INSURANCE BAD FAITH DEMAND LETTER – ARKANSAS
To: [Insurance Company Name, Claims Department Address]
From: [Insured/Claimant Name, via Counsel if applicable]
Date: [DATE]
Claim Number: [CLAIM NUMBER]
Policy Number: [POLICY NUMBER]
Insured: [INSURED NAME]
Date of Loss: [DATE OF LOSS]
Type of Coverage: [e.g., Homeowner's, Auto, Commercial Property]
Claim Type: [First-Party / UM-UIM / Property]
1. INTRODUCTION AND PURPOSE
This letter constitutes a formal demand for payment under Ark. Code Ann. § 23-79-208. Failure to pay within the time specified in your policy will subject [INSURANCE COMPANY] ("Insurer") to the 12% statutory penalty plus reasonable attorney's fees.
2. FACTUAL BACKGROUND
- Date of Loss: On or about [DATE], [INSURED] suffered [describe loss].
- Timely Notice: Insurer was notified on [DATE].
- Cooperation: Insured has fully cooperated with all reasonable requests and submitted complete proof of loss on [DATE].
- Coverage: The loss is covered under the Policy with limits of [$LIMITS].
3. CLAIM HISTORY AND INSURER'S CONDUCT
- [DATE]: Claim and proof of loss submitted.
- [DATE]: [Describe insurer's response, delays, or denial]
- [DATE]: [Additional relevant history]
- Current status: [Unpaid / Underpaid by $X / Wrongfully denied]
4. LEGAL BASIS – ARKANSAS BAD FAITH
Statutory Penalty (Ark. Code Ann. § 23-79-208)
If an insurer fails to pay a loss within the time specified in the policy after demand, the insurer shall pay:
- 12% damages upon the amount of the loss; plus
- Reasonable attorney's fees.
This letter constitutes the required statutory demand.
Payment is due within the time specified in your policy, which Insured understands to be [30/60/90] days. Payment must be received no later than [DATE].
IMPORTANT – 20% RULE: Under Arkansas case law, to recover the 12% penalty and attorney's fees, the amount actually recovered must be within 20% of the amount demanded. This demand is calculated in good faith based on documented losses.
Unfair Claims Settlement Practices (Ark. Code Ann. § 23-66-206)
Insurer's conduct may also violate Arkansas's Unfair Claims Settlement Practices Act, including but not limited to:
- Failing to act reasonably promptly upon communications;
- Failing to adopt and implement reasonable standards for prompt investigation;
- Refusing to pay claims without conducting a reasonable investigation;
- Not attempting in good faith to effectuate prompt, fair settlement when liability is reasonably clear.
Common Law Bad Faith
Arkansas recognizes common law bad faith for affirmative misconduct that is dishonest, malicious, or oppressive in denying or delaying payment. Aetna Cas. & Sur. Co. v. Broadway Arms Corp., 281 Ark. 128 (1983). This is distinct from the statutory penalty and requires proof of intentional wrongdoing beyond mere negligent delay.
Punitive Damages
Insured reserves the right to seek punitive damages if Insurer's conduct is found to be willful, wanton, or malicious.
5. DAMAGES
Insured demands payment of:
| Item | Amount |
|---|---|
| Policy benefits owed | [$AMOUNT] |
| TOTAL DEMAND | [$AMOUNT] |
This demand is calculated in good faith based on documented losses and is within the 20% threshold required for statutory recovery.
If not timely paid, Insured will seek:
- 12% statutory penalty under § 23-79-208;
- Reasonable attorney's fees;
- Pre- and post-judgment interest;
- Punitive damages for willful, wanton, or malicious conduct;
- Costs of suit.
6. STATUTORY DEMAND AND DEADLINE
THIS IS A FORMAL DEMAND UNDER ARK. CODE ANN. § 23-79-208
Payment must be received within the time specified in your policy, and in any event no later than: [DATE]
Failure to pay will result in immediate litigation asserting claims for breach of contract, statutory penalties, and common law bad faith.
7. PRESERVATION NOTICE
Insurer is directed to preserve all documents, communications, and electronically stored information related to this claim, including the complete claim file, reserve information, adjuster notes, and all internal and external communications.
8. ATTACHMENTS
- Exhibit A: Policy declarations page
- Exhibit B: Proof of loss / damage documentation with supporting calculations
- Exhibit C: Claim correspondence history
- Exhibit D: Estimates, invoices, or medical records (if applicable)
Signed:
[Name]
[Title / Attorney for Insured]
[Address]
[Phone / Email]
SENT VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED