Florida’s 4th largest property insurance company has gone bankrupt

TALLAHASSEE, Florida. – Nearly 80,000 Florida homeowners will have to find new insurance, after Southern Fidelity declared bankruptcy. The Tallahassee-based company is the fourth insurer to declare insolvency since February.

Southern Fidelity’s bankruptcy filing is concerning because, according to insurance agents, a large proportion of these abandoned customers will likely have to reinsure their homes using Citizens Property Insurance – the state-owned property insurance company. Insurance agents say Citizens has exploded as a private business and a single hurricane could harm homeowners statewide.

Southern Fidelity’s shutdown comes less than a month after state lawmakers held a special session to stabilize what has been described as an industry in crisis. The company announced in early June that it would not be able to purchase reinsurance in time for the 2022 hurricane season.

According to state insurance records: Lighthouse Property Insurance Corporation, Avatar Property and Casualty Insurance, and St. Johns Insurance Company have closed within the last four months. Local landlord and insurance agent Sean Way told News4JAX that it can be difficult to find some of these new affordable policies for landlords.

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“Especially for those on fixed incomes, they’ve now retired,” Way said. “And they may have been in the business for years and it’s just an automatic process – now to be in this position is very difficult, scary, especially since it’s the start of hurricane season.”

Way and other local insurance agents are expressing concern that the state-owned property insurance company Citizens is overloaded with homeowners policies that have recently been dropped. He says Citizens was designed to be an insurance company of last resort and was not created to compete with other companies as it does today. New figures from May reveal that Citizens has over 883,000 policies, up from over 463,000 policies two years earlier.

“So what happens the more policies we place with citizens – think of it this way, it’s state property, it’s property of all of us.” Way said.

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Way says Florida’s special session was a good start in tackling rampant insurance litigation and fraud. New legislation lawmakers agreed to also gives insurance companies more financial support to insure, but Way says a hurricane could wipe out any progress Florida has made.

“If we get hit by a hurricane and we give Citizens the biggest carrier, then it’s going to be, this crisis that we’re in, is going to be prolonged,” Way said.

The insurance agents we spoke with about this story say there are ways to avoid being let down — keep your roof up to date and in good repair, repair any minor damage as you go. it happens — and if you’re worried about being rolled over, consider wind protection measures. Buy hurricane straps for your roof or talk to a contractor about roof bracing measures.

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