FIGA Keeps Reducing Insurance Settlements. Protecting Yours Starts Now.

When a Florida property insurer becomes insolvent, policyholders in the middle of a claim can find that the settlement they negotiated is worth less than they thought. Florida’s appellate courts continue to hold that the Florida Insurance Guaranty Association (FIGA) is not required to pay attorneys’ fees that were carved out of a settlement reached before the insurer’s insolvency. As a result, how a settlement is drafted and allocated can significantly reduce a policyholder’s net recovery if the carrier fails before payment is made. Because insureds rarely get advance warning of an insolvency, the best protection is preparation: careful pre-storm documentation and diligent post-loss follow-through remain the surest ways to guard against claim denials and dismissals.

A Reshaped Market, Competing Narratives

Florida’s property insurance market looks very different from how it did three years ago. Senate Bill 2-A, enacted during the December 2022 special session, and House Bill 837, the 2023 tort reform bill, eliminated one-way attorneys’ fee awards in property disputes, restricted assignment-of-benefits arrangements, and shortened claim-filing windows, changes credited with substantially reducing first-party litigation volume. Yet stakeholders on both sides of the debate hold sharply different views on how these reforms have affected consumers.

Supporters of the reforms point to lower premiums, more carriers entering or returning to the Florida market, and an overall decline in litigation.

Critics, by contrast, counter that claim denial rates have increased and that insurers can no longer be held meaningfully accountable for coverage decisions when payments fall short of what an insured needs.

One point of agreement is that FIGA is putting money back into policyholders’ pockets, at least for now. Earlier this year, FIGA announced that it would terminate its 1% emergency assessment on homeowners’ and commercial property and casualty policies two years early. Under the announcement, the assessment continued to apply to policies renewing through September 30, 2026, and officially terminated on October 1, 2026.

FIGA’s Expanding Role and the Expanding Case Law

FIGA remains something of a mystery to the average consumer, but it has been making headway in Florida courts lately. When a Florida insurer is liquidated, FIGA steps into the shoes of the insolvent carrier and handles its outstanding claims. In recent years, FIGA has absorbed substantially more claims in light of the number of hurricanes that have battered the Sunshine State and the carrier insolvencies that have followed. This surge has created fertile ground for insurance lawsuits to be appealed when either side disagrees with a decision. This, in turn, has created a growing body of case law on the issues homeowners face most often when FIGA takes over a claim.

Because there is little visibility into when an insurer is nearing insolvency, insureds are typically unaware that the other shoe is about to drop. When it does, represented insureds who are in the middle of resolving a claim may lose insurance proceeds, depending on how their settlement agreement is structured.

Many insureds have already experienced this firsthand: a claim settles for one amount, only for FIGA to step in and decline to pay portions of the settlement.

FIGA’s position is grounded in section 631.57(1)(a), Florida Statutes, which obligates FIGA only to the extent of the “covered claims” existing against an insolvent insurer before the insurer is declared insolvent. Although section 631.54 defines “covered claim,” the Florida Supreme Court has explained that a covered claim has two separate elements: (1) it must arise, or originate, from an insurance policy; and (2) it must be within the coverage of the policy, that is, included within the risks assumed and losses protected against under the policy.

Where Settlement Allocation Becomes a Trap

So, when does this come into play? When filing suit against an insurer or FIGA, an insured will typically retain counsel under a contingency-fee arrangement in which the attorney collects a fee only if there is a recovery. If the claim settles, the insurer will likely require the insured to sign a settlement agreement releasing the carrier from further liability on the claim before payment issues. The insurer will also frequently require the agreement to allocate the settlement between the amount for property damage and the amount for the insured’s attorneys’ fees and costs.

However, if an insured agrees to the insurer’s request to break a global settlement into its components (i.e., the amount to repair the property and the amount for attorneys’ fees and costs), and the insurer becomes insolvent before paying, FIGA will step in to handle the remainder. In that scenario, the insured will likely see a reduced recovery. As of August 12, 2026, Florida’s district courts of appeal continue to reach that result.

The Fourth District’s Decision in Cantwell

In Florida Insurance Guaranty Association, Inc. v. Cantwell,[1] the insureds reached a “global” settlement with their insurer providing that one check would issue for “indemnity,” and a second check would issue for attorneys’ fees and costs. The insurer was then adjudicated insolvent and placed into liquidation. After FIGA was substituted into the lawsuit, it refused to pay the portion of the settlement allocated to the insureds’ attorneys’ fees and costs. The trial court rejected FIGA’s argument and enforced the full settlement, but the Fourth District Court of Appeal reversed. The appellate court reasoned that because the complaint sought attorneys’ fees, the settlement agreement stated that the payment was inclusive of those fees, and the payment was divided between the insureds and their attorneys, FIGA was not required to pay the fee portion. This resulted in a reduction of the total settlement amount by more than 28%. The insureds’ net recovery may have been reduced even further by whatever percentage their counsel was entitled to under the retainer agreement.

Cantwell is one of several decisions in the past year in which insureds saw their settlements significantly reduced because of drafting choices that careful planning may have avoided. Cantwell was cited as recently as October 14, 2026, by a Florida appellate court in Rosenbaum v. Fla. Ins. Guar. Ass’n[2] to justify its ruling on the same issue. These cases are part of the wave of appellate decisions and reversals since the fourth quarter of 2025 that has swept the state, turning a tide that once appeared to favor enforcing these settlement agreements as written.

Practical Steps for Policyholders

Because policyholders rarely know in advance whether their carrier will remain solvent through the life of a claim, hurricane preparedness should extend beyond securing a home and valuables against wind and water damage.

It also means preparing for a likely insurance claim as a storm strengthens and the spaghetti-model forecast tracks fill the TV screen.

Policyholders should also be aware of the grounds on which courts have recently dismissed insurance claims. With those trends in mind, consider the following rules of thumb if you are in a storm’s path:

1. Photograph and video your property routinely. This is especially important the day before a hurricane is expected to reach your area. Documentation will help if your insurer later claims the damage was unrelated to the storm or pre-existing.
2. Create an inventory after the storm. Do not rush to discard damaged items, including furniture, clothing, and roof shingles or tiles, without first photographing the damage and itemizing each item in a list.
3. Obtain an actual cash value (ACV) estimate before filing suit. Many policies now require the insured to submit an estimate accounting for depreciation before a lawsuit is filed. Compliance can be the difference between a claim proceeding in litigation and a claim being dismissed.
4. Report your claim promptly. Most policies require notice of a claim as soon as reasonably possible once damage is reasonably apparent. Delay can lead to an insurance denial, because conditions change over time and after repairs.
5. Mitigate damage when necessary. Your policy will likely require you to take reasonable steps to prevent further damage to your property. Document the original conditions as thoroughly as possible and give your insurer an opportunity to inspect the property before making permanent repairs, to foreclose a later defense that it could not evaluate the damage in its original condition.
6. Monitor your carrier’s financial health. If your insurer is showing signs of distress, discuss with counsel how any settlement should be structured and allocated before you sign.

And for a quick way to save: review your property insurance policy’s renewal statement for any renewal on or after October 1, 2026, to make sure the 1% FIGA assessment is not on your bill.

[1]Fla. Ins. Guar. Ass’n, Inc. v. Cantwell, 2026 WL 2327958 (Fla. 4th DCA Aug. 12, 2026).

[2] See Rosenbaum v. Fla. Ins. Guar. Ass’n, 2026 WL 3068516 (Fla. 4th DCA 2026 Oct. 14, 2026).

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