State law allows payment of attorney fees in insurance disputes as a matter of public policy. Providing these payments is intended to discourage large insurance companies from contesting valid insurance claims by giving policy holders the means to afford attorney representation in such disputes.
The provision is based on an insurance company’s behavior, not an obligation imposed based on an express provision. However, the Supreme Court of Florida held the Florida Insurance Guarantee Association (FIGA) is not required to make attorney payments unless expressly provided for in the original insurance policy.
Details of Petty v. Florida Insurance Guaranty Association Decision
In the case, a Florida Preferred Property Insurance Company policy holder’s home was damaged by Hurricane Charley. The owner received payment for a portion of the damages and demanded an appraisal to resolve the dispute over the value of the loss. The insurance company refused the appraisal and the owner filed suit.
The appraisal was completed and found the owner was owed more then the company paid. The company made a portion of payments, but filed for bankruptcy and an automatic stay stopped additional payments. As a result, the owner filed to substitute FIGA as the defendant.
Why the Law Applies Differently to the Florida Insurance Guarantee Association
FIGA is a nonprofit corporation created by Florida Legislature to handle claims of insolvent insurance companies. It is a legislative creature designed to avoid the hardship incurred by policy holders and is not a standard insurance company.
As a result, FIGA provides reimbursement for covered provisions only. Thus the court only allows payment of attorney fees if specifically provided for in the original insurance policy. This is unique to FIGA cases, since FIGA is not the issuing company but a legislative creature. If Florida Preferred had not become insolvent and remained a defendant, attorney fees would likely be awarded.
Navigating the complexity of insurance law is difficult. In order to preserve all your legal remedies, it is important to contact an experienced Florida insurance claims attorney.
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