Third DCA Clarifies Limits on Enforcing Attorney‑Fee Provisions in Pre‑Insolvency Settlements

Florida Insurance Guaranty Association v. Alfredo Ramos, No. 3D24-1003 (3d DCA January 14, 2026).

In a January 14, 2026, opinion, the Third District Cout of Appeal considered whether Florida Insurance Guaranty Association (FIGA) was required to pay the attorneys’ fees portion of a settlement agreement entered into between the insureds and their former insurer, United Property & Casualty Insurance Company, before the insurer became insolvent. The homeowners settled their hurricane claim for $45,000 in indemnity, $3,000 to one of their contractors, and $27,000 in attorney’s fees. The attorney’s fees were specifically sought under Fla. Stat. § 627.428. After the former insurer, United Property & Casualty Company, was put into receivership, FIGA was substituted as the defendant. Although FIGA paid the indemnity portion of the settlement, it refused to pay the attorney’s fees, arguing that such fees were not part of a “covered claim.” The trial court ruled FIGA to pay the full settlement amount including the attorney’s fees, to which FIGA appealed.

The appellate court reversed the lower court’s decision, holding that attorney’s fees awarded pursuant to Fla. Stat. § 627.428 are not included within a “covered claim” because they do not arise from the coverage provisions of the insurance policy. Relying on the Florida Supreme Court decision in Petty v. Florida Insurance Guarany Association, the appellate court explained that while statute attorney’s fees may be recoverable from an insurer under certain circumstances, they are imposed by operation of law and do not constitute as policy benefits. Further, per Fla. Stat. § 631.57(1), FIGA was only obligated to pay “covered claims” and in the instance case, the insurance policy did not provide coverage for attorney’s fees and costs.

Since FIGA’s liability was strictly limited by statute to covered claims, it could not be required to pay attorneys’ fees of the pre-insolvency settlement agreement. Accordingly, the appellate court reversed the order enforcing the settlement and remanded for entry of an order consistent with their opinion.