What Is Insurance Bad Faith in Florida? A Complete Guide

When an insurance company fails to deal fairly and honestly with its policyholder — or with an injured third party — Florida law calls that conduct "bad faith." Understanding what that means, and what remedies exist, can be the difference between an inadequate settlement and full accountability for an insurer's misconduct.

What Does "Insurance Bad Faith" Actually Mean?

Insurance companies sell a promise: pay your premiums, and we will protect you when something goes wrong. That promise carries a legal obligation to act in good faith toward the people the policy is meant to protect. When an insurer deliberately delays, denies, or underpays a legitimate claim without a reasonable basis — or when it places its own financial interests above the interests of its policyholder — it has breached that obligation. Florida courts and the legislature call this acting in "bad faith."

Bad faith is distinct from a simple coverage dispute. A company can disagree in good faith about whether a claim is covered. Bad faith arises when the insurer's conduct is unreasonable, dishonest, or motivated by a desire to avoid paying what it legitimately owes. The legal standard in Florida is whether the insurer acted with "reckless disregard for the interests of the insured" — a deliberately demanding bar that courts take seriously.

A successful bad faith claim can unlock damages that go far beyond the original policy limits, including the full amount of a judgment exceeding those limits, consequential damages caused by the delay, and — in egregious cases — punitive damages designed to punish the insurer and deter future misconduct.

First-Party Bad Faith vs. Third-Party Bad Faith

Florida recognizes two distinct categories of insurance bad faith, and they involve different relationships, different statutes, and different procedural requirements. Knowing which applies to your situation is the first step toward understanding your rights.

First-Party Bad Faith

First-party bad faith arises when your own insurance company fails to deal fairly with you — the policyholder — in handling your own claim. Common scenarios include:

• Your auto insurer unreasonably delays or denies your uninsured motorist (UM) claim after you are hurt by an uninsured driver
• Your homeowner's insurer refuses to pay a valid property damage claim after a hurricane or fire
• Your disability insurer cuts off benefits without a legitimate medical basis
• Your health insurer wrongfully denies coverage for a covered procedure

First-party bad faith in Florida is governed primarily by Florida Statute §624.155, part of the Florida Unfair Insurance Trade Practices Act. That statute sets out specific prohibited acts and — critically — establishes the procedural steps you must follow before filing a lawsuit.

Third-Party Bad Faith

Third-party bad faith arises when an insurer fails to fairly protect its insured from a judgment in favor of a third-party claimant. The most common scenario involves car accidents. Suppose another driver causes a serious accident and their liability insurer refuses to settle your claim within policy limits, even though the evidence clearly justifies a settlement. If the case goes to trial and you obtain a verdict exceeding the policy limits, the insurer — not just the negligent driver — may be liable for that excess amount under a bad faith theory.

Third-party bad faith is rooted in Florida common law. The insurer's duty in these cases is to give equal consideration to the interests of the policyholder as to its own financial interests when deciding whether to settle.

Florida Statute §627.727 addresses bad faith in the context of uninsured motorist coverage and imposes specific obligations on UM insurers regarding the handling of UM claims.

Florida's Insurance Bad Faith Statute: §624.155

Florida Statute §624.155 is the centerpiece of first-party bad faith litigation in this state. The statute identifies a range of insurer conduct that constitutes an "unfair claim settlement practice," including:

• Failing to acknowledge communications from a claimant within a reasonable time
• Failing to investigate and evaluate a claim promptly and thoroughly
• Refusing to pay a claim without conducting a reasonable investigation based on all available information
• Failing to affirm or deny coverage within a reasonable time after receiving proof of loss
• Offering substantially less than the amounts ultimately recovered in litigation
• Misrepresenting pertinent facts or policy provisions relating to coverages at issue
• Attempting to settle a claim on the basis of an application that was altered without the insured's knowledge or consent
• Failing to provide a reasonable explanation for the basis of a denial or a compromise settlement offer

The statute does not require the insurer to have acted with malice. Proof of a pattern of unfair conduct or a single act that demonstrates reckless disregard for the insured's interests can be sufficient.

