Bad faith and the civil remedy notice

There are two clocks in this statute and the exam swaps them constantly. Sixty days is the cure period that follows a civil remedy notice. Ninety days is the window a liability insurer has to tender and buy itself a complete defense. They do different work, they attach to different parties, and knowing which one a question is describing is usually the whole item.

Questions and answers, explained

All 9 questions above, with the correct answer and why it is correct. Everything here is on bad faith and the civil remedy notice.

1. A Florida insured believes her liability insurer has unreasonably refused to settle a covered third-party claim within policy limits and wants to bring a statutory bad faith action under s. 624.155, F.S. What must she do first?

   • ANothing further — she may plead the bad faith count together with her breach of contract count
   • BFile a civil remedy notice with the Department of Financial Services and the insurerCorrect
   • CDemand and complete appraisal before any notice may be filed
   • DObtain a ruling from the Division of Administrative Hearings that the insurer committed an unfair claim settlement practice

   Why: Section 624.155(3)(a), F.S., makes 60 days' written notice to the Department of Financial Services and the authorized insurer a condition precedent to a statutory bad faith action. The civil remedy notice must identify the statutory provision violated, the facts relied on and the policy language at issue. Under s. 624.155(3)(c) no action lies if, within 60 days after the insurer receives the notice, the damages are paid or the circumstances giving rise to the violation are corrected — that window is the insurer's cure period. Keep two Florida wrinkles straight: the cure period runs from the insurer's receipt of the notice, and for PROPERTY insurance s. 624.1551, F.S., adds a further requirement of an adverse adjudication of breach against the insurer, which does not apply to liability and casualty claims.

   Reference s. 624.155(3)(a) and (3)(c), F.S.

2. A claimant intends to sue an authorized insurer under the Insurance Code for a bad-faith failure to settle. Before that action may be brought, the code requires:

   • ADepartment-supervised mediation, which the insurer may decline in writing
   • BA civil remedy notice, giving the insurer 60 days to pay or to cureCorrect
   • CA written demand for appraisal, followed by a 30-day cooling-off period
   • DNothing, because a bad-faith action arises at common law and needs no notice

   Why: Section 624.155(3), F.S., makes a written civil remedy notice a condition precedent to the action: the department and the authorized insurer must be given 60 days' written notice of the violation on the department's form, stating the statutory provision violated, the facts and circumstances, the persons involved, and the policy language relied on. No action lies if, within 60 days after the insurer receives the notice, the damages are paid or the circumstances giving rise to the violation are corrected. The 2023 reforms tightened the standard — subsection (5) now says mere negligence alone is insufficient to constitute bad faith, and subsection (4)(a) gives the insurer of a liability insurance claim a safe harbor if it tenders the lesser of policy limits or the amount demanded within 90 days of actual notice with sufficient supporting evidence — but they did not repeal the notice requirement, which is why D is wrong. Appraisal is a loss-valuation mechanism in the policy, not a precondition to this statutory action. One further precondition governs property business: under s. 624.1551, F.S., a claim for extracontractual damages under s. 624.155(1)(b) arising from a property insurance policy does not lie until the insured has established, through an adverse adjudication by a court of law, that the insurer breached the contract and a final judgment or decree has been rendered against it — and neither the payment of an appraisal award nor an accepted offer of judgment counts as that adjudication.

   Reference ss. 624.155 and 624.1551, F.S.

3. A policyholder intends to bring a statutory bad faith action against her insurer and files a civil remedy notice of violation with the Department of Financial Services on April 2. What is the immediate legal effect of that filing?

   • AThe insurer must respond in writing within 30 days or the allegations are admitted
   • BThe insurer has 60 days to pay the damages or otherwise correct the circumstancesCorrect
   • CThe suit may be filed at once, since the notice is a courtesy rather than a condition
   • DThe insurer must obtain approval from the OIR before it may cure the alleged violation

   Why: Under s. 624.155(3), F.S., giving the Department of Financial Services and the insurer 60 days' written notice of the violation is a condition precedent to a statutory bad faith action, and no action lies if within those 60 days the damages are paid or the circumstances giving rise to the violation are corrected. That is why the notice is commonly called the cure period. Option C is the distractor that traps candidates who think of the notice as a formality: skipping it defeats the action outright. The notice must specify the statutory provisions allegedly violated, the facts and circumstances, and the name of any individual involved.

