Property and casualty insurance companies are required to join the insurance guarantee associations in the states in which they are licensed to do business; Tower Hill Insurance is a member of FIGA.
It is especially important to do your research before you purchase an insurance policy to be certain that the company you are considering is financially strong and stable. If an insurance carrier is ordered into liquidation, the company no longer has any financial obligation to its customers. FIGA then steps in to assist the failed insurer's customers by settling both new and outstanding claims; $300,000 is the standard claims limit for FIGA.
If your home's value exceeds the maximum $300,000 amount that FIGA is obligated to pay for a claim, then you are responsible for the remaining cost to rebuild or repair your home. Depending on the amount your home or property is insured for, the gap between FIGA's limit and the amount of coverage included in the policy originally purchased could be significant.
Because FIGA is a non-profit organization, it is primarily funded by assessing fees to the insurance industry. FIGA bases these assessments on a percentage of insurance premiums that each company receives from its customers.
Typically, Tower Hill is assessed a fee by FIGA, which we pay directly to them in advance of collecting monies from our customers. Then we recoup these funds — that we have already paid to FIGA — by collecting a percentage from each policyholder. On the declarations page at the front of your policy documents, this percentage fee is noted as a recoupment.
In December 2012, Florida property and casualty companies were assessed nine-tenths of one percent (0.9%) of the premiums collected from customers during calendar year 2011. Accordingly, a FIGA Recoupment Fee 2012 will be included on new and renewal Tower Hill policies that are effective March 15, 2013, or later. The fee varies slightly by insurance company and policy type.
To learn more about the Florida Insurance Guaranty Association and how this non-profit works to protect our state's insurance customers, please visit the FIGA website.