The Mandatory 60-Day Civil Remedy Notice

Before filing a bad faith lawsuit under §624.155, Florida law requires you to give the insurer — and the Florida Department of Financial Services — a written "Civil Remedy Notice" (CRN). This procedural step is one of the most critical — and most misunderstood — aspects of Florida bad faith practice.

The CRN must specifically identify:

• The statutory provision you believe was violated
• The facts and circumstances giving rise to the violation
• The name of any individual who allegedly committed the violation
• A reference to the specific policy language relevant to the violation
• The damages you are seeking

Once the insurer receives the CRN, it has 60 days to "cure" the violation — that is, to pay the amount owed or otherwise correct its conduct. If it cures within that window, the bad faith claim is extinguished. If it fails to cure, you may proceed with your lawsuit.

Filing the notice incorrectly, failing to identify the right statutory provisions, or missing the interplay between the underlying claim and the bad faith notice can jeopardize an otherwise strong case. An experienced bad faith attorney is essential to navigate this process correctly.

What Damages Are Available in a Florida Bad Faith Case?

The potential damages in a successful bad faith claim are substantially broader than in an ordinary coverage dispute — one reason insurers take these cases so seriously.

Extracontractual Damages

In a third-party bad faith case where an insurer refuses to settle within policy limits, the insurer can be held responsible for the entire verdict — even if it vastly exceeds the policy. If a driver's liability policy was $100,000 and a jury returns a $2 million verdict, the insurer may owe the full $2 million if its failure to settle was in bad faith.

Consequential Damages

In first-party cases, damages can include not just the unpaid claim amount but all consequential damages flowing from the insurer's bad faith: lost business income, additional living expenses, emotional distress, and attorney's fees and costs. Florida courts have recognized a broad range of consequential losses in bad faith cases, including financial harm suffered during the period of wrongful denial.

Punitive Damages

When an insurer's conduct is particularly egregious — a deliberate scheme to deny legitimate claims, for example — punitive damages may be available. Florida Statute §768.72 governs punitive damages and generally requires a showing of intentional misconduct or gross negligence. These awards are rare but not unheard of in insurance bad faith cases, and their availability is a powerful incentive for insurers to treat their policyholders fairly.

Attorney's Fees

Under Florida Statute §627.428, if a policyholder prevails in a lawsuit against their insurer, the insurer must pay the policyholder's reasonable attorney's fees. This fee-shifting provision is a significant deterrent to insurer misconduct and ensures that policyholders can afford quality legal representation even when their individual claim is relatively modest in size.

Common Real-World Examples of Insurance Bad Faith

Bad faith does not always look dramatic. Some of the most consequential insurer misconduct is subtle — a pattern of delay, an unexplained denial, a lowball offer accompanied by pressure to accept quickly. Here are typical scenarios that arise in bad faith cases:

Uninsured Motorist Claim Delay and Denial

A client is seriously injured by an uninsured driver. Their UM insurer demands thousands of pages of medical records, schedules then cancels independent medical examinations, and makes a series of inadequate settlement offers over eighteen months — never once providing a written explanation for why the claimed damages are disputed. This pattern is textbook first-party bad faith under §624.155.

Liability Insurer Refusing to Tender Policy Limits

A liability insurer is notified early in a case that the claimant's injuries are catastrophic and the evidence of fault is overwhelming. Despite receiving a formal demand to settle within the policy limits, the insurer delays responding for months, then makes a partial offer that falls short. The case goes to trial; the verdict is ten times the policy limit. The insurer is now exposed for the full verdict under third-party bad faith principles — a result that could have been avoided by settling within limits when it had the chance.

