TENNESSEE 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 / Bad Faith Claims Unit

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

RE: FORMAL BAD FAITH DEMAND LETTER PURSUANT TO TENN. CODE ANN. § 56-7-105

Insured: [________________________________]

Claimant: [________________________________]

Claim Number: [________________________________]

Policy Number: [________________________________]

Date of Loss: [__/__/____]

Type of Loss: [________________________________]

Policy Type: ☐ Life Insurance ☐ Fire Insurance ☐ Accident Insurance ☐ Health Insurance ☐ 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 bad faith refusal to pay will trigger statutory penalties under Tennessee law.

IMPORTANT NOTICE: Tennessee does not recognize a general common law tort for bad faith by an insured against an insurer. Ginn v. American Heritage Life Insurance Co., 173 S.W.3d 433 (Tenn. Ct. App. 2004). Therefore, all bad faith claims must be brought pursuant to Tennessee's statutory framework, primarily Tenn. Code Ann. § 56-7-105.

This letter serves as the formal demand required under Tenn. Code Ann. § 56-7-105 to trigger the 60-day waiting period before suit may be filed.

II. TENNESSEE LEGAL FRAMEWORK FOR BAD FAITH CLAIMS

A. The Bad Faith Penalty Statute - Tenn. Code Ann. § 56-7-105

Tennessee's bad faith statute provides that if an insurance company refuses to pay a loss within sixty (60) days after a demand by the policyholder, and it appears that the refusal to pay was not in good faith, the insurer shall be liable for:

1. 25% Penalty - Not exceeding twenty-five percent (25%) of the liability as additional damages; PLUS
2. Attorney's Fees - Reasonable attorney's fees for the prosecution and collection of the loss.

B. Applicable Policy Types

IMPORTANT: The bad faith penalty statute applies to:
- Life insurance
- Fire insurance
- Accident insurance
- Health insurance (in certain contexts)

The statute does NOT apply to:
- Automobile liability insurance (Giles v. Geico General Insurance Co., 2021 Tenn. App. WL 5013746)
- Workers' compensation insurance
- Certain other liability policies

This claim involves: ☐ Life Insurance ☐ Fire Insurance ☐ Accident Insurance ☐ Health Insurance

C. Elements Required for Recovery

To recover under Tenn. Code Ann. § 56-7-105, the insured must prove:

1. The policy of insurance must, by its terms, have become due and payable;
2. A formal demand for payment must have been made;
3. The insured must have waited 60 days after making the demand before filing suit (unless refusal occurred before 60 days);
4. The refusal to pay must not have been in good faith.

Palmer v. Nationwide Mutual Fire Insurance Co., 723 S.W.2d 124 (Tenn. Ct. App. 1986).

D. Tennessee Consumer Protection Act

A finding of bad faith refusal to pay may also expose an insurance company to liability under the Tennessee Consumer Protection Act, Tenn. Code Ann. § 47-18-101 et seq., which provides for treble damages.

III. FACTUAL BACKGROUND

A. The Insured and Policy Information

Named Insured(s): [________________________________]

Policy Number: [________________________________]

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

Policy Type: [________________________________]

Coverage Limits:
- Death Benefit (Life): $[________________________________]
- Property Coverage (Fire): $[________________________________]
- Accidental Death Benefit: $[________________________________]
- Medical Expense Coverage: $[________________________________]
- Disability Benefits: $[________________________________]
- Other Applicable Coverage: $[________________________________]

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 of Initial Contact: [__/__/____]

D. Documentation Submitted

The following documentation was timely provided to support this claim:

☐ Completed claim form, dated [__/__/____]
☐ Proof of loss form, dated [__/__/____]
☐ Death certificate (life insurance), dated [__/__/____]
☐ Police report / Fire report / Incident report, dated [__/__/____]
☐ Medical records and bills
☐ Autopsy report (if applicable)
☐ Photographs and/or video documentation
☐ Repair estimates
☐ Receipts and invoices
☐ Inventory of damaged/destroyed items
☐ Expert reports (specify): [________________________________]
☐ Other documents: [________________________________]

E. Timeline of Claim Handling

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 is a covered event under the policy
3. The insured/beneficiary is entitled to payment
4. The insured complied with all policy conditions
5. No exclusions apply to bar coverage
6. The policy benefits are now due and payable

C. Exclusions Do Not Apply

Your company has cited the following exclusion(s) as a basis for denial:

Cited Exclusion: [________________________________]

Why This Exclusion Does Not Apply:
[________________________________]
[________________________________]
[________________________________]

V. FORMAL DEMAND FOR PAYMENT

A. Statement of Demand

THIS LETTER CONSTITUTES THE FORMAL DEMAND REQUIRED UNDER TENN. CODE ANN. § 56-7-105.

Pursuant to Tenn. Code Ann. § 56-7-105, [________________________________] [Insured/Beneficiary Name] hereby makes formal demand upon [________________________________] [Insurance Company] for payment of the following amounts due under Policy Number [________________________________]:

Policy Benefits Demanded:

B. 60-Day Notice

DATE OF THIS DEMAND: [__/__/____]

60-DAY DEADLINE: [__/__/____]

Pursuant to Tenn. Code Ann. § 56-7-105, if payment is not made within sixty (60) days from the date of this demand, and the refusal to pay is determined not to be in good faith, your company shall be liable for:

1. 25% Bad Faith Penalty: $[________________________________]
2. Reasonable Attorney's Fees: To be determined

C. Prior Demands (If Any)

☐ This is the first formal demand for payment
☐ Prior demand(s) were made on the following date(s): [________________________________]

VI. BAD FAITH ANALYSIS

A. What Constitutes Bad Faith Under Tennessee Law

Under Tennessee law, a refusal to pay is in bad faith when it is without reasonable cause or excuse. Minton v. Tennessee Farmers Mutual Insurance Co., 832 S.W.2d 35 (Tenn. Ct. App. 1992).

