Florida-Based Insurance Carrier Deemed Insolvent – What This Means For Your Community Association

Florida-Based Insurance Carrier Deemed Insolvent – What This Means For Your Community Association

Breaking News alert in red, over the state of FloridaFlorida-based insurance carrier American Capital Assurance Corp. (“AmCap”) entered receivership recently and is in the process of being liquidated after being deemed insolvent by Florida’s Office of Insurance Regulation. There are potential issues for the many condominium associations and others that were insured by AmCap or who have claims with AmCap. The most important thing to know is that the receivership does not mean that you are out of luck, and money, as an insured or claimant. However, you do need to understand what you should be doing and next steps.

The Florida Department of Financial Services (“DFS”), serves as the receiver for any insurer placed into receivership in Florida and was granted a consent order for this purpose on April 14, 2021. With the exception of flood insurance coverage, all insurance policies issued by AmCap are cancelled effective 12:01 A.M. on May 14, 2021. Policies with normal expiration dates prior to May 14, or policies which are terminated by the insured or cancelled for non-payment of premium will be cancelled as of their earlier date.

Notice was sent to all AmCap insurance agents, brokers, and policyholders regarding AmCap’s liquidation. DFS has advised AmCap policyholders to immediately contact their agents and obtain new coverage prior to May 14, 2021. If you had an AmCap policy you should be working with your agent to locate and place new coverage currently as there is no time to waste. You may also need to be working on obtaining a loan or passing a special assessment as insurance policies continue to be one of the largest costs for condominium associations.

Fortunately, any unearned premiums paid to AmCap will be automatically calculated and returned to AmCap policyholders, subject to a $100 statutory deductible. Unfortunately there is no set timeline for returning unearned premiums as it is dependent on FIGA’s ability to process AmCap’s outstanding liabilities. If the policyholder disputes the amount of the unearned premium, then a “Proof of Claim” form must be filed with DFS.

The processing and payment of existing and new covered losses will be made by FIGA for insurance claims incurred prior to May 14, 2021, subject to the lesser of policy limits or the statutory maximum cap set forth in section 631.57(1)(a), Florida Statutes (generally $200,000 per unit for condominium and homeowners’ association claims). In order to file a claim for covered loss, the policyholder must complete and file a “Proof of Claim” form with DFS.

The deadline for filing claims in the AmCap receivership is October 14, 2021.

Sanjay Kurian is Board Certified in Construction Law and has substantial experience representing community associations, owners, and developers in a variety of construction and insurance matters. Should you need assistance regarding these issues, please contact Sanjay at 239.433.7707 or skurian@beckerlawyers.com.