959260&loc=d3e187143-122770

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21506-112644

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI http://asc.fasb.org/extlink&oid=6959260&loc=d3e187085-122770

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 30
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6405834&loc=d3e23285-112656

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
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-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Preferred Stock
-URI http://asc.fasb.org/extlink&oid=6521494

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
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Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
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-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21564-112644

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 43
-Section B
-Paragraph 7, 11A
-Chapter 1
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 10
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 16: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 5
-Paragraph 15
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 17: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph d
-Article 4

Reference 18: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 29, 30, 31
-Article 5

Reference 19: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section E

Reference 20: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Article 4

Reference 21: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section C

Reference 22: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 129
-Paragraph 2, 3, 4, 5, 6, 7, 8
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 23: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3

14. Statutory Financial Information and Accounting Policies

12 Months Ended

Dec. 31, 2012

14. Statutory Financial Information and Accounting Policies

For regulatory purposes, the Company’s Insurance Subsidiaries prepare their statutory basis financial statements in accordance with practices prescribed or permitted by the state in which they are domiciled (“statutory basis” or “SAP”). The more significant SAP variances from GAAP are as follows:

•	Policy acquisition costs are charged to operations in the year such costs are incurred, rather than being deferred and amortized as premiums are earned over the terms of the policies.

•	Ceding commission revenues are earned when ceded premiums are written except for ceding commission revenues in excess of anticipated acquisition costs, which are deferred and amortized as ceded premiums are earned. GAAP requires that all ceding commission revenues be earned as the underlying ceded premiums are earned over the term of the reinsurance agreements.

•	Certain assets including certain receivables, a portion of the net deferred tax asset, prepaid expenses and furniture and equipment are not admitted.

•	Investments in fixed-maturity securities are valued at National Association of Insurance Commissioners (“NAIC”) value for statutory financial purposes, which is primarily amortized cost. GAAP requires certain investments in fixed-maturity securities classified as available for sale, to be reported at fair value.

•	Certain amounts related to ceded reinsurance are reported on a net basis within the statutory basis financial statements. GAAP requires these amounts to be shown gross.
•	For SAP purposes, changes in deferred income taxes relating to temporary differences between net income for financial reporting purposes and taxable income are recognized as a separate component of gains and losses in surplus rather than included in income tax expense or benefit as required under GAAP.

State insurance laws restrict the ability of KICO to declare dividends. These restrictions are related to surplus and net investment income. Dividends are restricted to the lesser of 10% of surplus or 100% of investment income (on a statutory accounting basis) for the trailing four quarters. State insurance regulators require insurance companies to maintain specified levels of statutory capital and surplus. Generally, dividends may only be paid out of unassigned surplus, and the amount of an insurer’s unassigned surplus following payment of any dividends must be reasonable in relation to the insurer’s outstanding liabilities and adequate to meet its financial needs. On July 1, 2009, Kingstone completed the acquisition of 100% of the issued and outstanding common stock of KICO (formerly known as Commercial Mutual Insurance Company (“CMIC”)) pursuant to the conversion of CMIC from an advance premium cooperative to a stock property and casualty insurance company. Pursuant to the plan of conversion, Kingstone acquired a 100% equity interest in KICO. In connection with the plan of conversion of CMIC, Kingstone agreed with the New York State Department of Financial Services (formerly known as the New York State Insurance Department) (the “Department”) that for a period of two years following the effective date of conversion of July 1, 2009, no dividend could be paid by KICO without the approval of the Department (“Dividend Restriction Period”). No such request was made by Kingstone to the Department during the Dividend Restriction Period. For the year ended December 31, 2012, KICO paid dividends of $700,000. For the year ended December 31, 2011, KICO paid dividends of $350,000 after the expiration of the Dividend Restriction Period. On February 28, 2013, KICO’s board of directors approved a cash dividend of $175,000 to Kingstone, which was paid on March 1, 2013. Kingstone has also agreed with the Department that any intercompany transaction between itself and KICO must be filed with the Department 30 days prior to implementation and not disapproved by the Department.

For the years ended December 31, 2012 and 2011, KICO had statutory basis net income of $1,142,493 and $3,025,536, respectively. At December 31, 2012 and 2011, KICO had reported statutory basis surplus as regards policyholders of $14,345,729 and $13,602,701, respectively, as filed with the Department.

15. Risk Based Capital

12 Months Ended

Dec. 31, 2012

Banking and Thrift [Abstract]

15. Risk Based Capital

State insurance departments impose risk-based capital (“RBC”) requirements on insurance enterprises. The RBC Model serves as a benchmark for the regulation of insurance companies by state insurance regulators. RBC provides for targeted surplus levels based on formulas, which specify various weighting factors that are applied to financial balances or various levels of activity based on the perceived degree of risk, and are set forth in the RBC requirements. Such formulas focus on four general types of risk: (a) the risk with respect to the company’s assets (asset or default risk); (b) the risk of default on amounts due from reinsurers, policyholders, or other creditors (credit risk); (c) the risk of underestimating liabilities from business already written or inadequately pricing business to be written in the coming year (underwriting risk); and, (d) the risk associated with items such as excessive premium growth, contingent liabilities, and other items not reflected on the balance sheet (off-balance sheet risk). The amount determined under such formulas is called the authorized control level RBC (“ACLC”).

The RBC guidelines define specific capital levels based on a company’s ACLC that are determined by the ratio of the company’s total adjusted capital (“TAC”) to its ACLC. TAC is equal to statutory capital, plus or minus certain other specified adjustments. The Company is in compliance with RBC requirements as of December 31, 2012 and 2011.

The entire disclosure for banks, savings institutions, and credit unions, for regulatory capital requirements imposed by the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of Thrift Supervision (OTS) or for any state imposed capital requirements, as applicable. The disclosure may include (1) a description of regulatory capital requirements (a) for capital adequacy purposes and (b) established by the prompt corrective action provisions of Section 38 of the Federal Depository Insurance Act; (2) the actual or possible material effects of noncompliance with such requirements; (3) whether the entity is in compliance with the regulatory capital requirements including (a) required and actual ratios and amounts of Tier 1 leverage, Tier 1 risk-based, and total risk-based capital, tangible capital (for savings institutions), and Tier 3 capital for market risk (for certain banks and bank holding companies), (b) factors that may significantly affect capital adequacy; (4) the prompt corrective action category in which the entity was classified as of its most recent notification; (5) whether management believes any conditions or events since notification have changed the entity's category. Also may include additional information that might be disclosed in situations where substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1G
-URI http://asc.fasb.org/extlink&oid=7881181&loc=SL5958577-112826

Reference 2: http://www.xbrl.org/2003/role/presentationRef
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
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Reference 7: http://www.xbrl.org/2003/role/presentationRef
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Reference 8: http://www.xbrl.org/2003/role/presentationRef
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Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
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-URI http://asc.fasb.org/extlink&oid=7881181&loc=SL5958575-112826

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Audit and Accounting Guide (AAG)
-Number AAG-DEP
-Paragraph 15, 16, 17
-IssueDate 2006-05-01
-Chapter 17
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

16. Income Taxes

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

16. Income Taxes

The Company files a consolidated U.S. federal income tax return that includes all wholly-owned subsidiaries. State tax returns are filed on a consolidated or separate basis depending on applicable laws. The Company records adjustments related to prior years’ taxes during the period when they are identified, generally when the tax returns are filed. The effect of these adjustments on the current and prior periods (during which the differences originated) is evaluated based upon quantitative and qualitative factors and are considered in relation to the financial statements taken as a whole for the respective periods. The Company has evaluated this year’s amounts in relation to the current and prior reporting periods and determined that a restatement of those prior reporting periods is not appropriate.

The provision for income taxes is comprised of the following:

Years ended December 31,	2012			2011

Current federal income tax expense	$	641,857		$	1,394,090
Current state income tax expense		(225	)		19,529
Deferred federal and state income tax expense		(338,723	)		(325,106	)
Provision for income taxes	$	302,909		$	1,088,513

A reconciliation of the federal statutory rate to our effective tax rate is as follows:

Years ended December 31,	2012					2011
Computed expected tax expense	$	363,669		34.0	%	$	1,221,156		34.0	%
State taxes, net of Federal benefit		(44,687	)	(4.2	)		1,270		-
State valuation allowance		104,325		9.8			-		-
Permanent differences
Dividends received deduction		(64,274	)	(6.0	)		(39,613	)	(1.1	)
Non-taxable investment income		(68,667	)	(6.4	)		(84,930	)	(2.4	)
Stock-based compensation expense		16,414		1.5			35,999		1.0
Other permanent differences		25,956		2.4			(21,548	)	2.4
Prior year tax matters		(46,906	)	(4.4	)		(50,886	)	(1.4	)
Other		17,079		1.6			27,065		(2.2	)
Total tax	$	302,909		28.3	%	$	1,088,513		30.3	%

Deferred tax assets and liabilities are determined using the enacted tax rates applicable to the period the temporary differences are expected to be recovered. Accordingly, the current period income tax provision can be affected by the enactment of new tax rates. The net deferred income taxes on the balance sheet reflect temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and income tax purposes, tax effected at a various rates depending on whether the temporary differences are subject to federal taxes, state taxes, or both. Significant components of the Company’s deferred tax assets and liabilities are as follows:

	December 31,			December 31,
	2012			2011

Deferred tax asset:
Net operating loss carryovers (1)	$	264,648		$	276,312
Claims reserve discount		313,544			220,354
Unearned premium		811,413			647,596
Deferred ceding commission revenue		1,658,190			1,354,016
Other		10,921			4,583
Total deferred tax assets		3,058,716			2,502,861

Deferred tax liability:
Investment in KICO (2)		1,169,000			1,169,000
Deferred acquisition costs		1,893,759			1,542,163
Intangibles		1,082,886			1,244,628
Depreciation and amortization		152,576			133,411
Reinsurance recoverable		20,400			20,400
Net unrealized appreciation of securities - available for sale		527,376			172,155
Investment income		-			10,543
Total deferred tax liabilities		4,845,997			4,292,300

Net deferred income tax liability	$	(1,787,281	)	$	(1,789,439	)

(1)	The deferred tax assets from net operating loss carryovers are as follows:

	December 31,			December 31,
Type of NOL	2012			2011			Expiration
State only (A)	$	380,810		$	284,749		December 31, 2032
Valuation allowance		(146,762	)		(42,437	)
State only, net of valuation allowance		234,048			242,312
Amount subject to Annual Limitation, federal only (B)		30,600			34,000		December 31, 2019
Total deferred tax asset from net operating loss carryovers	$	264,648		$	276,312

(A) Kingstone generates operating losses for state purposes and has prior year net operating loss carryovers available. The state net operating loss carryover as of December 31, 2012 and 2011 was approximately $4,588,000 and $3,569,000, respectively. KICO, the Company’s insurance underwriting subsidiary, is not subject to state income taxes. KICO’s state tax obligations are paid through a gross premiums tax which is included in the Consolidated Statements of Comprehensive Income within other underwriting expenses. A valuation allowance has been recorded due to the uncertainty of generating enough state taxable income to utilize 100% of the available state net operating loss carryovers over their remaining lives which expire between 2027 and 2032.

