Insurance Bad Faith Claims in Sarasota, FL

When a Sarasota homeowner files a claim after a hurricane tears off their roof, or a car accident victim submits a personal injury claim to the at-fault driver's insurer, they trust that the insurance company will deal with them honestly and fairly. Florida law requires exactly that. When an insurer fails to meet that obligation — by delaying, denying, or underpaying a legitimate claim without reasonable grounds — the insured may have a powerful legal remedy: a bad faith claim.

Insurance bad faith litigation is one of the most consequential areas of insurance law in Florida. A successful bad faith claim can result in damages that far exceed the original policy limits, including compensation for consequential damages and, in some circumstances, attorney's fees. Understanding how these claims work is critical for any Sarasota resident or business owner locked in a dispute with their insurer.

What Constitutes Insurance Bad Faith Under Florida Law

Florida recognizes two categories of bad faith: first-party bad faith and third-party bad faith. Both are governed primarily by Florida Statute § 624.155, which gives policyholders a statutory cause of action against their own insurer for failing to settle claims in good faith.

First-party bad faith arises when your own insurance company — say, your homeowner's insurer or auto insurer — mishandles your claim. Common examples in Sarasota include:

• Unreasonable delays in investigating or paying out a valid hurricane damage claim
• Lowball settlement offers that ignore documented repair costs or medical bills
• Wrongful denial of a claim without a legitimate basis or adequate investigation
• Failure to communicate claim status or request information in a timely manner
• Misrepresenting policy terms or coverage to avoid paying a claim

Third-party bad faith, on the other hand, typically arises when a liability insurer fails to settle a claim against its policyholder within policy limits when it had a reasonable opportunity to do so. If the insurer's refusal to settle leads to a verdict exceeding the policy limits, the insurer may be liable for the excess judgment.

The Civil Remedy Notice: A Critical Procedural Step

Before filing a bad faith lawsuit against an insurer in Florida, the policyholder must first serve a Civil Remedy Notice (CRN) on the insurer and the Florida Department of Financial Services. This is a non-negotiable prerequisite under § 624.155(3)(a).

The CRN gives the insurer 60 days to "cure" the alleged bad faith conduct — essentially, to correct the violation and pay what is owed. If the insurer cures within that window, the bad faith claim is extinguished. If it does not, the policyholder may proceed with litigation. Courts in Florida have strictly enforced this requirement, and failing to file a proper CRN before suing can be fatal to an otherwise valid bad faith claim.

The CRN must specifically identify the insurer's conduct that constitutes bad faith, the policy language at issue, and the damages sustained. A vague or incomplete notice may not trigger the cure period properly, so working with an experienced attorney to draft this document is essential.

Damages Available in a Florida Bad Faith Case

One of the most significant aspects of Florida's bad faith framework is the scope of available damages. Unlike a typical breach of contract claim limited to policy benefits, a successful bad faith claim can yield:

• The full amount of the underlying claim, including amounts that exceeded the policy limit in third-party cases
• Consequential damages — losses caused by the insurer's delay or denial beyond the policy itself, such as foreclosure, business losses, or medical deterioration
• Attorney's fees and costs under Florida Statute § 627.428, which applies when an insurer is found liable
• Interest on delayed payments

In third-party bad faith cases in the Sarasota area, if a jury returns a verdict against a defendant that exceeds their liability policy limits, and the insurer had a reasonable chance to settle within limits before trial and refused, the insurer can be held responsible for the entire verdict — even the portion above the policy ceiling.

How Sarasota's Insurance Landscape Affects Bad Faith Claims

Sarasota sits in one of Florida's most hurricane-exposed corridors. The combination of coastal geography and an active storm season means that property insurance disputes are unusually common here. Following major storm events, insurers frequently face backlogs and, unfortunately, some adopt aggressive claim-denial tactics to manage exposure.

Florida's insurance market has undergone significant legislative changes in recent years, including reforms enacted in 2022 and 2023 that affect how bad faith claims proceed in the context of property insurance. Among the most notable changes: insurers can no longer be held liable for bad faith until after an underlying breach of contract claim is resolved in the policyholder's favor. This means that the sequencing of litigation matters enormously, and policyholders must secure a favorable coverage determination before pursuing bad faith damages.

These reforms make it more important than ever for Sarasota policyholders to build a strong underlying claim from the outset — documenting damages thoroughly, preserving communications with the insurer, and retaining independent adjusters or engineers when the insurer's assessment is disputed.

Steps to Take If You Suspect Insurance Bad Faith

If you believe your Sarasota insurer is acting in bad faith, acting systematically and promptly gives you the best chance of success:

• Document everything. Keep records of every communication with your insurer — emails, letters, phone call logs with dates and summaries. Request all claim decisions in writing.
• Request your claim file. Florida law gives policyholders the right to obtain information about their own claim. Reviewing the file can reveal internal assessments that contradict the insurer's stated reasoning for denying or underpaying.
• Get an independent assessment. Hire a licensed public adjuster or contractor to independently document your losses. Expert opinions carry significant weight in bad faith litigation.
• Track your damages. If the insurer's delay or denial caused additional harm — mold growth because repairs were delayed, temporary housing expenses, lost income — document those losses carefully, as they may be recoverable as consequential damages.
• Consult an attorney before filing a CRN. The Civil Remedy Notice is a legal document with specific content requirements. An improperly drafted notice can undermine the entire bad faith case.

Time is also a factor. Florida's statute of limitations for bad faith claims is generally five years from the date the cause of action accrues, but the clock can be complicated by the sequencing of the underlying coverage dispute. Do not assume you have unlimited time to act.

Insurance companies employ experienced claims professionals and defense attorneys whose job is to minimize payouts. Sarasota policyholders facing bad faith conduct deserve equal representation — counsel who understands both the nuances of Florida insurance law and the specific dynamics of the local market.

Need Help? If you have questions about your case, call or text 833-657-4812 for a free consultation with an experienced attorney.

Related Articles

• Roof Leak Insurance Claims in Pembroke Pines
• Water Damage Claim Denied in Hialeah, FL
• Hurricane Damage Claims in Hialeah: Know Your Rights