TAMPA, Fla. (WFLA) — When an insurance company goes bankrupt, their customers – the homeowners, take the hit. 

After Southern Fidelity went belly up, 8 On Your Side exposed hardships on families who had to pay thousands in premiums twice and then wait for a refund.

The state is required to do an investigation into why Southern Fidelity failed. 8 On Your Side Investigator Mahsa Saeidi found the company was sued by its former founder and CEO James Graganella a year ago. Some of the details in that lawsuit are now raising questions for customers and taxpayers in Florida.

Homeowners in a pinch

After the Realis paid a $4,000 premium, their insurance company Southern Fidelity went bankrupt. The state took over to manage the company’s debt.

Now, while the Realis wait months for a refund, they must come up with thousands again, paying their premium twice.

“You’re looking at still paying $4,000 but no protection for your roof?” asked Investigator Mahsa Saeidi.

“Right. Yea,” said Bari Reali. “Seems to be that there’s a problem with the roof, that the roof is old.”

Southern Fidelity lawsuit

8 On Your Side discovered Southern Fidelity owns three pieces of expensive real estate in Jefferson County. In fact, the company’s former CEO Graganella called the properties home in a lawsuit filed in the 2nd Judicial Circuit for Jefferson County.  

When the CEO parted ways with company in 2021, he filed the suit to recover personal items left behind in the properties, like:

  • 8 horses
  • 22 dogs
  • 50 deer
  • Wine fridge
  • Other valuables worth an estimated half a million dollars

A company lawyer tells 8 On Your Side that dispute about personal items has been resolved. But we wanted to know what happens to the failed insurer’s land now? Will the state sell the properties to help reimburse struggling policy holders like the Realis?

The Florida Department of Financial Services is the appointed receiver of Southern Fidelity. In a statement, a spokesman says they’re in the process of collecting all assets and that “includes taking steps to sell all real estate owned by the insurance company.”

Getting help

While the Realis wait and worry about their refund, they are getting a little bit of help from an anonymous 8 On Your Side viewer who saw their story and wanted to give them a gift of $400.

“How nice. Oh thank you so much whoever you are,” said Bari. “There’s still good people out there.”

What’s next?

8 On Your Side has more questions about why the insurance company failed. We asked the Florida Office of Insurance Regulation on Friday if anything about this arrangement was improper and will follow up.

If Southern Fidelity’s assets don’t cover premium refunds, the state — and taxpayers — will have to pay.

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