MISSOURI INSURANCE BAD FAITH DEMAND LETTER

SENT VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED

AND REGULAR U.S. MAIL

---

DATE: [__/__/____]

TO:
[________________________________]
[Insurance Company Name]
[________________________________]
[Street Address]
[________________________________]
[City, State, ZIP Code]

ATTENTION: Claims Manager / Executive Claims Unit

FROM:
[________________________________]
[Attorney Name / Law Firm Name]
[________________________________]
[Street Address]
[________________________________]
[City, State, ZIP Code]
[________________________________]
[Telephone Number]
[________________________________]
[Email Address]

---

RE: FORMAL BAD FAITH DEMAND LETTER - VEXATIOUS REFUSAL TO PAY

Insured: [________________________________]

Claimant: [________________________________]

Claim Number: [________________________________]

Policy Number: [________________________________]

Date of Loss: [__/__/____]

Type of Loss: [________________________________]

Policy Type: ☐ Homeowners ☐ Auto ☐ Commercial Property ☐ UM/UIM ☐ Other: [________________]

---

I. INTRODUCTION AND PURPOSE

This letter constitutes a formal demand for payment of all benefits owed under the above-referenced insurance policy, together with notice that your company's continued refusal to pay exposes it to significant liability under Missouri's vexatious refusal statute, Mo. Rev. Stat. § 375.420.

Missouri provides the following statutory remedies for vexatious refusal:
- Damages not to exceed 20% of the first $1,500 of the loss
- 10% of the amount in excess of $1,500
- Reasonable attorney's fees
- Interest and costs

Your company's handling of this claim constitutes vexatious refusal to pay, and our client is prepared to pursue all available remedies if this matter is not resolved promptly.

---

II. MISSOURI BAD FAITH LAW

A. Vexatious Refusal Statute - Mo. Rev. Stat. § 375.420

Missouri's vexatious refusal statute provides:

"In any action against any insurance company to recover the amount of any loss under a policy of... insurance, if it appears from the evidence that such company has refused to pay such loss without reasonable cause or excuse, the court or jury may, in addition to the amount thereof and interest, allow the plaintiff damages not to exceed twenty percent of the first fifteen hundred dollars of the loss, and ten percent of the amount of the loss in excess of fifteen hundred dollars and a reasonable attorney's fee; and the court shall enter judgment for the aggregate sum thus determined."

B. Elements of Vexatious Refusal

Under Missouri law, the insured must prove:

1. Refusal to Pay: The insurer refused to pay the claim
2. Without Reasonable Cause or Excuse: The refusal was not supported by a legitimate basis

The statute is remedial in nature and should be liberally construed. Dhyne v. State Farm Fire & Casualty Co., 188 S.W.3d 454 (Mo. 2006).

C. Key Case Law - What Constitutes Vexatious Refusal

"Reasonable Cause or Excuse" Standard:

In Dhyne v. State Farm, the Missouri Supreme Court held that an insurer's reliance on a policy exclusion that is "fairly debatable" may still constitute vexatious refusal if the insurer's investigation was inadequate or its position was not honestly maintained.

Factors Courts Consider:
- Whether the insurer conducted an adequate investigation
- Whether the insurer's interpretation of the policy was reasonable
- Whether the insurer's reliance on exclusions was in good faith
- Whether the insurer delayed or failed to communicate with the insured

D. Common Law Bad Faith

Missouri also recognizes common law bad faith claims. In Zumwalt v. Utilities Insurance Co., 228 S.W.2d 750 (Mo. 1950), the court recognized that insurers owe a duty of good faith to their insureds.

E. Unfair Claims Settlement Practices - Mo. Rev. Stat. § 375.1000 et seq.

Missouri's Unfair Claims Settlement Practices Act prohibits various unfair claims handling practices. While violations are enforced by the Department of Commerce and Insurance, evidence of such violations may support a vexatious refusal claim.

