A Florida policyholder who pays premiums for years and then watches the insurer deny a valid claim, delay payment for months, or refuse to defend a covered lawsuit has more than a grievance. Florida law allows that policyholder to pursue bad faith insurance claims under Fla. Stat. § 624.155, a cause of action that can produce damages well beyond the policy limits. The consequences for an insurer found to have acted in bad faith are severe: the full amount of an excess verdict, consequential damages, attorney’s fees, and in egregious cases punitive damages.

Filing a bad faith insurance claim in Florida requires meeting strict procedural prerequisites, and Florida’s 2023 tort reform added requirements that did not exist before.

Southron Firm, P.A., a Tampa, Florida litigation firm, represents businesses and insurers in coverage disputes where the insurer’s claims handling crosses the line from a legitimate coverage disagreement into actionable bad faith.

What Is a Bad Faith Insurance Claim in Florida?

A bad faith insurance claim is a legal action against an insurer that has failed to handle a policyholder’s claim fairly, honestly, or in accordance with its statutory obligations.

The statutory claim covers disputes where the insurer denies or underpays the policyholder’s own claim and disputes where the insurer fails to settle a liability claim against the policyholder within policy limits. The common law claim, established in Boston Old Colony Insurance Co. v. Gutierrez, 386 So. 2d 783 (Fla. 1980), requires the insurer to exercise the same care a person of ordinary prudence would use when handling a claim against its insured. The Florida Supreme Court held in Berges v. Infinity Insurance Co., 896 So. 2d 665 (Fla. 2004), that bad faith is judged on the “totality of the circumstances” and is ordinarily a question for the jury.

Bad faith insurance claim: A cause of action under Fla. Stat. § 624.155 or Florida common law against an insurer that has failed to act fairly and honestly in handling, investigating, or settling a policyholder’s claim, exposing the insurer to damages that exceed the policy limits.

How Does First-Party Bad Faith Differ from Third-Party Bad Faith in Florida?

First-party bad faith arises when an insurer unreasonably denies or underpays the policyholder’s own claim for property damage, business interruption, or another covered loss. In Florida, first-party bad faith exists only by statute. The Florida Supreme Court confirmed in Citizens Property Insurance Corp. v. Perdido Sun Condominium Ass’n, 164 So. 3d 663 (Fla. 2015), that no common law first-party bad faith cause of action exists in this state.

Third-party bad faith arises when a liability insurer fails to settle a claim brought against the policyholder by someone else. The scenario is familiar to any business that carries a commercial general liability policy: a plaintiff sues the policyholder, the insurer has an opportunity to settle within policy limits, and the insurer refuses or fails to act. When that refusal leads to a verdict exceeding the policy limits, the insurer becomes exposed to the full excess amount.

	First-Party Bad Faith	Third-Party Bad Faith
Who sues	The policyholder against their own insurer	The policyholder (or assignee) against their liability insurer
What triggers it	Unreasonable denial or underpayment of the policyholder’s own claim	Failure to settle a claim against the policyholder within policy limits
Legal basis	Statutory only (§ 624.155)	Both statutory (§ 624.155) and common law (Gutierrez)
Prerequisite	Underlying claim resolved in the policyholder’s favor	Excess judgment or equivalent against the policyholder
Key case	Talat Enterprises v. Aetna, 753 So. 2d 1278 (Fla. 2000)	Boston Old Colony v. Gutierrez, 386 So. 2d 783 (Fla. 1980)

Excess judgment: A court judgment against a policyholder that exceeds the available insurance policy limits, creating personal liability for the policyholder and bad faith exposure for the insurer that failed to settle within those limits.

What Insurer Conduct Supports a Bad Faith Claim Under Florida Law?

Florida’s unfair claims settlement practices statute, § 626.9541, defines the categories of insurer conduct that can support a bad faith insurance claim in Florida. The statute prohibits specific practices including failing to adopt reasonable standards for investigating claims, failing to affirm or deny coverage within a reasonable time, and making claim payments without statements identifying the coverage under which payment is made.

Conduct that commonly supports bad faith claims includes:

• Denying a claim without conducting a reasonable investigation into the facts
• Failing to acknowledge or act on a claim within a reasonable time after submission
• Offering substantially less than the claim is worth when liability and damages are reasonably clear
• Refusing to settle a liability claim within policy limits when a reasonably prudent insurer would have settled
• Refusing to defend a lawsuit when the complaint alleges facts that potentially fall within the policy’s coverage
• Requiring excessive or unnecessary documentation before processing a valid claim
• Misrepresenting policy provisions to avoid paying a covered loss

If your insurer sent a reservation of rights letter and then denied coverage, the denial may support a bad faith claim if the insurer failed to investigate adequately before reaching its coverage determination. Understanding the duty to defend and the duty to indemnify is essential to evaluating whether the insurer’s conduct crosses the line from a disputed coverage question into actionable bad faith.

