The Florida Manufactured Home Insurance market is incredibly unique. Manufactured homes specifically are looked at as a high-risk group to the eyes of Florida insurance companies because of the nature of their construction, and the clear threat to them posed by hurricanes.

Most manufactured homeowners face a difficult time obtaining insurance for their homes and are often left with the no great options to choose from. Whether it be the lack of options, lack of what some perceive as ‘complete coverage’, or the sheer cost of the coverage, these issues make a difficult decision that much more tough to nail down. One issue that tends to ‘hide’ from the naked eye, is what is called an ‘Admitted’ insurance carrier vs. a ‘Non-Admitted’ insurance carrier.

Admitted insurance carriers are subjected to more oversight, and more limitations on their business practices. They agree to work with the Florida Office of Insurance Regulation (OIR) when increasing rates or altering future coverage offerings (meaning they need permission from state representatives in order to do so) – and in return for this, they join a group of companies who are backed by the Florida Insurance Guaranty Act (FIGA). FIGA provides limited relief to consumers in the event their insurance carrier becomes insolvent and cannot meet their financial obligations for claims and/or premium refunds.

A ‘Non-Admitted’ (aka. ‘Surplus Lines’) insurance carrier works a bit differently – they choose NOT to become ‘Admitted’ because they prefer to have more control over their rating practices; if they see the need to increase rates they do not want to have to seek permission from the OIR to do it. The consequence of this, is they are not backed by FIGA, which means if they were to go insolvent, there is no relief for consumers to collect on monies owed to them.

Now initially this difference may scare you; however, companies that choose to go this route are large, national, and even multi-national carriers, with billions of dollars backing them - and some of them are even involved in providing re-insurance to the ‘Admitted’ carriers. If you believe you have insurance issued by a “Non-Admitted’ carrier, then it’s important to have a conversation with your agent about this. At Evolve Insurance Agency we only represent a handful of ‘Non-Admitted’ carriers, carriers whom we believe have strong financials and a solid history of meeting their obligations.

The OIR's mission is “to promote a stable and competitive insurance market for consumers” by regulating and enforcing compliance of Florida’s insurance laws, monitoring the admitted products offered to ensure fair and adequate coverage and rates, and maintaining oversight of the activities conducted by all the admitted insurers. The OIR is responsible to oversee things like the admitted companies’ licensing, rate changes, claims handling, financially viability, and market conduct.

In 1970, Florida Legislature created the Florida Insurance Guaranty Association (FIGA). FIGA garners their funds from the assets of insolvent insurers, distributions from the receivers of insolvent companies, and the assessments of their member companies (the admitted carriers). According to FIGA, “assessments are capped at 2% of a company’s net direct premium for regular assessments, and an additional 2% for emergency assessment for insolvencies relating to hurricanes, on premium written in similar lines of business in Florida.” In the event of a covered claim, after collecting a small deductible, FIGA will pay as follows, not exceeding the purchased policy limits:

• Maximum of $500,000 for damage to building and contents on homeowners’ claims
• Lesser of the policy's limits or $100,000 per unit on condo and HOA claims
• Maximum of $300,000 for all other admitted claims

In a similar way to admitted carriers, surplus lines carriers are also regulated, but face quite different enforcements that are administered by the Florida Surplus Lines Service Office (FSLSO), instead of the OIR. The FSLSO is designed to verify the compliance of the surplus lines laws in Florida, and monitor the activities and filing practices, of both licensed surplus lines agents and insurers.

Why Insure with an Admitted Carrier?

• Vigorous Regulations: policy forms and language, applications, and endorsements are all required to be submitted to the state’s insurance department for review. Additionally, any changes made to the rates offered by an admitted insurance company must first be reviewed by the state’s insurance department, before the change(s) in rate can take effect
• Financial Backing: admitted carriers are backed by the Florida Insurance Guaranty Act in the event the company became insolvent
• Standardization & Consistency: the policy forms used by the admitted carriers tends to be consistent with most other admitted companies, except for any tweaks each carrier makes. Most admitted carriers adopt policy forms issued by the Insurance Services Office (ISO), and must submit it to the state for approval before use.
• No Additional Taxes & Fees: admitted carriers do not have to pay the extra taxes and fees that the surplus lines carriers have to pay in order to transact insurance in Florida

Why Would One Want to Insure with a Surplus Lines Carrier?

• Coverage For Higher Risk Scenarios: since surplus lines carriers are not regulated by the state and have the ability to adjust their rates, they typically have products for situations where an ‘Admitted’ carrier may not. Many admitted carriers do not offer insurance for manufactured homes that do not meet certain roof eligibility requirements, are of older age, too close to the water, or simply because they will not write manufactured homes at all.
• Ability to Offer Coverage That May Otherwise Be Unavailable: since surplus lines carrier do not have to submit policy and endorsement forms to the state for approval, and that means in some cases the carriers have the ability to offer enhancements that an admitted carrier may not be willing to offer. For example, coverage for Hurricanes on an older manufactured home, Animal Liability, Trampoline Liability, Watercraft and Swimming Pool Liability, just to name a few.
• Competitive Rates: In many cases surplus lines carriers offer competitive premiums since their rates do not have to be reviewed and approved by the state’s insurance department.
• Size of Company: Every Surplus Lines Insurance Carrier we represent at Evolve Insurance Agency, is, financially speaking, multiple times larger than any Admitted Carrier we represent. They have the financial backing and support to maintain stable operations, and they are all very highly rated by A.M. Best Insurance rating firm – the most prestigious of insurance carrier rating firm.

What are some things I should look for in an insurance company when making a decision?

• Coverage Offerings: identify your risks and what matters to you most, and then make that clear with your agent. When we look to make a suggestion, we look to balance coverage with affordability, so if there is coverage important to you, let them know so they can provide you with carriers that fit your needs.
• Financial Strength Ratings: Insurance carriers are also peer-revied by financial rating firms, and virtually all of them are rated for their financial strength by one of these firms. The two main financial-strength rating companies are A.M. Best and Demotech. It’s very easy to search for your insurance carrier and locate their ratings (TIP: Most carriers are rated by one or the other, not both – so don’t discouraged if you don’t find a rating on both.)
• Longevity: although this should not be the ultimate deciding factor (especially considering that many home insurance companies will back out of writing home insurance in Florida after a short period of time), the time the company has been offering their manufactured home insurance product in Florida should come into play.

As with most responsible decisions one makes as a homeowner, you will need to weigh out the pros and cons of what each carrier has to offer. Decide based on what is being offered and which option most suits your needs.

Our goal at Evolve Insurance Agency is to educate and service our local community here in Venice, Florida, and all of our surrounding communities throughout the state, for all things related to insurance. We hope you found the information in this article to be helpful! Be sure to check our site again next week for another blog post.

If you would like request a free mobile home insurance quote, please call our office at 941-244-2760 or click here!