Guides
Attorney fees and insurance litigation reform
Who pays the lawyer in a home claim suit: the American rule, state fee-shifting statutes, Florida's repeal of one-way fees, and what changed for policyholders.
In most American lawsuits each side pays its own lawyer, win or lose. Property insurance was long an exception in some states, where a policyholder who won even a dollar more than the insurer had paid could make the insurer pay the attorney fees too. Florida ended that in 2022 and 2023, and the debate over whether fee-shifting protects homeowners or fuels litigation is now one of the central fights in state insurance policy.
For a homeowner the practical questions are narrower. Can I find a lawyer who will take a disputed claim? Will I owe the lawyer if I lose? And does my state make the insurer pay if I win? The answers depend on the state, on the date of your policy, and on how large the dispute is.
The default rule: each side pays its own
The "American rule" says litigants bear their own attorney fees unless a statute or a contract shifts them. The standard ISO homeowners form (HO 00 03) contains no fee-shifting clause. If your state has no insurance fee statute, a lawsuit over an underpaid claim means you pay your lawyer from your own recovery, whatever the result.
Most claim lawyers who represent homeowners work on contingency, taking a percentage of what is recovered and nothing if the case fails. The percentage and the treatment of costs (experts, filing fees, engineers) are set in the fee agreement, and they are negotiable. Statutory fees change the math in two ways. They can be paid on top of the recovery rather than out of it, and they make a smaller dispute worth a lawyer's time. When a statute removes them, small and mid-size disputes get harder to staff.
Why states shift fees to insurers
The case for fee-shifting is that an insurer has more resources than a homeowner, and a $12,000 underpayment is not worth $30,000 in legal fees to pursue. Without a fee statute, the argument goes, insurers can lowball small claims knowing few will be contested. Fee statutes, along with penalty interest, are meant to make the insurer's delay or denial costly enough to deter it.
The case against is that one-way fees (the policyholder recovers fees if it wins, the insurer never does) reward litigation over resolution. Critics point to contractors and lawyers who solicit claims, to cases where the fees dwarf the dispute, and to rising premiums in states with heavy litigation. Both sides have evidence, and regulators and insurers disagree about how much of any premium increase fee statutes explain. Our the home insurance affordability crisis: what the data show guide covers the premium side.
Florida: the largest rollback
Florida had a one-way fee statute, Fla. Stat. §627.428, under which an insurer that lost a suit paid the insured's reasonable attorney fees. Following the 2022 special-session law SB 2-A, signed December 16, 2022, a suit under a residential property policy could result in fees only under the sanctions statute (§57.105) or the pre-suit statute (§627.70152), and the offer-of-judgment statute (§768.79) was reinstated for property suits. HB 837 (signed March 24, 2023) then repealed §627.428 and its companion §626.9373 for all lines of insurance. Exceptions remain for declaratory actions after a total coverage denial and for construction bonds. Both laws say they do not impair rights under a contract in effect before their dates, and a 2023 clarifying law (SB 7052) applies the changes to contracts issued or renewed after the applicable effective date. Whether your claim falls under the old or new rule can therefore turn on when your policy was issued or renewed.
Related Florida changes in the same package:
- Assignment of benefits. Contractors could no longer take over a homeowner's claim and sue for fees; the AOB ban applies to policies issued on or after January 1, 2023.
- Pre-suit notice. A notice of intent to litigate must be filed through the Department of Financial Services at least 10 business days before suing, and the insurer must respond within 10 business days. See Florida.
- Bad faith. Under §624.1551, a property policyholder cannot bring a statutory bad-faith action until it has an adverse adjudication that the insurer breached the contract and a final judgment. Accepting an offer of judgment or being paid an appraisal award does not count.
How much these changes altered the number of suits and the cost of coverage is contested, and we do not state a figure here. For the current picture, the state guide and the Florida Office of Insurance Regulation are better sources than any single summary. Sources: the Florida Senate analyses of SB 2-A and HB 837, as of October 2026.