(B) The Company has an NOL of $90,000 that is subject to Internal Revenue Code Section 382, which places a limitation on the utilization of the federal net operating loss to approximately $10,000 per year (“Annual Limitation”) as a result of a greater than 50% ownership change of the Company in 1999. The losses subject to the Annual Limitation will be available for future years, expiring through December 31, 2019.

(2)	Deferred tax liability - investment in KICO

On July 1, 2009, the Company completed the acquisition of 100% of the issued and outstanding common stock of KICO (formerly known as Commercial Mutual Insurance Company (“CMIC”)) pursuant to the conversion of CMIC from an advance premium cooperative to a stock property and casualty insurance company. Pursuant to the plan of conversion, the Company acquired a 100% equity interest in KICO, in consideration for the exchange of $3,750,000 principal amount of surplus notes of CMIC. In addition, the Company forgave all accrued and unpaid interest on the surplus notes as of the date of conversion. As of the date of acquisition, unpaid accrued interest on the surplus notes along with the accretion of the discount on the original purchase of the surplus notes totaled $2,921,319 (together “Untaxed Interest”). As of the date of acquisition, the deferred tax liability on the Untaxed Interest was $1,169,000. Under GAAP guidance for business combinations, a temporary difference with an indefinite life exists when the parent has a lower carrying value of its subsidiary for income tax purposes. The Company is required to maintain its deferred tax liability of $1,169,000 related to this temporary difference until the stock of KICO is sold, or the assets of KICO are sold or KICO and the parent are merged.

The table below reconciles the changes in net deferred income tax liability to the deferred income tax provision for the year ended December 31, 2012:

Change in net deferred income tax liabilities	$	(2,158	)
Deferred tax expense allocated to other comprehensive income		336,565
Deferred income tax provision	$	(338,723	)

In assessing the valuation of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. No valuation allowance against deferred tax assets has been established, except for NOL limitations, as the Company believes it is more likely than not the deferred tax assets will be realized based on the historical taxable income of KICO, or by offset to deferred tax liabilities.

The Company had no material unrecognized tax benefit and no adjustments to liabilities or operations were required. There were no interest or penalties related to income taxes that have been accrued or recognized as of and for the years ended December 31, 2012 and 2011. If any had been recognized these would be reported in income tax expense.

IRS Tax Audit

The Company’s federal income tax return for the year ended December 31, 2009 was examined by the Internal Revenue Service and was accepted as filed. The tax returns for years ended December 31, 2010 and 2011 are subject to examination, generally for three years after filing.

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

Compensation and Retirement Disclosure [Abstract]

17. Employee Benefit Plans

12 Months Ended

Dec. 31, 2012

17. Employee Benefit Plans

The Company’s insurance subsidiary, KICO, maintains a salary reduction plan under Section 401(k) of the Internal Revenue Code (“401(k) Plan”) for its qualified employees. KICO matches 100% of each participant’s contribution up to 4% of the participant’s eligible contribution. The Company, at its discretion, may allocate an amount for additional contributions (“Additional Contributions”) to the 401(k) Plan. The Company incurred approximately $264,000 and $352,000 of expense for the years ended December 31, 2012 and 2011, respectively, related to the 401(k) Plan. For the years ended December 31, 2012 and 2011, Additional Contributions consisted of approximately $155,000 and $251,000, respectively.

18. Commitments and Contingencies

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

18. Commitments and Contingencies

Litigation

From time to time, the Company is involved in various legal proceedings in the ordinary course of business. For example, to the extent a claim asserted by a third party in a law suit against one of the Company’s insureds covered by a particular policy, the Company may have a duty to defend the insured party against the claim. These claims may relate to bodily injury, property damage or other compensable injuries as set forth in the policy. Such proceedings are considered in estimating the liability for loss and LAE expenses. The Company is not subject to any other pending legal proceedings that management believes are likely to have a material adverse effect on the financial statements.

State Insurance Regulation

In the aftermath of Superstorm Sandy, the New York State Department of Financial Services has adopted various regulations that effect insurance companies that operate in the state of New York. Included among the regulations are accelerated claims investigation and settlement requirements and mandatory participation in non-binding mediation proceedings funded by the insurer. Further, in February 2013, the state of New York announced that the Department of Financial Services has commenced an investigation into the claims practices of three insurance companies, including KICO, in connection with Superstorm Sandy claims. The Department of Financial Services stated that the three insurers had a much larger than average consumer complaint rate with regard to Superstorm Sandy claims and indicated that the three insurers were being investigated for (i) failure to send adjusters in a timely manner; (ii) failure to process claims in a timely manner; and (iii) inability of homeowners to contact insurance company representatives. KICO has received a letter from the Department of Financial Services seeking information and data with regard to the foregoing. KICO is cooperating with the Department of Financial Services in connection with its investigation and believes that such matter will not have a material adverse effect the Company’s financial position or results of operations.

Employment Agreements

Chief Executive Officer (Kingstone)

The Company’s President, Chairman of the Board and Chief Executive Officer, Barry B. Goldstein, is employed pursuant to an employment agreement, dated October 16, 2007, as amended (the “Goldstein Employment Agreement”), that expires on December 31, 2014. Pursuant to the Goldstein Employment Agreement, effective January 1, 2010, Mr. Goldstein was entitled to receive an annual base salary of $375,000 (“Base Salary”) and annual bonuses based on the Company’s net income (which bonus, commencing for 2010, may not be less than $10,000 per annum). Effective January 1, 2012, Mr. Goldstein assumed the positions of President and Chief Executive Officer of KICO. Effective April 16, 2012, the Company entered into an amendment to its employment agreement with Mr. Goldstein, pursuant to which, effective January 1, 2012 and continuing through the term of the agreement, Mr. Goldstein’s annual base salary was increased to $450,000 from $375,000 in consideration for his additional responsibilities to KICO. On August 25, 2008, the Company and Mr. Goldstein entered into an amendment (the “2008 Amendment”) to the Goldstein Employment Agreement. The 2008 Amendment entitles Mr. Goldstein to devote certain time to KICO to fulfill his duties and responsibilities as Chairman of the Board, Chief Investment Officer, and effective January 1, 2012, President and Chief Executive Officer of KICO. Such permitted activity is subject to a reduction in Base Salary under the Goldstein Employment Agreement on a dollar-for-dollar basis to the extent of the salary payable by KICO to Mr. Goldstein pursuant to his KICO employment contract, which, effective July 1, 2012 and 2011, is $367,500 and $275,000 per year, respectively. Pursuant to the Goldstein Employment Agreement, the Company also agreed that, under certain circumstances following a change of control of Kingstone Companies, Inc. and the termination of his employment, Mr. Goldstein would be entitled to a payout equal to one and one-half times his then annual salary and all of Mr. Goldstein’s outstanding options would become exercisable.

Chief Executive Officer (KICO)

John D. Reiersen, KICO’s Executive Vice President, is employed pursuant to an employment agreement effective as of November 13, 2006 and amended as of January 25, 2008 and February 28, 2011 (together, the “Reiersen Agreement”). The Reiersen Agreement expires on December 31, 2014 and may be terminated by KICO at any time with or without cause upon written notice. In the event of termination by KICO, Mr. Reiersen will be entitled to receive severance in an amount equal to the lesser of $50,000 or the remaining salary payable to him through the term of his agreement. Pursuant to the Reiersen Agreement, Mr. Reiersen was entitled to receive an annual base salary of $256,500 (with increases of 5% on each of January 1, 2010 and 2011), plus additional customary benefits. Effective January 1, 2012, Mr. Reiersen’s minimum annual salary is $100,000 in consideration of the anticipated provision of approximately 500 hours of service per year on behalf of KICO. Mr. Reiersen also receives a $2,000 annual fee for his position as a director of KICO.

Approval Required for Transactions with Subsidiary

In connection with the plan of conversion of CMIC, the Company has agreed with the Department of Financial Services that any intercompany transaction between itself and KICO must be filed with the Department 30 days prior to implementation.

The entire disclosure for commitments and contingencies.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 20
-Section 50
-Paragraph 1
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
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Reference 5: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 14
-Paragraph 3
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 5
-Paragraph 9, 10, 11, 12
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

19. Net Income Per Common Share

19. Net Income Per Common Share

12 Months Ended

Dec. 31, 2012

Earnings per common share:

Basic net earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding. Diluted earnings per share reflect, in periods in which they have a dilutive effect, the impact of common shares issuable upon exercise of stock options. The computation of diluted earnings per share excludes those options with an exercise price in excess of the average market price of the Company’s common shares during the periods presented.

The computation of diluted earnings per share excludes outstanding options in periods where the exercise of such options would be anti-dilutive. For the years ended December 31, 2012 and 2011 there were 225,115 and 269,432 options, respectively, with an exercise price below the average market price of the Company’s Common Stock during the period.

The reconciliation of the weighted average number of shares of Common Stock used in the calculation of basic and diluted earnings per common share for the years ended December 31, 2012 and 2011 follows:

	Year ended
	December 31,
	2012		2011

Weighted average number of shares outstanding		3,806,697		3,837,190
Effect of dilutive securities, common share equivalents		65,063		83,594
Weighted average number of shares outstanding,
used for computing diluted earnings per share		3,871,760		3,920,784

20. Subsequent Event

12 Months Ended

Dec. 31, 2012

Subsequent Events [Abstract]

20. Subsequent Event

The Company has evaluated events that occurred subsequent to December 31, 2012 through the date these financial statements were issued for matters that required disclosure or adjustment in these financial statements.

Dividends Declared and Paid

On February 22, 2013, the Company’s board of directors approved a dividend of $.04 per share, or $153,636, payable in cash on March 15, 2013 to stockholders of record as of March 7, 2013.

Bank Line of Credit

On March 6, 2013, the bank line of credit, which had an outstanding balance of $550,000, was paid in full.