An insurer cannot be found to have acted in bad faith if there exists "substantial legal grounds that the policy does not afford coverage for the alleged loss." Riad v. Erie Insurance Exchange, 436 S.W.3d 256 (Tenn. Ct. App. 2013).

B. Your Company's Refusal Is NOT in Good Faith

Your company's refusal to pay this claim is not in good faith because:

☐ No Legitimate Coverage Defense:
There are no substantial legal grounds to deny coverage:
[________________________________]
[________________________________]

☐ Refusal Based on Suspicion, Not Facts:
Your company's denial is based on suspicion rather than supported facts:
[________________________________]
[________________________________]

☐ Denial After Recognizing No Defense:
Your company continued to refuse payment after recognizing it had no meritorious defense:
[________________________________]
[________________________________]

☐ Insufficient Investigation:
Your company denied the claim without conducting a reasonable investigation:
[________________________________]
[________________________________]

☐ Misrepresentation of Policy Terms:
Your company misrepresented the policy provisions:
[________________________________]
[________________________________]

☐ Other Bad Faith Conduct:
[________________________________]
[________________________________]

C. Violations of Tenn. Code Ann. § 56-8-104 (Unfair Claims Practices)

Your company has also violated Tennessee's Unfair Claims Settlement Practices Act:

☐ Misrepresenting pertinent facts or policy provisions relating to coverages at issue
☐ Failing to acknowledge and act reasonably promptly upon communications regarding claims
☐ Failing to adopt and implement reasonable standards for prompt investigation of claims
☐ Refusing to pay claims without conducting a reasonable investigation
☐ Failing to affirm or deny coverage of claims within a reasonable time
☐ Not attempting in good faith to effectuate prompt, fair and equitable settlements
☐ Compelling insureds to institute litigation to recover amounts due
☐ Other violations: [________________________________]

VII. DAMAGES

A. Contract Damages - Policy Benefits Owed

Policy Benefits Due:

TOTAL POLICY BENEFITS DUE: $[________________________________]

B. Bad Faith Penalty (Tenn. Code Ann. § 56-7-105)

25% Statutory Penalty:
- Policy Benefits: $[________________________________]
- Penalty (25%): $[________________________________]

C. Attorney's Fees

Pursuant to Tenn. Code Ann. § 56-7-105, the insured is entitled to reasonable attorney's fees for prosecution and collection of the loss.

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

Estimated Additional Fees if Litigation Required: $[________________________________]

D. Interest

Interest on unpaid benefits: $[________________________________]

E. Tennessee Consumer Protection Act Damages (If Applicable)

If your company's conduct also violates the Tennessee Consumer Protection Act, treble damages may be awarded:

Actual Damages: $[________________________________]
Treble Damages (TCPA): $[________________________________]

F. Limitations on Damages

IMPORTANT: Under Tennessee law, a plaintiff cannot recover both punitive damages and bad faith failure to pay damages on a bad faith claim. The bad faith penalty under § 56-7-105 is an alternative to punitive damages.

G. Summary of Damages

VIII. SETTLEMENT DEMAND

A. Time-Limited Demand

This constitutes a TIME-LIMITED SETTLEMENT DEMAND.

DEMAND AMOUNT: $[________________________________]

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

Note: The 25% penalty and attorney's fees are waived if payment is made within 60 days.

B. Deadline for Response

PAYMENT DEADLINE UNDER § 56-7-105: [__/__/____] (60 days from demand)

If full payment is made within 60 days:
- The 25% bad faith penalty will NOT be sought
- Attorney's fees will be limited to reasonable amounts incurred to date

If payment is NOT made within 60 days:
- Suit will be filed without further notice
- The full 25% bad faith penalty will be sought
- All attorney's fees will be sought

C. Terms of Settlement

Upon receipt of the policy benefits within 60 days, our client agrees to:

☐ Execute a full release of all claims arising from this loss
☐ Not pursue the 25% statutory penalty
☐ Limit attorney's fees claim to reasonable amounts incurred
☐ Other terms: [________________________________]

IX. CONSEQUENCES OF NON-COMPLIANCE

A. Litigation

If your company fails to make payment within 60 days, our client will file suit in the appropriate Tennessee court, asserting claims for:

1. Breach of insurance contract
2. Bad faith refusal to pay under Tenn. Code Ann. § 56-7-105
3. 25% statutory penalty
4. Attorney's fees
5. Violation of Tennessee Consumer Protection Act (if applicable)
6. Interest

B. Regulatory Complaints

Our client will also file complaints with:

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

C. Discovery and Trial

In litigation, we will pursue:

• Complete claims file and all related documents
• Internal communications regarding this claim
• Evidence of pattern of bad faith conduct
• Depositions of all persons involved in handling this claim

X. 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
☐ All metadata associated with electronic documents

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

XI. RESPONSE REQUIRED

Please direct your response to:

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

Payment should be made within 60 days of the date of this demand.

XII. CONCLUSION

Your company's refusal to pay this claim is not in good faith. The policy benefits are due and payable, and there is no legitimate basis for denial. We urge you to reconsider your position and make payment within the 60-day period to avoid the statutory bad faith penalty and attorney's fees.

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 TENNESSEE
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: Death Certificate (if applicable)
☐ Exhibit G: Medical Records (if applicable)
☐ Exhibit H: Damage Calculations
☐ 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]