First-Party Property Damage Demand Letter - Montana

FIRST-PARTY PROPERTY DAMAGE DEMAND LETTER

State of Montana

[LAW FIRM LETTERHEAD]

SETTLEMENT COMMUNICATION — FOR RESOLUTION PURPOSES ONLY
ADMISSIBILITY SUBJECT TO M.R. EVID. 408 AND F.R.E. 408, WHERE APPLICABLE

VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED
AND VIA EMAIL TO: [________________________________]

Date: [__/__/____]

[INSURANCE COMPANY NAME]
[________________________________]
[________________________________]
[City], [State] [Zip]

Attention: [________________________________], [Title]
Re: FORMAL DEMAND FOR FULL PAYMENT — FIRST-PARTY PROPERTY DAMAGE — MONTANA
Insured: [________________________________]
Property Address: [________________________________], [City], MT [Zip]
Policy Number: [________________________________]
Claim Number: [________________________________]
Date of Loss: [__/__/____]
Type of Loss: [________________________________]
Applicable Coverage Limits: $[________________________________]
Response Deadline: [__/__/____] at 5:00 p.m. Mountain Time

Dear [________________________________]:

I. INTRODUCTION AND NATURE OF DEMAND

This firm represents [________________________________] ("our client") in connection with a first-party property insurance claim arising under Montana law. This letter constitutes a formal demand for full payment of all policy benefits owed for covered losses sustained at [________________________________] ([City], Montana) on or about [__/__/____].

[CARRIER SHORT NAME] has [☐ refused to pay / ☐ substantially underpaid / ☐ unreasonably delayed payment of] this claim. Our client is a Montana property owner who purchased insurance precisely to be protected against this type of loss. The coverage is clear, the loss is documented, and the balance owed is $[________________________________].

This demand gives [CARRIER SHORT NAME] a final opportunity to honor its contractual and statutory obligations before our client pursues available remedies under Montana law, including UTPA damages, any supported punitive damages, and attorney's fees when recoverable.

II. MONTANA PROPERTY INSURANCE LEGAL FRAMEWORK

A. Montana Unfair Trade Practices Act — Mont. Code Ann. § 33-18-201

Montana's UTPA, codified at Mont. Code Ann. § 33-18-201, prohibits insurers from engaging in unfair claims settlement practices. Relevant provisions applicable to property claims include:

• § 33-18-201(1): Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue
• § 33-18-201(4): Refusing payment without a reasonable investigation based on all available information
• § 33-18-201(5): Failing to affirm or deny coverage within a reasonable time after completed proof of loss
• § 33-18-201(6): Failing to attempt prompt, fair, and equitable settlement when liability has become reasonably clear
• § 33-18-201(9): Attempting settlement based on an application altered without the insured's notice, knowledge, or consent
• § 33-18-201(13): Failing to promptly settle under one coverage, when liability has become reasonably clear, to influence settlement under another coverage

B. Private Right of Action — Mont. Code Ann. § 33-18-242

An insured has an independent private right of action against its insurer for actual damages caused by violations of § 33-18-201(1), (4), (5), (6), (9), or (13). Section 33-18-242(3) also preserves a supported contract claim for policy benefits.

C. Montana Valued Policy Law — Mont. Code Ann. §§ 33-24-102 and 33-24-103

For insured improvements to Montana real property, Mont. Code Ann. § 33-24-102 treats the policy amount as the conclusive value and measure of damages when the insured property is considered a total loss, unless the statutory criminal-fault or fraud conditions defeat the claim. The insurer may still dispute whether the property and loss meet those conditions. Section 33-24-103 separately addresses covered total loss of specifically valued, listed personal property; its stated-valuation measure is subject to the selected policy deductible.

Total Loss Evidence: Describe the extent of destruction, remaining use of the insured property, and the evidence supporting classification as a total loss: [________________________________].

