The Florida District Court of Appeal ruled on September 2, 2026, in the case of Florida Insurance Guaranty Association v. Danielle Simmons, docket number 3D25-0873. The court reversed a lower court's decision regarding a settlement agreement between Simmons and her former insurance company, United Property & Casualty Insurance Company (UPC). This ruling affects how insurance claims and attorney's fees are handled when an insurance company becomes insolvent.
Danielle Simmons, the insured party, had sued UPC for damages to her home caused by Hurricane Irma in 2019. After mediation, Simmons and UPC agreed to a settlement of $75,000. However, after the settlement was reached, UPC became insolvent, leading the Florida Insurance Guaranty Association (FIGA) to take over the responsibility of handling the claim. Simmons sought to enforce the settlement against FIGA, which argued it should not be liable for attorney's fees included in the settlement.
This case arose when Simmons moved to substitute FIGA as the defendant after UPC's insolvency. She contended that FIGA had the same obligation to pay the settlement as UPC had. FIGA, however, claimed that the settlement included attorney's fees that are not covered under its obligations, citing a previous ruling that stated such fees do not constitute a covered claim under Florida law.
The dispute centered around the interpretation of the settlement agreement and whether it included attorney's fees as part of the covered claims under FIGA's statutory obligations. The trial court initially ruled in favor of Simmons, stating that the settlement agreement was vague and that FIGA should pay the full amount. However, FIGA appealed this decision, leading to the current ruling.
The court ruled that the trial court erred in compelling FIGA to pay Simmons’ attorney’s fees, stating, "FIGA cannot be compelled to pay the portion of the settlement amount attributable to ‘attorneys’ fees and costs, and other good and valuable consideration’ because the insured has not demonstrated that it was included within the risks taken and losses protected against in the subject insurance policy." The judges involved in this ruling were Fernandez, Miller, and Lobree.
This ruling is significant because it clarifies the limitations of FIGA's responsibilities when an insurance company becomes insolvent. It emphasizes that FIGA is only liable for claims that arise directly from the insurance policy and not for attorney's fees that may be included in a settlement agreement. This decision aligns with previous rulings that have established a precedent regarding the definition of covered claims under Florida law.
The impact of this ruling extends to homeowners and insurance policyholders in Florida. It reinforces the idea that when an insurance company becomes insolvent, the guaranty association's obligations are limited to the terms of the insurance policy. Homeowners must be aware that attorney's fees are not automatically included in settlements and may not be recoverable if the insurer becomes insolvent.
Moving forward, this case may influence how settlements are structured in the future, particularly in terms of clarity regarding attorney's fees and other costs. It also highlights the importance of understanding the implications of insurance policy terms and the limitations of coverage when an insurer faces insolvency.
As for what’s next, it is unclear whether Simmons will appeal this ruling or if there are related cases pending that could further clarify this issue. The court has remanded the case for an evidentiary hearing to determine if any payments were made to attorneys that could be considered covered claims under the insurance policy.