2. Accounting Policies and Basis of Presentation (Policies)

12 Months Ended

Dec. 31, 2012

Principles of Consolidation

Revenue Recognition

Net Premiums Earned

Ceding Commission Revenue

Premium Finance Placement Fees

Liability for Loss and Loss Adjustment Expenses ("LAE")

Reinsurance

Cash and Cash Equivalents

Investments

Fair Value

Premiums Receivable

Deferred Acquisition Costs

Intangible Assets

Property and Equipment

Income Taxes

Assessments

Concentration and Credit Risk

Direct premiums earned from lines of business that subject the Company to concentration risk for the years ended December 31, 2012 and 2011 are as follows:

	Years ended December 31,
	2012			2011
Personal Lines		68.4	%		65.9	%
Commercial Lines		16.2	%		14.2	%
Commercial Automobile		11.6	%		15.6	%
Total premiums earned subject to concentration		96.2	%		95.7	%
Premiums earned not subject to concentration		3.8	%		4.3	%
Total premiums earned		100.0	%		100.0	%

Use of Estimates

Net earnings per share

Advertising Costs

Stock-based Compensation

Comprehensive Income

Recent Accounting Pronouncements

Accounting guidance adopted in 2012

Accounting guidance not yet effective

2. Accounting Policies and Basis of Presentation (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of Concentration Risk

Direct premiums earned from lines of business that subject the Company to concentration risk for the years ended December 31, 2012 and 2011 are as follows:

	Years ended December 31,
	2012			2011
Personal Lines		68.4	%		65.9	%
Commercial Lines		16.2	%		14.2	%
Commercial Automobile		11.6	%		15.6	%
Total premiums earned subject to concentration		96.2	%		95.7	%
Premiums earned not subject to concentration		3.8	%		4.3	%
Total premiums earned		100.0	%		100.0	%

Tabular disclosure of the nature of a concentration, a benchmark to which it is compared, and the percentage that the risk is to the benchmark.

3. Investments (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of Availalbe for Sale Securities

The amortized cost and fair value of investments in available for sale fixed-maturity securities and equities as of December 31, 2012 and 2011 are summarized as follows:

	December 31, 2012
													Net
	Cost or		Gross		Gross Unrealized Losses								Unrealized
	Amortized		Unrealized		Less than 12			More than 12			Fair		Gains/
Category	Cost		Gains		Months			Months			Value		(Losses)

Fixed-Maturity Securities:
Political subdivisions of States,
Territories and Possessions	$	5,219,092	$	257,298	$	(1,574	)	$	-		$	5,474,816	$	255,724

Corporate and other bonds
Industrial and miscellaneous		19,628,005		1,123,392		(43,553	)		(722	)		20,707,122		1,079,117
Total fixed-maturity securities		24,847,097		1,380,690		(45,127	)		(722	)		26,181,938		1,334,841

Equity Securities:
Preferred stocks		1,475,965		19,512		(11,130	)		-			1,484,347		8,382
Common stocks		3,598,012		353,782		(145,899	)		-			3,805,895		207,883
Total equity securities		5,073,977		373,294		(157,029	)		-			5,290,242		216,265

Total	$	29,921,074	$	1,753,984	$	(202,156	)	$	(722	)	$	31,472,180	$	1,551,106

	December 31, 2011
													Net
	Cost or		Gross		Gross Unrealized Losses								Unrealized
	Amortized		Unrealized		Less than 12			More than 12			Fair		Gains/
Category	Cost		Gains		Months			Months			Value		(Losses)

Fixed-Maturity Securities:
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies	$	499,832	$	50,356	$	-		$	-		$	550,188	$	50,356

Political subdivisions of States,
Territories and Possessions		5,868,743		301,559		-			-			6,170,302		301,559

Corporate and other bonds
Industrial and miscellaneous		15,846,616		338,284		(228,792	)		(107,666	)		15,848,442		1,826
Total fixed-maturity securities		22,215,191		690,199		(228,792	)		(107,666	)		22,568,932		353,741

Equity Securities:
Preferred stocks		1,428,435		36,762		(76,969	)		(4,893	)		1,383,335		(45,100	)
Common stocks		2,429,306		274,538		(21,969	)		-			2,681,875		252,569
Total equity securities		3,857,741		311,300		(98,938	)		(4,893	)		4,065,210		207,469

Total	$	26,072,932	$	1,001,499	$	(327,730	)	$	(112,559	)	$	26,634,142	$	561,210

Schedule of amortized cost and fair value

A summary of the amortized cost and fair value of the Company’s investments in available for sale fixed-maturity securities by contractual maturity as of December 31, 2012 and 2011 is shown below:

	December 31, 2012				December 31, 2011
	Amortized				Amortized
Remaining Time to Maturity	Cost		Fair Value		Cost		Fair Value

Less than one year	$	546,952	$	560,162	$	1,063,493	$	1,079,924
One to five years		9,031,248		9,569,943		6,899,892		7,045,774
Five to ten years		12,605,798		13,306,033		12,547,046		12,680,441
More than 10 years		2,663,099		2,745,800		1,704,760		1,762,793
Total	$	24,847,097	$	26,181,938	$	22,215,191	$	22,568,932

Schedule of Held to Maturity Securities

The amortized cost and fair value of investments in held to maturity fixed-maturity securities as of December 31, 2012 and 2011 are summarized as follows:

December 31, 2012

Cost or

Gross

Gross Unrealized Losses

Net

Unrealized

Amortized

Unrealized

Less than 12

More than 12

Fair

Gains/

Category

Cost

Gains

Months

Value

(Losses)

U.S. Treasury securities

606,281

172,745

779,026

172,745

	December 31, 2011
					Gross Unrealized Losses
Category	Cost or Amortized Cost		Gross Unrealized Gains		Less than 12 Months		More than 12 Months		Fair Value		Net Unrealized Gains/ (Losses)


U.S. Treasury securities	$	606,234	$	171,719	$	-	$	-	$	777,953	$	171,719

Schedule of Investment Income

Major categories of the Company’s net investment income are summarized as follows:

	Years ended
	December 31,
	2012		2011
Income:
Fixed-maturity securities	$	951,895	$	748,046
Equity securities		268,034		168,813
Cash and cash equivalents		134		5,248
Other		23,857		11,974
Total		1,243,920		934,081
Expenses:
Investment expenses		228,764		179,451
Net investment income	$	1,015,156	$	754,630

Schedule of net realized gains and losses on investments

The Company’s net realized gains and losses on investments are summarized as follows:

	Year ended
	December 31,
	2012			2011

Fixed-maturity securities
Gross realized gains	$	233,299		$	190,855
Gross realized losses		(52,933	)		(1,983	)
		180,366			188,872

Equity securities
Gross realized gains		137,271			292,687
Gross realized losses		(29,569	)		(90,876	)
		107,702			201,811

Cash and short term investments (1)		-			133,211

Net realized gains	$	288,068		$	523,894

Schedule of Securities with Unrealized Losses

The Company held securities with unrealized losses representing declines that were considered temporary at December 31, 2012 and 2011 as follows:

	December 31, 2012
	Less than 12 months							12 months or more							Total
						No. of							No. of		Aggregate
	Fair		Unrealized			Positions		Fair		Unrealized			Positions		Fair		Unrealized
Category	Value		Losses			Held		Value		Losses			Held		Value		Losses

Fixed-Maturity Securities:
Political subdivisions of
States, Territories and
Possessions	$	202,798	$	(1,574	)		1	$	-	$	-			-	$	202,798	$	(1,574	)

Corporate and other
bonds industrial and
miscellaneous		4,025,551		(43,553	)		19		128,125		(722	)		1		4,153,676		(44,275	)

Total fixed-maturity
securities	$	4,228,349	$	(45,127	)		20	$	128,125	$	(722	)		1	$	4,356,474	$	(45,849	)

Equity Securities:
Preferred stocks	$	387,925	$	(11,130	)		3	$	-	$	-			-	$	387,925	$	(11,130	)
Common stocks		1,536,860		(145,899	)		9		-		-			-		1,536,860		(145,899	)

Total equity securities	$	1,924,785	$	(157,029	)		12	$	-	$	-			-	$	1,924,785	$	(157,029	)

Total	$	6,153,134	$	(202,156	)		32	$	128,125	$	(722	)		1	$	6,281,259	$	(202,878	)

	December 31, 2011
	Less than 12 months							12 months or more							Total
						No. of							No. of		Aggregate
	Fair		Unrealized			Positions		Fair		Unrealized			Positions		Fair		Unrealized
Category	Value		Losses			Held		Value		Losses			Held		Value		Losses

Fixed-Maturity Securities:
Corporate and other
bonds industrial and
miscellaneous	$	4,849,378	$	(228,792	)	$	26	$	1,483,425	$	(107,666	)	$	7	$	6,332,803	$	(336,458	)

Total fixed-maturity
securities	$	4,849,378	$	(228,792	)		26	$	1,483,425	$	(107,666	)		7	$	6,332,803	$	(336,458	)

Equity Securities:
Preferred stocks	$	368,350	$	(76,969	)		12	$	189,364	$	(4,893	)		5	$	557,714	$	(81,862	)
Common stocks		397,268		(21,969	)		14		-		-			-		397,268		(21,969	)

Total equity securities	$	765,618	$	(98,938	)		26	$	189,364	$	(4,893	)		5	$	954,982	$	(103,831	)

Total	$	5,614,996	$	(327,730	)		52	$	1,672,789	$	(112,559	)		12	$	7,287,785	$	(440,289	)

4. Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

Schedule of Fixed-maturity investments available for sale

The Company’s investments are allocated among pricing input levels at December 31, 2012 and 2011 as follows:

	December 31, 2012
($ in thousands)	Level 1		Level 2		Level 3		Total

Fixed-maturity investments available for sale
Political subdivisions of
States, Territories and
Possessions	$	-	$	5,475	$	-	$	5,475

Corporate and other
bonds industrial and
miscellaneous		11,600		9,107		-		20,707
Total fixed maturities		11,600		14,582		-		26,182
Equity investments		5,290		-		-		5,290
Total investments	$	16,890	$	14,582	$	-	$	31,472

	December 31, 2011
($ in thousands)	Level 1		Level 2		Level 3		Total

Fixed-maturity investments available for sale
U.S. Treasury securities
and obligations of U.S.
government corporations
and agencies	$	550	$	-	$	-	$	550

Political subdivisions of
States, Territories and
Possessions		-		6,171		-		6,171

Corporate and other
bonds industrial and
miscellaneous		8,465		7,168		215		15,848
Total fixed maturities		9,015		13,339		215		22,569
Equity investments		4,065		-		-		4,065
Total investments	$	13,080	$	13,339	$	215	$	26,634

Schedule of reconciliation of the beginning and ending balances of assets measured at fair

A reconciliation of the beginning and ending balances of assets measured at fair value using Level 3 inputs is as follows:

	Years ended
	December 31,
	2012			2011

Beginning balance, January 1	$	215		$	237
Total unrealized (losses)
included in other comprehensive income		-			(22	)
Net transfers out of Level 3		(215	)		-
Ending balance, December 31	$	-		$	215

5. Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of Estimated Fair Value of Financial Instruments

The estimated fair values of the Company’s financial instruments are as follows:

	December 31, 2012				December 31, 2011
	Carrying Value		Fair Value		Carrying Value		Fair Value

Fixed-maturity investments held to maturity	$	606,281	$	779,026	$	606,234	$	777,953
Cash and cash equivalents		2,240,012		2,240,012		173,126		173,126
Premiums receivable		7,766,825		7,766,825		5,779,085		5,779,085
Receivables - reinsurance contracts		-		-		1,734,535		1,734,535
Reinsurance receivables		38,902,782		38,902,782		23,880,814		23,880,814
Notes receivable-sale of business		323,141		323,141		393,511		393,511
Real estate, net of accumulated depreciation		1,696,924		1,720,000		1,477,639		1,510,000
Reinsurance balances payable		1,820,527		1,820,527		2,761,828		2,761,828
Advance payments from catastrophe reinsurers		7,358,391		7,358,391		-		-
Notes payable (including related parties)		1,197,000		1,197,000		1,047,000		1,047,000

6. Intangibles (Tables)

12 Months Ended

Dec. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of components of intangible assets and their useful lives, accumulated amortization, and net carrying value

The components of intangible assets and their useful lives, accumulated amortization, and net carrying value as of December 31, 2012 and 2011 are summarized as follows:

			December 31, 2012						December 31, 2011
	Useful		Gross				Net		Gross				Net
	Life		Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
	(in yrs)		Value		Amortization		Amount		Value		Amortization		Amount
Insurance license		-	$	500,000	$	-	$	500,000	$	500,000	$	-	$	500,000
Customer relationships		10		3,400,000		1,190,000		2,210,000		3,400,000		850,000		2,550,000
Assembled workforce		7		950,000		475,042		474,958		950,000		339,328		610,672
Total			$	4,850,000	$	1,665,042	$	3,184,958	$	4,850,000	$	1,189,328	$	3,660,672

Schedule of estimated aggregate amortization expense

The estimated aggregate amortization expense for the remaining life of finite life intangibles is as follows:

2013	$	475,714
2014		475,714
2015		475,714
2016		407,816
2017		340,000
Thereafter		510,000
	$	2,684,958

7. Reinsurance (Tables)

12 Months Ended

Dec. 31, 2012

Insurance [Abstract]

Schedule of approximate reinsurance recoverables

Approximate reinsurance recoverables on unpaid and paid losses by reinsurer are as follows:

	Unpaid		Paid
($ in thousands)	Losses		Losses		Total		Security
December 31, 2012
Maiden Reinsurace Company	$	8,173	$	2,989	$	11,162	$	6,503	(1)
SCOR Reinsurance Company		4,437		1,495		5,932		-
Motors Insurance Corporation		1,550		49		1,599		1,214	(1)
Sirius American Insurance Company		1,406		18		1,424		-
Swiss Reinsurance America Corporation		1,705		756		2,461		-
Allied World Assurance Company		808		372		1,180		-
Others		341		113		454		91	(2)
Total	$	18,420	$	5,792	$	24,212	$	7,808

December 31, 2011
Maiden Reinsurace Company	$	3,534	$	514	$	4,048	$	8,156	(1)
SCOR Reinsurance Company		2,046		272		2,318		-
Motors Insurance Corporation		1,730		228		1,958		1,923	(1)
Sirius American Insurance Company		993		67		1,060		-
Others		1,657		536		2,193		360	(2)
Total	$	9,960	$	1,617	$	11,577	$	10,439

Schedule of Ceding commissions earned

Ceding commissions earned consists of the following:

	Years ended
	December 31,
	2012		2011

Provisional ceding commissions earned	$	8,516,240	$	6,916,027
Contingent ceding commissions earned		1,173,915		3,708,687
	$	9,690,155	$	10,624,714

8. Notes Receivable-Sale of Business (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of Notes Receivable-Sale of Business

	December 31, 2012						December 31, 2011
	Total		Current				Total		Current
	Note		Maturities		Long-Term		Note		Maturities		Long-Term
Sale of Pennsylvania stores		320,833		33,814		287,019		351,861		31,028		320,833
Sale of Franchise business		-		-		-		37,797		37,797		-
		320,833		33,814		287,019		389,658		68,825		320,833
Accrued interest		2,308		2,308		-		3,853		3,853		-
Total	$	323,141	$	36,122	$	287,019	$	393,511	$	72,678	$	320,833

9. Deferred Acquisition Costs and Deferred Ceding Commission Revenue (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of acquisition costs incurred

Acquisition costs incurred and policy-related ceding commission revenue are deferred, and amortized to income on property and casualty insurance business as follows:

	Year ended
	December 31,
	2012			2011

Net deferred acquisition costs net of ceding
commission revenue, beginning of year	$	553,374		$	399,488

Cost incurred and deferred:
Commissions and brokerage		8,087,355			6,863,504
Other underwriting and acquisition costs		3,012,611			2,316,928
Ceding commission revenue		(9,410,871	)		(7,678,913	)
Net deferred acquisition costs		1,689,095			1,501,519
Amortization		(1,549,621	)		(1,347,633	)
		139,474			153,886
Net deferred acquisition costs net of ceding
commission revenue, end of year	$	692,848		$	553,374

Schedule of Ending balances for deferred acquisition costs and deferred ceding commission revenue

Ending balances for deferred acquisition costs and deferred ceding commission revenue as of December 31, 2012 and 2011 follows:

	December 31,
	2012			2011

Deferred acquisition costs	$	5,569,878		$	4,535,773
Deferred ceding commission revenue		(4,877,030	)		(3,982,399	)
Balance at end of period	$	692,848		$	553,374

10. Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of components of property and equipment

The components of property and equipment are summarized as follows:

			Accumulated
	Cost		Depreciation			Net

December 31, 2012
Building	$	1,648,838	$	(152,976	)	$	1,495,862
Land		153,097		-			153,097
Furniture		138,115		(66,570	)		71,545
Computer equipment and software		336,851		(219,447	)		117,404
Automobile		81,394		(50,880	)		30,514
Total	$	2,358,295	$	(489,873	)	$	1,868,422

December 31, 2011
Building	$	1,457,543	$	(112,001	)	$	1,345,542
Land		132,097		-			132,097
Furniture		132,323		(52,034	)		80,289
Computer equipment and software		212,224		(184,050	)		28,174
Automobile		81,394		(21,155	)		60,239
Total	$	2,015,581	$	(369,240	)	$	1,646,341

11. Property and Casualty Insurance Activity (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of Earned Premiums

Premiums written, ceded and earned are as follows:

	Direct			Assumed			Ceded			Net

Year ended December 31, 2012
Premiums written	$	49,251,630		$	23,967		$	(29,715,971	)	$	19,559,626
Change in unearned premiums		(4,724,193	)		(5,010	)		2,386,188			(2,343,015	)
Premiums earned	$	44,527,437		$	18,957		$	(27,329,783	)	$	17,216,611

Year ended December 31, 2011
Premiums written	$	40,734,767		$	10,990		$	(24,449,655	)	$	16,296,102
Change in unearned premiums		(4,005,312	)		(516	)		2,578,472			(1,427,356	)
Premiums earned	$	36,729,455		$	10,474		$	(21,871,183	)	$	14,868,746

Schedule of components of the liability for loss and LAE expenses and related reinsurance receivables

	Gross		Reinsurance
	Liability		Receivables
December 31, 2012
Case-basis reserves	$	21,190,141	$	13,284,613
Loss adjustment expenses		2,502,169		1,064,420
IBNR reserves		6,793,222		4,070,661
Recoverable on unpaid losses				18,419,694
Recoverable on paid losses		-		5,792,405
Total loss and loss adjustment expenses	$	30,485,532		24,212,099
Unearned premiums				14,690,683
Total reinsurance receivables			$	38,902,782

December 31, 2011
Case-basis reserves	$	11,467,967	$	6,148,765
Loss adjustment expenses		2,117,242		1,017,983
IBNR reserves		4,895,508		2,793,586
Recoverable on unpaid losses				9,960,334
Recoverable on paid losses		-		1,615,981
Total loss and loss adjustment expenses	$	18,480,717		11,576,315
Unearned premiums				12,304,499
Total reinsurance receivables			$	23,880,814

Schedule of a reconciliation of the beginning and ending balances for unpaid losses and loss adjustment expenses

The following table provides a reconciliation of the beginning and ending balances for unpaid losses and loss adjustment expenses (“LAE”):

	Years ended
	December 31,
	2012			2011

Balance at beginning of period	$	18,480,717		$	17,711,907
Less reinsurance recoverables		(9,960,334	)		(10,431,415	)
Net balance, beginning of period		8,520,383			7,280,492

Incurred related to:
Current year		10,460,000			8,297,998
Prior years		774,713			273,060
Total incurred		11,234,713			8,571,058

Paid related to:
Current year		4,419,000			4,108,010
Prior years		3,270,258			3,223,157
Total paid		7,689,258			7,331,167

Net balance at end of period		12,065,838			8,520,383
Add reinsurance recoverables		18,419,694			9,960,334
Balance at end of period	$	30,485,532		$	18,480,717

Schedule of method used by product line and accident year

The table below shows the method used by product line and accident year to select the estimated year-ending loss reserves:

		Accident Year
Product Line	Most Recent	1st Prior	All Other

Fire	Loss Ratio	Loss Development	Loss Development
Homeowners	Loss Ratio	Loss Development	Loss Development
Two to Four Family	Loss Ratio	Loss Development	Loss Development
Commercial multiple-peril property	Loss Ratio	Loss Development	Loss Development
Commercial multiple-peril liability	Loss Ratio	Loss Development	Loss Development
Other Liability	Loss Ratio	Loss Development	Loss Development
Commercial Auto Liability	Loss Ratio	Loss Development	Loss Development
Auto Physical Damage	Loss Ratio	Loss Development	Loss Development
Personal Auto Liability	Loss Ratio	Loss Development	Loss Development

12. Long-Term Debt (Tables)

12 Months Ended

Dec. 31, 2012

Debt Disclosure [Abstract]

Schedule of Long-Term Debt

Long-term debt and capital lease obligations consist of:

	December 31, 2012						December 31, 2011
			Less						Less
	Total		Current		Long-Term		Total		Current		Long-Term
	Debt		Maturities		Debt		Debt		Maturities		Debt
Notes payable	$	747,000	$	-	$	747,000	$	747,000	$	-	$	747,000
Bank line of credit		450,000		450,000		-		300,000		300,000		-
	$	1,197,000	$	450,000	$	747,000	$	1,047,000	$	300,000	$	747,000

Schedule of Related Party Balances


					Balance
			Less Principal Prepayments		December 31, 2012
	Balance		Year Ended		and
	December 31, 2010		December 31, 2011		December 31, 2011

