Key Takeaways
- The Florida Insurance Guaranty Association (FIGA) protects Florida policyholders when P&C insurers become insolvent
- FIGA covers claims up to $300,000 per claim for most covered claims
- Workers' compensation claims are covered up to statutory limits
- FIGA does not cover surplus lines policies, self-insured plans, or life insurance
- Producers cannot advertise or use FIGA coverage as a selling point
Florida Insurance Guaranty Association (FIGA)
The Florida Insurance Guaranty Association (FIGA) protects Florida residents when P&C insurance companies become insolvent.
Purpose and Function
FIGA:
- Protects policyholders of insolvent P&C insurers
- Pays covered claims up to statutory limits
- Funded by assessments on member insurers
- Operates under state law supervision
How It Works
When a P&C insurer becomes insolvent:
- OIR/DFS takes over - Places insurer in receivership
- FIGA activates - Takes responsibility for covered claims
- Claims processed - FIGA pays covered claims
- Assessments made - Member insurers pay assessments
Coverage Limits
FIGA provides coverage up to specific limits:
Claim Limits
| Coverage Type | Maximum |
|---|---|
| Most Covered Claims | $300,000 per claim |
| Workers' Compensation | Statutory limits |
| Homeowners Claims | $300,000 |
| Auto Claims | $300,000 |
| Commercial Claims | $300,000 |
Important Limitations
- $300,000 maximum per claim
- $100 deductible on first-party claims
- Net worth reduction may apply for large entities
- Claims pending at insolvency are covered
Exam Tip: Remember the $300,000 limit for most FIGA claims. This is a frequently tested amount.
What Is Covered
FIGA covers claims under:
Covered Policies
- Homeowners insurance
- Auto insurance
- Commercial property
- Commercial liability
- Workers' compensation
- Personal lines policies
What's NOT Covered
| Not Covered | Reason |
|---|---|
| Surplus lines policies | Non-admitted insurers |
| Self-insured plans | Not insurance policies |
| Title insurance | Separate guaranty fund |
| Ocean marine insurance | Excluded |
| Amounts above $300,000 | Statutory limit applies |
| Life & health | Separate guaranty association |
| Financial guaranty | Excluded |
Funding
FIGA is funded by assessments on member insurers:
Assessment Process
- Member insurers pay assessments when needed
- Based on premium volume in Florida
- May be recouped through rate increases
- Separate accounts by line of insurance
Assessment Accounts
| Account | Purpose |
|---|---|
| Workers' Comp Account | WC claims only |
| Auto Account | Auto claims |
| Property Account | Property claims |
| All Other Account | All other claims |
Assessment Limits
- Regular assessments: Up to 2% of premium per year
- Emergency assessments: Higher limits after major insolvencies
- Insurers may pass through to policyholders
Producer Restrictions
Advertising Prohibition
Producers cannot:
- Use FIGA coverage as a selling point
- Advertise guaranty association protection
- Imply policies are "guaranteed" by FIGA
- Compare FIGA to FDIC
- Suggest choosing insurer based on FIGA
Required Conduct
- Provide accurate information if asked directly
- Cannot misrepresent coverage limits
- Cannot suggest coverage exceeds actual limits
- Must not use to induce sales
Exam Tip: Remember that producers CANNOT use FIGA coverage as a selling point. This is a frequently tested rule.
Claims Process
When an insurer becomes insolvent:
- Notice sent - FIGA notifies policyholders
- Claims submitted - Directly to FIGA
- Claims evaluated - Within statutory limits
- Benefits paid - If claim is covered
- Policy may end - Policyholder finds new coverage
Net Worth Reduction
For insureds with net worth over $25 million:
- Coverage may be reduced or eliminated
- Encourages large companies to use other risk management
- Does not apply to workers' comp claims
Covered Claims Account (CCA)
FIGA also administers the Covered Claims Account for:
- Hurricane claims on behalf of Citizens
- Helps manage catastrophe exposure
- Separate from regular FIGA accounts
What is the maximum coverage FIGA provides for most P&C claims?
Can a Florida P&C producer use FIGA coverage as a selling point?
Which type of insurance is NOT covered by FIGA?
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