Insurance
Home›Insurance›Industry & Deals›Florida appeals court rules FIGA may owe attorney fees…
Florida appeals court rules FIGA may owe attorney fees after repair deal
The court found FIGA effectively denied a covered claim through underpayment and coverage defenses, despite choosing repairs under a Drew repair contract.
A Florida appeals court ruled that insurers cannot avoid attorney-fee exposure by handling a claim through repairs rather than paying the loss amount, and it extended that reasoning to the Florida Insurance Guaranty Association. Insurance Business reports that on August 12, 2026, Florida's Fourth District Court of Appeal reversed a lower court and held that two condominium owners may recover attorney's fees from FIGA, the fund that takes over claims when an insurer becomes insolvent.
The case stemmed from a 2015 water supply line break that flooded the owners' condominium and damaged flooring. Their insurer, Avatar Property and Casualty Insurance Company, selected a policy option to repair the property, creating a separate Drew repair contract under Florida law that required the insurer to restore the home to its pre-loss condition.
After a trial and appeal, Avatar was declared insolvent in March 2022 and FIGA stepped in as the defendant. The owners' contractor estimated repairs at $49,674.94, but FIGA paid only $19,000 in August 2022, trimming items it associated with Ordinance and Law coverage, which includes costs to bring a structure into compliance with applicable ordinances or laws.
The dispute later shifted to attorney fees after the parties settled the payment amount with a consent judgment ordering FIGA to pay $58,000 in policy limits, less the $19,000 already paid. The court held that a one-way attorney-fee statute still applied to this type of dispute, and it also found FIGA met the conditions for fee liability by underpaying before it answered, denying coverage in its defenses, and arguing the claim was not covered.