While damage to your home from Irma can feel devastating, one thing that might bring you comfort is that you have homeowners insurance. Unfortunately, not all insurance companies are created equal and all may not be able to pay all of the very costly claims from Irma. In the weeks before Irma struck, not one but two Florida insurance companies were ordered by the Florida Office of Insurance Regulation to stop writing new policies because the company was not sufficiently funded to pay all policyholder claims if they became due. What would you do if you suffered a major loss to your property or an injury that racked up a mountain of medical expenses and your insurance company could not pay? Think of all the damage Irma has caused and how many insurance claims will be flooding in. Like any other business, insurance companies have to have sufficient capital to pay their debts and, if they don't, they have to file for bankruptcy. It's scary to think this can happen but it can. This is why your insurance company's rating matters. Four firms─A.M. Best, Fitch, Moody's and Standard & Poor's─assess the financial strength of insurance companies and award ratings accordingly. When shopping for insurance and comparing companies, their rating is an important factor to consider. You can find the rating of an insurance company using easy online rating tools like this one at www.insure.com/interactive-tools/sandp/newtool1.jsp.

If your home was insured by Guarantee Insurance Company and was damaged in Irma, this may affect you. An independent audit was completed of Guarantee Insurance Company in August, 2016 showed Guarantee had overstated its level of capitalization, leaving the auditor with “substantial doubt” as to whether Guarantee could truly fund claims. While Guarantee disagreed with the conclusion of the audit, it did agree to state intervention and to stop writing new policies. Now under state supervision, Guarantee must submit a reorganization plan to show it has sufficient reserves to pay all policyholder claims and provide for the payment of liabilities as they come due. This order came just days after another Florida insurance company, Sawgrass Mutual, was instructed to wind down business and transfer its policies to another company due to financial difficulties. While it is a bit frightening to hear news like this if you are a Guarantee policyholder, it is much better that a financial misrepresentation like this is discovered and corrected by the state before the company faces a mass of claim filings later and has to go belly up. You can read more about the state's intervention of Guarantee here.

So what do you do if your insurance company is unable to pay your claim? Thankfully, there is good news. If your insurance company goes belly up, the Florida Insurance Guaranty Association, a non-profit organization created to pay outstanding claims of insolvent insurance companies, will step in to cover claims, but only to a certain extent. This is why your insurance company's rating is so important. Learn more about what FIGA covers here: http://www.figafacts.com/faq.

Insurance can be complicated and is not always the easy guarantee you think it might be. If you or your clients have questions about your coverage or your rights as a policyholder, do not hesitate to give us a call at (850) 438-4899 or www.twwlawfirm.com. We are always happy to sit down with clients, look over your policy and explain your coverage and legal right to you and we never charge any fee or cost for an initial consultation