Application to This Claim:
☐ This claim involves a covered total loss of insured real-property improvements under § 33-24-102; the policy amount is $[________________________________], subject to the statute's conditions and any supported defense.
☐ This claim involves a covered total loss of specifically valued listed personal property under § 33-24-103; the stated valuation is $[________________________________], subject to the selected deductible.
☐ This claim involves a partial loss; the amount sought under the policy, with supporting estimate, is $[________________________________].

D. Appraisal Rights

Montana does not have a mandatory statutory appraisal provision for property insurance disputes. Appraisal rights are therefore governed by the policy's own appraisal or dispute resolution clause. Where the policy provides an appraisal mechanism, Montana courts enforce it as a condition precedent to suit on amount-of-loss disputes. Coverage disputes (as opposed to valuation disputes) are reserved for litigation.

E. Prejudgment Interest

Under Mont. Code Ann. § 27-1-211, our client is entitled to prejudgment interest on all amounts that are certain or capable of being made certain by calculation from the date they became due.

F. Statute of Limitations

• Contract claim founded on the written policy: generally 6 years for an action commenced on or after October 1, 2025 — Mont. Code Ann. § 27-2-202(1), as amended; prior law may govern an earlier-filed action
• Insured's private UTPA claim: 2 years from the § 33-18-201 violation under § 33-18-242(8)(a)

III. POLICY INFORMATION AND COVERAGE

A. Policy Details

B. Applicable Coverage and Limits

Note on Extended Replacement Cost / Guaranteed Replacement Cost: If the policy contains an extended or guaranteed replacement cost endorsement, the insurer is obligated to pay the actual cost of rebuilding — even if it exceeds the stated Coverage A limit — up to the endorsement's cap. [CARRIER SHORT NAME]'s failure to honor this endorsement is a separate breach of contract.

C. Coverage Analysis — Why Coverage Applies

The loss is a covered event for the following reasons:

1. Covered peril: The cause of loss — [________________________________] — is a covered peril under the policy's insuring agreement or open-perils provision
2. In-force policy: The loss occurred on [__/__/____], within the policy period of [__/__/____] to [__/__/____]
3. Covered property: The damaged property constitutes "covered property" under the policy
4. No exclusion applies: No policy exclusion bars this claim; specifically: [EXPLAIN WHY CLAIMED EXCLUSIONS DO NOT APPLY — E.G., EARTH MOVEMENT, FLOOD, WEAR AND TEAR, ETC.]
5. Conditions satisfied: Our client timely reported the loss, cooperated with the investigation, and provided a sworn proof of loss as requested

IV. THE LOSS EVENT

A. Description of Loss

On [__/__/____], the insured property at [________________________________], [City], Montana sustained significant damage due to [DESCRIBE LOSS EVENT IN DETAIL].

[DETAILED NARRATIVE — INCLUDE: TIME OF DISCOVERY, WHAT WAS FOUND/OBSERVED, IMMEDIATE STEPS TAKEN, CAUSE AS IDENTIFIED BY ORIGIN & CAUSE EXPERT IF APPLICABLE]

B. Loss Type

☐ Wildfire / Forest Fire — Montana experiences significant wildland-urban interface fire risk. The [________________________________] Fire caused direct flame, smoke, ash, and heat damage to the insured property.
☐ Wind / Windstorm — Straight-line winds of approximately [____] mph caused roof, siding, and structural damage
☐ Hail — Hailstones of approximately [____] inches in diameter caused damage to roofing, gutters, siding, and [________________________________]
☐ Water / Plumbing Failure — A [burst pipe / appliance malfunction / roof leak] caused water intrusion and resulting damage
☐ Lightning Strike — A direct or induced lightning strike caused [fire / electrical / structural] damage
☐ Theft / Vandalism — [________________________________]
☐ Collapse — [________________________________]
☐ Other: [________________________________]

C. Cause and Origin Investigation

☐ A cause and origin investigation was performed by [________________________________] on [__/__/____]. Summary of findings: [________________________________].
☐ No independent cause and origin investigation was performed by [CARRIER SHORT NAME], which is itself a deficiency in the claims handling process.

