Florida Bad Faith Statute: Notice, Cure Period & Damages

A Florida bad faith insurance claim is a lawsuit under Section 624.155 of the Florida Statutes against an insurer that failed to handle a claim fairly and honestly, and it can produce damages that exceed the original policy limits. To bring one, you generally have to resolve the underlying coverage dispute first, file a Civil Remedy Notice with the Florida Department of Financial Services, give the insurer 60 days to cure, and only then sue. Recent reforms under SB 2-A (2022) and HB 837 (2023) tightened several of these steps.

What Counts as Bad Faith in Florida

Section 624.155 defines bad faith as an insurer’s failure to settle a claim “when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for her or his interests.”¹ That language is broad on purpose, and courts have applied it to several recurring patterns:

Unreasonable refusal to settle within policy limits when liability is clear.
Failing to investigate thoroughly. In Berges v. Infinity Insurance Co., 896 So. 2d 665 (Fla. 2004), the Florida Supreme Court found that an insurer’s delay in evaluating a claim and failure to communicate with the claimant supported a bad faith determination.
Misrepresenting policy terms, exclusions, or how to file.
Unreasonable delays in paying a valid claim, including repeatedly requesting documents already provided.

The 2023 reforms set a floor the earlier case law had left fuzzy: mere negligence alone does not establish bad faith.² An honest processing mistake is not enough. The conduct must reflect something more, though it need not rise to intentional wrongdoing.

First-Party and Third-Party Claims

Florida recognizes two kinds of bad faith claims, and the prerequisites differ.

A first-party claim is against your own insurer. You file a hurricane claim, the insurer lowballs or denies it, and you want to sue. Under Blanchard v. State Farm Mutual Automobile Insurance Co., 575 So. 2d 1289 (Fla. 1991), a bad faith claim does not ripen until there has been a determination that the insurer was obligated to pay the underlying claim. For property insurance specifically, SB 2-A went further: there must be an adverse court judgment against the insurer finding a breach of the insurance contract. An appraisal award or an accepted offer of judgment does not count, though the gap between the insurer’s appraiser’s estimate and the final appraisal award can be used as evidence of bad faith later.

A third-party claim arises when a liability insurer fails to protect its own policyholder from an excess judgment. If a claimant offers to settle within policy limits, the insurer refuses or drags its feet, and a jury later returns a verdict beyond those limits, the insurer can be on the hook for the full judgment. The Florida Supreme Court held in Boston Old Colony Insurance Co. v. Gutierrez, 386 So. 2d 783 (Fla. 1980), that insurers owe a duty to protect policyholders from excess judgments by making reasonable settlement decisions.³

The 90-Day Safe Harbor for Liability Claims

HB 837 added a protection insurers can invoke in liability cases. Under Section 624.155(4)(a), a bad faith action cannot be brought if the insurer tenders the lesser of the policy limits or the amount demanded by the claimant within 90 days of receiving actual notice of the claim, provided the claim is accompanied by sufficient evidence supporting the amount.²

If the insurer misses the 90-day window, the existence of the safe harbor and the fact that paying within it would have prevented the claim are both inadmissible in the subsequent bad faith action. The claimant cannot argue the insurer “could have just paid within 90 days.” But when the insurer fails to tender within the window, any applicable statute of limitations on the bad faith claim is extended by an additional 90 days.

How to File a Bad Faith Claim

Resolve the Underlying Dispute

Before pursuing bad faith, the underlying insurance claim must be resolved. For property insurance, that means a court judgment against the insurer finding a breach of contract. For other types of insurance, the Blanchard rule applies: there must be a final determination that the insurer owed benefits. Bad faith is about how a valid claim was handled, so you cannot prove improper handling until the claim itself is settled.

File a Civil Remedy Notice

Once the underlying claim is resolved, you must file a Civil Remedy Notice (CRN) with the Florida Department of Financial Services before filing suit. This is a mandatory condition precedent. In Juliano v. Citizens Property Insurance Corp., 300 So. 3d 1164 (Fla. 3d DCA 2020), an improperly drafted CRN resulted in dismissal.⁴

The CRN must be filed on the department’s official form and must include:

The specific statutory language the insurer allegedly violated, not just a section number but the actual text.
A detailed account of the facts and circumstances giving rise to the violation.
The names of any adjusters, managers, or other personnel connected to the violation.
The relevant policy language. Third-party claimants who have requested and not received a copy of the policy are excused from this requirement.

One timing restriction matters in property cases: the CRN cannot be filed within 60 days after any party invokes appraisal in a residential property insurance claim.²

Wait Out the 60-Day Cure Period

After the department forwards the CRN to the insurer, the insurer has 60 days to cure the violation. If it pays the claim or corrects the problem within that window, the bad faith action is extinguished.¹ If the insurer does nothing, or its response is inadequate, you can then file suit.

