FIGA Coverage Limits: Check Your Policies to Maximize Coverage
Are you completely familiar with the insurance coverage available to your association? Will you have FIGA coverage in the event your insurance carrier becomes insolvent?
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The Florida Insurance Guarantee Association (FIGA) was created to ease the burden on policyholders with claims when an insurance carrier becomes insolvent. FIGA coverage is limited to licensed insurers in the State of Florida, otherwise referred to as admitted carriers. When an admitted insurance company becomes insolvent, the FIGA pays eligible claims. However there is no FIGA coverage for non-admitted or unlicensed products, such as surplus lines or is a self-insurer covered in the non-admitted market.
While FIGA steps into the shoes of the dissolved carrier, payment limits are established by statute, not the original policy. The way the policy is written for a multi-building association is important - very important as demonstrated by the recent ruling in Florida Insurance Guarantee Association v. B.T. of Sunrise Condominium Association, Inc. The ruling is hot off the press and therefore subject to rehearing upon proper Motion.
There are seven (7) buildings within the B.T. of Sunrise Community. All of them were damaged by Hurricane Wilma. The association filed its insurance claim with the carrier, Southern Family. Southern Family assigned one claim number to the entire claim and paid for certain damages before it went insolvent.
The association was not satisfied with the amount paid by Southern Family and therefore requested supplemental payments from FIGA. FIGA issued a check for what it believed was its statutory limit: $300,000 minus $100 for the FIGA deductible. The association then challenged FIGA's finding - there were seven (7) buildings, each listed separately, each covered for a specific amount and each had a specific premium payment based on the coverage amount. Why would FIGA only pay for one claim? The association argued FIGA should pay for seven (7) claims.
That issue was decided in the association's favor at the trial level. FIGA appealed and the Fourth District likewise ruled in favor of the association. FIGA will now have to participate in the appraisal process with respect to each building - with separate limits of coverage for each building.
Please review your policies and declaration pages carefully, then discuss this issue with your insurance professional. Make sure your community has the maximum benefit fromFIGA coverage.
