Underpaid First-Party Residential Property Claims in Florida: Bad Faith and Extra-Contractual Remedies After SB 2-A and HB 837

Scope and as-of date. This is a Florida-specific analysis of the remedies available when a residential property insurer underpays a first-party claim, written for coverage counsel. It covers admitted and surplus lines residential property policies and the statutory bad faith regime in section 624.155, Florida Statutes. It does not address third-party or liability bad faith (a separate body of law under the duty to settle), uninsured-motorist or PIP bad faith, commercial property except where the statutes treat the two lines alike, or NFIP flood claims, which are governed by federal law. The analysis is current as of June 19, 2026, and reflects the 2025 Florida Statutes, Senate Bill 2-A (effective December 16, 2022, with the section 627.70131 claim-handling amendments effective March 1, 2023), and House Bill 837 (effective March 24, 2023). No superseding legislation had passed as of this date; the 2025 fee-restoration bills are discussed under Open Questions.

The short version: an underpaid residential property claim now travels two tracks that the 2022 and 2023 reforms pulled further apart. The contract track recovers policy benefits and interest and nothing more. The statutory bad faith track is the only route to extra-contractual damages, and for any claim that accrued after the December 2022 reforms a property insurer cannot be sued on it until the insured has won the contract case. The fee economics that drove a generation of first-party litigation are gone, with one surviving exception inside the bad faith statute itself.

The contract track recovers benefits, not consequences

A suit to enforce the policy is a breach-of-contract action. The insured recovers the amount owed under the policy, including the unpaid or underpaid loss measured at actual cash value or replacement cost as the policy provides, plus prejudgment interest. It does not recover the downstream financial harm the underpayment caused.

The Florida Supreme Court drew that line in Citizens Property Insurance Corp. v. Manor House, LLC, 313 So. 3d 579 (Fla. 2021). Answering a certified question from the Fifth District, the Court held that in a first-party breach-of-insurance-contract action not brought under section 624.155, Florida law does not allow the insured to recover extra-contractual, consequential damages. Manor House had sought roughly $2.5 million in lost rental income tied to the insurer's delay in adjusting and paying a hurricane claim, on top of the appraisal award it had already collected. The answer was no. Because the defendant was Citizens, a government entity statutorily immune from first-party bad faith, the lost rents in that case were recoverable in neither track; but the rule the Court announced reaches every property insurer. Lost rents and similar consequential losses are recoverable, if at all, only through a bad faith action.

That holding matters for valuation and for client counseling. The contract claim sets a ceiling at policy benefits plus interest. Everything above that ceiling, the lost rents, the additional repair costs caused by delay, the financing costs, lives in the bad faith statute or nowhere.

Statutory bad faith is the only first-party bad faith Florida has

There is no common-law first-party bad faith cause of action in Florida. The Supreme Court said so directly in QBE Insurance Corp. v. Chalfonte Condominium Apartment Ass'n, 94 So. 3d 541 (Fla. 2012), answering certified questions from the Eleventh Circuit. The implied covenant of good faith and fair dealing does not create a freestanding action against an insurer for bad-faith refusal to pay a first-party claim, and the Court found, based on case law and the 1982 legislative history, that no such common-law action existed before section 624.155 was enacted. First-party bad faith in Florida is a creature of statute, full stop.

Section 624.155(1) supplies the cause of action. The two provisions that matter for an underpaid property claim are subsection (1)(a), which incorporates the unfair claim settlement practices listed in section 626.9541(1)(i), and subsection (1)(b)1, which reaches an insurer's failure to attempt in good faith to settle a claim when, under all the circumstances, it could and should have done so had it acted fairly and honestly toward its insured and with due regard for the insured's interests. The statutory text is at section 624.155.

Bad faith damages are not capped at the policy limit. Section 624.155(7) makes the insurer liable, upon adverse adjudication at trial or on appeal, for damages, court costs, and reasonable attorney fees. Section 624.155(11) defines those damages as the ones reasonably foreseeable from the violation and confirms they may exceed the policy limits. This is where the Manor House consequential losses can come back in. Punitive damages are available only under section 624.155(8), which requires the heightened showing that the acts occurred with the frequency of a general business practice and were willful, wanton, or in reckless disregard of the insured's rights, and the plaintiff must post the costs of discovery in advance.

