Exhibit 10.32

FEDERAL INCOME TAX ALLOCATION AGREEMENT

Federal Income Tax Allocation Agreement (“Agreement”) made and entered into as
of October 1, 2008, by and between United Insurance Holdings Corp., a Florida
corporation (“Parent”), United Insurance Holdings, L.C., a wholly owned
single-member LLC, (“UIH”), United Insurance Management, L.C., a wholly owned
single-member LLC, (“UIM”), Skyway Claims Services, LLC, a wholly owned
single-member LLC, (“SCS”), and United Property & Casualty Insurance Company
(“UPCIC”). UIH, UIM, SCS, and UPCIC are sometimes hereinafter referred to as
Subsidiary. Parent, UIH, UIM, SCS, and UPCIC are sometimes hereinafter referred
to severally as a “Member” and collectively as the “Affiliated Group.”

WITNESSETH:

WHEREAS, Parent and UPCIC are an affiliated group within the meaning of Code
Section 1504(a) and the related Regulations, and therefore, are eligible to file
a consolidated income tax return for federal income tax purposes; and

WHEREAS, the Affiliated Group intends to file consolidated federal income tax
returns for so long as Parent shall determine; and

WHEREAS, the Affiliated Group wishes to allocate the consolidated federal income
tax liability to UIH, UIM, and SCS as if they were corporations; and

WHEREAS, the Affiliated Group desires to establish a method for allocating the
consolidated federal income tax liability of the Affiliated Group among the
Members in an agreed fashion and to compensate any Member for use of its net
operating and net capital losses, and tax credits utilized in computing
consolidated federal taxable income, and to provide for the allocation and
payment of any refund arising from a carryback of net operating or capital
losses, or tax credits generated in subsequent taxable years.

NOW THEREFORE, in consideration of their mutual covenants herein, the Members
agree as follows:

 

1. Consolidated Return Election. If at any time and from time to time Parent so
elects, all Members will join in the filing of a consolidated federal income tax
return for the Affiliated Group for such initial period, and for any subsequent
taxable period for which the Affiliated Group is required or permitted to file
such a return. Each Member agrees to file such consents, elections and other
documents and take such other action as may be necessary or appropriate to carry
out the purpose of this Paragraph 1. Any period for which a Member is included
in a consolidated federal income tax return filed by the Affiliated Group is
referred to in this Agreement as a “Consolidated Return Year.”

 

2. Appointment of Parent as Agent. Parent is hereby appointed as agent for the
Subsidiaries in the preparing and filing of tax returns and payment of
consolidated federal income taxes, pursuant to the applicable provisions of the
Code for the initial tax year, and any tax year thereafter where 80 percent or
more of the issued and outstanding stock of a Subsidiary as defined in Code
Section 1504(a)(2) and the related Regulations is owned directly or indirectly
by the Parent for all or any portion of such year.

 

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3. Payment to Parent by Subsidiary. The Subsidiaries agree to pay Parent for all
years or portions of years where the Subsidiary is included in the consolidated
federal income tax return with Parent the portions of the consolidated federal
income tax liability attributable to the Subsidiary as determined in accordance
with Paragraph 4, below. All tax payments are to be settled within 90 days of
filing the tax return.

 

4. Computation of Tax Liability to Parent for Consolidated Return Year.

 

  a) Each Subsidiary agrees to pay to Parent, at the times specified in
Paragraphs 5 and 6, the amount (if any) of the consolidated federal income tax
liability attributable to the Subsidiary determined under the methods prescribed
in Regulation Sections 1.1552-1(a)(1) and 1.1502-33(d)(3). The percentage method
compensates a Member for the use of its losses in the year a Member’s losses are
absorbed by the Affiliated Group.

 

  b) The absorption of losses under the percentage method shall first be
determined by the year in which such losses were generated. All losses shall be
absorbed in the order in which they were generated.

 

  c) Parent shall calculate the payments due to it from the Subsidiaries under
this Paragraph 4, and Paragraphs 5 and 6, in a manner consistent with the tax
elections, methods of accounting, and other positions taken by Parent on the
Affiliated Group’s consolidated federal income tax return.

 

  d) Any consolidated alternative minimum tax (“AMT”) will be allocated among
the Parent and the Subsidiaries in accordance with the provisions of Proposed
Regulation Section 1.1552-1(g).

 

5. Interim Estimated Payments. The Subsidiaries shall advance to Parent amounts
necessary to reimburse Parent for that portion of any estimated federal income
tax payments attributable to the inclusion of such Subsidiary in the Affiliated
Group. These amounts shall be computed on an interim basis as described in
Paragraph 4. The Subsidiaries shall pay Parent within 30 days of receiving
notice from the Parent of the amount due. Any amounts so paid for any year shall
be credited against the amounts payable to Parent for such year pursuant to
Paragraph 4, and any excess resulting from such payments, at the option of the
Parent, shall either be refunded by Parent to such Subsidiary within 30 days of
a determination that such excess exists or shall be applied to future interim
estimated payments due from such Subsidiary.

