What happens if your insurance company goes under? Many people never see this as an opportunity, but as more and more insurance companies go bankrupt in Florida, this is becoming a very common reality.
In Florida since 2018, seven Florida insurance companies have gone bankrupt, including three in this year alone.1 The three that have been ordered in liquidation so far this year have been Lighthouse Property Insurance Corporation, Avatar Property Insurance and St. John’s Insurance Company.2 FedNat, in an attempt to restructure, even announced the termination of 68,000 of their policies.3 “The fact that there are now several Florida insurance companies that fail each year at a time when the state has been spared from hurricane hurricanes should be a cause for concern.”;4
So if your insurance company goes under, what happens next?
When insurance companies go under, the Florida Guarantee Association (“FIGA”) takes over.5 FIGA is a statutory and state-based system that pays certain FIGA revenues to handle any claims or payments from the liquidated or insolvent insurance companies.6
By going to FIGA’s website and their section on insolvency,7 You can not only see which insurance companies have become insolvent but also their liquidation date, the bankruptcy trustee of the company and important deadlines for filing claims, among other things.8 It is important to know the deadline for your application if you end up in this situation.
So what outstanding receivables are paid by FIGA? Guarantee associations provide coverage in accordance with the insurance policy or state law.9 FIGA will process and pay for covered claims.10
FIGA Statute FS 631.54 defines a covered claim as “…” Covered claim “refers to an unpaid claim, including one of unearned premiums, that arises from, and is within the coverage of, and does not exceed, the applicable limits for an insurance… . ”11
There are also certain claims that FIGA will not pay for, such as non-insurance claims, claims from self-insured groups or other exempt units from the guarantee association system.12
However, there are limits to what FIGA will pay.13 FIGA’s ceiling is $ 300,000 with additional restrictions on homeowners ‘claims with damage to structure and content, and claims on condominiums and homeowners’ associations.14 Homeowners’ claims for damage to structure and content are limited by FIGA to an additional $ 200,000.15 Claims from tenant-owner and homeowners’ associations are limited to the lowest of $ 200,000 multiplied by the number of units in the association or policy limits.16
With the current reality for many insurance companies in Florida going under, it is important to be informed about what this may mean for you, your policy and your claims.
For more information on how to find out the status of a claim, the next step and information on how to obtain a new insurance, check out the FAQ page on FIGA’s website: https://figafacts.com/frequently-asked-questions/
For more information on FIGA, check out our previous blog posts on the subject: https://www.propertyinsurancecoveragelaw.com/?s=FIGA
1 Jerry Theodorou, Florida’s Failed Insurance Company – Who’s Next?R Street Blog, Insurance Journal, https://www.insurancejournal.com/blogs/right-street/2022/05/12/667368.htm, 12 May 2022.
2 Sheldon Dutes, “Stuck with the Bill”: How Florida’s insurance companies go under lets buyers dry upWESH 2, https://www.wesh.com/article/florida-insurance-bankruptcy/40044775#, 19 May 2022.
3 Lawrence Mower, Florida conducts financial autopsies on failed insurance companies. Few people read themMiami Herald, https://www.miamiherald.com/news/politics-government/state-politics/article261495072.html, 17 May 2022.
4 Jerry Theodorou, Florida’s Failed Insurance Company – Who’s Next?R Street Blog, Insurance Journal, https://www.insurancejournal.com/blogs/right-street/2022/05/12/667368.htm, 12 May 2022.
5 Sheldon Dutes, “Stuck with the Bill”: How Florida’s insurance companies go under lets buyers dry upWESH 2, https://www.wesh.com/article/florida-insurance-bankruptcy/40044775#, 19 May 2022.
6 common questionsFlorida Insurance Guaranty Association, https://figafacts.com/frequently-asked-questions/
7 InsolvenciesFlorida Insurance Guarantee Association, https://figafacts.com/category/insolvency/
9 common questionsFlorida Insurance Guarantee Association, https://figafacts.com/frequently-asked-questions/.