When shopping for homeowners insurance in Florida, you may receive a quote from either a standard (admitted) insurance company or a surplus lines insurance company.
So what’s the difference?
Both can provide homeowners insurance, but they operate differently and can have different policy terms, pricing, and protections.
What Is a Standard or Admitted Insurance Company?
A standard insurance company, also called an admitted or authorized insurer, is licensed to write insurance in Florida and has a Certificate of Authority from the Florida Office of Insurance Regulation (OIR).
These companies must meet Florida’s insurance requirements and file their rates and policy forms with the OIR for approval.
Standard companies typically have specific underwriting guidelines for the homes they will insure.
Factors such as:
- Age of the home
- Roof age and condition
- Plumbing and electrical systems
- Location
- Construction type
- Wind mitigation features
can affect whether a home qualifies for coverage.
What Is a Surplus Lines Insurance Company?
A surplus lines company provides insurance for risks that may not be available through the standard or admitted market.
In Florida, surplus lines insurers are eligible to write certain types of insurance that admitted companies may be unable or unwilling to insure.
For homeowners, surplus lines coverage can be an option for properties that don’t meet the underwriting requirements of standard insurance companies.
For example, a home may have characteristics that make it difficult to obtain coverage in the standard market.
Is Surplus Lines Insurance Bad?
No.
A surplus lines policy is not automatically a bad policy.
Surplus lines insurance serves an important purpose by providing coverage for properties that may not qualify for standard insurance.
However, homeowners should understand that surplus lines policies can have different coverage, exclusions, deductibles, conditions, and pricing than standard policies. Florida’s Department of Financial Services recommends carefully reviewing a surplus lines policy before purchasing it.
One Important Difference: FIGA Protection
One of the biggest differences Florida homeowners should understand involves the Florida Insurance Guaranty Association (FIGA).
Generally, policyholders of admitted insurers have the protection provided by FIGA if an eligible insurer becomes insolvent, subject to the limits and conditions of Florida law.
Surplus lines policies are not protected by FIGA. If a surplus lines insurer becomes insolvent, FIGA does not provide the same protection for unpaid claims or refunds.
This is an important difference to understand when comparing insurance options.
Can a Surplus Lines Policy Cost More?
It can.
Surplus lines coverage may be more expensive because it is often used for properties that present risks standard insurance companies are unwilling or unable to accept.
There may also be additional surplus lines fees and premium taxes associated with the policy.
However, price should not be the only factor when comparing policies.
It’s important to compare the coverage, deductibles, exclusions, limits, and policy conditions as well.
Which One Is Better?
There isn’t one answer for every homeowner.
If your home qualifies for a standard insurance company, that may be an option worth considering.
If your property doesn’t qualify for the standard market, a surplus lines company may provide an alternative when other options are unavailable.
The most important thing is to understand what you’re buying and how the policy works.
What Should You Ask Before Choosing a Policy?
When comparing a standard and surplus lines policy, ask your insurance agent:
- Is the company admitted or surplus lines?
- What are the policy’s deductibles?
- What coverage is included?
- Are there important exclusions or limitations?
- How are the roof and personal property covered?
- Are there minimum earned premium provisions?
- Is the company covered by FIGA?
Don’t compare homeowners insurance based on premium alone. A lower price does not necessarily mean better coverage, and a higher price does not necessarily mean better coverage.
HomeInsuranceFlorida.com Can Help You Compare Your Options
At HomeInsuranceFlorida.com, our Florida-licensed agents work with multiple insurance companies to help homeowners explore their available options.
Depending on your home’s characteristics and the insurance companies’ underwriting requirements, your options may include standard or surplus lines coverage.
We can help you understand the differences between the policies so you can make an informed decision about your Florida homeowners insurance.
Have questions about a standard or surplus lines homeowners policy? Contact HomeInsuranceFlorida.com to speak with a Florida-licensed insurance agent.
Coverage terms, conditions, eligibility, deductibles, pricing, and availability vary by insurance company and property.