D. Mitigation Efforts

Our client took the following reasonable mitigation steps as required under Montana law and the policy's conditions:

We request reimbursement of the documented, reasonable costs above to the extent covered by the policy, subject to its terms, limits, and deductible.

V. CLAIM HISTORY AND INSURER'S CONDUCT

A. Claim Timeline

B. [CARRIER SHORT NAME]'s Position and Our Response

[CARRIER SHORT NAME] has taken the following position: [DESCRIBE INSURER'S POSITION — DENIAL, PARTIAL PAYMENT, EXCLUSION INVOCATION, ETC.].

This position is contrary to Montana law for the following reasons:

1. [REASON 1 — E.G., MISAPPLICATION OF EXCLUSION]
2. [REASON 2 — E.G., FAILURE TO APPLY VALUED POLICY LAW ON TOTAL LOSS]
3. [REASON 3 — E.G., IMPROPER DEPRECIATION METHODOLOGY]
4. [REASON 4 — E.G., FAILURE TO INCLUDE OVERHEAD AND PROFIT]

C. Disputes Regarding Scope and Valuation

Our independent contractor / public adjuster / expert, [________________________________], has prepared a detailed scope of repairs and replacement cost estimate. The gap between our estimate and [CARRIER SHORT NAME]'s estimate is substantial:

VI. DAMAGES AND CLAIMED AMOUNTS

A. Dwelling Damage — Coverage A

B. Other Structures — Coverage B

C. Personal Property — Coverage C

D. Loss of Use / Additional Living Expenses — Coverage D

Our client has been displaced from the insured residence since [__/__/____] and has incurred the following additional living expenses:

E. Ordinance and Law Coverage

Montana's building codes have been updated since the original construction of [________________________________]. Bringing the repaired/rebuilt structure into compliance with current [City/County] building codes will require additional expenditures not covered under a standard replacement cost calculation:

F. Overhead and Profit

We request contractor overhead and profit only to the extent supported by the issued policy, the attached contractor estimate, and the documented repair plan. The estimate lists overhead of $[OVERHEAD_AMOUNT] and profit of $[PROFIT_AMOUNT] for [PROJECT-SPECIFIC SCOPE]. Please identify the policy term or estimate item disputed.

G. Claim Summary

VII. MONTANA UNFAIR TRADE PRACTICES ACT VIOLATIONS AND BAD FAITH

A. Specific UTPA Violations

[CARRIER SHORT NAME]'s handling of this claim has violated Mont. Code Ann. § 33-18-201 in the following specific respects. For a private action under § 33-18-242(1), select only supported violations of § 33-18-201(1), (4), (5), (6), (9), or (13); other prohibited practices do not independently support that private action:

Violation 1 — § 33-18-201([____]):
[DESCRIBE A PRIVATELY ACTIONABLE VIOLATION — E.G., "Failing to affirm or deny coverage within a reasonable time after our client completed proof of loss on [DATE]"]

Violation 2 — § 33-18-201([____]):
[DESCRIBE SPECIFIC VIOLATION — E.G., "Refusing to pay the claim without conducting a reasonable investigation — [CARRIER SHORT NAME]'s field inspector spent only [X] minutes on-site, failed to inspect the [AREA], and did not engage a cause-and-origin expert despite the complexity of the loss"]

Violation 3 — § 33-18-201([____]):
[DESCRIBE A PRIVATELY ACTIONABLE VIOLATION — E.G., "Failing to attempt a prompt, fair, and equitable settlement after liability became reasonably clear on [DATE], as shown by [FACTS]"]

Violation 4 — § 33-18-201([____]):
[DESCRIBE SPECIFIC VIOLATION — E.G., "Misrepresenting that [EXCLUSION] bars coverage when the policy language and Montana law clearly do not support that interpretation"]

B. Statutory Private Action Under § 33-18-242

Under Mont. Code Ann. § 33-18-242, our client has an independent cause of action for:

1. Actual damages proximately caused by [CARRIER SHORT NAME]'s violations of § 33-18-201 — including the policy benefits withheld, consequential economic losses, and emotional distress
2. Punitive damages — if [CARRIER SHORT NAME] acted with actual malice (a conscious disregard for our client's rights) or actual fraud, proven by clear and convincing evidence (§ 27-1-221); capped under § 27-1-220(3) at the lesser of $10,000,000 or 3% of [CARRIER SHORT NAME]'s net worth
3. Prejudgment interest under Mont. Code Ann. § 27-1-211 on all amounts that became liquidated and due

C. Aggravating Factors Supporting Punitive Damages

☐ [CARRIER SHORT NAME] had no reasonable basis to deny or underpay this claim — coverage was facially clear
☐ [CARRIER SHORT NAME] ignored and failed to respond to [____] written communications over [____] months
☐ [CARRIER SHORT NAME]'s own claim file contains notations demonstrating awareness that the claim was valid
☐ [CARRIER SHORT NAME] applied an exclusion that its own underwriting guidelines indicate does not apply in circumstances like these
☐ [CARRIER SHORT NAME] has a documented pattern of similar conduct toward Montana policyholders
☐ [________________________________]

VIII. APPRAISAL DEMAND (IF APPLICABLE)

A. Basis for Invoking Appraisal

The policy at Section [____] provides the following appraisal provision:

"[QUOTE POLICY APPRAISAL CLAUSE VERBATIM]"

Due to [CARRIER SHORT NAME]'s unreasonable and inadequate evaluation of this claim, we hereby invoke the appraisal process under the policy to resolve the amount-of-loss dispute.

We appoint [________________________________] of [________________________________] as our client's independent appraiser.

Please designate [CARRIER SHORT NAME]'s appraiser within [____] calendar days of this letter. If the appraisers cannot agree on an umpire within [____] days, the parties should follow the appointment procedure in the quoted policy clause. Counsel should review any dispute about that procedure before seeking court relief.

B. Scope of Appraisal

The following amount-of-loss issues are submitted to appraisal:

☐ Replacement cost value of dwelling (Coverage A) damage
☐ Actual cash value of dwelling (Coverage A) damage
☐ Replacement cost value of personal property (Coverage C)
☐ Amount of additional living expenses (Coverage D)
☐ [________________________________]

Note: All questions of coverage — including whether any exclusion applies — are reserved for litigation and are NOT submitted to appraisal.

IX. DEMAND

A. Monetary Demand

We hereby demand payment of the following within [____] calendar days:

X. RESPONSE DEADLINE AND CONSEQUENCES

THIS DEMAND MUST BE ACCEPTED BY 5:00 P.M. MOUNTAIN TIME ON [__/__/____].

Consequences of Non-Response or Continued Underpayment

If [CARRIER SHORT NAME] fails to tender the demanded amount by the deadline:

1. Litigation will be filed in Montana District Court, [________________________________] County, seeking:

   • All policy benefits with prejudgment interest under § 27-1-211
   • Damages for a supported private UTPA claim under §§ 33-18-201 and 33-18-242
   • Punitive damages under § 27-1-221, if proved (cap under § 27-1-220(3): the lesser of $10,000,000 or 3% of net worth)
   • Attorney's fees and costs may be recoverable in an appropriate first-party coverage action under Montana's insurance exception to the American Rule; they are not an automatic MUTPA remedy. See Mountain West Farm Bureau Mut. Ins. Co. v. Brewer, 2003 MT 98, ¶ 36.
   • All consequential and economic damages flowing from the delay

2. A regulatory complaint will be filed with the Montana Commissioner of Securities and Insurance through its insurance complaint page. The Commissioner accepts complaints online or in writing; consumer advocates are available at (406) 444-2040.

