Florida Insurance Guaranty Association

In my previous blog post, I gave shared an overview of the facts surrounding Florida Insurance Guaranty Association v. De La Fuente,1 which lead Florida’s Second District Court of Appeal (2nd DCA) to certify two unique questions involving FIGA’s liability in sinkhole claims as being "of great public importance." Part 2 of this blog series examines the parties’ arguments regarding the first question: whether the new definition of a "covered claim" under the FIGA Act applies to a sinkhole loss where the homeowner’s policy was issued before the effective date of the new definition (May 17, 2011) but the insurer was adjudicated to be insolvent after this effective date.


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Suffering a sinkhole loss is already difficult enough, but for those homeowners with a claim being handled by FIGA, the process can often become even more complicated. This can occur when the terms of the insurance contract issued by the original, now insolvent, insurance carrier arguably conflict with FIGA’s duties and obligations under the Florida Insurance Guaranty Act (“FIGA Act”). In a recent opinion, Florida’s Second District Court of Appeal (“2nd DCA”) found such a gray area regarding a policy’s appraisal provision and FIGA’s obligation to pay a policyholder for their sinkhole loss.1


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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.


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​In Florida, the Florida Insurance Guaranty Association (“FIGA”) handles and resolves claims of insolvent insurers under certain statutory guidelines. But what happens when the underlying insurer had reached a settlement agreement with a claimant before becoming insolvent? You would hope that FIGA would be ordered to honor such an agreement. It is a beautiful thing when the law follows common sense. This happened recently in the case, Alessio ex rel. Estate of Garza v. FIGA.1


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On January 19th, the Florida Supreme Court issued its opinion in Petty v. Florida Insurance Guaranty Association, which decided whether an insured is entitled to recover attorney’s fees from the Florida Insurance Guaranty Association (FIGA). I wrote about the case in October 2010, when it was at the lower appellate level, in The Definition of a “Covered” Claim by the FIGA Act Leads Florida Second and Third District Court of Appeals to Different Results.

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Just last week, Florida’s Fourth District Court of Appeals held that the Florida Insurance Guaranty Association (“FIGA”) wrongly denied a policyholder’s claim and was obligated to pay attorney’s fees and costs. In Rahabi v. FIGA, the appellate court distinguished the holding from its earlier case, FIGA v. Ehrlich, which was just decided in May of this year. I wrote about Ehrlich in my May 9, 2011 post titled Recent Ruling Concerning Attorney’s Fees And The Florida Insurance Guaranty Association. In Ehrlich, the Court held that FIGA was not responsible for attorney’s fees since it did not deny the policyholder’s claim by affirmative action. In Ehrlich, the trial court had ordered FIGA to answer the complaint in the lawsuit, and pursuant to that order, FIGA raised affirmative defenses.


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In Florida, the Florida Insurance Guaranty Association (FIGA), was created by statute to pay claims to policyholders if their insurers become insolvent. The FIGA Act, §631.54(3) defines a covered claim as:

[A]n unpaid claim, including one of unearned premiums, which arises out of, and is within the coverage, and not in excess of, the applicable limits of an insurance policy to which this part applies, issued by an insurer, if such insurer becomes an insolvent insurer and the claimant or insured is a resident of this state at the time of the insured event or the property from which the claim arises is permanently located in this state.
 


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Coral Insurance Company has been placed in receivership. One aspect of handling claims where the insurer is in receivership is that a statutory time limit exists to file a lawsuit. However, for adjusters and policyholders, before a lawsuit can be filed, a "claim deadline" must first be met. We often get requests shortly before the lawsuit deadline only to find the claim deadline had not been met.


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A number of policyholder attorneys have asked me why FIGA is being so difficult lately. At one time, it was not that way. There has obviously been a change of the guard because nobody should expect quick resolution of any claim from FIGA based on recent complaints and the developing case law helps demonstrate this point.


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