ALASKA INSURANCE BAD FAITH DEMAND LETTER

FORMAL DEMAND FOR PAYMENT AND NOTICE OF BAD FAITH CLAIM

PRIVILEGED AND CONFIDENTIAL
SETTLEMENT COMMUNICATION PURSUANT TO A.R.E. 408

DOCUMENT INFORMATION

ADDRESSEE INFORMATION

SENDER/CLAIMANT INFORMATION

CLAIM IDENTIFICATION

I. INTRODUCTION

This letter constitutes a formal demand to [INSURANCE COMPANY] ("Insurer") for immediate payment of all benefits owed under the above-referenced policy on behalf of [INSURED/CLAIMANT NAME] ("Insured").

Under Alaska law, every insurance contract contains an implied covenant of good faith and fair dealing. An insurer breaches this covenant when it fails to give equal consideration to the insured's interests. State Farm Fire & Cas. Co. v. Nicholson, 777 P.2d 1152 (Alaska 1989).

Continued refusal to pay will result in litigation seeking:
- All policy benefits
- Consequential damages
- Emotional distress damages
- Punitive damages for egregious conduct
- Pre- and post-judgment interest
- Attorney's fees

II. SUMMARY OF DEMAND

TOTAL AMOUNT DEMANDED: $[________________________________]

RESPONSE DEADLINE: [__/__/____] (30 days from receipt)

III. FACTUAL BACKGROUND

A. The Insurance Policy

Policy No. [________________________________] was issued [__/__/____], providing [________________________________] coverage with limits of $[________________________________].

B. The Loss Event

On [__/__/____], Insured suffered a covered loss:

[________________________________]
[________________________________]
[________________________________]

C. Notice and Cooperation

☐ Notice provided on [__/__/____]
☐ Proof of Loss on [__/__/____]
☐ Full cooperation provided
☐ Documentation submitted
☐ Inspection on [__/__/____]

IV. CLAIM HISTORY

V. COVERAGE ANALYSIS

Insuring Agreement: [________________________________]

Conditions Satisfied: ☐ Notice ☐ Proof of loss ☐ Cooperation

Exclusion Cited: [________________________________]

Not Applicable Because: [________________________________]

Conclusion: The loss is covered. There is no reasonable basis for denial.

VI. IDENTIFICATION OF BAD FAITH CONDUCT

A. Breach of Implied Covenant of Good Faith

Under State Farm Fire & Cas. Co. v. Nicholson, 777 P.2d 1152 (Alaska 1989), an insurer commits bad faith when it refuses to honor a claim without a reasonable basis.

Insurer's conduct demonstrates:

☐ Denial without reasonable basis
- Conduct: [________________________________]

☐ Failure to give equal consideration to Insured's interests
- Conduct: [________________________________]

☐ Unreasonable delay in investigation or payment
- Conduct: [________________________________]

☐ Failure to conduct fair investigation
- Conduct: [________________________________]

☐ Misrepresentation of policy provisions
- Conduct: [________________________________]

☐ Lowball offer substantially less than claim value
- Conduct: [________________________________]

B. Violations of AS § 21.36.125 (Unfair Claim Settlement Practices)

While AS § 21.36.125 does not create a private right of action, violations support a common law bad faith claim:

☐ Failing to attempt good faith settlement when liability is clear
☐ Compelling insureds to litigate by offering substantially less than owed
☐ Offering amount without objectively reasonable basis in law and fact
☐ Failing to acknowledge claims promptly
☐ Failing to adopt reasonable investigation standards

VII. LEGAL FRAMEWORK – ALASKA BAD FAITH LAW

A. Implied Covenant of Good Faith

State Farm Fire & Cas. Co. v. Nicholson, 777 P.2d 1152 (Alaska 1989) established:

"Every insurance contract contains an implied covenant of good faith and fair dealing."

The insurer must give equal consideration to the insured's interests. Bad faith is a tort action arising from this implied covenant.

B. Standard for Bad Faith

To maintain a bad faith claim, the insured must show the insurer refused to honor a claim without a reasonable basis. It does not require proof of fraud or deception.

C. Available Damages

Under Alaska law, successful bad faith plaintiffs may recover:

1. Compensatory damages – Contract benefits plus consequential damages
2. Emotional distress damages – Available without physical injury. Alaska Pac. Assur. Co. v. Collins, 794 P.2d 936, 949 (Alaska 1990)
3. Punitive damages – Available upon "clear and convincing evidence that defendant's conduct was either outrageous, including acts done with malice or bad motives, or evidenced reckless indifference." Great Divide Ins. Co. v. Carpenter, 79 P.3d 599, 608 (Alaska 2004)

D. Statute of Limitations

Alaska bad faith claims have a 2-year statute of limitations under AS § 09.10.070(a).

E. Key Alaska Case Law

1. State Farm Fire & Cas. Co. v. Nicholson, 777 P.2d 1152 (Alaska 1989) – Established tort bad faith cause of action.

2. Alaska Pac. Assur. Co. v. Collins, 794 P.2d 936 (Alaska 1990) – Emotional distress damages recoverable.

3. Great Divide Ins. Co. v. Carpenter, 79 P.3d 599 (Alaska 2004) – Punitive damages standard.

4. O.K. Lumber Co. v. Providence Washington Ins. Co., 759 P.2d 523 (Alaska 1988) – Duty of good faith in claims handling.

VIII. DAMAGES

A. Contract Damages

B. Consequential Damages

C. Emotional Distress Damages

☐ Anxiety ☐ Sleep disturbances ☐ Depression ☐ Physical symptoms

Emotional Distress: $[________________________________]

D. Punitive Damages

Insurer's conduct was outrageous, malicious, or recklessly indifferent:
[________________________________]

Punitive Damages: To be determined at trial

E. Summary

IX. SETTLEMENT DEMAND

Insured demands payment of $[________________________________] within THIRTY (30) DAYS.

Payment Instructions

1. Made payable to: [________________________________]
2. Delivered to: [________________________________]
3. Received by: [__/__/____]

Consequences of Non-Payment

If not paid:
1. Insured will file suit in [________________________________] Superior Court
2. Insured will seek contract damages, emotional distress, punitive damages, and attorney's fees

X. PRESERVATION OF EVIDENCE

Preserve all documents and ESI including:
☐ Claim file ☐ Communications ☐ Adjuster notes ☐ Expert reports ☐ Reserves

XI. DIVISION OF INSURANCE COMPLAINT

Insured reserves the right to file with:

Alaska Division of Insurance
P.O. Box 110805
Juneau, AK 99811-0805
(907) 465-2515

XII. CONCLUSION

Insurer's refusal lacks reasonable basis. This demand provides opportunity to resolve before litigation seeking punitive damages.

SIGNATURE

Insured:

Signature: _______________________________________________

Print Name: [________________________________]

Date: [__/__/____]

Attorney:

Signature: _______________________________________________

Print Name: [________________________________]

Alaska Bar No.: [________________________________]

Date: [__/__/____]

EXHIBITS

☐ Exhibit A: Insurance Policy
☐ Exhibit B: Proof of Loss
☐ Exhibit C: Correspondence
☐ Exhibit D: Denial Letter

All rights under Alaska law are expressly reserved.