A Florida appeals court ruled this week that the state's insurance guaranty association isn't liable for attorneys' fees that were part of a settlement reached before an insurer went belly up, clarifying just how far FIGA's obligations extend when an insurance company fails.
The Third District Court of Appeal issued its decision on January 14 in Florida Insurance Guaranty Association v. Alfredo Ramos, et al., a dispute that began with a straightforward Hurricane Irma claim but ended up defining the boundaries of what the guaranty association must pay.
Homeowners Alfredo Ramos and Maria Carranza had sued United Property & Casualty Insurance Company in 2021 over unpaid claims from the 2017 storm. After years of litigation, the parties finally hammered out a settlement in January 2023. United P&C agreed to pay the couple $45,000, cut a separate check to their lawyer for $27,000 in fees, and pay a contractor $3,000.
But before anyone received a dime, United P&C collapsed into receivership in late February 2023. The homeowners then asked the court to make FIGA step into the failed insurer's shoes and honor the entire settlement.
FIGA paid the $45,000 to the homeowners without issue. The attorneys' fees, however, were another story. The guaranty association refused to pay the $27,000, setting up a legal fight over what exactly counts as a covered claim under Florida law.
The trial court initially sided with the homeowners and ordered FIGA to pay up. But the appeals court reversed that decision, finding that the trial judge got it wrong.
At the heart of the ruling is a fairly technical but important distinction. Under Florida law, FIGA only has to pay covered claims, which are defined as unpaid claims that arise from and fall within the coverage of an insurance policy. The homeowners' policy didn't include any provision for attorneys' fees. Instead, their right to collect those fees came from a separate Florida statute that lets policyholders recover legal costs when insurers wrongly deny valid claims.
The appeals court pointed to a 2012 Florida Supreme Court case that drew a bright line between coverage that exists in a policy and obligations that arise from how an insurer behaves. Attorneys' fees under the statute fall into the second category, the court said.
Judge Logue, writing for the panel, explained that while the right to attorneys' fees is implicit in every Florida insurance policy, that doesn't make those fees part of the policy's actual coverage. The settlement agreement might have called for United P&C to pay the lawyers $27,000, but that payment obligation stemmed from the insurer's conduct in handling the claim, not from any promise made in the insurance contract itself.
The court also noted that Florida law specifically bars FIGA from paying statutory attorneys' fees unless the guaranty association itself denies a covered claim. Since FIGA never denied anything and in fact paid the homeowners' claim in full, there was no basis to make it cover the legal fees.
The decision tracks closely with a similar ruling the Fourth District Court of Appeal issued in late November 2025. In that case involving a water restoration company, the court reached the same conclusion when FIGA balked at paying the attorneys' fees portion of a pre-insolvency settlement.
For insurers and guaranty associations, the ruling offers some clarity on the limits of FIGA's exposure. Settlement agreements reached before an insurer fails don't automatically bind FIGA to every term, particularly when it comes to statutory attorneys' fees that weren't part of the original policy coverage.
The decision also highlights a wrinkle that can arise when insurers settle cases shortly before going under. While policyholders might reasonably expect the guaranty association to honor those deals in full, the law treats different components of settlements differently depending on whether they stem from policy coverage or statutory obligations.
For now, the case serves as a reminder that in Florida's troubled property insurance market, where carrier failures have become increasingly common, the safety net provided by FIGA has defined boundaries. The guaranty association will make policyholders whole on their actual insurance claims, but statutory remedies like attorneys' fees remain outside its purview.
