Merica·Estate Hunter
Own · Insurance · Problems

When your insurer fails

Your claim survives. Your cover does not. On the first point, the Florida Insurance Guaranty Association takes over covered claims of an insolvent member insurer, within statutory limits†. On the second, your policy terminates a short period after the liquidation order — you must obtain replacement cover, not wait to be told†. Almost everybody hears the first half and is caught out by the second.

Two clocks start on the same day, and only one is anybody else’s jobLiquidation order; FIGA takes the claim — automatically; Your policy ends — shortly after; You must replace it — nobody does this for youLiquidation orderFIGA takes the claimautomaticallyYour policy endsshortly afterYou must replace itnobody does this for you
The claim transfers automatically. The cover does not — that part is yours.
Do this first, before anything about the claim

Get replacement cover. An uninsured house is a mortgage default waiting to happen — your lender will force-place a policy that costs more and covers less, and bill you for it. The claim will still be there in a week. The gap in cover will not forgive itself.

What FIGA actually does

Why there is no cap figure on this page

the cap differs by policy type, and a higher limit applies to a homeowner’s claim covering the structure and its contents†. Publishing a single number here would be wrong for most readers and stale for the rest, so we are not going to. Ask FIGA what limit applies to your policy type — they answer this question every day, and the answer is specific to your cover.

If you had a claim open when it failed

  1. Assemble the file yourself. Every photograph, estimate, adjuster report, email and letter. Assume the transfer loses some of it, because transfers do.
  2. Note the claim number and the dates. When you reported it, when it was inspected, what was agreed.
  3. Watch the statutory deadlines anyway. Insolvency does not obviously extend them, and 1 year† to give notice and 18 months† for a supplemental claim are the outer limits you are working inside.
  4. Do not accept that work already agreed is now in dispute without seeing the reasoning in writing.
  5. Keep paying the contractor properly and keep the invoices. A documented, itemised loss survives a change of insurer far better than a negotiated round figure.

The premium you already paid

unearned premium is itself a claim against the association, not something refunded automatically†. So the unused portion of your premium is something you have to claim, in the same process, rather than a cheque that arrives. Put it on the list with everything else and do not assume it is being handled.

Replacing the cover, quickly

  1. Call an independent agent today, not a single carrier. You want whoever can reach the most markets in the least time.
  2. Have your documents ready — the wind mitigation form, the four-point if you have one, the roof date. Having these in hand is what turns a week into a day.
  3. Tell your lender what has happened and send the new declarations page as soon as you have it. Force-placed cover is expensive and hard to unwind.
  4. Check Citizens if the market will not write you — eligibility turns on 20%†, so a failed insurer does not by itself qualify you.
  5. Do not let the deductible drift upward in the rush. A cheaper premium bought under time pressure has usually moved risk to you.

Whether you could have seen it coming

Somewhat. Financial strength ratings on Florida property carriers are published, and a carrier being downgraded is a signal worth acting on at renewal rather than after. But the honest position is that several Florida insurers have failed with little public warning, and a homeowner is not well placed to underwrite their own underwriter. What you can control is having your wind mitigation form, your roof documentation and your photographs ready — so that whoever ends up holding your policy, the evidence is yours rather than theirs.

Related

Filing a claimThe deadlines that still apply.Non-renewalThe other way you lose a policy.CitizensThe residual market, and who qualifies.Public adjustersWhen a stalled claim justifies one.
A modern suburban detached house with a spacious driveway under a bright blue sky.
A modern suburban detached house with a spacious driveway under a bright blue sky.Photograph: Curtis Adams / Pexels

Common questions

What happens to my claim if my Florida insurer goes bankrupt?

The Florida Insurance Guaranty Association takes over covered claims within statutory limits and pays them, applying a $100 deductible to each in addition to your policy deductible. The process is slower than a functioning carrier.

Does my policy continue if my insurer is liquidated?

No. Your policy terminates a short period after the liquidation order. Obtaining replacement cover is your job — nobody does it for you, and a gap invites force-placed cover from your lender.

How much does FIGA pay?

The cap differs by policy type, with a higher limit for a homeowner’s claim covering the structure and contents. Ask FIGA what applies to your policy rather than relying on a single published figure.

Do I get my premium back if my insurer fails?

Unearned premium is itself a claim against the association rather than an automatic refund. Put it on the list with everything else and do not assume it is being handled.

What should I do first if my insurer is declared insolvent?

Get replacement cover, before anything about the claim. The claim will still be there in a week; a gap in cover will not forgive itself, and force-placed insurance costs more and covers less.

The Florida Insurance Guaranty Association operates under Part II of Chapter 631 of the Florida Statutes. Coverage limits differ by policy type and are set by that chapter — confirm the limit applicable to your own policy with the association directly.