Your Florida Insurance Company Went Insolvent — Here Is What to Do Next

You paid your premiums on time, filed your claim after a storm, and then received news that your insurance company is no longer in business. For thousands of Florida homeowners, this scenario is not hypothetical. In recent years, carriers like FedNat Insurance, Avatar Property & Casualty, and St. Johns Insurance Company have collapsed, leaving policyholders scrambling for answers mid-claim.

If your Florida insurance company has gone insolvent, you are not necessarily without recourse — but you need to act quickly and understand exactly what protections exist. This guide walks you through every step you should take right now.

What Happens When a Florida Insurance Company Goes Insolvent?

When a Florida insurer is declared insolvent by a court, the Florida Department of Financial Services steps in and appoints a receiver to manage the wind-down of the company’s operations. At that point, your policy does not simply vanish — but it also does not function the way it once did.

Within days of a court-ordered insolvency declaration, the Florida Insurance Guaranty Association (FLIGA) assumes responsibility for covered claims under Florida Statutes Chapter 631. FLIGA is a nonprofit association funded by assessments on other licensed insurers. Its purpose is to serve as a safety net so that policyholders are not left completely without protection when their carrier fails.

Here is what happens in sequence:

1. A Florida court declares the insurer insolvent. This triggers FLIGA’s statutory obligations under §631.57, Fla. Stat.
2. A receiver is appointed to manage the insolvent estate, handle assets, and coordinate with FLIGA.
3. Your existing policy is cancelled — typically within 30 days of the insolvency order.
4. FLIGA takes over covered claims, subject to its statutory limits and eligibility rules.
5. You must find new coverage immediately. Do not wait. Gap periods leave your home exposed.

One critical detail: FLIGA only covers claims that arise from covered property in Florida by Florida residents under Florida-issued policies. If your policy was issued by a surplus lines carrier, FLIGA does not apply. Surplus lines insurers are not members of the guaranty association.

FLIGA Coverage Limits and What They Mean for You

FLIGA protection is meaningful — but it has hard caps that may fall short of your actual losses, especially after a major hurricane or catastrophic water damage event.

Under Florida Statutes §631.57(1)(a), FLIGA’s coverage limits for homeowners and property insurance claims are:

• $300,000 per claim for covered property damage (structural losses, additional living expenses, and other property coverages)
• $100,000 for cash value claims in certain policy types
• FLIGA does not pay punitive damages, attorney fees awards against the insolvent insurer, or claims that exceed the original policy limits

These numbers sound substantial, but in the current Florida market — where the median home value exceeds $400,000 in many coastal counties and full reconstruction costs routinely exceed that — $300,000 may not be enough. Storm damage combined with code-upgrade requirements, contractor shortages, and material inflation can push legitimate covered losses well past FLIGA’s ceiling.

Additionally, FLIGA is not obligated to honor claims that were already denied by the insolvent insurer before it failed. If your claim was underpaid or wrongfully denied before the insolvency, that dispute may need to be resolved through a separate legal process against the receiver’s estate.

How to File a FLIGA Claim: Step-by-Step

If your insurer has been declared insolvent and you have an open or new claim, follow these steps without delay.

Step 1: Confirm FLIGA eligibility. Visit the FLIGA website or call them directly to verify that your insurer is a FLIGA member company and that your policy type is covered. Surplus lines policies are excluded.

Step 2: Watch the 30-day window. Florida law imposes strict deadlines. Under §631.68, Fla. Stat., you generally must file your claim within 30 days of the cancellation of your policy or the insolvency order, whichever is later. Missing this deadline can result in your claim being barred entirely. Do not assume you have more time.

Step 3: Gather all documentation. Compile your original policy declarations page, any prior correspondence with the insolvent insurer, photographs of the damage, contractor estimates, and any claim numbers or adjuster communications you received before the insolvency.

Step 4: Submit a formal proof of loss to FLIGA. FLIGA requires a completed proof of loss form. Submit it with all supporting documentation. Keep copies of everything you send and send it by certified mail so you have a delivery record.

Step 5: Follow up in writing. FLIGA operates under significant volume after major insolvencies. Document every communication. If you do not receive written acknowledgment of your claim within a reasonable timeframe, follow up in writing and keep records.

Step 6: Do not accept a lowball settlement without review. FLIGA is subject to the same obligation to pay covered losses as your original insurer — but that does not mean every initial offer will be fair. If FLIGA’s settlement offer seems insufficient relative to your documented damages, you have the right to challenge it.

What to Do When Your Loss Exceeds FLIGA Limits

This is where many Florida homeowners find themselves in a difficult position. If your actual covered loss exceeds FLIGA’s $300,000 cap, you may still have legal options.

File a claim against the receivership estate. The receiver managing the insolvent insurer’s assets may have funds available to pay excess claims, though these distributions are typically partial and can take years to materialize. An attorney can help you file in the correct order of priority under Florida’s liquidation statutes.

Review your policy for additional coverages. Some homeowners carry endorsements or umbrella policies through separate carriers that may provide supplemental coverage. Review all your insurance contracts carefully.

Pursue a bad faith claim if warranted. If the insolvent insurer wrongfully denied or delayed your claim before it failed, that conduct may give rise to a claim under Florida’s bad faith statute (§624.155, Fla. Stat.). While recovering from an insolvent estate is difficult, documenting the bad faith conduct now preserves your options.

Consult a Florida insurance attorney immediately. Once FLIGA’s limits are exhausted, navigating the receivership process, identifying additional recovery avenues, and challenging inadequate offers requires legal expertise. This is not a process designed for unrepresented homeowners.

Recent Florida Insurance Insolvencies: Is Your Carrier on the List?

Florida’s property insurance market has been under severe stress. Here are some of the notable recent insolvencies and downgrades that have affected policyholders:

• FedNat Insurance Company — placed into receivership, leaving tens of thousands of policyholders searching for new coverage mid-claim
• Avatar Property & Casualty Insurance Company — declared insolvent, FLIGA activated
• St. Johns Insurance Company — liquidation ordered, a major market exit that rippled across the state
• Demotech downgrades — multiple carriers received financial stability rating downgrades, signaling insolvency risk to mortgage lenders and homeowners alike

The pattern is consistent: rapid premium increases, reinsurance shortfalls, and catastrophic storm losses have pushed carriers into insolvency faster than most policyholders anticipated. If your carrier is currently showing financial instability signs — such as a Demotech downgrade or a Department of Financial Services watch-list placement — it is worth contacting an insurance attorney before a crisis occurs.

Your Insurance Company Went Under — But Your Rights Haven’t

Navigating FLIGA claims, receivership filings, and coverage disputes after your insurer goes insolvent is genuinely complex. The deadlines are short, the paperwork is exacting, and the stakes are high. Experienced Florida property damage attorneys can help you navigate the process and fight for the full recovery you deserve.

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Call (833) 657-4812 today for a free consultation. There are no upfront fees — you pay nothing unless you win.