Other states: fees tied to delay or bad faith
Most states with fee provisions do not shift fees automatically. They attach them to an insurer's unreasonable behavior or to a late payment, as of the statutes in our research in October 2026:
| State | Fee rule (summary) |
|---|---|
| Texas | Prompt-payment penalties under Ins. Code ch. 542 include 18% annual interest and attorney fees. For weather-related property suits, ch. 542A replaces that interest with the judgment rate plus 5% and ties recoverable fees to how the verdict compares with the amount demanded in the pre-suit notice, which must be sent 61 days before suit |
| Louisiana | R.S. 22:1892: if payment is arbitrary, capricious or without probable cause, a 50% penalty on the amount due, plus attorney fees and costs. Catastrophe-claim penalty suits require a 60-day cure notice first. The old bad-faith statute, R.S. 22:1973, was repealed effective July 1, 2024 |
| Illinois | 215 ILCS 5/155: for "vexatious and unreasonable" delay, a court may award fees plus a penalty of up to 60% of the recovery, $60,000, or the excess over the pre-suit offer |
| Colorado | C.R.S. §10-3-1116: a first-party claimant whose claim was unreasonably delayed or denied may recover attorney fees, costs and two times the covered benefit |
| Virginia | Va. Code §38.2-209: costs and fees if the court finds the insurer, not acting in good faith, denied coverage or failed to pay |
| South Carolina | S.C. Code §38-59-40: fees (capped at one-third of the judgment) if the insurer refuses to pay a covered claim within 90 days of demand without reasonable cause or in bad faith |
Note the pattern. In these states the homeowner has to show more than that the insurer paid too little. A good-faith disagreement over how much the roof repair costs usually does not trigger fees. A denial without investigation, a ninety-day silence, or a lowball based on a made-up depreciation figure might. That is the territory of bad faith claim handling: what it means and what it doesn't and of the state's unfair claims settlement practices laws rules.
Statutes change every session and policy dates matter, so treat the table as a map of where to look, then read the current text or ask a licensed attorney in your state.
The NAIC model laws do not give you a fee claim
Unfair claims settlement practices statutes, patterned on the NAIC's Model #900, list improper insurer behavior but do not usually create a private right to sue or collect fees. The model says so directly: "Nothing herein shall be construed to create or imply a private cause of action." Violations are enforced by the department of insurance. Homeowner remedies come from the separate statutes above or from common-law bad faith. Arizona, for instance, expressly says its statute (A.R.S. §20-461) creates no private right of action. Source: NAIC Model #900.
Other ways fees get shifted
- Offer of judgment or settlement offer rules. In Florida (§768.79) and many other states, a party who rejects a formal offer and then does worse at trial can owe the other side's fees from the date of the offer. This can cut either way, so a lawyer should explain any offer before it is rejected.
- Sanctions. Courts can award fees against a party who brings or defends a claim with no reasonable basis (Florida's §57.105 is an example).
- Contract terms. Some policies and endorsements include their own provisions. They are rare in homeowners forms, but read your policy.
- Appraisal. The appraisal clause process has each party pay its own appraiser and split the umpire's cost. It is not a lawsuit, and it generally does not shift fees. See the appraisal clause: settling a claim value dispute.
Questions to ask before you hire a claim lawyer
- Is this on contingency, and what percentage? Ask whether the percentage rises if the case goes to trial, and whether it is computed on the gross recovery or after costs.
- Who advances costs, and who pays them if we lose? Engineers and estimators can run into the thousands of dollars.
- If a fee statute applies, who keeps the fees? Many agreements say the lawyer gets the greater of the contingency or the statutory fee. Know which.
- What is my deadline? Ask for the suit date and any pre-suit notice, and compare it to your own reading (deadlines to sue over a home insurance claim).
- Would a public adjuster or appraisal solve this faster? For a pure disagreement on price, they often can. Our underpaid home insurance claim: how to push back guide compares the routes.
- Is there a cheaper first step? A complaint to the state insurance department costs nothing, and some states run claim mediation programs.
Treat with caution any contractor who offers to "handle everything" or pay for the lawyer, especially where an assignment of benefits is involved. In some states these arrangements are restricted or banned.
A hypothetical comparison
Say a storm damages your roof and the insurer pays $18,000 against a contractor's $34,000 estimate. You hire a lawyer on a 33% contingency, and the case settles for an additional $12,000.
- No fee statute. The lawyer takes $4,000 of the $12,000 and you keep $8,000, less any costs you agreed to bear.
- A fee-shifting statute that applies. The insurer may be ordered to pay the reasonable fees on top, so you could keep close to the full $12,000. The statutory fee is usually decided by the court, and your agreement may let the lawyer choose between the contingency and the court-awarded amount.
The second scenario is why fee statutes make small cases workable and why insurers lobby against them. The first is why many homeowners in states without fee-shifting use appraisal, a public adjuster or the regulator before a lawyer.
Key takeaways
- Under the American rule you pay your own lawyer unless a statute or contract says otherwise, and the ISO HO-3 form has no fee clause.
- Florida repealed one-way attorney fees for property suits (SB 2-A, December 2022; HB 837, March 2023), and which rule applies can depend on when your policy was issued or renewed.
- Many other states award fees only for unreasonable delay or denial, as in Texas ch. 542, Louisiana R.S. 22:1892, Illinois 215 ILCS 5/155, Colorado C.R.S. §10-3-1116 and Virginia §38.2-209.
- NAIC-style unfair claims laws are enforced by regulators and generally give you no right to sue for fees; your remedy comes from separate statutes or common-law bad faith.
- Before you sign with a lawyer, get the contingency percentage, cost responsibility and your suit deadline in writing.