What Happens When Your Florida Insurance Company Goes Insolvent?

You’ve been paying your premiums on time for years. Then one day, a letter arrives telling you your insurance company is being liquidated. It’s going out of business. The company you’ve been counting on to protect your home — the one you’d call if a hurricane ripped off your roof or a pipe burst in your kitchen — no longer exists.

If this has happened to you, you’re not alone. Over the past five years, ten Florida property insurance companies have gone under, and the Florida Insurance Guaranty Association (FIGA) has paid more than $2.1 billion in claims left behind by those failed carriers. Florida has seen more property insurer insolvencies than any other state in the country over the past two decades.

The good news is that Florida law provides a safety net. FIGA steps in to pay covered claims when your insurer can’t. But FIGA has limits, deadlines, and rules that differ from a normal insurance claim. Understanding how FIGA works — and what to do the moment you learn your carrier is insolvent — can save you thousands of dollars and months of frustration.

What Does It Mean When an Insurance Company Is “Insolvent”?

An insurance company is insolvent when it can no longer meet its financial obligations — meaning it doesn’t have enough money to pay the claims its policyholders are filing. This can happen for a number of reasons: catastrophic hurricane losses, poor financial management, insufficient reserves, or a business model that couldn’t survive Florida’s volatile insurance market.

When an insurer becomes financially unstable, the Florida Office of Insurance Regulation (OIR) can place it into receivership — a legal process where a court-appointed receiver takes control of the company’s affairs. If the company can’t be rehabilitated, the court issues a final order of liquidation, which effectively shuts the company down. At that point, the insurer no longer has any financial obligation to its policyholders. Your policy is cancelled, and any open claims transfer to FIGA.

The wave of Florida insurer insolvencies in recent years has been staggering. Companies like St. Johns Insurance, Avatar Property & Casualty, Southern Fidelity Insurance, and United Property & Casualty all went under between 2022 and 2023, leaving tens of thousands of Florida homeowners scrambling for coverage and waiting for their claims to be processed. The Citizens depopulation program, which moves policyholders from the state-backed insurer to private carriers, has added another layer of complexity — especially when some of those private carriers later become insolvent themselves.

What Is FIGA and How Does It Protect You?

The Florida Insurance Guaranty Association is a nonprofit organization created by the Florida Legislature in 1970 to protect policyholders when an insurance company becomes insolvent. Think of it as a safety net — not a replacement policy, but a mechanism to ensure that covered claims from failed insurers still get paid.

Here’s how FIGA works:

• FIGA steps in after liquidation. Once a court issues a final order of liquidation, FIGA assumes responsibility for the insolvent company’s covered claims. It receives the claim files from the failed insurer and begins processing them.
• FIGA pays covered claims up to statutory limits. FIGA doesn’t offer a new policy. It pays the claims that existed under your original policy, subject to the coverage limits set by Florida law (more on those limits below).
• FIGA is funded by assessments on other insurers. When FIGA needs money to pay claims, it levies assessments on all Florida-licensed property and casualty insurance companies. Those companies then pass the cost along to their policyholders as a surcharge on premiums. In 2023, FIGA imposed a 1% emergency assessment on all homeowners and commercial policies statewide. In early 2026, FIGA announced it would end this assessment two years ahead of schedule, saving policyholders an estimated $650 million.
• FIGA refunds unearned premiums. If you paid for a full year of coverage and your insurer is liquidated three months in, FIGA will refund the remaining nine months of premium you paid for coverage you never received.
• Surplus lines insurers are NOT covered. If your policy was issued by a surplus lines insurer (a company that provides coverage for risks the standard market won’t cover), FIGA does not apply. You can check whether your insurer is a FIGA member by searching the OIR Company Search tool and confirming the authorization type is “Certificate of Authority.”

What Are FIGA’s Coverage Limits?

This is where many homeowners are caught off guard. FIGA’s coverage limits may be lower than your original policy limits, which means you could receive less than what your insurer would have owed you.

FIGA Coverage Limits vs. Typical Policy Limits

If your home is insured for $600,000 under your original policy, FIGA’s $500,000 cap for homeowners claims means there’s a $100,000 gap that FIGA won’t cover. You may be able to file a claim against the insolvent insurer’s estate for the difference, but recovery from estate distributions is uncertain and can take years.

All FIGA claims are also subject to a $100 FIGA deductible in addition to your original policy deductible. While $100 is a modest amount, it’s an additional out-of-pocket cost that many homeowners don’t expect.

