15.4 Civil Remedy Notices, Bad Faith and the House Bill 837 Changes
Key Takeaways
- A civil remedy notice filed with DFS under F.S. § 624.155(3) is a condition precedent to a statutory bad faith action, and the insurer has 60 days to cure the alleged violation.
- Under F.S. § 624.155(4) no liability bad faith action lies if the insurer tenders the lesser of policy limits or the amount demanded within 90 days after actual notice of a claim accompanied by sufficient evidence.
- If the insurer misses that 90-day window, the existence of the safe harbor is inadmissible in the bad faith action and any applicable statute of limitations is extended by 90 days.
- F.S. § 624.155(5) provides that mere negligence alone is insufficient to constitute bad faith, and allows the trier of fact to reduce damages where the claimant side did not act in good faith.
- A civil remedy notice may not be filed within 60 days after appraisal is invoked in a residential property claim, and the limitations period is tolled for 60 days after the department gives the insurer notice and for 60 days after appraisal is invoked.
Civil Remedy Notices (CRN) & Statutory Bad Faith (F.S. § 624.155)
In Florida, an insurer's failure to settle claims fairly and promptly can expose the company to extra-contractual liability under Florida Statutes § 624.155, the statutory basis for Civil Remedy Actions (Bad Faith).
The CRN as a Mandatory Condition Precedent
An insured or third-party claimant cannot simply march into a Florida circuit court and file a statutory bad faith lawsuit against an insurance company. Under F.S. § 624.155(3), the filing of a formal Civil Remedy Notice of Insurer Violations (CRN) with the Department of Financial Services (DFS) is an absolute mandatory condition precedent to bringing an action.
- The CRN must be submitted electronically through the DFS online portal and served simultaneously upon the authorized insurer.
- The notice must specify the statutory provisions violated, the factual basis of the complaint, the insurance policy number, and the specific cure demand.
The 60-Day Statutory Cure Period
Once the CRN is officially filed with the DFS and received by the insurer, a 60-calendar-day statutory cure clock begins running:
- The Insurer's Safe Harbor: The insurer has exactly 60 days from the filing date to evaluate the claim and "cure" the alleged violation.
- How to Cure: The insurer cures the violation by paying the contractual damages claimed, paying the policy limits, or tendering the amount required to resolve the underlying claim.
- Legal Effect of Cure: If the insurer pays the claim damages within the 60-day period, no statutory bad faith action can ever be filed or maintained. The carrier's liability is strictly capped at the contractual policy benefits paid.
- Failure to Cure: If the insurer fails to pay or cure within the 60-day window, and the insured subsequently proves that the insurer acted in bad faith during underlying litigation, the insurer faces extensive statutory bad faith liability. This may include the full amount of an excess judgment, consequential damages, and the claimant's reasonable attorney fees.
Exam Trap: The 60-Day CRN Clock is Jurisdictional!
On the Florida exam, questions frequently test the timeline and prerequisites for bad faith lawsuits. Remember: The cure period is exactly 60 calendar days, not 30, 45, or 90 days. Furthermore, a bad faith claim cannot be litigated concurrently with an unresolved breach of contract action—coverage and the underlying contractual damages must be established before a court will adjudicate the bad faith lawsuit!
How House Bill 837 Reshaped Florida Bad Faith
House Bill 837 (effective March 24, 2023) added subsections (4), (5) and (6) to F.S. § 624.155 and tightened the notice rules in subsection (3). Adjusters handling liability claims work inside these provisions every day.
The 90-Day Liability Safe Harbor (§ 624.155(4))
An action for bad faith on a liability insurance claim — statutory or common law — does not lie if the insurer tenders the lesser of the policy limits or the amount demanded by the claimant within 90 days after receiving actual notice of a claim accompanied by sufficient evidence to support the amount of the claim.
- If the insurer misses the window, the existence of the 90-day safe harbor is inadmissible in the later bad faith action — the jury never hears that the insurer could have bought peace.
- Missing the window also extends any applicable statute of limitations by an additional 90 days.
- Practical effect: the moment a liability file arrives with a demand and supporting documentation, the adjuster should date-stamp it and calendar the 90th day.
Negligence Is Not Bad Faith (§ 624.155(5)(a))
In any bad faith action, whether statutory or common law, "mere negligence alone is insufficient to constitute bad faith." A missed diary entry or a slow assignment, standing alone, no longer supports the claim.
The Claimant Also Owes Good Faith (§ 624.155(5)(b))
The insured, the claimant and their representatives have a duty to act in good faith in furnishing claim information, making demands, setting deadlines, and attempting to settle. The duty creates no separate cause of action, but the trier of fact may reduce the damages awarded against the insurer if the claimant side did not act in good faith. This is the statutory answer to the manufactured "set-up" demand with an impossible deadline.
Competing Third-Party Claimants (§ 624.155(6))
Where two or more third-party claimants have competing claims from a single occurrence that together may exceed the available limits, the insurer is not liable beyond the available policy limits for failing to pay one claimant if, within 90 days after receiving notice of the competing claims, it either:
- files an interpleader action, in which case the claimants share the limits pro rata as determined by the trier of fact (interpleading does not relieve the insurer of its duty to defend the insured); or
- submits to binding arbitration agreed to by the insurer and the third-party claimants, making the full limits available before a qualified arbitrator at the insurer's expense, with the arbitrator apportioning the limits after considering comparative fault and the likely trial outcome.
Two More Notice Rules Adjusters Must Track (§ 624.155(3))
- The statute of limitations on a civil remedy action is tolled for 60 days after the department gives the insurer the required notice, and for 60 days after appraisal is invoked.
- A civil remedy notice may not be filed within 60 days after appraisal is invoked by any party in a residential property insurance claim. Invoking appraisal therefore buys the file a statutory pause.
Summary Comparison: Unfair Claims Practices vs. Lawful Claims Handling
| Statutory Requirement | Prohibited Unfair Claims Practice (F.S. § 626.9541) | Lawful Claims Handling Best Practice |
|---|---|---|
| Coverage Disclosure | Concealing applicable coverages or misrepresenting limits to suppress payouts | Providing complete policy copies and explaining applicable coverages honestly |
| Communications | Ignoring calls and emails; delaying responses beyond statutory windows | Reviewing and acknowledging claim communications within 7 calendar days (F.S. § 627.70131(1)(a)) |
| Investigation | Denying claims arbitrarily without site inspections or interviewing witnesses | Conducting prompt, thorough site inspections and gathering all factual evidence |
| Proof of Loss | Holding completed proofs of loss indefinitely without making a determination | Affirming or denying coverage within a reasonable time after receipt |
| Denial Documentation | Issuing vague verbal denials or blanket rejections without policy citations | Providing formal written denial letters citing exact policy forms, sections, and facts |
| Claim Payments | Issuing lump-sum checks without explaining what coverages are funded | Accompanying every payment with a detailed statement showing specific coverages |
| Bad Faith Notice | Ignoring a filed Civil Remedy Notice beyond the 60-day statutory safe harbor | Conducting emergency file audits and curing valid claims within the 60-day cure window |
What is the primary legal function and statutory timeline associated with a Civil Remedy Notice (CRN) under Florida Statutes § 624.155?
A Florida liability insurer receives actual notice of a claim accompanied by sufficient evidence to support the amount demanded. It tenders the lesser of policy limits or the demand 75 days later. What is the effect under F.S. § 624.155(4)?