F. Statute of Limitations

• Contract claims: Ten (10) years
• Vexatious refusal: Must be pled in conjunction with breach of contract claim

---

III. FACTUAL BACKGROUND

A. The Insured and Policy Information

Named Insured(s): [________________________________]

Policy Number: [________________________________]

Policy Period: [__/__/____] to [__/__/____]

Policy Type: [________________________________]

Coverage Limits:
- Coverage A (Dwelling/Property): $[________________________________]
- Coverage B (Other Structures): $[________________________________]
- Coverage C (Personal Property): $[________________________________]
- Coverage D (Loss of Use): $[________________________________]
- Liability Coverage: $[________________________________]
- Medical Payments: $[________________________________]
- Uninsured/Underinsured Motorist: $[________________________________]
- Other Applicable Coverage: $[________________________________]

Deductible: $[________________________________]

Premium Paid: $[________________________________]

B. The Loss Event

Date of Loss: [__/__/____]

Time of Loss: [________________________________]

Location of Loss: [________________________________]

Description of Loss Event:

[________________________________]
[________________________________]
[________________________________]
[________________________________]
[________________________________]
[________________________________]

C. Claim Submission and Response

Date Claim Reported: [__/__/____]

Method of Reporting: ☐ Telephone ☐ Online ☐ Written ☐ Agent

Claim Number Assigned: [________________________________]

Initial Adjuster Assigned: [________________________________]

Date Adjuster Contacted Insured: [__/__/____]

Date of Initial Inspection: [__/__/____]

D. Documentation Submitted

The following documentation was timely provided to support this claim:

☐ Completed proof of loss form, dated [__/__/____]
☐ Police report / Fire report / Incident report, dated [__/__/____]
☐ Photographs and/or video documentation
☐ Repair estimates from licensed contractors
☐ Medical records and bills
☐ Receipts and invoices for damaged property
☐ Inventory of damaged/destroyed items
☐ Examination under oath transcript, dated [__/__/____]
☐ Expert reports (specify): [________________________________]
☐ Other documents: [________________________________]

E. Timeline of Claim Handling

Date	Event	Your Company's Response
[__/__/____]	[________________________________]	[________________________________]
[__/__/____]	[________________________________]	[________________________________]
[__/__/____]	[________________________________]	[________________________________]
[__/__/____]	[________________________________]	[________________________________]
[__/__/____]	[________________________________]	[________________________________]
[__/__/____]	[________________________________]	[________________________________]
[__/__/____]	[________________________________]	[________________________________]
[__/__/____]	[________________________________]	[________________________________]

---

IV. COVERAGE ANALYSIS

A. Applicable Policy Provisions

The policy at issue provides coverage for the type of loss that occurred. Specifically:

Insuring Agreement: [________________________________]
[________________________________]
[________________________________]

Relevant Coverage Provisions:
[________________________________]
[________________________________]
[________________________________]

B. Coverage Clearly Applies

Based on the policy language and the facts of this loss:

1. The loss occurred during the policy period
2. The loss was caused by a covered peril
3. The property/person is a covered interest under the policy
4. The insured complied with all policy conditions
5. No exclusions apply to bar coverage
6. The damages claimed are within policy limits

C. No Reasonable Cause or Excuse for Denial

Your company has cited the following basis for denial or limitation:

Cited Basis: [________________________________]

Why No Reasonable Cause or Excuse Exists:
[________________________________]
[________________________________]
[________________________________]

Your company's position is not supported by the policy language, the facts of this loss, or Missouri law.

---

V. IDENTIFICATION OF VEXATIOUS CONDUCT

A. Your Company's Refusal Was Without Reasonable Cause or Excuse

Your company's handling of this claim constitutes vexatious refusal because:

☐ Denial Without Legitimate Basis
Your company denied coverage when no reasonable basis exists:
[________________________________]
[________________________________]

☐ Inadequate Investigation
Your company failed to conduct a reasonable investigation before denying the claim:
[________________________________]
[________________________________]

☐ Unreasonable Delay
Your company unreasonably delayed payment without legitimate reason:
[________________________________]
[________________________________]

☐ Failure to Pay Undisputed Amounts
Your company has failed to pay amounts that are clearly owed:
[________________________________]
[________________________________]

☐ Misrepresentation of Policy Terms
Your company misrepresented policy provisions to avoid payment:
[________________________________]
[________________________________]

☐ Lowball Settlement Offer
Your company made unreasonably low settlement offers:
[________________________________]
[________________________________]

☐ Failure to Communicate
Your company failed to communicate adequately with the insured:
[________________________________]
[________________________________]

☐ Other Vexatious Conduct:
[________________________________]
[________________________________]

