Bankruptcy of a property insurance company in Florida: Tips for homeowners awaiting premium refunds

TAMPA, Fla. (WFLA) — A month into hurricane season, a bankrupt insurance company has left some Florida families caught in a home insurance nightmare.

Earlier this week, 8 On Your Side spoke with a couple whose insurance company went bankrupt. After this story spread, more owners reached out, all asking what would happen next.

Bari and Vince Reali paid $4,000 for property insurance. But their insurer, Southern Fidelity Insurance Company, went bankrupt.

Now they have to find a new policy and pay their premium a second time while waiting for a refund.

“It’s happening everywhere and no one seems to be doing anything about it,” Bari Reali said.

8 On Your Side works to help secure Realis coverage. Thousands of others are in the same boat.

We discovered that the Florida Insurance Guaranty Association, or FIGA, will ensure that homeowners receive a proportional share of their reimbursement. The insured will take a small hit.

Ronald Assise CIC, CPRM, an insurance broker, says some minor fees will not be reimbursed.

He says that while Southern Fidelity can issue a refund in one day, it takes months for FIGA to process the checks. The reason? When a company goes bankrupt, it takes time for FIGA to understand its system.

In the Southern Fidelity case, the agency must triage nearly 80,000 cases.

“Why can’t we ask the company to process the refund?” asked investigator Mahsa Saeidi.

“Once insolvency is established by the Office of Insurance Regulation, FIGA must support all transactions for the next 30 days by law,” Assisi explained. “So it’s not a will – it’s a can’t, unfortunately.”

So how can you pay for new coverage while waiting for a refund? Assisi says premium funding is an option but probably not the best as there are fees to set it up.

“In our experience, people are actually better off if they access it by using a credit card to make that deposit,” Assisi said.

Meanwhile, the Réalis regret not having paid the premium in one installment.

8 On Your Side asked if families would be better off trying to pay their premium in instalments.

“Any time you start splitting premiums,” Assisi said, “the fee for that to be paid four times a year…it’s maybe $8 or $10 per installment.”

It says most companies will allow you to split payments.

If you have a story to share, email interviewer Mahsa Saeidi at MSaeidi@WFLA.com.

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