3. Appraisal will be invoked (if not already invoked by this letter)

XI. DOCUMENT PRESERVATION NOTICE

This letter constitutes a formal litigation hold notice. [CARRIER SHORT NAME] must immediately preserve all documents and ESI related to this claim, including without limitation:

• The complete claim file — all versions, drafts, and revisions
• All internal communications (email, chat, notes) regarding coverage, valuation, or settlement authority
• Adjuster field notes, inspection photographs, activity logs, and diaries
• Reserve worksheets, reserve changes, and supervisory approvals
• All estimates, Xactimate or similar files, and supporting line-item data
• Communications with independent adjusters, consultants, or vendors
• Claim handling guidelines and procedures applicable to [LOSS TYPE] losses
• Training materials and bulletins applicable to [LOSS TYPE] losses
• Quality assurance, audit, or peer review reports related to this claim
• Any coverage opinions from [CARRIER SHORT NAME]'s in-house or outside counsel

Failure to preserve this material may result in adverse inference instructions and spoliation sanctions in subsequent litigation.

XII. CONCLUSION

[CARRIER SHORT NAME] sold our client a policy promising meaningful protection against property losses. The loss has occurred. The coverage is clear. The only thing preventing resolution is [CARRIER SHORT NAME]'s [failure to investigate / undervaluation / unjustified denial].

Montana's UTPA and the insurance policy impose real consequences for this type of conduct. Section 33-18-242(3) bars a separate bad-faith claim against the insurer for handling this claim. We urge [CARRIER SHORT NAME] to honor its contractual obligations and resolve this claim fully and fairly.

Please direct all communications to the undersigned.

Respectfully submitted,

[________________________________]

By: ___________________________
[________________________________]
Montana Bar No. [________]
[________________________________]
[City], MT [Zip]
Tel: [________________________________]
Email: [________________________________]

Counsel for [________________________________]

ENCLOSURES:

• Policy declarations page and applicable endorsements
• Full policy (coverage form, conditions, exclusions)
• Contractor repair estimates (independent)
• Photographs and video of all damage
• Cause and origin report (if applicable)
• Personal property inventory with valuations
• Additional living expense receipts and documentation
• Correspondence history with [CARRIER SHORT NAME]
• [CARRIER SHORT NAME]'s estimate / adjuster report
• Ordinance / code upgrade documentation

CC:

• [CLIENT NAME] — [Address]
• [Mortgagee / Loss Payee Name and Address] (if applicable)
• Montana Commissioner of Securities and Insurance, 840 Helena Avenue, Helena, MT 59601

MONTANA PROPERTY INSURANCE LAW QUICK REFERENCE

SOURCES AND REFERENCES

• Mont. Code Ann. § 33-18-242: https://mca.legmt.gov/bills/mca/title_0330/chapter_0180/part_0020/section_0420/0330-0180-0020-0420.html
• Mont. Code Ann. § 33-24-102 (real-property improvements): https://mca.legmt.gov/bills/mca/title_0330/chapter_0240/part_0010/section_0020/0330-0240-0010-0020.html
• Mont. Code Ann. § 33-24-103 (listed personal property): https://mca.legmt.gov/bills/mca/title_0330/chapter_0240/part_0010/section_0030/0330-0240-0010-0030.html
• Mont. Code Ann. § 27-1-221 (Punitive Damages — liability/proof): https://law.justia.com/codes/montana/title-27/chapter-1/part-2/section-27-1-221/
• Mont. Code Ann. § 27-1-220(3) (Punitive Damages — cap): https://mca.legmt.gov/bills/mca/title_0270/chapter_0010/part_0020/section_0200/0270-0010-0020-0200.html
• Mont. Code Ann. § 27-1-211 (Prejudgment Interest): https://archive.legmt.gov/bills/mca/title_0270/chapter_0010/part_0020/section_0110/0270-0010-0020-0110.html
• Montana Valued Policy Law Discussion: https://www.propertyinsurancecoveragelaw.com/blog/montana-valued-policy-law/
• What Constitutes a Total Loss in Montana: https://www.propertyinsurancecoveragelaw.com/2013/03/articles/insurance/what-constitutes-a-total-loss-in-montana/
• Montana Commissioner of Securities and Insurance — Fire: https://csimt.gov/your-insurance/fire/
• ALFA International — Montana Insurance Law: https://www.alfainternational.com/compendium/insurance-law/montana/
• Chartwell Law — Montana Bad Faith Guide: https://www.chartwelllaw.com/bad-faith-claims-map/montana