Recently, the Florida Second District Court of Appeal (“Second DCA”) considered whether a claim was time-barred by the statute of limitations as it relates to the Florida Insurance Guaranty Association (“FIGA”).1 The policyholders appealed the trial court ruling that the applicable statute of limitation (F.S.A. 95.11(5)(d) and 631.68) barred their claim for sinkhole damage. It should be noted that these statutory provisions specifically relate to FIGA, once it steps in to address claims from a liquidated insurance carrier within the State.
The policyholders had been insured by Magnolia Insurance Company, which was ordered into liquidation on April 30, 2010. The policyholders timely filed a notice of claim with FIGA per that liquidation order and formal proof of claim. The deadline for filing claims with FIGA in the liquidation order was May 2, 2011.
FIGA issued a payment to them on May 4, 2012. The policyholders were not satisfied with the payment so they filed suit against FIGA on May 22, 2012. FIGA raised the statute of limitations as a defense to the case. The trial court determined that the action was barred by Florida statute 95.11(5)(d).
F.S. 95.11(5)(d) requires that commencement of suit against FIGA be within one year for “[a]n action against any guaranty association and its insured, with the period running from the date of the deadline for filing claims in the order of liquidation.”
F.S.A. 631.68 provides as follows:
A covered claim as defined herein with respect to which settlement is not effected and suit is not instituted against the insured of an insolvent insurer or the association within 1 year after the deadline for filing claims, or any extension thereof, with the receiver of the insolvent insurer shall thenceforth be barred as a claim against the association and the insured.
The Second DCA held that based on these statutes, the policyholders were required to file suit against FIGA by May 2, 2012, within one year of the deadline for filing claims provided in the order of liquidation. The Court noted that FIGA can extend that deadline for filing suit, but there was nothing in the record to indicate that had been done so in this particular case.
The Second DCA noted in its holding that:
The one-year statutes of limitations contained in sections 95.11(5)(d) and 631.68 may compel claimants to file lawsuits against FIGA before FIGA has completed the processing of their claims and made satisfactory payments. Such lawsuits may later prove to be unnecessary, depending on the outcome of the claim adjustment process. A statutory change in the limitations period to extend the time for filing such lawsuits until the adjusting process has been completed by FIGA may be sensible, but that is a matter for the Legislature.
Think about it – here the payment FIGA made was after the timeframe within which the policyholder had to file the lawsuit. It would seem under the facts this case has brought to light, that the Legislature should consider a change to the limitations period for filing suit against FIGA.