The claim-handling clocks that produce the underpayment

The posture of an underpayment dispute is set by the prompt-handling statutes, and SB 2-A tightened them, with these amendments to section 627.70131 taking effect March 1, 2023. The insurer must acknowledge a claim communication within 7 calendar days (down from 14), and under subsection (7)(a) it must pay or deny the claim, or a portion of it, within 60 days after receiving notice of an initial, reopened, or supplemental claim, unless factors beyond its control prevent payment. That 60-day pay-or-deny clock was 90 days before SB 2-A. The Homeowner Claim Bill of Rights and the Unfair Insurance Trade Practices Act were conformed to the same 60-day figure.

The reporting deadlines moved the other way, against the insured. Under section 627.70132, a new or reopened claim is barred unless notice is given within one year after the date of loss (down from two years), and a supplemental claim is barred unless notice is given within 18 months (down from three years). For a slow-developing loss, that compressed window is now the first thing to check.

Before suit on the policy, the insured must clear the presuit notice in section 627.70152, effective July 1, 2021. The notice is a condition precedent, must be filed on the department's form at least 10 business days before filing suit, and may not be served until the insurer has made a coverage determination under section 627.70131. The insurer then has 10 business days to respond with a presuit settlement offer or to demand reinspection. SB 2-A stripped out the tiered fee-recovery formula that section 627.70152 originally carried, which is why the presuit demand-and-offer exchange now functions mainly as a settlement and limitations mechanism rather than a fee driver.

The Civil Remedy Notice and the cure window

Bad faith has its own condition precedent. Under section 624.155(3)(a) and (b), the insured must give the Department of Financial Services and the insurer 60 days' written notice of the violation on the department's Civil Remedy Notice form, stating the specific statutory provision violated, the facts giving rise to the violation, the individuals involved, and the relevant policy language. The insurer then gets a cure period: under section 624.155(3)(c), no action lies if, within 60 days after the insurer receives the notice from the department, the damages are paid or the circumstances giving rise to the violation are corrected.

The Supreme Court read that cure window for what it is in Talat Enterprises, Inc. v. Aetna Casualty & Surety Co., 753 So. 2d 1278 (Fla. 2000). An insurer that pays the contractual damages owed within the 60 days defeats the statutory bad faith claim. Payment of what is owed during the cure period is a complete answer. That makes the CRN a genuine settlement opportunity for the carrier, not a formality, and it makes the precision of the CRN's damages demand a real strategic question for the insured.

Two timing wrinkles specific to property appraisal sit in the same subsection. Under section 624.155(3)(f), a CRN in a residential property claim may not be filed within 60 days after any party invokes appraisal. And under section 624.155(3)(e), the limitations period is tolled for 60 days after the CRN and for 60 days after appraisal is invoked. Counsel sequencing a property bad faith claim has to calendar appraisal invocation, the 60-day appraisal blackout on the CRN, the 60-day CRN notice, and the 60-day cure period as four distinct, sometimes stacking, intervals.

Section 624.1551 and the adverse-adjudication prerequisite

The center of gravity in property bad faith is now section 624.1551. The First District summarized its history accurately in Vo: the Legislature enacted it in May 2022 and amended it in December 2022, with the operative version effective December 16, 2022. It reads, in relevant part, that notwithstanding any contrary provision of section 624.155, in any claim for extracontractual damages under section 624.155(1)(b), no action lies until the insured or beneficiary has established, through an adverse adjudication by a court of law, that the property insurer breached the insurance contract and a final judgment or decree has been rendered against the insurer.

Two sentences in the statute do specific work. Acceptance of an offer of judgment under section 768.79 or payment of an appraisal award is not an adverse adjudication. And the difference between the insurer's appraiser's final estimate and the appraisal award may be evidence of bad faith under section 624.155(1)(b), but is not itself an adverse adjudication and does not, on its own, give rise to a cause of action.