How Do You File a Claim with FIGA?

If your insurance company has been declared insolvent and your claim is being transferred to FIGA, the process is different from filing a standard insurance claim. Here’s what to expect.

1. You’ll receive notification. FIGA will contact policyholders of the insolvent company to inform them that their claims are being transferred. If you had an open claim with the failed insurer, FIGA will take over the file. If you have a new loss that occurred before the liquidation date (or within 30 days after), you can file a new claim with FIGA directly.
2. Expect a six-month litigation stay. When a Florida insurer is liquidated, Florida law imposes an automatic six-month stay on all pending litigation. This means if you had already sued your insurer over a denied claim, the lawsuit is paused for six months while FIGA gets up to speed. After the stay expires, FIGA is substituted as the defendant and the case can proceed. This stay can be extended if FIGA requests it from the court.
3. Submit your claim documentation. Provide FIGA with all supporting documentation for your claim: photos, contractor estimates, proof of loss, correspondence with the original insurer, and any other evidence. You can submit documents by email, mail, or fax. Keep copies of everything.
4. Know the filing deadline. You generally have two years from the date the insurer was declared insolvent to file your claim with FIGA. If your insurer’s liquidation order was entered on January 15, 2025, your deadline to file with FIGA would be January 15, 2027. Missing this deadline can permanently bar your claim.
5. FIGA processes the claim like any insurer. FIGA has its own adjusters who are licensed and trained to handle property claims. They’ll review your documentation, inspect the property if needed, and make a coverage determination. FIGA is required to follow Florida insurance law in settling claims, just like any other carrier.

What Should You Do Right Now If Your Insurer Goes Insolvent?

Learning that your insurance company is going under is alarming, but taking the right steps immediately can protect your home and your claim. Here’s your action plan.

• Get new coverage immediately. FIGA only covers losses that occur before the liquidation date or within 30 days after — unless you obtain a replacement policy sooner. Once the 30-day window closes, you’re uninsured. Contact an insurance agent right away to secure a new policy. If you can’t find coverage in the private market, you may need to apply for Citizens Property Insurance, Florida’s insurer of last resort.
• Don’t accept a low settlement just because FIGA is involved. Some homeowners feel pressured to settle quickly because they’re dealing with FIGA instead of a traditional insurer. But FIGA is bound by the same Florida insurance laws as any carrier. If FIGA underpays your claim or denies it without proper justification, you have the right to dispute the decision, request mediation, or pursue legal action.
• Gather and organize all your documentation. Collect every piece of evidence related to your claim: the original policy, all correspondence with the failed insurer, adjuster reports, engineer reports, photos, contractor estimates, and receipts. FIGA is starting from scratch with your file, so the more organized and complete your documentation, the faster and smoother your claim will be processed.
• Check whether your insurer was a FIGA member. Not all insurers are covered by FIGA. Surplus lines carriers are excluded. Verify your insurer’s membership by searching the OIR Company Search tool at floir.com. If your carrier was a surplus lines insurer, FIGA will not cover your claim, and your options may be limited to filing against the insurer’s estate.
• Contact a property insurance attorney. FIGA claims are governed by the FIGA Act, which has different rules and deadlines than a typical insurance claim. If your claim involves significant damage, complex coverage issues, or if you suspect bad faith insurance practices by the original insurer before it went under, an attorney who understands FIGA’s processes can ensure your rights are protected and your claim is maximized within FIGA’s statutory limits.

The insolvency of a Florida insurance company is disruptive and stressful, but it doesn’t mean your claim disappears. FIGA exists specifically to make sure homeowners aren’t left holding the bag when their carrier fails. The key is acting quickly, documenting thoroughly, and knowing what you’re entitled to under the law.

At Krapf Legal, we’ve helped Florida homeowners navigate the FIGA process after carrier insolvencies, including the wave of failures that followed Hurricane Ian. We understand the deadlines, the coverage caps, and the strategies for maximizing your recovery. And because we work on contingency, you pay nothing unless we recover additional money on your claim.

Your insurance company failed you. FIGA is a lifeline — but you may need help using it.

At Krapf Legal, we fight for Florida homeowners who’ve been wrongfully denied or underpaid by their insurance company. We advance our time and money to prove you’re owed more — and if we’re not successful, you owe us nothing.

Contact us today for a free case evaluation: (727) 777-7450