Barry Goldstein IRA (Mr. Goldstein is Chairman of the Board, President
and Chief Executive Officer, and principal stockholder of the Company)	$	150,000	$	60,000	$	90,000
Kidstone LLC, a limited liability company owned by Mr. Goldstein, along
with Steven Shapiro (a director of KICO), and a family member of Sam
Yedid (a director of KICO)		120,000		120,000		-
Jay Haft, a director of the Company		50,000		20,000		30,000
A member of the family of Michael Feinsod, a director of the Company		100,000		40,000		60,000
Mr. Yedid and members of his family		295,000		139,000		156,000
A member of the family of Floyd Tupper, a director of KICO		70,000		28,000		42,000
Total related party transactions	$	785,000	$	407,000	$	378,000

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.22)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 470
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6479336&loc=d3e64711-112823

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(e),(f))
-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 55
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=6584090&loc=d3e28878-108400

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21538-112644

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=6451184&loc=d3e28541-108399

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21506-112644

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6451184&loc=d3e28551-108399

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21521-112644

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 22
-Article 5

Schedule of weighted average assumptions used

13. Stockholders' Equity (Tables)

12 Months Ended

Dec. 31, 2012

Equity [Abstract]

The following weighted average assumptions were used for grants during the year ended December 31, 2012:

Dividend Yield		0.00	%
Volatility		50.89% - 89.27	%
Risk-Free Interest Rate		.61	%
Expected Life	5 years

Schedule of Stock Options Activity

A summary of option activity under the Company’s 2005 Plan for the year ended December 31, 2012 is as follows:

Stock Options	Number of Shares			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value

Outstanding at January 1, 2012		393,865		$	2.32		2.28	$	498,913

Granted		10,000		$	4.81		-	$	600
Exercised		(168,750	)	$	2.12		-	$	515,281
Forfeited		-		$	-		-	$	-

Outstanding at December 31, 2012		235,115		$	2.58		2.24	$	539,485

Vested and Exercisable at December 31, 2012		165,398		$	2.48		2.13	$	395,556

16. Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Schedule of provision for income taxes from continuing operations

The provision for income taxes is comprised of the following:

Years ended December 31,	2012			2011

Current federal income tax expense	$	641,857		$	1,394,090
Current state income tax expense		(225	)		19,529
Deferred federal and state income tax expense		(338,723	)		(325,106	)
Provision for income taxes	$	302,909		$	1,088,513

Schedule of a reconciliation of the federal statutory rate

Years ended December 31,	2012					2011
Computed expected tax expense	$	363,669		34.0	%	$	1,221,156		34.0	%
State taxes, net of Federal benefit		(44,687	)	(4.2	)		1,270		-
State valuation allowance		104,325		9.8			-		-
Permanent differences
Dividends received deduction		(64,274	)	(6.0	)		(39,613	)	(1.1	)
Non-taxable investment income		(68,667	)	(6.4	)		(84,930	)	(2.4	)
Stock-based compensation expense		16,414		1.5			35,999		1.0
Other permanent differences		25,956		2.4			(21,548	)	2.4
Prior year tax matters		(46,906	)	(4.4	)		(50,886	)	(1.4	)
Other		17,079		1.6			27,065		(2.2	)
Total tax	$	302,909		28.3	%	$	1,088,513		30.3	%

Schedule of Deferrred Tax Assets and Liabilities

Significant components of the Company’s deferred tax assets and liabilities are as follows:

	December 31,			December 31,
	2012			2011

Deferred tax asset:
Net operating loss carryovers (1)	$	264,648		$	276,312
Claims reserve discount		313,544			220,354
Unearned premium		811,413			647,596
Deferred ceding commission revenue		1,658,190			1,354,016
Other		10,921			4,583
Total deferred tax assets		3,058,716			2,502,861

Deferred tax liability:
Investment in KICO (2)		1,169,000			1,169,000
Deferred acquisition costs		1,893,759			1,542,163
Intangibles		1,082,886			1,244,628
Depreciation and amortization		152,576			133,411
Reinsurance recoverable		20,400			20,400
Net unrealized appreciation of securities - available for sale		527,376			172,155
Investment income		-			10,543
Total deferred tax liabilities		4,845,997			4,292,300

Net deferred income tax liability	$	(1,787,281	)	$	(1,789,439	)

Schedule of net operating loss carryovers

	December 31,			December 31,
Type of NOL	2012			2011			Expiration
State only (A)	$	380,810		$	284,749		December 31, 2032
Valuation allowance		(146,762	)		(42,437	)
State only, net of valuation allowance		234,048			242,312
Amount subject to Annual Limitation, federal only (B)		30,600			34,000		December 31, 2019
Total deferred tax asset from net operating loss carryovers	$	264,648		$	276,312

Schedule of changes in net deferred income tax liability to the deferred income tax provision

The table below reconciles the changes in net deferred income tax liability to the deferred income tax provision for the year ended December 31, 2012:

Change in net deferred income tax liabilities	$	(2,158	)
Deferred tax expense allocated to other comprehensive income		336,565
Deferred income tax provision	$	(338,723	)

19. Net Income Per Common Share (Tables)

12 Months Ended

Dec. 31, 2012

Earnings per common share:

Reconciliation of the weighted average number of shares of Common Stock used in the calculation of basic and diluted earnings per common share

	Year ended
	December 31,
	2012		2011

Weighted average number of shares outstanding		3,806,697		3,837,190
Effect of dilutive securities, common share equivalents		65,063		83,594
Weighted average number of shares outstanding,
used for computing diluted earnings per share		3,871,760		3,920,784

2. Accounting Policies and Basis of Presentation (Details)	3 Months Ended	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2012	Dec. 31, 2011
Total premiums earned subject to concentration	0.957	0.962
Premiums earned not subject to concentration	0.043	0.038
Total premiums earned	1.000	1.000
Personal Lines [Member]
Total premiums earned subject to concentration		0.684	0.659
Commercial Lines [Member]
Total premiums earned subject to concentration		0.162	0.142
Commercial Automobile [Member]
Total premiums earned subject to concentration		0.116	0.156

2. Accounting Policies and Basis of Presentation (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Notes to Financial Statements
Allowance for uncollectible reinsurance	$ 0	$ 103,000
Due and accrued investment income	343,521	305,103
Allowance for doubtful accounts	85,000	92,000
Uncollectible premiums receivable balances written off	54,000	57,000
Advertising costs	$ 35,000	$ 32,000

3. Investments (Details) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Cost or Amortized Cost	$ 29,921,074	$ 26,072,932
Gross Unrealized Gains	1,753,984	1,001,499
Gross Unrealized Losses-Less than 12 Months	(202,156)	(327,730)
Gross Unrealized Loss-More than 12 Months	(722)	(112,559)
Fair Value	31,472,180	26,634,142
Net Unrealized Gains/(Losses)	1,551,106	561,210
Fixed Maturity Securities Political Subdivisions Of States Territories And Possessions
Cost or Amortized Cost	5,219,092	5,868,743
Gross Unrealized Gains	257,298	301,559
Gross Unrealized Losses-Less than 12 Months	(1,574)
Gross Unrealized Loss-More than 12 Months
Fair Value	5,474,816	6,170,302
Net Unrealized Gains/(Losses)	255,724	301,559
Fixed Maturity Securities Corporate And Other Bonds Industrial And Miscellaneous
Cost or Amortized Cost	19,628,005	15,846,616
Gross Unrealized Gains	1,123,392	338,284
Gross Unrealized Losses-Less than 12 Months	(43,553)	(228,792)
Gross Unrealized Loss-More than 12 Months	(722)	(107,666)
Fair Value	20,707,122	15,848,442
Net Unrealized Gains/(Losses)	1,079,117	1,826
Fixed Maturity Securities Total Fixed Maturity Securities
Cost or Amortized Cost	24,847,097	22,215,191
Gross Unrealized Gains	1,380,690	690,199
Gross Unrealized Losses-Less than 12 Months	(45,127)	(228,792)
Gross Unrealized Loss-More than 12 Months	(722)	(107,666)
Fair Value	26,181,938	22,568,932
Net Unrealized Gains/(Losses)	1,334,841	353,741
Equity Securities Preferred Stocks
Cost or Amortized Cost	1,475,965	1,428,435
Gross Unrealized Gains	19,512	36,762
Gross Unrealized Losses-Less than 12 Months	(11,130)	(76,969)
Gross Unrealized Loss-More than 12 Months		(4,893)
Fair Value	1,484,347	1,383,335
Net Unrealized Gains/(Losses)	8,382	(45,100)
Equity Securities Common Stocks
Cost or Amortized Cost	3,598,012	2,429,306
Gross Unrealized Gains	353,782	274,538
Gross Unrealized Losses-Less than 12 Months	(145,899)	(21,969)
Gross Unrealized Loss-More than 12 Months
Fair Value	3,805,895	2,681,875
Net Unrealized Gains/(Losses)	207,883	252,569
Equity Securities Total Equity Securities
Cost or Amortized Cost	5,073,977	3,857,741
Gross Unrealized Gains	373,294	311,300
Gross Unrealized Losses-Less than 12 Months	(157,029)	(98,938)
Gross Unrealized Loss-More than 12 Months		(4,893)
Fair Value	5,290,242	4,065,210
Net Unrealized Gains/(Losses)	$ 216,265	207,469
Fixed Maturity Securities US Treasury Securities And Obligations Of US Government Corporations And Agencies
Cost or Amortized Cost		499,832
Gross Unrealized Gains		50,356
Gross Unrealized Losses-Less than 12 Months
Gross Unrealized Loss-More than 12 Months
Fair Value		550,188
Net Unrealized Gains/(Losses)		$ 50,356

3. Investments (Details 1) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Amortized Cost	$ 24,847,097	$ 22,215,191
Fair Value	26,181,938	22,568,932
Less Than One Year
Amortized Cost	546,952	1,063,493
Fair Value	560,162	1,079,924
One To Five Years
Amortized Cost	9,031,248	6,899,892
Fair Value	9,569,943	7,045,774
Five To Ten Years
Amortized Cost	12,605,798	12,547,046
Fair Value	13,306,033	12,680,441
More Than 10 Years
Amortized Cost	2,663,099	1,704,760
Fair Value	$ 2,745,800	$ 1,762,793

3. Investments (Details 2) - US Treasury Securities - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Cost or Amortized Cost	$ 606,281	$ 606,234
Gross Unrealized Gains	172,745	171,719
Gross Unrealized Losses-Less than 12 Months
Gross Unrealized Loss-More than 12 Months
Fair Value	779,026	777,953
Net Unrealized Gains/(Losses)	$ 172,745	$ 171,719

3. Investments (Details 3) - USD ($)	12 Months Ended
3. Investments (Details 3) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Income:
Fixed-maturity securities	$ 951,895	$ 748,046
Equity securities	268,034	168,813
Cash and cash equivalents	134	5,248
Other	23,857	11,974
Total	1,243,920	934,081
Expenses:
Investment expenses	228,764	179,451
Net investment income	$ 1,015,156	$ 754,630

This item represents investment income derived from investments in debt and equity securities consisting of interest income earned from investments in debt securities and on cash and cash equivalents, dividend income from investments in equity securities, and income or expense derived from the amortization of investment related discounts or premiums, respectively, net of related investment expenses. This item does not include realized or unrealized gains or losses on the sale or holding of investments in debt and equity securities required to be included in earnings for the period or for other than temporary losses related to investments in debt and equity securities which are included in realized losses in the period recognized, and does not include investment income from real or personal property, such as rental income.

