Do your homework on insurance carriers


March 10th, 2008

South Florida Sun-Sentinel--Mar. 10, 2008

Consumers should thoroughly research insurance carriers that aren't regulated by the state such as surplus-lines insurers for individual homes and self-insurance trusts for groups of condos or homes.

Surplus-lines insurance
Many consumers don't know they're buying surplus-lines insurance, even though insurers are required to disclose that on policies. Insurance agents may recommend surplus lines if it's cheaper, rated better than other insurers or mainstream insurers refuse to cover a home. Consumers should be clear on what type of insurance they're getting and if surplus lines is an option, they should ask critical questions:

What is the company's reputation? Rating agencies such as A.M. Best can provide information about a company's rating and why it earned that rating.

How much money is the company required to have in the bank? The Florida Surplus Lines Service Office outlines requirements for surplus lines companies at www.fslso.com/statutes, including how much in assets surplus-lines companies are required to have based on the number of years they've been eligible to sell insurance.

What does the insurer cover or decline to cover? When purchasing any form of insurance, consumers should pay particular attention to what and how much an insurer can cover.

Self-insurance trusts
The state Insurance Consumer Advocate's office recommends that housing groups exploring forming or joining a self-insurance pool spell out how much individual homes or condo unit owners may be charged for damages after a hurricane strikes.

Sources: Florida Surplus Lines Service Office, Consumer Federation of America and local insurance agents.