When a home is damaged and an insurance company steps in, the insurer sometimes chooses to fix the property itself rather than write a check. Florida law treats that election as creating a separate “repair contract.” But what happens to a homeowner’s right to recover attorney’s fees if the repairs go wrong and the dispute lands in court?
The question grows more complicated when the original insurer becomes insolvent and a state-created safety net takes over the claim. That entity has its own rules about when it must pay a policyholder’s attorney’s fees.
A recent decision addressed both issues in one appeal, explaining when a fee-shifting statute reaches a repair-contract dispute and when a guaranty association’s litigation conduct counts as a denial that triggers fee liability.
These questions were at the center of Vainberg v. Florida Insurance Guaranty Association, a decision from Florida’s Fourth District Court of Appeal.
Key Takeaway
The court held that a lawsuit over a defective insurer-elected repair can fall within Florida’s one-way insurance fee statute, and that a guaranty association’s coverage denials through its conduct can count as a denial “by affirmative action” that permits a fee award.
The question is more specific:
- Does a “repair contract” dispute arise “under a policy or contract executed by the insurer”?
- Did the guaranty association’s actions amount to a denial by affirmative action, rather than mere delay?
What happened in this case?
A water line broke and flooded a condominium, damaging the flooring. The insurer chose to repair the property rather than pay money, which under Florida law created a new repair contract separate from the policy. The contractor’s work was deficient, and the insurer ultimately declined to fix it.
The homeowners sued. During the litigation, the original insurer was declared insolvent, and the Florida Insurance Guaranty Association (FIGA) was substituted as the defendant. FIGA paid part of the claim, contested other portions related to code-upgrade coverage, and the case eventually settled through a consent judgment—leaving only the question of attorney’s fees and costs.
Does the fee statute reach a repair-contract dispute?
The trial court had denied fees, reasoning that the homeowners’ claim arose under a repair contract that was “separate and distinct” from the insurance policy, and therefore not “under” the policy as the statute requires.
The appellate court disagreed. It explained that section 627.428, Florida Statutes (2015), is a one-way fee-shifting statute designed to discourage insurers from contesting valid claims and to reimburse insureds who must go to court to enforce their rights. The statute authorizes fees when a judgment is entered “under a policy or contract executed by the insurer.”
Because a repair contract exists only because the insurer exercised a repair right granted by the policy, the court concluded that a dispute over the adequacy of those repairs arises under the policy and falls within the statute. The court also noted that reading “policy or contract” as covering both alternatives gives the word “contract” independent meaning.
Why the distinction mattered
The court reasoned that an insurer should not be able to avoid fee liability simply by choosing to repair instead of pay, when both obligations flow from the same covered loss and the same policy.
When does a guaranty association’s conduct count as a denial?
A separate statute, section 631.70, Florida Statutes (2022), limits when FIGA must pay attorney’s fees. It applies fees only when the association “denies by affirmative action, other than delay,” a covered claim or a portion of one.
Prior decisions drew a line: filing an answer that a court compelled, before the association had time to investigate, is not an affirmative denial. But voluntarily asserting coverage defenses—when there was a genuine contest over the claim—can be.
Here, the court found several affirmative actions rather than mere delay. FIGA had the benefit of an automatic stay and two agreed extensions, then chose not to seek more time and instead asserted coverage defenses. The court also pointed to FIGA’s partial payment that cut items it treated as not covered, corporate-representative testimony, pretrial stipulation positions, and a summary judgment motion—all denying that the repair claim was covered.
Why does this matter to policyholders?
This decision explains that the form an insurer chooses—repairing rather than paying—does not by itself remove a fee-shifting statute from the picture when a covered loss and the same policy are involved.
It also illustrates how courts examine the full course of an insurer’s or guaranty association’s conduct, not just a single pleading, when deciding whether there was a real, contested denial versus a routine delay to investigate.
What did the court ultimately decide?
The Fourth District reversed the order denying attorney’s fees and sent the case back to the trial court to determine the amount of fees to be awarded. It held both that the repair-contract claim fell within section 627.428 and that section 631.70 did not bar fees because FIGA had denied a portion of the claim by affirmative action.
Disclaimer: This post is for general information only, is not legal advice, does not create an attorney-client relationship, and does not predict or guarantee any result. The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before deciding, ask for free written information about the lawyer’s qualifications and experience.