In Florida Insurance Guaranty Association v. Smothers (4D09-4597), the Fourth District reversed the trial court’s entry of an attorneys’ fee judgment against the appellant. After Mr. Smother’s residence was damaged by Hurricane Wilma, his insurer was declared insolvent and “FIGA stepped in to provide a mechanism for the payment of ‘covered claims’.” “The trial court found that FIGA denied the claim by affirmative action when the independent adjuster found ‘NO VISIBLE STORM DAMAGE TO THE INTERIOR’.”
FIGA is a statutory creature, subject to special rules specifically formulated by the Florida legislature….While created to cover claims under policies issued by insolvent carriers, the full gamut of a defunct insurance company’s liabilities was not intended to be shifted onto FIGA…..Chapter 631 was designed to manage, but not bankrupt the statute’s funding and payment mechanism….
Here, FIGA never denied coverage. The insured submitted a claim, and FIGA assumed limited responsibility, pursuant to chapter 631. FIGA hired an independent adjuster to inspect the claim and tendered payment. Nothing in FIGA’s payment transmittal letter indicated that it denied the claim….Section 631.70 unambiguously creates the boundaries of FIGA’s liability for attorney’s fees….Here, FIGA did not deny the insured’s claim; therefore, section 631.70 bars the application of section 627.428.
To sustain the award of attorney’s fees would render the Legislature’s creation of section 631.70 meaningless. Therefore, we hold that a dispute about the amount of damages does not constitute a denial of coverage by affirmative action, other than delay, exposing FIGA to attorney’s fees under section 631.70. As there was no denial of coverage by affirmative action, we therefore reverse the judgment for the insured and remand the case to the trial court for entry of judgment for FIGA.