When an insurer goes broke, who pays its policyholders' lawyers? In Florida, not the state's insurance guaranty fund - at least not here.
In a June 17, 2026 ruling, the Fourth District Court of Appeal sided with the Florida Insurance Guaranty Association, or FIGA, over a $10,507.90 piece of a hurricane settlement. FIGA, the court said, does not have to cover attorney's fees baked into a deal it inherited from an insurer that went under.
The story began with Hurricane Irma in 2017. Homeowners David and Judith Hintz filed a claim for roof damage they said came from the storm, and their insurer denied it, pointing to "a lack of maintenance, wear and tear." The Hintzes sued for breach of contract and sought attorney's fees.
The two sides settled before trial for $30,000, paid in two checks. One, for $19,492.10, went jointly to the homeowners and others, including their mortgage company and lienholders. The second, for $10,507.90, was payable only to their attorneys. In exchange, the Hintzes agreed to release "any and all causes of action, suits, claims for loss and demands of any kind," including "attorney's fees."
Then the insurer became insolvent. FIGA, the fund that backstops failed insurers, stepped in and paid the first check - but refused the second, calling attorney's fees something it is not required to cover.
A trial court ordered FIGA to pay anyway. The appeals court reversed.
It comes down to two words: "covered claim." Florida law makes FIGA responsible only "to the extent of the covered claims existing" against an insolvent insurer, and a covered claim is one that "arises out of, and is within the coverage" of the policy itself. Attorney's fees, the court said, don't qualify. Citing the Florida Supreme Court's 2012 Petty decision, it noted a statutory fee award "was not 'a covered claim.'" FIGA, it added, "does not simply step[] into the shoes of the insolvent insurer."
The Hintzes argued the settlement never spelled out that the money was for fees, so FIGA could not treat it that way. The panel disagreed. A check written only to the law firm, paired with a release covering "attorney's fees," said enough. "We cannot conceive of any other explanation for the separate check to the law firm," the judges wrote.
The practical lesson for claims teams: when settlement money is clearly carved out for a policyholder's lawyers, a guaranty fund inheriting an insolvency may not have to pay it. The wording of the deal - and the way the checks are cut - can decide who does.