To see what changed, read the statute against the case it was written to overturn. In Cammarata v. State Farm Florida Insurance Co., 152 So. 3d 606 (Fla. 4th DCA 2014) (en banc), the Fourth District held that an insurer's liability for coverage and the extent of damages, "and not necessarily an insurer's liability for breach of contract," must be determined before a bad faith action becomes ripe. The Cammaratas had taken a Hurricane Wilma claim through appraisal, the umpire's award exceeded the deductible, the insurer paid it, and the court held that result plus a CRN made the bad faith claim ripe. That was the prevailing "functional equivalent of a judgment" approach, built on Blanchard v. State Farm Mutual Automobile Insurance Co., 575 So. 2d 1289 (Fla. 1991) and Vest v. Travelers Insurance Co., 753 So. 2d 1270 (Fla. 2000), which together hold that a first-party bad faith claim does not accrue until the underlying coverage and the extent of damages are resolved in the insured's favor.

Section 624.1551 takes the appraisal route away from property insureds. A favorable appraisal award, even one many multiples of the insurer's estimate, is no longer enough. The insured must obtain a court adjudication of breach and a final judgment first. In practice that means the bad faith claim cannot be filed alongside the breach claim and proceed in parallel; it waits behind a contract judgment. Trial courts have abated or dismissed bad faith counts pleaded before the contract case is resolved, which is the direct operational consequence of the statute.

The appraiser-versus-award evidence clause is the counterweight the Legislature left for insureds, and it is underused. A property insurer whose own appraiser came in at a small fraction of the award has handed the insured evidence of bad faith for the eventual extra-contractual case, even though that gap does not start the clock by itself. For claims professionals, the corollary is that the spread between the carrier's appraisal position and the award is now a documented bad-faith exhibit, not just a number.

Retroactivity: which claims the prerequisite actually reaches

Whether section 624.1551 applies turns on when the bad faith claim arose, and the answer for older claims is that it does not. In Vo v. Scottsdale Insurance Co., No. 1D2023-2228 (Fla. 1st DCA Feb. 26, 2025), the First District reversed a dismissal and held that section 624.1551 cannot be applied retroactively to a claim that accrued before the statute's effective date. The insured filed a 2020 hurricane claim that the insurer valued at $420.64 against a public adjuster's $38,584 estimate; an appraisal returned $34,545.66; the parties settled in 2021; and the insured filed her bad faith suit in March 2023. The trial court dismissed for failure to allege an adverse adjudication of breach. Applying the two-part retroactivity test from Menendez v. Progressive Express Insurance Co., 35 So. 3d 873 (Fla. 2010), the court reasoned that section 624.1551 is substantive, not merely remedial, because it eliminates a previously valid, legislatively created cause of action, and that applying it to a completed claim would impair a vested right. The motion to dismiss had to be denied.

Settled point: a property bad faith claim that accrued and vested before December 16, 2022 is governed by the old Cammarata functional-equivalent framework, not by the adverse-adjudication prerequisite. Note the posture and reach. Vo reversed a motion-to-dismiss ruling, so it decides the legal availability of the claim, not its merits, and one judge concurred only in the result. As a published decision it binds trial courts in the First District and, absent a conflicting decision from another district, operates as persuasive-to-binding authority statewide. As of June 2026 it is the leading published Florida appellate decision squarely on section 624.1551 retroactivity, and no district has published a contrary holding. Counsel handling pre-reform hurricane inventory (Michael, Sally, Ian claims that accrued before the cutoff) should treat the appraisal-plus-CRN route as still open for those files, while assuming the adverse-adjudication wall applies to anything that accrued after the effective date.

