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NEWS RELEASE

FOR IMMEDIATE RELEASE:                                                                                                                  MEDIA CONTACT:

May 6, 2009                                                                                                           

Waldo Faura, Founder

Belen Valladares, Founder

Floridians in Action

                                       Info@FloridiansInAction.com

Florida Lawmakers Pass Surplus Lines Insurance Regulation Exemption

See Article:  http://www.insurancejournal.com/news/southeast/2009/04/22/99831.htm

How can this affect you?

Surplus lines usually insure businesses as we see in the newspaper article, but they are insuring homes.  These policies are very restrictive as to what they cover but the main issue with them is that many Florida laws don’t apply to surplus lines.  Following is an example that will illustrate better.

Let’s say tomorrow there is a thunderstorm, lightning hits and starts a fire which burns down to the ground two neighboring homes of the same model and value.   Both homes were built 50 years ago, with the same layout and by the same builder and have a current value of $400,000.00.

Neighbor A is insured by an insurance company in Florida.  Neighbor A gets a check for $400,000, no deductible is taken out and the check is accompanied by a letter from their insurance company advising them they can use the State of Florida Mediation program if there are any problems with their claim.

Neighbor B is insured by a surplus lines carrier in Florida. Neighbor B gets a check for$ 160,000 with a letter from their surplus-lines carrier stating that they are depreciating their home by 60% and that when they have completed the repairs (in this case rebuilt their home) they can claim the depreciation in their homes.

The reason for the difference between these two Floridians is that the surplus lines carrier is not guided by the same laws.  For example, the surplus lines carrier is exempt from complying with what is called “Florida Value Policy Law”, which protects the insured, for example, if you suffer a total loss of your home the insurance co. cannot even take the deductible out, they have to pay you the full policy amount.

Surplus lines were allowed in the State to ensure that there would be insurance companies willing to provide some types of coverage, therefore the Florida Legislature created a format that permits out-of-state “unauthorized” insurers to provide surplus-lines coverage. See § 626.916(1)(a), Fla. Stat. (2003) and  §§ 626.913-626.937, Fla. Stat. (2003) Basically, Surplus lines carriers are exempt from Florida laws, this is the main issue.