   Reference s. 624.155(3), F.S.

4. An insurer's adjuster mishandles a liability file: he misreads the policy limit, lets the file sit for weeks, and never presents the claimant's settlement demand to the committee that could have accepted it. The insured sues for statutory bad faith. Which statement best reflects Florida law?

   • ACareless claim handling of this kind is by itself bad faith once the civil remedy notice cure period expires
   • BBad faith is established automatically whenever an excess judgment is entered against the insured
   • CMere negligence alone is insufficient to constitute bad faith; the insured must show more than careless handlingCorrect
   • DBad faith requires proof that the adjuster acted with criminal intent

   Why: Section 624.155(5)(a), F.S., states that mere negligence alone is insufficient to constitute bad faith. Sloppy or negligent claim handling is evidence a jury may weigh, but standing alone it does not carry the insured's burden; the insured must show the insurer failed to act fairly and honestly toward its insured with due regard for the insured's interests. Option B confuses consequence with proof — an excess judgment is the damage a bad faith action seeks to recover, not evidence that bad faith occurred. Option D errs in the opposite direction by importing a criminal standard the statute does not use. Option A is the most tempting distractor because the cure period is real, but letting it lapse merely permits suit; it does not establish liability.

   Reference s. 624.155(5)(a), F.S.

5. Before a first-party civil remedy action for bad faith may be brought against an authorized insurer under s. 624.155, F.S., what condition must be satisfied?

   • AA civil remedy notice must be filed and 30 days allowed to cure
   • BThe insured must first complete DFS mediation of the disputed claim
   • CA civil remedy notice must be filed and 60 days allowed to cureCorrect
   • DThe insured must obtain an appraisal award establishing the loss amount

   Why: Section 624.155(3)(a), F.S., makes 60 days' written notice of the violation to the department and to the authorized insurer a condition precedent to bringing the statutory bad faith action. Note how service actually works under the current statute: the claimant files the civil remedy notice with the department on the department's form, and notice to the authorized insurer is then provided by the department to the e-mail address the insurer has designated under s. 624.422, F.S. Paragraph (3)(c) runs the cure period from that transmittal, so no action lies if within 60 days after the insurer receives notice from the department the damages are paid or the circumstances giving rise to the violation are corrected. Paragraph (3)(f) adds that a civil remedy notice may not be filed within 60 days after appraisal is invoked by any party in a residential property insurance claim. Two further limits matter: under subsection (5) mere negligence alone is insufficient to constitute bad faith, and under subsection (4) no bad faith action lies in a liability claim if the insurer tenders the lesser of the policy limits or the amount demanded within 90 days after receiving actual notice of the claim accompanied by sufficient evidence. Option B is the strongest distractor because DFS mediation is a real Florida process, but it is the residential property program under s. 627.7015, F.S., and it is not a precondition to a civil remedy action.

   Reference s. 624.155(3), (4) and (5), F.S.

6. A liability insurer receives actual notice of a third-party claim accompanied by evidence sufficient to support the amount demanded. Eighty days later it tenders the full policy limits, which are lower than the amount demanded. The claimant nonetheless sues the insurer for bad faith. Under s. 624.155, F.S., as amended in 2023, what happens?

   • AThe action proceeds, because the safe harbor covers only first-party property claims
   • BThe action fails only if the insurer had also tendered the full amount demanded
   • CThe action fails, because the tender fell inside the statutory 90-day safe harbor windowCorrect
   • DThe action proceeds if the insurer's handling of the claim was merely negligent

   Why: Section 624.155(4), F.S., added by HB 837 in 2023, provides that an action for bad faith involving a liability insurance claim, including a common-law action, does not lie if the insurer tenders the lesser of the policy limits or the amount demanded within 90 days after receiving actual notice of a claim accompanied by sufficient evidence to support the amount claimed. The insurer tendered limits on day 80, and limits were the lesser figure, so the safe harbor closes the case. Option B is the near-miss worth understanding: the statute says the LESSER of limits or the demand, so tendering limits is enough even when the demand is higher. Option D fails for a separate reason — s. 624.155(5) states that mere negligence alone is insufficient to constitute bad faith.