Fees after the one-way repeal

The fee regime that made small underpayment suits economically rational is gone. SB 2-A first made the one-way fee provisions in sections 627.428, 626.9373, and 627.70152 inapplicable to suits arising under residential or commercial property policies, effective December 16, 2022. HB 837 then repealed section 627.428 and section 626.9373 outright, effective March 24, 2023, and created section 86.121, a narrow declaratory-judgment fee provision that applies only after a total coverage denial and, by its terms, does not apply to residential or commercial property policies. SB 2-A also reinstated the offer-of-judgment statute, section 768.79, for property suits. The net effect for a property insured: prevailing on the contract claim no longer carries an automatic fee award.

One fee hook survives, and it is the one this audience cares about. Section 624.155(7) still awards the bad faith plaintiff its damages, costs, and reasonable attorney fees upon an adverse adjudication. Fees follow the bad faith judgment, not the contract judgment. That is a structural reason the extra-contractual case is now where the settlement pressure concentrates, and it reinforces the sequencing the statute already forces: win the contract case to clear section 624.1551, then pursue bad faith where the fees and the consequential damages both live.

When the repeal applies is largely, but not entirely, settled. Florida treats fee entitlement as substantive and reads the fee statute in force at policy issuance into the contract, the approach taken in Menendez and grounded in cases like L. Ross, Inc. v. R.W. Roberts Construction Co., 481 So. 2d 484 (Fla. 1986), which held that a statute creating a right to attorney fees is substantive and cannot be applied retroactively. On that view the repeal applies prospectively to policies issued or renewed after the effective date, and most courts have so held. Some Florida trial courts have gone the other way on a theory that fee entitlement does not vest until a final judgment, so no entitlement exists once the statute is repealed regardless of issuance date. No binding appellate decision has resolved that split for the HB 837 repeal, so the policy issuance or renewal date relative to the effective date remains the controlling fact to plead and, where the theory is contested, an open question to brief.

Pre-reform versus post-reform first-party bad faith

The substantive standard moved with the procedure. HB 837 codified in section 624.155(5)(a) that mere negligence alone is not bad faith, and in section 624.155(5)(b) imposed a duty on the insured, claimant, and their representatives to act in good faith in furnishing information, making demands, setting deadlines, and attempting settlement, a comparative-bad-faith concept that can reduce or defeat recovery. Those provisions apply to both statutory and common-law bad faith actions.

Open questions, labeled

These are genuinely unsettled as of June 2026, and counsel should not represent any of them as resolved.

Fee-repeal vesting. Whether the HB 837 fee repeal reaches policies issued before the effective date on a no-vested-right theory has divided trial courts and lacks a controlling appellate answer.

Section 624.155(5) and policy effective date. Vo decided section 624.1551 retroactivity but did not reach whether its reasoning extends to the HB 837 substantive-standard additions in section 624.155(5), the rule that mere negligence alone is not bad faith and the comparative-bad-faith duty on the insured, or how those provisions interact with a policy's effective date. Commentators flagged that question soon after the decision.

Presuit-notice retroactivity. A separate district split exists over whether the section 627.70152 presuit-notice requirement applies to claims under policies issued before its July 1, 2021 effective date. The First, Second, Fifth, and Sixth Districts treat the requirement as substantive and decline to apply it retroactively, while the Third and Fourth Districts treat it as procedural and apply it. That conflict is pending before the Florida Supreme Court in Universal Property & Casualty Insurance Co. v. Hughes, No. SC2024-0025. It is a procedural-notice question rather than a bad faith question, but it affects the same property files.

Legislative restoration. In the 2025 session, fee-restoration bills, HB 1551 with its Senate companion SB 426 and the broader SB 554, would have restored prevailing-party or two-way fees in insurance suits, while separate bills, SB 230 and HB 1047, would have tightened the bad faith standard. None passed; HB 1551 died in the House Judiciary Committee on June 16, 2025, and SB 426 died in the Senate Banking and Insurance Committee the same day. Several are expected to return in the 2026 session, so the fee and bad faith framework described here is stable but politically contested, and the policy-period analysis could shift again.

