When the carrier had a chance to settle within limits and failed to. The bad faith setup is where insurance cases get their leverage.
Reviewed by Graham W. Syfert, Esq., Florida Bar No. 39104. Last updated .
Florida bad faith law is the mechanism by which insurance carriers can be held liable for damages exceeding policy limits when they unreasonably refuse to settle or pay claims. Section 624.155, Florida Statutes codifies the statutory remedy. The civil remedy notice (CRN) procedure controls the pre-suit timeline. HB 837 (2023) tightened the standard but did not eliminate the cause of action. Two flavors exist: third-party bad faith (the carrier exposed its insured to excess judgment by failing to settle within limits) and first-party bad faith (the carrier denied or delayed its insured's own claim without reasonable basis).
The classic Florida bad faith case: an injured plaintiff has a claim against an insured driver whose policy limit is, say, $100,000. The damages are clearly $500,000. The plaintiff sends a clear policy-limits demand with full documentation and a reasonable deadline. The carrier refuses or fails to respond meaningfully. Trial results in a $500,000 verdict against the insured.
The insured now has a $400,000 personal judgment in excess of the policy limit. Under Boston Old Colony and the line of cases that follow, the carrier's failure to settle within limits — when settlement was reasonably available and the insured's interests warranted it — exposes the carrier to liability for the full excess judgment. The insured assigns the bad faith claim to the plaintiff (a Coblentz agreement), and the plaintiff pursues the carrier directly for the excess.
The doctrine creates powerful settlement leverage. A carrier facing a credible bad faith setup will often pay limits even on a thin liability case to avoid the excess-judgment exposure.
The mechanics of setting up bad faith start with a clear, well-documented policy-limits demand. The demand should:
Identify the policy and the limit at issue.
Set forth the facts establishing liability with documentation (police report, witness statements, photos).
Document damages comprehensively (medical bills, lost wage records, treating physician opinions, where appropriate a life-care plan).
Demand the policy limits in clear and unambiguous terms.
Set a reasonable deadline for response — typically 30 to 45 days, though specific facts may justify shorter.
Identify any defects in the carrier's response that would constitute bad faith if uncured.
The HB 837 amendments to section 624.155 codified some of these mechanics and added safe-harbor provisions for carriers who tender limits within statutory windows. The exact mechanics of the demand letter now matter more than they did pre-2023; lawyers familiar with the post-HB 837 framework structure demands accordingly.
Section 624.155(3) requires that before a bad faith civil action is filed, the claimant must:
(1) File a Civil Remedy Notice with the Department of Financial Services in the form prescribed by the Department, AND
(2) Serve a copy on the carrier.
The CRN identifies the alleged violation, the policy and claim, and the relief sought. The carrier has 60 days from receipt to cure the alleged bad faith. Cure can mean paying the claim, settling within limits, or otherwise addressing the alleged violation.
If the carrier fails to cure within 60 days, the bad faith cause of action ripens and suit may be filed.
Timing of the CRN is strategic. Too early — before the underlying claim is fully developed — and the carrier can cure easily. Too late, and the limits demand has stale. Coordinating the CRN with the underlying tort case is part of the case management.
First-party bad faith arises when the insured's own carrier fails to fairly handle the insured's own claim. Common contexts:
UM/UIM claims. The insured's UM carrier refuses to fairly evaluate a clear-liability claim brought by the insured against the carrier under the UM coverage.
PIP claims. Wrongful PIP denials, particularly the EMC issue, generate first-party PIP bad faith claims.
Property and casualty. Homeowners hurricane claims, fire claims, and other property-loss claims where the carrier delays or underpays.
Health insurance. Claim denials based on pretextual coverage analysis.
The CRN procedure applies. Damages in first-party bad faith typically include the contractual benefits owed, consequential damages, attorney's fees under section 627.428 (where applicable), and in egregious cases punitive damages.
HB 837 amended section 624.155 in several ways. The key changes:
Heightened standard. The statute now requires the plaintiff to show that the carrier "breached its duty of good faith and fair dealing." Negligence alone is not enough; a heightened standard applies, though courts are still working out the exact contours.
Safe harbor for prompt limits tender. Carriers who tender policy limits within specified timeframes following a properly-structured demand are protected from bad faith liability for the underlying claim.
Codification of mechanics. Several previously case-law mechanics (timing, demand-letter requirements) are now codified, providing more predictability but also more procedural pitfalls.
Practical effect: post-HB 837 bad faith setup requires more attention to procedure than pre-2023 practice did. The cause of action remains viable and powerful when properly developed.
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