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Frequently Asked Questions

FIGA is part of a non-profit, state-based, statutorily-created system that pays certain outstanding claims of insolvent insurance companies. By paying these claims, guaranty associations protect policyholders and claimants.

Guaranty associations are active in every state, the District of Columbia, Puerto Rico and the Virgin Islands. State laws require that licensed property and casualty insurance companies belong to the guaranty associations in every state where they are licensed to do business.
A guaranty association system also exists in Florida for the life, health and annuity insurance industry; but they operate independently from the property and casualty system. This information concerns only the property casualty guaranty associations.

Guaranty associations ease the burden on policyholders and claimants of the insolvent insurer by immediately stepping in to assume responsibility for most policy claims following liquidation. The coverage guaranty associations provide is fixed by the policy or state law; they do not offer a “replacement policy.”

By virtue of the authority given to the guaranty associations by state law, they are able to provide two important benefits: prompt payment of covered claims and payment of the full value of covered claims up to the limits set by the policy or state law.

The potential failure of insurance companies, like the potential failure of all businesses, is an unfortunate, but inevitable, part of doing business in a free-market system.  Since inception of the property and casualty guaranty association system, there have been about 600 insolvencies.  In all, the system has paid out about $24.2 billion.

FIGA is largely funded by industry assessments, which are collected following insolvencies. These assessments raise funds to pay claims and administrative and other costs related to the FIGA’s claim paying activities.

FIGA’s assessments are capped at 2% of a company’s net direct premium for regular assessments, and an additional 2% for emergency assessment for insolvencies relating to hurricanes, on premium written in similar lines of business in Florida the prior year. The other source of funding is recoveries from distributions of the insolvent insurance companies.

FIGA’s assessments are computed and billed based on the immediate needs of the guaranty association that has claims it needs to pay. Claim files come in from the insolvent insurance company; the adjusters review them, and set appropriate reserves on those files. (Reserves are the projected ultimate liability under terms of a given policy.)

In Florida the assessment cap is 2% of net direct-written premium for regular assessments and an additional 2% for emergency assessments for insolvencies relating to hurricanes. FIGA cannot assess an insurance company more than the statutorily set cap on assessments.

Liquidation is similar to bankruptcy. When a company is liquidated, the Liquidator (also referred to as the Receiver), collects the assets of the company and verifies the liabilities such as claim payments and bills. The Liquidator then develops a plan to distribute the company’s assets according to the law and submits the plan to the Court for approval.

In most cases, an estate will not yield sufficient money to pay claims in full; and most are not able to pay claims in a timely manner. For this reason, FIGA and other state guaranty associations step in (depending on the number of states in which the failed company wrote business) to cover certain claims. The estate’s creditors not covered by the guaranty associations usually receive only partial payment on their claims.

Yes.

Most liquidation orders cancel all policies within a certain time period after liquidation, typically 30 days.
 
You will need to obtain coverage with another insurance company. However, we do not recommend any particular company. You may contact any licensed insurance agent to get the names of other insurers. For homeowner’s insurance information in the State of Florida, you may contact the Florida Market Assistance Plan at 800-524-9023.

The processing and payment of pending covered claims will be made by FIGA (subject to the lesser of policy limits or FIGA’s maximum cap, see "Are there limits on the amount that FIGA will pay?" below).

You may contact the Florida Insurance Guaranty Association (FIGA) at;

PO Box 14249
Tallahassee, Florida 32317

(800) 988-1450 Toll Free
(850) 523-1888 FAX

 

A covered claim is defined in the FIGA statute (F.S.631.54) as “… “Covered claim” means an unpaid claim, including one of unearned premiums, which arises out of, and is within the coverage, and not in excess of, the applicable limits of an insurance policy…”.

Yes.