B. Violations of Mo. Rev. Stat. § 375.1000 et seq. (Unfair Claims Settlement Practices)

Your company has violated Missouri's Unfair Claims Settlement Practices statute:

☐ Misrepresenting pertinent facts or policy provisions relating to coverages at issue
☐ Failing to acknowledge and act reasonably promptly upon communications
☐ Failing to adopt and implement reasonable standards for prompt investigation
☐ Refusing to pay claims without conducting a reasonable investigation
☐ Failing to affirm or deny coverage within a reasonable time
☐ Not attempting in good faith to effectuate prompt, fair settlements when liability is clear
☐ Compelling insureds to institute litigation to recover amounts due by offering substantially less than amounts ultimately recovered
☐ Attempting to settle claims on the basis of an application altered without the insured's consent
☐ Making claims payments without indicating coverage under which payment is made
☐ Other violations: [________________________________]

C. Evidence of Vexatious Conduct

1. Unreasonable Investigation:
[________________________________]
[________________________________]

2. Unsupported Denial Position:
[________________________________]
[________________________________]

3. Failure to Honestly Evaluate the Claim:
[________________________________]
[________________________________]

---

VI. DAMAGES UNDER MO. REV. STAT. § 375.420

A. Contract Damages - Policy Benefits Owed

Coverage A - Property Damage:
- Replacement Cost / Actual Cash Value: $[________________________________]
- Less Depreciation (if ACV): $[________________________________]
- Less Deductible: $[________________________________]
- Net Amount Due: $[________________________________]

Coverage D - Loss of Use:
- Amount Incurred: $[________________________________]
- Amount Due: $[________________________________]

Medical Expenses:
- Past Medical Expenses: $[________________________________]
- Future Medical Expenses: $[________________________________]
- Total Medical: $[________________________________]

Lost Wages / Income:
- Past Lost Wages: $[________________________________]
- Future Lost Wages: $[________________________________]
- Total Lost Wages: $[________________________________]

Other Contract Damages:

TOTAL CONTRACT DAMAGES: $[________________________________]

B. Vexatious Refusal Penalty (§ 375.420)

Calculation of Statutory Penalty:

• First $1,500 of loss x 20%: $[________________________________]
• Amount in excess of $1,500: $[________________________________]
• Excess amount x 10%: $[________________________________]
• TOTAL VEXATIOUS PENALTY: $[________________________________]

C. Attorney's Fees and Costs

Attorney's Fees Incurred to Date: $[________________________________]

Estimated Additional Fees if Litigation Required: $[________________________________]

Costs Incurred: $[________________________________]

D. Interest

Prejudgment Interest: $[________________________________]

E. Summary of Damages

Category	Amount
Contract Damages (Policy Benefits)	$[________________________________]
Vexatious Refusal Penalty (§ 375.420)	$[________________________________]
Attorney's Fees	$[________________________________]
Interest	$[________________________________]
Costs	$[________________________________]
TOTAL POTENTIAL DAMAGES	$[________________________________]

---

VII. SETTLEMENT DEMAND

A. Time-Limited Demand

This constitutes a TIME-LIMITED SETTLEMENT DEMAND pursuant to Missouri law.

DEMAND AMOUNT: $[________________________________]

This demand includes:
- Policy benefits owed: $[________________________________]
- Interest to date: $[________________________________]
- TOTAL DEMAND: $[________________________________]

Note: If payment is made before suit is filed, vexatious refusal penalties will NOT be sought.

B. Deadline for Response

THIS DEMAND EXPIRES ON: [__/__/____] at 5:00 PM Central Time

You have [____] days from the date of this letter to:

1. Tender payment in the full amount demanded; OR
2. Provide a written, substantive response with a reasonable counteroffer supported by specific policy language and factual basis.