3. Investments (Details 4) - USD ($)	12 Months Ended
3. Investments (Details 4) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Fixed-maturity securities:
Gross realized gains	$ 233,299	$ 190,855
Gross realized losses	(52,933)	(1,983)
Total	180,366	188,872
Equity securities:
Gross realized gains	137,271	292,687
Gross realized losses	(29,569)	(90,876)
Total equity securities	107,702	201,811
Cash and short term investments		133,211
Net realized gains	$ 288,068	$ 523,894

3. Investments (Details 5) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Fair Value-Less than 12 months	$ 6,153,134	$ 5,614,996
Unrealized Losses-Less than 12 Months	(202,156)	(327,730)
No. of Positions Held-Less than 12 Months	32	52
Fair Value-12 months or more	128,125	1,672,789
Unrealized Losses-12 months or more	(722)	(112,559)
No. of Positions Held-12 months or more	1	12
Aggregate Fair Value-Total	6,281,259	7,287,785
Unrealized Losses-Total	(202,878)	(440,289)
Fixed Maturity Securities Political Subdivisions Of States Territories And Possessions
Fair Value-Less than 12 months	202,798
Unrealized Losses-Less than 12 Months	(1,574)
No. of Positions Held-Less than 12 Months	1
Fair Value-12 months or more
Unrealized Losses-12 months or more
No. of Positions Held-12 months or more
Aggregate Fair Value-Total	202,798
Unrealized Losses-Total	(1,574)
Fixed Maturity Securities Corporate And Other Bonds Industrial And Miscellaneous
Fair Value-Less than 12 months	4,025,551
Unrealized Losses-Less than 12 Months	(43,553)
No. of Positions Held-Less than 12 Months	19
Fair Value-12 months or more	128,125
Unrealized Losses-12 months or more	(722)
No. of Positions Held-12 months or more	1
Aggregate Fair Value-Total	4,153,676
Unrealized Losses-Total	(44,275)
Fixed Maturity Securities Total Fixed Maturity Securities
Fair Value-Less than 12 months	4,228,349
Unrealized Losses-Less than 12 Months	(45,127)
No. of Positions Held-Less than 12 Months	20
Fair Value-12 months or more	128,125
Unrealized Losses-12 months or more	(722)
No. of Positions Held-12 months or more	1
Aggregate Fair Value-Total	4,356,474
Unrealized Losses-Total	(45,849)
Equity Securities Preferred Stocks
Fair Value-Less than 12 months	387,925
Unrealized Losses-Less than 12 Months	(11,130)
No. of Positions Held-Less than 12 Months	3
Fair Value-12 months or more
Unrealized Losses-12 months or more
No. of Positions Held-12 months or more
Aggregate Fair Value-Total	387,925
Unrealized Losses-Total	(11,130)
Equity Securities Common Stocks
Fair Value-Less than 12 months	1,536,860
Unrealized Losses-Less than 12 Months	(145,899)
No. of Positions Held-Less than 12 Months	9
Fair Value-12 months or more
Unrealized Losses-12 months or more
No. of Positions Held-12 months or more
Aggregate Fair Value-Total	1,536,860
Unrealized Losses-Total	(145,899)
Equity Securities Total Equity Securities
Fair Value-Less than 12 months	1,924,785
Unrealized Losses-Less than 12 Months	(157,029)
No. of Positions Held-Less than 12 Months	12
Fair Value-12 months or more
Unrealized Losses-12 months or more
No. of Positions Held-12 months or more
Aggregate Fair Value-Total	1,924,785
Unrealized Losses-Total	$ (157,029)
FixedMaturitySecuritiesCorporateAndOtherBondsIndustrialsAndMiscellaneousMember
Fair Value-Less than 12 months		4,849,378
Unrealized Losses-Less than 12 Months		(228,792)
No. of Positions Held-Less than 12 Months		26
Fair Value-12 months or more		1,483,425
Unrealized Losses-12 months or more		(107,666)
No. of Positions Held-12 months or more		7
Aggregate Fair Value-Total		6,332,803
Unrealized Losses-Total		(336,458)
FixedMaturitySecuritiesTotalFixedMaturitiesSecuritiesMember
Fair Value-Less than 12 months		4,849,378
Unrealized Losses-Less than 12 Months		(228,792)
No. of Positions Held-Less than 12 Months		26
Fair Value-12 months or more		1,483,425
Unrealized Losses-12 months or more		(107,666)
No. of Positions Held-12 months or more		7
Aggregate Fair Value-Total		6,332,803
Unrealized Losses-Total		(336,458)
EquitySecuritiesPreferredStockMember
Fair Value-Less than 12 months		368,350
Unrealized Losses-Less than 12 Months		(76,969)
No. of Positions Held-Less than 12 Months		12
Fair Value-12 months or more		189,364
Unrealized Losses-12 months or more		(4,893)
No. of Positions Held-12 months or more		5
Aggregate Fair Value-Total		557,714
Unrealized Losses-Total		(81,862)
EquitySecuritiesCommonStockMember
Fair Value-Less than 12 months		397,268
Unrealized Losses-Less than 12 Months		(21,969)
No. of Positions Held-Less than 12 Months		14
Fair Value-12 months or more
Unrealized Losses-12 months or more
No. of Positions Held-12 months or more
Aggregate Fair Value-Total		397,268
Unrealized Losses-Total		(21,969)
EquitySecuritiesTotalEquitySecurityMember
Fair Value-Less than 12 months		765,618
Unrealized Losses-Less than 12 Months		(98,938)
No. of Positions Held-Less than 12 Months		26
Fair Value-12 months or more		189,364
Unrealized Losses-12 months or more		(4,893)
No. of Positions Held-12 months or more		5
Aggregate Fair Value-Total		954,982
Unrealized Losses-Total		$ (103,831)

3. Investments (Details Narrative) - USD ($)	12 Months Ended
3. Investments (Details Narrative) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Investments Details Narrative
Sale and maturity of fixed-maturity securities	$ 4,322,120	$ 3,532,245
Sale of equity securities	$ 1,726,345	$ 2,771,631

The cash inflow associated with the sale or maturity of securities for which the entity has both the ability and intent to hold the instrument until maturity.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 320
-SubTopic 10
-Section 45
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=6871852&loc=d3e26853-111562

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Investing Activities
-URI http://asc.fasb.org/extlink&oid=6516133

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 230
-SubTopic 10
-Section 45
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=6943989&loc=d3e3179-108585

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 95
-Paragraph 15
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 115
-Paragraph 18
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 95
-Paragraph 16
-Subparagraph a
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

4. Fair Value Measurements (Details) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Fixed-maturity investments available for sale U.S. Treasury securities and obligations of U.S. government corporations and agencies		$ 550
Political subdivisions of States, Territories and Possessions	$ 5,475	6,171
Corporate and other bonds industrial and miscellaneous	20,707	15,848
Total fixed maturities	26,182	22,569
Equity investments	5,290	4,065
Total investments	31,472	26,634
Level 1
Fixed-maturity investments available for sale U.S. Treasury securities and obligations of U.S. government corporations and agencies		550
Political subdivisions of States, Territories and Possessions
Corporate and other bonds industrial and miscellaneous	11,600	8,465
Total fixed maturities	11,600	9,015
Equity investments	5,290	4,065
Total investments	16,890	13,080
Level 2
Fixed-maturity investments available for sale U.S. Treasury securities and obligations of U.S. government corporations and agencies
Political subdivisions of States, Territories and Possessions	5,475	6,171
Corporate and other bonds industrial and miscellaneous	9,107	7,168
Total fixed maturities	14,582	13,339
Equity investments
Total investments	14,582	13,339
Level 3
Fixed-maturity investments available for sale U.S. Treasury securities and obligations of U.S. government corporations and agencies
Political subdivisions of States, Territories and Possessions
Corporate and other bonds industrial and miscellaneous		215
Total fixed maturities		215
Equity investments
Total investments		$ 215

4. Fair Value Measurements (Details 1) - USD ($)	12 Months Ended
4. Fair Value Measurements (Details 1) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Fair Value Disclosures [Abstract]
Beginning balance, January 1	$ 215	$ 237
Total unrealized (losses) included in other comprehensive income		(22)
Net transfers out of Level 3	(215)
Ending balance, December 31		$ 215

5. Fair Value of Financial Instruments (Details) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Reinsurance receivables	$ 5,792,000	$ 1,617,000
Reinsurance balances payable	1,820,527	2,761,828
Advance payments from catastrophe reinsurers	7,358,391
Carrying Value
Fixed-maturity investments held to maturity	606,281	606,234
Cash and cash equivalents	2,240,012	173,126
Premiums receivable	7,766,825	5,779,085
Receivables - reinsurance contracts		1,734,535
Reinsurance receivables	38,902,782	23,880,814
Notes receivable-sale of business	323,141	393,511
Real estate net of accumulated depreciation	1,696,924	1,477,639
Reinsurance balances payable	1,820,527	2,761,828
Advance payments from catastrophe reinsurers	7,358,391
Notes payable (including related parties)	1,197,000	1,047,000
Fair Value
Fixed-maturity investments held to maturity	779,026	777,953
Cash and cash equivalents	2,240,012	173,126
Premiums receivable	7,766,825	5,779,085
Receivables - reinsurance contracts		1,734,535
Reinsurance receivables	38,902,782	23,880,814
Notes receivable-sale of business	323,141	393,511
Real estate net of accumulated depreciation	1,720,000	1,510,000
Reinsurance balances payable	1,820,527	2,761,828
Advance payments from catastrophe reinsurers	7,358,391
Notes payable (including related parties)	$ 1,197,000	$ 1,047,000

6. Intangibles (Details) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Gross Carrying Value	$ 4,850,000	$ 4,850,000
Accumulated Amortization	1,665,042	1,189,328
Net Carrying Amount	3,184,958	3,660,672
Insurance license [Member]
Gross Carrying Value	500,000	500,000
Accumulated Amortization
Net Carrying Amount	500,000	500,000
Customer relationships [Member]
Gross Carrying Value	3,400,000	3,400,000
Accumulated Amortization	1,190,000	850,000
Net Carrying Amount	$ 2,210,000	2,550,000
Useful Life (in yrs)	10 years
Assembled workforce [Member]
Gross Carrying Value	$ 950,000	950,000
Accumulated Amortization	475,042	339,328
Net Carrying Amount	$ 474,958	$ 610,672
Useful Life (in yrs)	7 years