Practical takeaways by role

For coverage counsel, sequencing is now the case strategy. The contract judgment is the gate to bad faith for any post-reform claim, so plead and try the breach case to a final judgment before the extra-contractual claim is viable, and calendar the appraisal blackout, CRN, and cure intervals as separate clocks. Preserve the insurer's appraiser-versus-award spread as section 624.1551 bad-faith evidence even though it will not ripen the claim. On older inventory, confirm the accrual date; a claim that vested before December 16, 2022 keeps the Cammarata route under Vo. And brief the policy issuance or renewal date on fees, because that date, not the date of loss or the date of suit, drives which fee regime governs.

For claim handling and reserving, the 60-day pay-or-deny clock in section 627.70131(7)(a) and the 60-day CRN cure window in section 624.155(3)(c) are the two intervals where exposure is made or avoided. Paying the amount actually owed inside the cure period forecloses the statutory bad faith claim under Talat, which makes a well-evaluated CRN a reserving event, not a filing formality. Treat a wide gap between the carrier's appraisal estimate and the award as a future bad-faith exhibit and document the basis for the estimate accordingly. Reserve the contract exposure and the extra-contractual exposure separately, because Manor House keeps consequential losses out of the contract case but sections 624.155(7) and (11) let them, plus fees, into the bad faith case.

For underwriting and rate filing, the date a policy is issued or renewed determines whether the one-way fee repeal and section 624.1551 apply to claims under it, so the book is transitioning policy by policy rather than all at once, and litigated severity on the pre-reform tail will run higher and longer than on new business. The assignment-of-benefits prohibition for post-loss benefits applies to residential property policies issued on or after January 1, 2023, which removes a category of litigation from new policies but not from the legacy book. The litigation-frequency drop the reforms produced is real, but the surviving bad faith fee hook means the remaining cases skew toward larger, extra-contractual exposure, which is the severity profile reserving and reinsurance should anticipate.

Sources

Primary law (statutes and session laws):

• Fla. Stat. § 624.155 (2025), Civil remedy
• Fla. Stat. § 624.1551 (2025), Civil remedy actions against property insurers
• Fla. Stat. § 626.9541 (2025), Unfair methods of competition and unfair or deceptive acts
• Fla. Stat. § 627.70131 (2025), Insurer's duty to acknowledge communications; investigation
• Fla. Stat. § 627.70132 (2025), Notice of property insurance claim
• Fla. Stat. § 627.70152 (2025), Suits arising under a property insurance policy
• Fla. Stat. § 86.121 (2025), Attorney fees; declaratory relief after total coverage denial
• Fla. Stat. § 627.428 (2022), Attorney fees (repealed by HB 837, eff. Mar. 24, 2023)
• Florida Senate, 2022A Special Session Bill Summaries (SB 2-A)
• Florida Senate, CS/CS/HB 837 (2023) staff analysis
• Florida Senate, HB 1551 (2025) staff analysis, Attorney Fee Awards in Insurance Actions

Case opinions (Florida Supreme Court, then District Courts of Appeal):

• Citizens Prop. Ins. Corp. v. Manor House, LLC, 313 So. 3d 579 (Fla. 2021)
• QBE Ins. Corp. v. Chalfonte Condo. Apartment Ass'n, 94 So. 3d 541 (Fla. 2012)
• Menendez v. Progressive Express Ins. Co., 35 So. 3d 873 (Fla. 2010)
• Talat Enters., Inc. v. Aetna Cas. & Sur. Co., 753 So. 2d 1278 (Fla. 2000)
• Vest v. Travelers Ins. Co., 753 So. 2d 1270 (Fla. 2000)
• Blanchard v. State Farm Mut. Auto. Ins. Co., 575 So. 2d 1289 (Fla. 1991)
• L. Ross, Inc. v. R.W. Roberts Construction Co., 481 So. 2d 484 (Fla. 1986)
• Cammarata v. State Farm Fla. Ins. Co., 152 So. 3d 606 (Fla. 4th DCA 2014) (en banc)
• Vo v. Scottsdale Ins. Co., No. 1D2023-2228 (Fla. 1st DCA Feb. 26, 2025)