Civil Remedy Notice (CRN): A formal written notice filed with the Florida Department of Financial Services under § 624.155(3) that a policyholder must submit before bringing a statutory bad faith lawsuit, giving the insurer 60 days to pay the claim or correct the violation before suit can be filed.

How Do You File a Bad Faith Insurance Claim in Florida?

Filing a bad faith insurance claim in Florida requires satisfying several procedural prerequisites in a specific order. Skipping any step can be fatal to the claim.

1. Resolve the underlying claim. The Florida Supreme Court held in Blanchard v. State Farm Mutual Automobile Insurance Co., 575 So. 2d 1289 (Fla. 1991), that a bad faith claim does not accrue until the underlying coverage claim has been determined in the policyholder’s favor. This means obtaining a judgment, an arbitration award, an appraisal determination, or a payment establishing that the insurer owed the claim.
2. File a Civil Remedy Notice with the Department of Financial Services. The CRN must be filed on the department’s official form and must identify the specific statutory provision the insurer violated, the facts and circumstances of the violation, the names of individuals involved, and the relevant policy language. The Department may reject the CRN within 20 days if it lacks the required specificity, and a rejected notice does not start the cure clock.
3. Allow 60 days for the insurer to cure. Under § 624.155(3)(c), no lawsuit may be filed if the insurer pays the damages or corrects the circumstances giving rise to the violation within 60 days of receiving the CRN. The insurer need only pay contractual damages to cure within this window. The Florida Supreme Court confirmed this standard in Talat Enterprises, Inc. v. Aetna Casualty & Surety Co., 753 So. 2d 1278 (Fla. 2000).
4. File the bad faith lawsuit. If the cure period expires without cure, the policyholder may file suit in Florida circuit court. The statute of limitations is tolled during the notice period.

For third-party common law bad faith claims, the path is different. The policyholder or assignee must establish an excess judgment or its functional equivalent and show that the insurer missed a reasonable opportunity to settle within policy limits. No Civil Remedy Notice is required for a common law claim.

A commercial litigation attorney experienced in bad faith insurance claims in Florida can evaluate whether the procedural prerequisites have been satisfied and whether the insurer’s conduct supports a viable claim.

What Damages Are Available in a Florida Bad Faith Insurance Lawsuit?

A successful bad faith insurance claim in Florida can produce damages far exceeding the original policy limits.

• Damages beyond policy limits. The insurer becomes liable for the full amount of any excess judgment against the policyholder. The policy limits no longer cap the insurer’s exposure. Consider a policyholder with $500,000 in liability coverage whose insurer refused to settle a clear case for $400,000. If the case goes to trial and the jury returns a $2 million verdict, the insurer faces exposure to the entire $2 million through a bad faith claim.
• Consequential damages. Reasonably foreseeable losses flowing from the insurer’s conduct, including lost rental income, lost business revenue, costs of alternative arrangements, and expenses incurred because the claim was not paid when it should have been.
• Attorney’s fees and court costs. Under § 624.155(7), a prevailing party in a bad faith action recovers reasonable attorney’s fees and court costs upon an adverse adjudication at trial or on appeal.
• Punitive damages. Available when the insurer’s violations occurred “with such frequency as to indicate a general business practice” and were carried out with willful, wanton, or malicious disregard for the insured’s rights. This is a high standard, but it remains available in egregious cases.

Comparative bad faith: A provision introduced by Florida’s 2023 tort reform requiring the policyholder and their representatives to act in good faith when furnishing information, making demands, and attempting to settle, with damages subject to reduction if the policyholder failed to meet this standard.

How Did Florida’s 2023 Tort Reform Change Bad Faith Insurance Claims?

Florida’s 2023 tort reform (HB 837, Chapter 2023-15) restructured parts of the bad faith insurance framework. These changes apply to insurance contracts issued or renewed after March 24, 2023, as confirmed in Blumberg v. Security First Insurance Co., 420 So. 3d 1070 (Fla. 5th DCA 2025).

The safe harbor for liability insurers. Under § 624.155(4), a liability insurer that tenders the lesser of the policy limits or the amount demanded within 90 days of receiving actual notice of a claim avoids bad faith liability for that claim. This provision gives insurers a defined window to resolve liability claims without bad faith exposure. If the insurer fails to tender within that window, the failure itself is not admissible as evidence of bad faith.