Property Insurance Denial After Hurricane

A homeowner suffers extensive damage from a hurricane. The insurer sends an adjuster who spends 45 minutes on the property, then issues a denial claiming the damage is "pre-existing." The insurer never retains an independent engineer, never reviews the home's prior inspection history, and never provides a written explanation of how it reached its conclusion. That is not a reasonable investigation — it is bad faith.

Disability Insurance Benefit Termination

A policyholder receiving long-term disability benefits has their payments abruptly terminated based on a surveillance video showing them walking to the mailbox — conduct entirely consistent with their treating physician's documentation. The insurer never requests updated medical records from the treating physician before terminating benefits. Courts have found bad faith in similar circumstances.

Warning Signs Your Insurer May Be Acting in Bad Faith

You may be dealing with bad faith conduct if your insurer has done any of the following:

• Denied your claim without providing a specific policy provision or factual basis for the denial
• Failed to acknowledge your claim or respond to communications within a reasonable time
• Offered a settlement that is dramatically lower than your documented losses without explanation
• Pressured you to accept a quick settlement before you knew the full extent of your injuries
• Sent you duplicate or unnecessary requests for documentation to delay processing
• Misrepresented what your policy covers or told you that hiring an attorney will hurt your claim
• Refused to conduct a meaningful investigation into the facts of your claim
• Used an independent medical examination that contradicts all of your treating physicians without explanation

What to Do If You Suspect Insurance Bad Faith

If you believe your insurer is not dealing with you honestly or fairly, take these steps immediately to protect your rights:

• Document everything. Keep copies of all correspondence, emails, and notes from phone calls, including the date, time, and name of every representative you speak with.
• Request explanations in writing. If your insurer denies or delays your claim, ask for a written explanation citing the specific policy provision or factual basis for the decision.
• Do not accept a settlement under pressure. An insurer that pressures you to accept a quick, inadequate offer may be acting in bad faith. Once you sign a release, you generally cannot pursue additional compensation.
• Do not give a recorded statement without consulting an attorney. Anything you say can be used to minimize or deny your claim — even to your own insurer in a UM case.
• Consult a bad faith attorney promptly. The procedural requirements of §624.155 — including the 60-day Civil Remedy Notice — mean that timing matters. The sooner you get legal advice, the more options you will have.

Insurance companies have teams of lawyers and decades of experience defending bad faith claims. The only way to level that playing field is to have an experienced bad faith attorney involved before you make any decisions about your claim.

How Bad Faith Intersects With Personal Injury Cases

Most people encounter insurance bad faith through a personal injury case. After a serious car accident, the injured person files a claim with the at-fault driver's insurer, and that insurer refuses to settle within policy limits despite overwhelming evidence of both liability and damages. The case proceeds to trial, and the jury returns a verdict that exceeds the policy. At that point, the bad faith framework activates: the insurer may owe the entire verdict, including the amount above its policy limits.

This dynamic creates a powerful alignment between personal injury litigation and bad faith claims. Attorneys who understand both can pursue maximum recovery by holding insurers accountable not just for the underlying harm, but for their conduct in handling the claim.

Swope, Rodante P.A.: A Track Record in Bad Faith Litigation

Insurance bad faith litigation is one of the most technical and fiercely contested areas of Florida civil law. Insurers retain experienced defense counsel and fight these cases aggressively, precisely because the damages exposure can be enormous. Swope, Rodante P.A. has spent decades holding insurers accountable — including in the landmark case of Willoughby v. GEICO, which resulted in a $30.1 million verdict against GEICO for bad faith failure to settle within policy limits. That case became one of the most significant bad faith verdicts in Florida history and set precedent that continues to shape this area of law.

Our approach begins with a thorough review of the insurer's claim file, which we obtain through the litigation discovery process. The claim file — containing internal notes, reserve calculations, adjuster communications, and coverage analysis — is often where the clearest evidence of bad faith resides. We combine that documentary evidence with expert testimony from former insurance industry professionals who can explain what a reasonable insurer would have done differently.

We handle bad faith cases on a contingency fee basis. You pay nothing unless we recover for you.