 

6. Tax Adjustments.

 

  a) In the event of any adjustment to the tax returns of the Affiliated Group
as filed (by reason of an amended return, claim for refund, or an audit by the
Internal Revenue Service (IRS)), the liabilities of the Members, including
Parent, under Paragraphs 4 and 5, shall be re-determined to give effect to any
such adjustment as if it was made as part of the original computation of tax
liability. Corresponding adjusting payments among Members will be made within 30
days after any such payments are made to or refunds are received from the IRS
or, in the case of contested proceedings, within 30 days after a final
resolution of the dispute. To the extent that the IRS imposes interest and
penalties or interest is included in any refund, any adjusting payment among the
Members shall reflect the same in an equitable manner.

 

  b) It is agreed that Parent shall be responsible for coordinating and
overseeing any IRS examinations. All expenses of the examination and of
defending any final or proposed adjustments directly identifiable with a Member
shall be borne by that Member. All costs and expenses not specifically
identifiable with a Member shall be allocated based upon relevant facts and
circumstances as Parent deems just and proper.

 

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  c) The Subsidiaries agree that they will inform Parent promptly of all
questions raised by the IRS in conducting an examination of federal income tax
returns and shall cooperate with Parent’s accountants, tax advisors, and counsel
in preparing responses to IRS information requests and proposed adjustments.

 

  d) The Subsidiaries agree that any adjustments to its tax liabilities arising
out of an examination by the IRS shall be computed on the basis of agreement
reached by Parent and the IRS, or on the basis of the decision of a court of
applicable jurisdiction.

 

  e) The Subsidiaries hereby waive any and all present and future claims against
Parent relating to a compromise, arrangement or agreement between Parent and the
IRS based upon an allegation that such compromise, arrangement or agreement
improperly causes overstatements of their liabilities to Parent, or that such
Subsidiary could have reached more favorable agreements with the IRS on a
separate company basis, unless such overstatements result from gross negligence
or fraudulent conduct on the part of Parent, its agents, or representatives.

 

7. New Members. Any subsidiary of Parent from time to time shall be subject to
this Agreement. If at any time Parent acquires or creates one or more subsidiary
corporations that become members of the Affiliated Group, they shall be subject
to this Agreement, and the term Affiliated Group as used herein shall be deemed
to include such subsidiaries.

 

8. Successors. This Agreement shall be binding on and inure to the benefit of
successors to all the parties hereto (including without limit any successor of
any Member succeeding to the tax attributes of such Member under Section 381 of
the Code), to the same extent as if such successor had been an original party to
the Agreement.

 

9. Execution of Documents. Each Member agrees to cause its proper officers to
execute the documents, including, but not limited to, statements, elections,
certificates, and schedules deemed necessary by the Parent’s tax advisors to the
Affiliated Group’s federal income tax return in order to carry out the intent of
the provisions of the applicable law and regulations thereunder in effect from
time to time.

 

10. Termination. This Agreement shall be terminated if:

 

  a) All Members agree in writing to such termination; or

 

  b) The Affiliated Group fails to file a consolidated federal income tax return
for any taxable year; or

 

  c) A Subsidiary ceases to be a member of the Affiliated Group but, then,
termination of this Agreement is only with respect to such Subsidiary.

Termination of this Agreement shall not affect the obligations of the Members
for any taxable year ending on or prior to termination, except that no carryback
from a year to which this Agreement does not apply shall be taken into account
in applying this Agreement to any taxable year ending on or prior to
termination.

 

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11. Departing Members.

 

  a) Except as provided in Paragraph 11, a Member whose membership in the
Affiliated Group ceases or is terminated for any reason whatsoever shall not
have any further remedies, rights, or obligations under this Agreement.

 

  b) Notwithstanding the termination of a Member, the provisions of this
Agreement will remain in effect with respect to such Member, with respect to any
period of time during the tax year in which the departure occurs, for which the
income of the departing member must be included in the consolidated federal
income tax return.

 

12. Availability of Records. Notwithstanding termination of this Agreement, all
material including, but not limited to, returns, supporting schedules,
workpapers, correspondence and other documents relating to the consolidated
return shall be available to any Member during regular business hours.

 

13. Assignability. No Member shall assign this Agreement without the prior
written consent of the other Members.

 

14. Applicable Law. Tax calculations shall be made pursuant to the Code and
Regulations. In all other respects this Agreement shall be construed in
accordance with the laws of the State of Florida without regard to conflict of
law provisions.

 

15. Modification. The Subsidiaries agree that Parent shall have the authority to
make any necessary alterations to this Agreement to comply with any changes or
amendments in the provisions of the Code or Regulations enacted thereunder
relating to consolidated federal income tax returns. The Members hereby consent
to the application of all Code and Regulations sections relating to the filing
of consolidated federal income tax returns. Subject to the rights of Parent to
modify the provisions of this Agreement for purposes of conforming with the
applicable provisions of the Code related to filing consolidated federal income
tax returns, and the Regulations thereunder, all alterations, modifications, and
amendments of this Agreement shall be in writing and signed by all Members.

 

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IN WITNESS THEREOF, the parties hereto have duly executed this Agreement by
authorized officers thereof as of the date first above written.

 

UNITED INSURANCE HOLDINGS CORP. By:  

 

UNITED INSURANCE HOLDINGS, L.C. By:  

 

UNITED INSURANCE MANAGEMENT, L.C. By:  

 

SKYWAY CLAIMS SERVICES, LLC By:  

 

UNITED PROPERTY & CASUALTY INSURANCE COMPANY By:  

 

 

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