The negligence floor. Section 624.155(5)(a) provides that “mere negligence alone is insufficient to constitute bad faith.” Before this reform, the line between negligent claims handling and bad faith was less defined. A policyholder must now show more than carelessness or a reasonable mistake in the claims process.

The insured’s reciprocal duty. The statute requires policyholders and their representatives to act in good faith when furnishing information, making demands, setting deadlines, and attempting to settle. A factfinder may reduce damages based on the policyholder’s own failure to meet this standard.

Repealed fee provisions. HB 837 repealed § 627.428 and § 626.9373, the attorney’s fee statutes that previously permitted only policyholders to recover fees in coverage disputes. The bad faith fee provision under § 624.155(7) survives, but the fee recovery rules shifted in the insurer’s favor.

These reforms make bad faith insurance claims in Florida more procedurally demanding for policyholders than they were before 2023. A policyholder considering a bad faith claim on a policy issued after March 2023 faces a narrower path than those holding older policies.

What Mistakes Weaken a Bad Faith Insurance Claim?

• Filing a deficient Civil Remedy Notice. The Department of Financial Services can reject a CRN that fails to identify the specific statutory violation, the facts, the individuals involved, or the relevant policy language. A rejected CRN does not start the cure clock, and a lawsuit filed before a valid CRN is premature.
• Filing suit before the underlying claim is resolved. A bad faith claim brought before the policyholder obtains a favorable determination on the underlying coverage dispute is subject to dismissal under the Blanchard ripeness doctrine.
• Failing to preserve evidence of the insurer’s conduct. Every communication with the insurer, including letters, emails, adjuster reports, recorded statements, and payment records, is potential evidence of unreasonable claims handling. Discarding or failing to organize this documentation weakens the claim at every stage.
• Breaching the insured’s duty of good faith. Under the 2023 reforms, the policyholder’s own conduct matters. Making unreasonable demands, imposing artificial deadlines, or withholding information from the insurer can reduce or defeat a bad faith recovery.
• Missing the statute of limitations. The limitations clock does not start until the underlying coverage claim is resolved in the policyholder’s favor, but the deadline is absolute once it begins running. The tolling provisions during the CRN period do not extend the limitations period indefinitely.

When Should a Florida Business Contact an Attorney About Insurance Bad Faith?

Not every claim denial or delay is bad faith. Insurers have the right to investigate claims, request documentation, and make reasonable coverage determinations. Bad faith begins when the insurer’s conduct crosses from reasonable claims handling into unreasonable or dishonest treatment.

Contact an attorney when:

• Your insurer has denied a claim that appears to fall squarely within your policy’s coverage
• Your insurer has offered a settlement amount substantially below the documented value of your loss
• Your liability insurer refused to settle a claim against you within policy limits when liability appeared clear, exposing you to a potential excess judgment
• Your insurer has failed to respond to your claim, failed to investigate, or caused unreasonable delays in processing
• You received a reservation of rights letter followed by a coverage denial
• Your insurer has breached its contractual obligations under the policy and refuses to correct the breach

An attorney experienced in bad faith insurance claims can determine whether the insurer’s conduct satisfies the legal standard, whether the procedural prerequisites have been met, and how the 2023 tort reform provisions affect your claim.

Frequently Asked Questions

Key Takeaways

• Fla. Stat. § 624.155 provides a statutory cause of action against insurers that fail to handle claims in good faith, with potential damages exceeding the policy limits.
• Bad faith insurance claims in Florida require strict procedural prerequisites, including resolving the underlying claim first and filing a Civil Remedy Notice with the Department of Financial Services.
• First-party bad faith (denial of your own claim) is purely statutory in Florida, while third-party bad faith (failure to settle a claim against you) can be pursued under both statute and common law.
• Florida’s 2023 tort reform (HB 837) added a safe harbor for liability insurers, established that negligence alone is insufficient for bad faith, and imposed a reciprocal duty of good faith on policyholders.
• The Civil Remedy Notice must identify the specific statutory violation, the facts, the individuals involved, and the relevant policy language; the insurer then has 60 days to cure before suit can be filed.
• A successful bad faith claim can produce the full amount of an excess judgment, consequential damages, attorney’s fees under § 624.155(7), and in egregious cases punitive damages.

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Legal Disclaimer: This article is provided for informational purposes only and does not constitute legal advice. The information contained herein is based on Florida law as of the publication date and may not reflect recent changes. Laws vary by jurisdiction and circumstance, and no single article can address every situation. Do not rely on this article as a substitute for professional legal counsel. If you face a legal matter related to the topics discussed, contact an attorney licensed in Florida to review your specific facts and circumstances. Southron Firm, P.A., is a Florida law firm based in Tampa. For a consultation regarding your litigation or estate planning matter, contact our office.