7.3 Florida Insurance Guaranty Association (FIGA)

What FIGA Is and Why It Exists

The Florida Insurance Guaranty Association (FIGA) is a statutory, nonprofit safety net created under Part II of Chapter 631, Florida Statutes. Every admitted property and casualty insurer licensed to write covered lines in Florida is required to be a member. When a member insurer is declared insolvent and placed in liquidation by a court, FIGA steps in to pay the insurer's covered claims, so that policyholders and third-party claimants are not left empty-handed.

FIGA protects against insolvency risk, not against an insurer's ordinary decision to deny a claim. It is triggered only by a formal order of liquidation. This is why Florida -- a hurricane-exposed market where carriers have repeatedly failed -- relies so heavily on FIGA: it converts a failed company's promise into a funded payment, within statutory limits.

FIGA operates through two accounts -- an auto liability account and an all-other-lines account -- which keeps assessments for one industry segment from subsidizing the other. A claim is a covered claim only if it arises under a covered Florida policy, the insurer was a FIGA member, and it is presented within the deadlines set after liquidation. FIGA stands in the shoes of the insolvent insurer: it can adjust, settle, and deny claims on the merits just as the original carrier could, inheriting the policy's defenses.

It is therefore not a guarantee of payment in full -- it is a guarantee that a valid covered claim will be paid up to the statutory cap.

Covered Lines vs. Excluded Lines

FIGA covers most property and casualty lines: homeowners, dwelling fire, commercial multi-peril, general and professional liability, medical malpractice, watercraft, and similar admitted P&C coverages. It does not cover several categories that have their own guaranty mechanisms or are excluded by statute.

Covered vs. not covered

Two distinctions are heavily tested. First, workers' compensation insolvencies are handled by the separate Florida Workers' Compensation Insurance Guaranty Association (FWCIGA), not FIGA. Second, life and health insolvencies fall under the Florida Life and Health Insurance Guaranty Association. FIGA also excludes claims of self-insured groups and surplus lines insurers (surplus lines carriers are non-admitted and are not FIGA members).

Claim Caps and the $100 Deductible

FIGA does not pay unlimited amounts; it pays each covered claim subject to statutory caps:

• General cap: $300,000 per covered claim.
• Homeowners structure & contents: an additional $200,000 is available for damage to the structure and contents on a homeowners' claim (effectively allowing up to $500,000 on that portion).
• Condominium / homeowners association policies: the cap is $200,000 multiplied by the number of residential units the association policy covers -- recognizing that one master policy insures many homes. This higher structural cap is the reform Florida added so that a single insolvency would not leave an entire condo building underfunded.
• Unearned premium: FIGA also returns unearned premium, but that return is capped (generally $10,000).

The $100 FIGA deductible is a classic exam point with a twist. For insurers liquidated before July 1, 2021, every covered claim was reduced by a $100 deductible (applied on top of the policy's own deductible). Legislation eliminated that $100 deductible for insurers liquidated on or after July 1, 2021. So the right exam answer depends on the liquidation date: older insolvencies still carry the $100 reduction; newer ones do not.

A further nuance: the caps apply per claim, and FIGA pays only the portion the insolvent insurer would have owed -- it does not pay punitive damages, bad-faith extra-contractual awards, or amounts above the policy limits. When the same loss generates multiple claims under one policy, each covered claim is evaluated against the applicable cap, which is why the association-policy multiplier (units x $200,000) matters so much for large condominium buildings.

How FIGA Is Funded: Assessments

FIGA is not pre-funded like a tax reserve. It pays claims first and then assesses its solvent member insurers to recoup the cost. Because the assessment base is the P&C industry, the cost of one company's failure is ultimately spread across the policyholders of the survivors.

There are two assessment layers:

1. Regular assessment -- capped at 2% of an insurer's net direct written premium for the covered account, levied to fund anticipated obligations.
2. Emergency assessment -- an additional amount of up to 2% that FIGA may levy when regular assessments are insufficient to cover the obligations of a large insolvency.

Insurers are permitted to recoup assessments by adding a line-item surcharge to policyholder premiums, which is why Florida homeowners have seen FIGA surcharges on renewal notices. As of the 2026 cycle, FIGA moved to conclude its 2023 emergency (1%) assessment early, with the surcharge ending for policies effective on or after October 1, 2026 -- a sign the post-2022 wave of insolvencies had been substantially funded. The mechanics, not the exact current rate, are what the exam tests: FIGA pays, then assesses; insurers may recoup from policyholders.