Introduction to the FAJUA
The Florida Automobile Joint Underwriting Association (FAJUA) serves as Florida’s "market of last resort" for automobile insurance. In the insurance industry, this is often referred to as the residual market. Its primary purpose is to ensure that automobile insurance is available to individuals who are unable to obtain coverage through the voluntary (standard) market due to their high-risk status.
For those preparing for the complete FL 2-20 exam guide, understanding the mechanics of the FAJUA is essential. It is not a private insurance company, but rather a syndicate created by the state legislature. Every insurance company authorized to write automobile liability and physical damage insurance in Florida must be a member of the FAJUA and share in its expenses and losses.
Core Characteristics of the FAJUA
Eligibility Requirements
To qualify for coverage through the FAJUA, an applicant must generally certify that they have attempted to obtain insurance in the voluntary market and have been unable to do so. This makes it a critical safety net for the state's transportation system. Eligibility is extended to the following groups:
- Florida Residents: Individuals residing in the state of Florida.
- Military Personnel: Non-residents who are members of the United States Armed Forces stationed in Florida on military orders.
- Non-Residents: Individuals who own a vehicle registered in Florida or those who have a vehicle that is physically located in Florida for a specific number of days within the year.
Candidates practicing with practice FL 2-20 questions should remember that the FAJUA is specifically designed for those who are entitled but unable to procure insurance through ordinary methods.
Voluntary Market vs. FAJUA
| Feature | Voluntary Market | FAJUA (Residual Market) |
|---|---|---|
| Pricing | Competitive / Risk-based | Statutorily higher/Surcharged |
| Risk Acceptance | Insurer chooses which risks to take | Must accept all eligible applicants |
| Carrier Role | Primary insurer handles all | Servicing carriers handle admin |
| Goal | Profitability and growth | Availability of coverage |
Available Coverages and Limits
The FAJUA offers several types of coverage to ensure drivers meet the legal requirements of the Florida No-Fault Law and Financial Responsibility Law. While it provides essential protections, the limits and options may differ from what is typically found in the standard market.
- Personal Injury Protection (PIP): The standard $10,000 limit required by Florida law.
- Liability Coverage: Generally offers limits of 10/20/10 (Bodily Injury per person/Bodily Injury per occurrence/Property Damage), but higher limits (such as 100/300/50) may be available for private passenger vehicles.
- Medical Payments: Optional coverage for medical expenses resulting from an accident.
- Uninsured Motorist (UM): Available to protect the insured against at-fault drivers with no insurance.
- Physical Damage: Comprehensive and Collision coverage are available for private passenger vehicles, though they are usually subject to specific underwriting rules and higher deductibles.
For commercial risks, the FAJUA provides liability limits as required by state or federal law, often up to a combined single limit of $1,000,000.
Exam Tip: Servicing Carriers
On the 2-20 exam, remember that the FAJUA does not process claims or issue policies directly. Instead, it designates certain insurance companies, known as Servicing Carriers, to handle the administration, policy issuance, and claims processing for FAJUA risks. These carriers are then reimbursed for their expenses and losses by the association.
Operations and Governance
The FAJUA is governed by a Board of Governors. This board consists of representatives from the insurance industry and consumer representatives appointed by the Insurance Commissioner. The board is responsible for overseeing the plan of operation, ensuring that the association remains financially stable, and selecting the servicing carriers.
Because the FAJUA is a non-profit entity, any deficits incurred by the association are shared among all member companies in proportion to their share of the voluntary automobile insurance market in Florida. Conversely, if there is a surplus, it is used to offset future assessments or reduce rates.
Frequently Asked Questions
Yes. Because the FAJUA covers high-risk drivers who have been rejected by other companies, the premiums are generally higher than those found in the voluntary market. This acts as an incentive for drivers to improve their records and return to the standard market.
The FAJUA must accept all eligible risks. However, an applicant can be denied if they do not meet the definition of a Florida resident or military personnel stationed in the state, or if they fail to pay the required premium.
Every insurance company that is licensed to write automobile insurance in the state of Florida is legally required to be a member of the FAJUA.
Yes, the FAJUA provides coverage for both private passenger vehicles and commercial vehicles that cannot find coverage elsewhere, including certain types of public transportation or trucking risks.