Florida’s high court has ruled that the state fund charged with paying claims from insolvent insurers is not responsible for paying a claimant’s legal fees on a pre-insolvent claim unless they are specifically covered under the terms of their policy.
The Florida Supreme Court in the case of Petty v. Florida Insurance Guaranty Association [No. SC10-2097, Jan. 19, 2012], resolved a conflict between two lower court rulings that addressed the guaranty fund’s liability for paying claimant’s attorney fees based on the legal definition of a “covered claim.”
Under the FIGA statute, the guaranty fund obligation to pay a covered claim is limited to the terms of the policy and cannot be in excess of the policy’s financial limits.
FIGA Director of Operations Tom Streukens welcomed the high court’s ruling, which will clarify any ambiguity in the law. He noted that many companies as they head toward bankruptcy make poor decisions and that it could have cost the guaranty fund millions in legal fees for actions of which it had no part.
Topics Florida
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