What You Can Recover

Section 624.155(11) allows recovery of “damages which are a reasonably foreseeable result” of the insurer’s violation, and those damages may exceed the policy limits.¹ In Perera v. U.S. Fidelity & Guaranty Co., 35 So. 3d 893 (Fla. 2010), the Florida Supreme Court reaffirmed that an insurer is responsible for the entire excess judgment when its failure to settle in good faith produces a verdict beyond those limits.

Consequential damages are also fair game. Foreclosure, credit damage, business losses, and similar financial harms are recoverable if they are a reasonably foreseeable consequence of the insurer’s conduct.

HB 837 added a counterweight. The insured, claimant, or representative must also act in good faith when furnishing information, making demands, setting deadlines, and attempting to settle.² A failure to act in good faith is not a separate cause of action against the claimant, but if the jury finds the claimant fell short, it can reduce the damage award.

Punitive Damages

Punitive damages exist but are hard to get. Section 624.155(8) requires both that the bad faith conduct occurred “with such frequency as to indicate a general business practice” and that the acts were willful, wanton, and malicious, or in reckless disregard for the insured’s rights.¹ One incident, however egregious, will not support punitives. You need a pattern. A claimant pursuing punitive damages must also post the costs of discovery in advance, and if no punitive award results, the insurer recovers those costs.

How Bad Faith Recoveries Are Taxed

Under 26 U.S.C. § 104(a)(2), damages received on account of physical injuries or physical sickness are excluded from gross income.⁵ If the bad faith case grew out of a personal injury claim and part of the recovery compensates for physical harm, that portion is generally tax-free. Emotional distress damages are taxable except to the extent they do not exceed amounts paid for related medical care. Consequential damages for things like lost business income or credit damage are taxable, and punitive damages are always taxable.

Deadline to File

Florida’s statute of limitations for bad faith actions runs under Section 95.11. Because bad faith is a statutory cause of action, the limitations period is five years. The clock generally does not begin until the underlying insurance claim is resolved, since the bad faith action cannot ripen before then. For liability claims where the insurer failed to tender within the 90-day safe harbor, the statute of limitations is extended by an additional 90 days.²

Defenses Insurers Commonly Raise

Genuine coverage dispute. If the insurer can show its position was reasonable based on the policy language or the facts, the claim weakens. In Dadeland Depot, Inc. v. St. Paul Fire & Marine Insurance Co., 483 F.3d 1265 (11th Cir. 2007), the court found that differences in legal interpretation regarding coverage did not rise to bad faith.⁶ The 2023 “mere negligence is insufficient” standard reinforces this: a wrong coverage call is not automatically bad faith.

CRN defects. Procedural failures in the Civil Remedy Notice are a reliable defense. Missing statutory text, thin factual detail, or filing within the 60 days after an appraisal demand can all lead to dismissal. Florida courts enforce the CRN requirements strictly.

Claimant’s own conduct. Under HB 837, insurers can point to artificially short deadlines, withheld material information, or demands structured to manufacture a bad faith scenario rather than resolve the claim. The jury can reduce the award accordingly.

Advice of counsel. An insurer may argue it relied on its attorney’s advice. The defense requires that the insurer fully disclosed the relevant facts, reasonably believed the advice was correct, and gave the policyholder’s interests at least as much weight as its own. It does not apply when an insurer denies coverage and then uses the denial as the basis for refusing a reasonable settlement.

No actual damages. Bad faith requires proof of financial harm. Inconvenience and frustration are not enough. If the insurer eventually paid in full and the policyholder cannot show specific monetary losses from the delay, the action may fail on damages alone.

When Florida’s Bad Faith Statute Does Not Apply

Section 624.155 does not reach every insurance policy sold in Florida. Two federal preemption situations come up often.

Employer-sponsored health or disability coverage governed by ERISA generally preempts state bad faith claims. ERISA supersedes state laws that “relate to any employee benefit plan,” and Section 502 limits available remedies. State insurance regulations can survive preemption under ERISA’s savings clause if they specifically target the insurance industry, but self-funded employer plans fall outside that exception. If your employer self-insures its health plan rather than buying a policy from a carrier, Florida’s bad faith statute almost certainly does not apply.

Flood insurance issued under the National Flood Insurance Program raises a similar problem. Federal courts have generally held that claims arising from the terms of a Standard Flood Insurance Policy are governed by federal law, preempting state bad faith remedies. Claims about how the policy was sold or procured, rather than how a claim was handled, may still proceed under state law.

1
Florida Senate. Florida Statutes 624.155 – Civil Remedy
2
Online Sunshine. Florida Statutes 624.155 – Civil Remedy
3
Justia Law. Boston Old Colony Insurance Co. v. Gutierrez, 386 So. 2d 783 (Fla. 1980)
4
Third District Court of Appeal of Florida. Juliano v. Citizens Property Insurance Corp
5
Office of the Law Revision Counsel. 26 USC 104 – Compensation for Injuries or Sickness
6
Justia Law. Dadeland Depot Inc v. St. Paul Fire and Marine Insurance Co, 483 F.3d 1265