If your insurance company has been declared insolvent, covered claims will be paid by FIGA.  The maximum amount FIGA will cover is $300,000 with special limits applying to (1) damages to structure and contents on homeowners’ claims and (2) on condominium and homeowners’ association claims.  For damages to structure and contents on homeowners’ claims the FIGA cap is an additional $200,000.  For condominium and homeowners’ association claims the cap will be the lessor of policy limits or $100,000 multiplied by the number of units in the association.  No claim will be paid in excess of this cap. All claims are subject to a $100 FIGA deductible in addition to any deductible identified in your policy.  You may file a claim against the assets of the insurance company estate for the $100 deductible and for amounts over the cap.  The Receiver will send proof of claim forms and instructions for filing a claim.
 
Claims not covered by FIGA may be claims against the remaining assets (estate) of the insurance company and will be considered after all covered claims have been processed.

It varies, but claim payments usually begin as soon as possible once a company is ordered liquidated.  FIGA, coordinating with the receivers of the liquidating companies, work hard to avoid delays but it is not uncommon for delays of 30-60 days after the order of liquidation.

No. FIGA is designed as a safety net to pay certain claims arising out of policies issued by licensed insurance companies. FIGA does not pay non-policy claims or claims of self-insured groups, or other entities that are exempt from participation in the guaranty association system.

FIGA coverage is limited to licensed insurers (the members of the guaranty associations that, in turn, pay insolvency-related assessments.) When a licensed insurance company becomes insolvent, the FIGA pays eligible claims; but a company does not have guaranty association coverage if it is writing non-admitted or unlicensed products, such as surplus lines or is a self-insurer covered in the non-admitted market.
 
These limits on guaranty association coverage are necessary to balance the need to provide a safety net to those who would be most harmed by the insolvency of their insurance company and keep the burden of providing the safety net at an acceptable level.

FIGA is administered by a board that is elected by the guaranty association members (that is, all companies writing licensed business in that state) and a Chief Financial Officer appointee.  There is oversight authority by the Florida Department of Financial Services, who reviews the association’s plan of operation, and may also audit a guaranty association.  In Florida the appointment to the guaranty association board is subject to the approval of the Chief Financial Officer.

While many of the associations are based on a model set forth by the National Association of Insurance Commissioners (NAIC), there are differences in statutes that govern the associations and their operation from state to state, including the amount of coverage provided by the association.

You should contact FIGA immediately at 800-988-1450. They will determine if you are entitled to receive legal defense just as the insurance company would have done if it were still in business. You will need to cooperate with FIGA and the defense counsel just as you would have had to with your company.

Yes

You will receive a form from the Receiver called a “Proof of Claim” form. In order for your claim to be considered by the Receiver you must complete the form and return it to the Receiver by the filing deadline. The first $100 of your claim is included in the liabilities of the estate and will be paid with any assets that remain after all covered claims have been paid.

 

FIGA will pay unearned premium claims after the Receiver completes its processing of the policy records and sends the unearned premium record to FIGA.  This may take several weeks or several months depending on the condition of the data at the insolvent insurance company.

If a dwelling is deemed uninhabitable due to a covered loss and the insured must move, or if a civil authority prevents access to the dwelling, following a covered loss, the Additional Living Expense (ALE) provision of your homeowner’s policy may pay reasonable additional expenses. (Your policy controls this.) Consult your policy for this coverage.

If your auto policy includes Comprehensive coverage (a.k.a. “Other than Collision”) at the time of a disaster, then wind and flood damages are covered. For example, auto glass broken by windblown objects, vehicles overturned by the force of the wind, or auto glass that pops out due to a sudden drop in atmospheric pressure, are all covered losses. Windshield glass claims are subject to the statutory deductible but not to your comprehensive deductible.