   Reference s. 624.155(4) and (5), F.S.

7. A claimant gives a Florida liability insurer actual notice of a claim accompanied by sufficient evidence to support the amount demanded. Sixty days later the insurer tenders its full policy limits, which the claimant refuses. The claimant wins an excess verdict and then pursues the insurer for bad faith. What does s. 624.155, F.S., provide?

   • AThe action proceeds; tender is relevant only to damages, not liability
   • BThe action proceeds because the claimant rejected the tender offer
   • CNo action lies only if the insurer also pays the excess judgment
   • DNo bad faith action lies; the tender came within the statutory windowCorrect

   Why: The 2023 tort reform added a safe harbor at s. 624.155(4)(a), F.S. An action for bad faith involving a liability insurance claim, including one brought under the 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 claimed. A tender at day sixty is comfortably inside that window, and the claimant's refusal of the tender does not revive the action. Option A is the strongest distractor because under the older common law analysis a late or partial tender genuinely was weighed as evidence rather than treated as a bar; the current statute converts a timely tender into a complete defense. Two related mechanics are worth memorizing: if the insurer misses the 90 days, s. 624.155(4)(b) makes the existence of the 90-day period, and the fact that no bad faith action could have been brought had the insurer tendered in time, inadmissible in the bad faith action, and s. 624.155(4)(c) extends any applicable statute of limitations by an additional 90 days.

   Reference s. 624.155(4), F.S.

8. A liability insurer receives actual notice of a claim accompanied by sufficient evidence to support the amount demanded. It tenders the lesser of the policy limits or the amount demanded 70 days later. The claimant then sues the insurer for bad faith. What is the result?

   • AThe insurer is liable, because any delay beyond 60 days is bad faith by itself
   • BThe insurer is protected, because a tender within 90 days bars the actionCorrect
   • CThe insurer is protected only if it also answered a civil remedy notice in time
   • DThe insurer is liable unless it proves the claimant caused part of the delay

   Why: Section 624.155(4)(a), F.S., added by HB 837 in 2023, gives liability insurers a safe harbor: if the insurer tenders the lesser of the policy limits or the amount demanded within 90 days after receiving actual notice of a claim that is accompanied by sufficient evidence to support the amount claimed, the insurer is not liable for bad faith. Failure to tender within that window does not create liability by itself; under s. 624.155(4)(c) it merely extends any applicable statute of limitations by an additional 90 days. Track the paragraph letters, because the exam separates them: s. 624.155(5)(a) provides that mere negligence alone is insufficient to constitute bad faith, and s. 624.155(5)(b) lets the trier of fact reduce a bad faith award to reflect the insured's or claimant's own failure to act in good faith. Option A is the near-miss: the 60-day figure is real but belongs to the cure period that follows a civil remedy notice under s. 624.155(3), not to the tender safe harbor.

   Reference s. 624.155(4) and (5), F.S.

9. A claimant believes her insurer has handled her claim in bad faith. She files a civil remedy notice with the Department of Financial Services and serves it on the insurer. Which statement is correct under s. 624.155, F.S.?

   • AShe may sue immediately, since the notice is filed for informational purposes
   • BThe insurer's negligence in handling the claim is by itself enough for bad faith
   • CThe insurer has 60 days to pay the damages or correct the circumstances allegedCorrect
   • DThe insurer has 30 days to respond in writing or bad faith is conclusively shown

   Why: Section 624.155(3), F.S., makes the civil remedy notice a condition precedent to a statutory bad faith action: the department and the insurer must be given 60 days' written notice of the violation, and no action lies if within that 60-day window the damages are paid or the circumstances giving rise to the violation are corrected. That cure period is the whole point of the notice, which is why A is wrong. Option B is the most tempting because it was the working intuition before 2023: HB 837 added s. 624.155(5)(a), F.S., providing that mere negligence alone is insufficient to constitute bad faith. The same act created a safe harbor in s. 624.155(4), F.S. — no bad faith action, statutory or common law, lies on a liability claim if the insurer tenders the lesser of the policy limits or the amount demanded within 90 days after receiving actual notice of a claim accompanied by sufficient evidence to support the amount claimed. Do not read that 90-day tender window as the cure period; the cure period is 60 days.

   Reference s. 624.155, F.S.

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