C. Terms of Settlement

Upon receipt of the demanded amount, our client agrees to:

☐ Execute a full release of all claims arising from this loss
☐ Not pursue vexatious refusal penalties under § 375.420
☐ Not pursue attorney's fees beyond reasonable amounts incurred
☐ Maintain confidentiality regarding settlement terms
☐ Other terms: [________________________________]

D. Reservation of Rights

If this demand is not accepted within the time specified:

1. This offer is withdrawn and may not be accepted thereafter
2. Suit will be filed
3. VEXATIOUS REFUSAL PENALTIES will be sought (20%/$1,500 + 10% of excess)
4. FULL ATTORNEY'S FEES will be sought
5. This letter may be used as evidence of pre-suit demand

---

VIII. CONSEQUENCES OF NON-COMPLIANCE

A. Litigation

If your company fails to resolve this matter, our client will file suit in the appropriate Missouri court, asserting claims for:

1. Breach of insurance contract
2. Vexatious refusal to pay under Mo. Rev. Stat. § 375.420
3. Statutory penalty damages
4. Attorney's fees and costs
5. Prejudgment interest

B. Regulatory Complaints

Our client will also file complaints with:

• Missouri Department of Commerce and Insurance
• National Association of Insurance Commissioners
• Any other appropriate regulatory bodies

C. Discovery

In litigation, we will pursue extensive discovery, including:

• Complete claims file and all related documents
• Internal communications regarding this claim
• Training materials and claims handling guidelines
• Similar claims handled by your company
• Depositions of all persons involved in handling this claim
• Evidence regarding pattern and practice of claim denials

---

IX. PRESERVATION OF EVIDENCE

LITIGATION HOLD NOTICE

This letter constitutes formal notice to preserve all documents and electronically stored information related to this claim, including but not limited to:

☐ Complete claims file
☐ All correspondence (internal and external)
☐ All emails, text messages, and other electronic communications
☐ Photographs, videos, and inspection reports
☐ Adjuster notes and diaries
☐ Expert reports and opinions
☐ Training materials and claims manuals
☐ Similar claims files for pattern evidence
☐ Financial records
☐ Personnel files of persons involved in claim handling
☐ All metadata associated with electronic documents

Failure to preserve this evidence may result in sanctions and adverse inference instructions at trial.

---

X. RESPONSE REQUIRED

Please direct your response to:

[________________________________]
[Attorney Name]
[________________________________]
[Law Firm Name]
[________________________________]
[Street Address]
[________________________________]
[City, State, ZIP Code]
[________________________________]
[Telephone]
[________________________________]
[Email]

We require a substantive response by [__/__/____].

---

XI. CONCLUSION

Your company's handling of this claim constitutes vexatious refusal to pay under Mo. Rev. Stat. § 375.420. There is no reasonable cause or excuse for your company's denial or delay. Under Missouri law, your company faces significant exposure for statutory penalties up to 20% of the first $1,500 plus 10% of the excess, along with attorney's fees.

We urge you to pay the claim in full to avoid litigation and statutory penalties.

This letter is written without prejudice to any rights, remedies, or defenses our client may have, all of which are expressly reserved.

We look forward to your prompt response.

Respectfully submitted,

________________________________________
[Attorney Name]
[Bar Number]
[Law Firm Name]

Date: [__/__/____]

---

VERIFICATION

STATE OF MISSOURI
COUNTY OF [________________________________]

I, [________________________________], being duly sworn, state that I am the [________________________________] in the above-referenced matter, that I have read the foregoing Bad Faith Demand Letter, and that the facts stated therein are true and correct to the best of my knowledge, information, and belief.

________________________________________
[Signature]

Subscribed and sworn to before me this [____] day of [________________], 20[____].

________________________________________
Notary Public
My Commission Expires: [__/__/____]

---

EXHIBITS AND ATTACHMENTS

☐ Exhibit A: Copy of Insurance Policy
☐ Exhibit B: Proof of Loss / Claim Documents
☐ Exhibit C: Correspondence with Insurer
☐ Exhibit D: Denial Letter(s)
☐ Exhibit E: Supporting Documentation
☐ Exhibit F: Expert Reports
☐ Exhibit G: Damage Calculations
☐ Exhibit H: Medical Records (if applicable)
☐ Exhibit I: Photographs/Video Evidence
☐ Exhibit J: Other: [________________________________]

---

CERTIFICATE OF SERVICE

I hereby certify that on [__/__/____], a true and correct copy of this Bad Faith Demand Letter was served upon the above-named insurance company by:

☐ Certified Mail, Return Receipt Requested
☐ Regular U.S. Mail
☐ Overnight Delivery
☐ Hand Delivery
☐ Electronic Mail to: [________________________________]

________________________________________
[Attorney Signature]