6. Intangibles (Details 1)	Dec. 31, 2012 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2013	$ 475,714
2014	475,714
2015	475,714
2016	407,816
2017	340,000
Thereafter	510,000
Total	$ 2,684,958

6. Intangibles (Details Narrative) - USD ($)	12 Months Ended
6. Intangibles (Details Narrative) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Goodwill and Intangible Assets Disclosure [Abstract]
Weighted average amortization period of identified intangible assets of finite useful life	6 years
Amortization expense, related to intangibles	$ 475,714	$ 475,714

7. Reinsurance (Details) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Unpaid Losses	$ 18,420,000	$ 9,960,000
Paid Losses	5,792,000	1,617,000
Total	24,212,000	11,577,000
Security	7,808,000	10,439,000
Maiden Reinsurace Company [Member]
Unpaid Losses	8,173,000	3,534,000
Paid Losses	2,989,000	514,000
Total	11,162,000	4,048,000
Security	6,503,000	8,156,000
SCOR Reinsurance Company [Member]
Unpaid Losses	4,437,000	2,046,000
Paid Losses	1,495,000	272,000
Total	5,932,000	2,318,000
Security
Motors Insurance Corporation [Member]
Unpaid Losses	1,550,000	1,730,000
Paid Losses	49,000	228,000
Total	1,599,000	1,958,000
Security	1,214,000	1,923,000
Sirius American Insurance Company [Member]
Unpaid Losses	1,406,000	993,000
Paid Losses	18,000	67,000
Total	1,424,000	1,060,000
Security
Swiss Reinsurance America Corporation [Member]
Unpaid Losses	1,705,000
Paid Losses	756,000
Total	2,461,000
Security
Allied World Assurance Company [Member]
Unpaid Losses	808,000
Paid Losses	372,000
Total	1,180,000
Security
Others [Member]
Unpaid Losses	341,000	1,657,000
Paid Losses	113,000	536,000
Total	454,000	2,193,000
Security	$ 91,000	$ 360,000

7. Reinsurance (Details 1) - USD ($)	12 Months Ended
7. Reinsurance (Details 1) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Insurance [Abstract]
Provisional ceding commissions earned	$ 8,516,240	$ 6,916,027
Contingent ceding commissions earned	1,173,915	3,708,687
Ceding commission revenue	$ 9,690,155	$ 10,624,714

7. Reinsurance (Details Narrative) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Insurance [Abstract]
Reinsurance receivables	$ 14,690,683	$ 12,304,499
Unpaid losses	7,358,391	0
Reinsurance balances payable	807,415
Receivables reinsurance contracts		$ 1,734,535

8. Notes Receivable-Sale of Business (Details) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Total Note
Sale of NY stores
Sale of Pennsylvania stores	320,833	351,861
Sale of Franchise business		37,797
Total-Sale of Business	320,833	389,658
Accrued interest	2,308	3,853
Total-Note Receivable-Sale of Business	323,141	393,511
Current Maturities
Sale of NY stores
Sale of Pennsylvania stores	33,814	31,028
Sale of Franchise business		37,797
Total-Sale of Business	33,814	68,825
Accrued interest	2,308	3,853
Total-Note Receivable-Sale of Business	36,122	72,678
Long Term
Sale of NY stores
Sale of Pennsylvania stores	287,019	320,833
Sale of Franchise business
Total-Sale of Business	287,019	320,833
Accrued interest
Total-Note Receivable-Sale of Business	$ 287,019	$ 320,833

9. Deferred Acquisition Costs and Deferred Ceding Commission Revenue (Details) - USD ($)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Deferred Acquisition Costs And Deferred Ceding Commission Revenue Details
Net deferred acquisition costs net of ceding commission revenue, beginning of year	$ 553,374	$ 399,488
Cost incurred and deferred:
Commissions and brokerage	8,087,355	6,863,504
Other underwriting and acquisition costs	3,012,611	2,316,928
Ceding commission revenue	(9,410,871)	(7,678,913)
Net deferred acquisition costs	1,689,095	1,501,519
Amortization	(1,549,621)	(1,347,633)
Deferred acquisition costs	139,474	153,886
Net deferred acquisition costs net of ceding commission revenue, end of year	$ 692,848	$ 553,374

9. Deferred Acquisition Costs and Deferred Ceding Commission Revenue (Details 1) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Deferred Acquisition Costs And Deferred Ceding Commission Revenue Details 1
Deferred acquisition costs	$ 5,569,878	$ 4,535,773
Deferred ceding commission revenue	1,658,190	1,354,016
Balance at end of period	$ 692,848	$ 553,374

10. Property and Equipment (Details) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Cost	$ 2,358,295	$ 2,015,581
Accumulated Depreciation	(489,873)	(369,240)
Net	1,868,422	1,646,341
Building
Cost	1,648,838	1,457,543
Accumulated Depreciation	(152,976)	(112,001)
Net	1,495,862	1,345,542
Land
Cost	153,097	132,097
Accumulated Depreciation
Net	153,097	132,097
Furniture
Cost	138,115	132,323
Accumulated Depreciation	(66,570)	(52,034)
Net	71,545	80,289
Computer equipment and software
Cost	336,851	212,224
Accumulated Depreciation	(219,447)	(184,050)
Net	117,404	28,174
Automobile
Cost	81,394	81,394
Accumulated Depreciation	(50,880)	(21,155)
Net	$ 30,514	$ 60,239

The cumulative amount of depreciation, depletion and amortization (related to property, plant and equipment, but not including land) that has been recognized in the income statement.

11. Property and Casulty Insurance Activity (Details) - USD ($)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Premiums Written
Direct	$ 49,251,630	$ 40,734,767
Assumed	23,967	10,990
Ceded	(29,715,971)	(24,449,655)
Net	19,559,626	16,296,102
Changes In Unearned Premiums
Direct	(4,724,193)	(4,005,312)
Assumed	(5,010)	(516)
Ceded	2,386,188	2,578,472
Net	(2,343,015)	(1,427,356)
Premiums Earned
Direct	44,527,437	36,729,455
Assumed	18,957	10,474
Ceded	(27,329,783)	(21,871,183)
Net	$ 17,216,611	$ 14,868,746

11. Property and Casulty Insurance Activity (Details 1) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Unearned premiums	$ 26,012,363	$ 21,283,160
Total reinsurance receivables	5,792,000	1,617,000
Gross Liability
Case-basis reserves	21,190,141	11,467,967
Loss adjustment expenses	2,502,169	2,117,242
IBNR reserves	6,793,222	4,895,508
Recoverable on paid losses
Total loss and loss adjustment expenses	30,485,532	18,480,717
Reinsurance Receivables
Case-basis reserves	13,284,613	6,148,765
Loss adjustment expenses	1,064,420	1,017,983
IBNR reserves	4,070,661	2,793,586
Recoverable on unpaid losses	18,419,694	9,960,334
Recoverable on paid losses	5,792,405	1,615,981
Total loss and loss adjustment expenses	24,212,099	11,576,315
Unearned premiums	14,690,683	12,304,499
Total reinsurance receivables	$ 38,902,782	$ 23,880,814

11. Property and Casulty Insurance Activity (Details 2) - USD ($)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Property And Casulty Insurance Activity Details 2
Balance at beginning of period	$ 18,480,717	$ 17,711,907
Less reinsurance recoverables	(9,960,334)	(10,431,415)
Net balance, beginning of period	8,520,383	7,280,492
Incurred related to:
Current year	10,460,000	8,297,998
Prior years	774,713	273,060
Total incurred	11,234,713	8,571,058
Paid related to:
Current year	4,419,000	4,108,010
Prior years	3,270,258	3,223,157
Total paid	7,689,258	7,331,167
Net balance at end of period	12,065,838	8,520,383
Add reinsurance recoverables	18,419,694	9,960,334
Balance at end of period	$ 30,485,532	$ 18,480,717

11. Property and Casulty Insurance Activity (Details 3)	12 Months Ended
11. Property and Casulty Insurance Activity (Details 3)	Dec. 31, 2012
Fire
Most Recent	Loss Ratio
1st Prior	Loss Development
All Other	Loss Development
Homeowners
Most Recent	Loss Ratio
1st Prior	Loss Development
All Other	Loss Development
Two to Four Family
Most Recent	Loss Ratio
1st Prior	Loss Development
All Other	Loss Development
Commercial multiple-peril property
Most Recent	Loss Ratio
1st Prior	Loss Development
All Other	Loss Development
Commercial multiple-peril liability
Most Recent	Loss Ratio
1st Prior	Loss Development
All Other	Loss Development
Other Liability
Most Recent	Loss Ratio
1st Prior	Loss Development
All Other	Loss Development
Commercial Auto Liability
Most Recent	Loss Ratio
1st Prior	Loss Development
All Other	Loss Development
Auto Physical Damage
Most Recent	Loss Ratio
1st Prior	Loss Development
All Other	Loss Development
Personal Auto Liability
Most Recent	Loss Ratio
1st Prior	Loss Development
All Other	Loss Development

11. Property and Casulty Insurance Activity (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Property And Casulty Insurance Activity Details Narrative
Incurred Losses and Loss Adjustment Expenses are net of reinsurance recoveries under reinsurance contracts	$ 21,396,768	$ 7,073,026
Advance premiums	$ 611,000	$ 545,000

12. Long-Term Debt (Details) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Notes Payable	$ 1,197,000	$ 1,047,000
Total Debt
Notes Payable	747,000	747,000
Bank line of credit	450,000	300,000
Long-Term Debt-Total	1,197,000	1,047,000
Less Current Maturities
Notes Payable
Bank line of credit	450,000	300,000
Long-Term Debt-Total	450,000	300,000
LongTermDebt
Notes Payable	747,000	747,000
Bank line of credit
Long-Term Debt-Total	$ 747,000	$ 747,000

The carrying value as of the balance sheet date of the current and noncurrent portions of long-term obligations drawn from a line of credit, which is a bank's commitment to make loans up to a specific amount. Examples of items that might be included in the application of this element may consist of letters of credit, standby letters of credit, and revolving credit arrangements, under which borrowings can be made up to a maximum amount as of any point in time conditional on satisfaction of specified terms before, as of and after the date of drawdowns on the line. Includes short-term obligations that would normally be classified as current liabilities but for which (a) postbalance sheet date issuance of a long term obligation to refinance the short term obligation on a long term basis, or (b) the enterprise has entered into a financing agreement that clearly permits the enterprise to refinance the short-term obligation on a long term basis and the following conditions are met (1) the agreement does not expire within 1 year and is not cancelable by the lender except for violation of an objectively determinable provision, (2) no violation exists at the BS date, and (3) the lender has entered into the financing agreement is expected to be financially capable of honoring the agreement.

12. Long-Term Debt (Details 1) - USD ($)	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Barry Goldstein IRA (Mr. Goldstein is Chairman of the Board, President and Chief Executive Officer, and principal stockholder of the Company)	$ 90,000	$ 90,000	$ 150,000
Kidstone LLC, a limited liability company owned by Mr. Goldstein, along with Steven Shapiro (a director of KICO), and a family member of Sam Yedid (a director of KICO)			120,000
Jay Haft, a director of the Company	30,000	30,000	50,000
A member of the family of Michael Feinsod, a director of the Company	60,000	60,000	100,000
Sam Yedid, a director of KICO, and members of his family	156,000	156,000	295,000
A member of the family of Floyd Tupper, a director of KICO	42,000	42,000	70,000
Total related party balances	$ 378,000	378,000	$ 785,000
December31, 2011 [Member]
Barry Goldstein IRA (Mr. Goldstein is Chairman of the Board, President and Chief Executive Officer, and principal stockholder of the Company)		60,000
Kidstone LLC, a limited liability company owned by Mr. Goldstein, along with Steven Shapiro (a director of KICO), and a family member of Sam Yedid (a director of KICO)		120,000
Jay Haft, a director of the Company		20,000
A member of the family of Michael Feinsod, a director of the Company		40,000
Sam Yedid, a director of KICO, and members of his family		139,000
A member of the family of Floyd Tupper, a director of KICO		28,000
Total related party balances		$ 407,000

13. Stockholders' Equity (Details)	12 Months Ended
13. Stockholders' Equity (Details)	Dec. 31, 2012
Dividend Yield	0.00%
Risk-Free Interest Rate	0.61%
Expected Life	5 years
Minimum [Member]
Volatility	50.89%
Maximum [Member]
Volatility	89.27%

13. Stockholders' Equity (Details 1)	12 Months Ended
13. Stockholders' Equity (Details 1)	Dec. 31, 2012 USD ($) $ / shares shares
Stockholders Equity Details 1
Number of Options Outstanding, Beginning \| shares	393,865
Number of Options Granted \| shares	10,000
Number of Options Exercised \| shares	(168,750)
Number of Options Forfeited \| shares
Number of Options Outstanding, Ending \| shares	235,115
Number of Options Exercisable \| shares	165,398
Weighted Average Exercise Price Outstanding, Beginning	$ 2.32
Weighted Average Exercise Price Granted	4.81
Weighted Average Exercise Price Exercised	2.12
Weighted Average Exercise Price Forfeited
Weighted Average Exercise Price Outstanding, Ending	2.58
Weighted Average Exercise Price Exercisable	$ 2.48
Weighted Average Remaining Contractual Life (in years) Outstanding Beginning	2 years 3 months 11 days
Weighted Average Remaining Contractual Life (in years) Outstanding Granted	0 years
Weighted Average Remaining Contractual Life (in years) Outstanding Exercised	0 years
Weighted Average Remaining Contractual Life (in years) Outstanding Forfeited	0 years
Weighted Average Remaining Contractual Life (in years) Outstanding Ending	2 years 2 months 27 days
Weighted Average Remaining Contractual Life (in years) Exercisable	2 years 1 month 17 days
Aggregate Intrinsic Value Outstanding, Beginning \| $	$ 498,913
Aggregate Intrinsic Value Granted	$ 600
Aggregate Intrinsic Value Exercised \| $	$ 515,281
Aggregate Intrinsic Value Forfeited/canceled
Aggregate Intrinsic Value Outstanding, Ending \| $	$ 539,485
Aggregate Intrinsic Value Exercisable \| $	$ 395,556

13. Stockholders' Equity (Details Narrative) - USD ($)	12 Months Ended
13. Stockholders' Equity (Details Narrative) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Stockholders Equity Details Narrative
Dividends Declared	$ 533,763	$ 230,303
Compensation Expense	$ 48,000	106,000
Stock-based compensation expense related to stock options net of estimated forfeitures	21.00%
weighted average estimated fair value of stock options granted	$ 2.47
Intrisic Value-Options Exercised	$ 515,281
Options Exercised - Cash proceeds	$ 47,075
Options for the purchase of shares of Common Stock	22,500
Options net Exercises	146,250
Unamortized compensation cost related to unvested stock option awards	$ 26,000	55,000
Unamortized compensation cost expected to be recognized over a remaining weighted-average vesting period	1 year 9 months 16 days
Fair value of shares vested	$ 135,000	$ 127,000
Shares reserved under the 2005 Plan	143,635

14. Statutory Financial Information and Accounting Policies (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Statutory Financial Information And Accounting Policies Details Narrative
Statutory basis net income	$ 1,142,493	$ 3,025,536
Statutory basis surplus	$ 14,345,729	$ 13,602,701

16. Income Taxes (Details) - USD ($)	12 Months Ended
16. Income Taxes (Details) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Income Taxes Details
Current federal income tax expense	$ 641,857	$ 1,394,090
Current state income tax expense	(225)	19,529
Deferred federal and state income tax expense	(338,723)	(325,106)
Provision for income taxes	$ 302,909	$ 1,088,513

The component of income tax expense for the period representing amounts paid or payable (or refundable) as determined by applying the provisions of enacted federal tax law to the domestic taxable Income or Loss from continuing operations.

The component of income tax expense for the period representing amounts paid or payable (or refundable) as determined by applying the provisions of enacted state and local tax law to relevant amounts of taxable Income or Loss from continuing operations.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
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Reference 7: http://www.xbrl.org/2003/role/presentationRef
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Reference 8: http://www.xbrl.org/2003/role/presentationRef
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The component of income tax expense for the period representing the increase (decrease) in the entity's deferred tax assets and liabilities pertaining to continuing operations.

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Reference 7: http://www.xbrl.org/2003/role/presentationRef
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Reference 9: http://www.xbrl.org/2003/role/presentationRef
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Reference 10: http://www.xbrl.org/2003/role/presentationRef
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16. Income Taxes (Details 1) - USD ($)	12 Months Ended
16. Income Taxes (Details 1) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Income Taxes Details
Computed expected tax expense	$ 363,669	$ 1,221,156
State taxes, net of Federal benefit	(44,687)	1,270
State valuation allowance	104,325
Permanent differences
Dividends received deduction	(64,274)	(39,613)
Non-taxable investment income	(68,667)	(84,930)
Stock based compensation expense	16,414	35,999
Other permanent differences	25,956	(21,548)
Prior year tax matters	(46,906)	(50,886)
Other	17,079	27,065
Total tax	$ 302,909	$ 1,088,513
Computed expected tax expense	34.00%	34.00%
State taxes, net of Federal benefit	(4.20%)
State valuation allowance	9.80%
Permanent differences
Dividends received deduction	(6.00%)	(1.10%)
Non-taxable investment income	(6.40%)	(2.40%)
Stock based compensation expense	1.50%	1.00%
Other permanent differences	2.40%	2.40%
Prior year tax matters	(4.40%)	(1.40%)
Other	1.60%	(2.20%)
Total tax	28.30%	30.30%

16. Income Taxes (Details 2) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Deferred tax asset:
Net operating loss carryovers (1)	$ 264,648	$ 276,312
Claims reserve discount	313,544	220,354
Unearned premium	811,413	647,596
Deferred ceding commission revenue	1,658,190	1,354,016
Other	10,921	4,583
Total deferred tax assets	3,058,716	2,502,861
Deferred tax liability:
Investment in KICO (2)	1,169,000	1,169,000
Deferred acquisition costs	1,893,759	1,542,163
Intangibles	1,082,886	1,244,628
Depreciation and amortization	152,576	133,411
Reinsurance recoverable	20,400	20,400
Net unrealized appreciation of securities - available for sale	527,376	172,155
Investment income		10,543
Total deferred tax liabilities	4,845,997	4,292,300
Net deferred income tax liability	$ (1,787,281)	$ (1,789,439)

16. Income Taxes (Details 3) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Income Taxes Details 3
State only (A)	$ 380,810	$ 284,749
Valuation allowance	(146,762)	42,437
State only, net of valuation allowance	234,048	242,312
Amount subject to Annual Limitation, Federal only (B)	30,600	34,000
Total deferred tax asset from net operating loss carryovers	$ 264,648	$ 276,312
State only (A) expiration date	December 31, 2027
Amount subject to Annual Limitation, Federal only (B) expiration date	December 31, 2019

Amount of an unrecognized tax benefit that is directly related to a position taken in a tax year that results in a net operating loss carryforward. This amount is presented as a reduction of the related deferred tax asset in the balance sheet if that deferred tax asset is not used. This amount is presented separately from the deferred tax asset for a net operating loss carryforward if this unrelated tax benefit is associated with a different tax position.

16. Income Taxes (Details 4) - USD ($)	12 Months Ended
16. Income Taxes (Details 4) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Income Taxes Details 4
Change in net deferred income tax liabilities	$ (2,158)
Deferred tax expense allocated to other comprehensive income	(336,565)	$ (115,988)
Deferred income tax provision	$ (338,723)	$ (325,106)

The component of income tax expense for the period representing the increase (decrease) in the entity's deferred tax assets and liabilities pertaining to continuing operations.

Net of tax amount of other comprehensive income (loss) attributable to the parent entity.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
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-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 30
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16. Income Taxes (Details Narrative) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Income Taxes Details Narrative
State net operating loss carryover	$ 4,588,000	$ 3,569,000

Amount before allocation of valuation allowances of deferred tax asset attributable to deductible state and local operating loss carryforwards.

17. Employee Benefit Plans (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Employee Benefit Plans Details Narrative
Compensation expense	$ 264,000	$ 352,000
Additional contributions expense	$ 155,000	$ 251,000

19. Net Income Per Common Share (Details) - USD ($)	12 Months Ended
19. Net Income Per Common Share (Details) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Net Income Per Common Share Details
Weighted average number of shares outstanding	3,806,697	3,837,190
Effect of dilutive securities, common share equivalents	$ 65,063	$ 83,594
Weighted average number of shares outstanding, used for computing diluted earnings per share	3,871,760	3,920,784

The average number of shares or units issued and outstanding that are used in calculating diluted EPS or earnings per unit (EPU), determined based on the timing of issuance of shares or units in the period.

Number of [basic] shares or units, after adjustment for contingently issuable shares or units and other shares or units not deemed outstanding, determined by relating the portion of time within a reporting period that common shares or units have been outstanding to the total time in that period.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
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