(Your policy controls what is covered.) Consult your policy for this coverage.  Generally, voluntary evacuation expenses will not be covered by your insurance policy, and only under certain conditions will mandatory evacuation expenses be covered.

a.  As soon as possible, report damage to your agent or FIGA, even if the cause of the damage is unknown;
b.  Make temporary repairs to prevent further damage, and remember to keep receipts for any supplies necessary for those repairs;
c.  Save damaged items until the adjuster inspects them; additionally, take pictures and/or video, if possible, of all damages and damaged items;
d.  Make your property easily identifiable by displaying the house address and insurance company;
e.  Seek long term shelter if the property is uninhabitable and has sustained major damage. Reasonable expenses are generally reimbursed. The limits of your policy may determine your “Loss of Use” coverage;
f.   Be patient, after disasters, especially larger ones, the company’s immediate response time may take longer than usual;
g.  Prepare an inventory with receipts or other evidence of value and ownership, as necessary, to assist in the claim settlement process;
h.  On smaller losses start getting repair estimates, if possible;
i.   If you disagree with the settlement offer, you may wish to elect mediation or arbitration; however, first try to negotiate with the adjuster or company.

Since policies vary you should review your coverage with your agent.

Generally, Condo Associations may assess individual units for damage to common areas which aren’t covered by the Association’s policy. Your unit owner’s policy may provide limited coverage. The standard ISO homeowners program does cover an assessment due to an association deductible but only up to $1,000. This is the case even if the policy has been endorsed to provide loss assessment coverage above the $1,000 limit that is built in. Damage must be to covered property due to a covered peril.

 

Most policies will pay for food spoilage when the interruption of power is caused by direct damage to the insured premises, not if the power goes out in the general area.

Replacement cost coverage is triggered when you actually replace the item. The company will initially pay the depreciated value (ACV) and will pay the difference between depreciated value and the replacement cost upon evidence that the items have been replaced. This applies to the structure and contents. Some companies will release replacement cost payment for the dwelling when you produce a signed repair contract from a licensed contractor. In the case of a dwelling’s total loss, the structure portion of the claim is usually paid in full. The legislature changed this in 2005 and hold back no longer applies.

In most insurance policies, the removal of a tree and its debris is generally limited to $500 per tree and a maximum payout of $1,000 for the entire property. Furthermore, it only applies if a covered structure (i.e., house, fence, utility building) is damaged, or if it blocks driveway access or a ramp that provides disability access.

Homeowner’s insurance hurricane deductibles are determined by the insured’s Dwelling Value as stated in Coverage A. For most homes, deductibles can range from a minimum of $250 to a maximum of 10 % of the home’s value.

Individual policies have different deductibles, different coverages and specific amounts. You must read your policy to determine more specific answers.

 

 

After an order of liquidation is entered by the Court, the Receiver assumes responsibility for marshalling all of the assets of the insolvent company, liquidating the assets and recommending to the Court payment of liabilities as those assets allow. In Florida, the Receiver is the Florida Department of Financial Services. All “covered claims” which are amounts payable under an insurance policy of an insolvent company (see complete definition in Florida Statute 631.54 (3)) are transferred to FIGA for the express purpose of avoiding excessive delay in the payment to claimants or policyholders (Florida Statute 631.51). Therefore, FIGA is not responsible for outstanding service provider or vendor invoices as these liabilities of the insolvent entity are not “covered claims” under the statute. You are, however, not without recourse as these outstanding invoices will be evaluated for payment by the Receiver.
 
If you provided goods or services to the insolvent company prior to the date of liquidation you should contact the Receiver for additional instructions. Generally the Receiver requires a listing of outstanding amounts owed, along with a description of the services provided so that the request can be fairly evaluated. A Proof of Claim will need to be submitted and these can be obtained through the Receiver’s office. For a Florida insolvency you may find the web site www.myfloridacfo.com/Receiver/ helpful.
 
You should not continue to provide services after the date of liquidation with the expectation of being paid by FIGA without the express written permission of FIGA. FIGA’s statutory authority is to pay claims and to retain persons necessary to handle those claims. There is no statutory authority for FIGA to pay expenses incurred prior to the liquidation as they are not "Covered Claims" – these are the responsibility of the estate and will be evaluated by the Receiver for payment following Florida Statute 631.271 under the supervision of the Court.