First-Party Property Damage Demand Letter - Oregon

FIRST-PARTY PROPERTY DAMAGE DEMAND LETTER

State of Oregon

[LAW FIRM LETTERHEAD]

CONFIDENTIAL SETTLEMENT COMMUNICATION
PROTECTED UNDER OEC 408 / ORS 40.190 AND FED. R. EVID. 408

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

Date: [__/__/____]

[INSURANCE_COMPANY_NAME]
[PROPERTY_CLAIMS_DEPARTMENT_ADDRESS]
[CITY], [STATE] [ZIP]

Attention: [ADJUSTER_NAME], [ADJUSTER_TITLE]

Re: FORMAL DEMAND — FIRST-PARTY PROPERTY DAMAGE — OREGON
Insured: [________________________________]
Insured Property: [________________________________], Oregon
Policy Number: [________________________________]
Claim Number: [________________________________]
Date of Loss: [__/__/____]
Type of Loss: ☐ Fire ☐ Wind/Storm ☐ Water (non-flood) ☐ Hail ☐ Vandalism ☐ Theft ☐ Other: [________]
Coverage A (Dwelling) Limit: $[____]
Date Proof of Loss Submitted: [__/__/____]
Six-Month ORS 742.061 Clock Expires: [__/__/____]
Response Deadline: [__/__/____] at 5:00 p.m. Pacific

Dear [ADJUSTER_NAME]:

I. INTRODUCTION

This firm represents [CLIENT_NAME] ("our client") on the above-referenced first-party property insurance claim. Our client purchased a homeowner's [or commercial property] policy from [INSURANCE_COMPANY_NAME]; paid the premium; suffered a covered loss on [__/__/____]; promptly reported the loss; cooperated in the investigation; submitted proof of loss; and has waited months for [INSURANCE_COMPANY_NAME] to honor its contractual obligations. The time for gamesmanship has ended.

This letter is a formal demand for full payment of policy benefits under Oregon law. [INSURANCE_COMPANY_NAME]'s handling of this claim has triggered (a) the fee-shifting protections of ORS 742.061, (b) statutory liability under ORS 746.230 (Unfair Claim Settlement Practices), and (c) the extracontractual negligence per se exposure recognized in Moody v. Oregon Community Credit Union, 371 Or. 772 (2023).

II. OREGON FIRST-PARTY PROPERTY INSURANCE FRAMEWORK

A. Construction of Insurance Contracts

Under Oregon law, insurance policies are construed from the perspective of the ordinary purchaser of insurance; ambiguities are resolved against the insurer as drafter. Hoffman Construction Co. v. Fred S. James & Co., 313 Or. 464, 836 P.2d 703 (1992); Holloway v. Republic Indemnity Co., 341 Or. 642 (2006). Exclusions are strictly construed against the insurer, and the insurer bears the burden of establishing that an exclusion applies. Employers Ins. of Wausau v. Tektronix, Inc., 211 Or. App. 485 (2007).

B. Mandatory Policy Provisions

ORS 742.230 requires that every fire insurance policy issued in Oregon contain the standard fire policy provisions, or provisions substantially as favorable to the insured. These include the mandatory 12-month suit limitation, 60-day proof of loss requirement, and the insurer's obligation to pay within 60 days of an accepted proof of loss.

C. Unfair Claims Settlement Practices — ORS 746.230

ORS 746.230(1) prohibits, among other things:

• (a) Misrepresenting facts or policy provisions;
• (b) Failing to acknowledge and act promptly on communications regarding claims;
• (c) Failing to adopt reasonable standards for the prompt investigation of claims;
• (d) Refusing to pay claims without conducting a reasonable investigation based on all available information;
• (e) Failing to affirm or deny coverage within a reasonable time after proof of loss;
• (f) Not attempting in good faith to promptly and equitably settle claims where liability has become reasonably clear;
• (g) Compelling insureds to initiate litigation by offering substantially less than amounts ultimately recovered;
• (h) Failing to promptly provide a reasonable explanation for denial or compromise offer.

These duties are further detailed in the Oregon Administrative Rules, OAR 836-080-0225 through 836-080-0240, which require acknowledgment of claim communications within 10 working days, acceptance or denial of coverage within 30 days after completed proof of loss (extendable only upon written notice explaining the reason), and complete written notice of any claim denial.

D. Attorney Fees — ORS 742.061 (Mandatory Fee Shifting)

ORS 742.061(1) provides: "if settlement is not made within six months from the date proof of loss is filed with the insurer and an action is brought in any court of this state upon any policy of insurance of any kind or nature, and the plaintiff's recovery exceeds the amount of any tender made by the defendant in such action, a reasonable amount to be fixed by the court as attorney fees shall be taxed as part of the costs of the action and any appeal thereon."

This is mandatory ("shall"), not discretionary. Any first-party claim — including structural property claims — triggers this fee-shifting provision after six months. The Oregon appellate courts have repeatedly construed ORS 742.061 liberally in favor of insureds. See, e.g., Long v. Farmers Ins. Co., 360 Or. 791 (2017) (insurer's voluntary payments to insured after suit filed triggered fee entitlement); Robinson v. Tri-Met, 277 Or. App. 60 (2016).

E. Bad Faith / Extracontractual Recovery — Moody

Prior to 2023, Oregon courts were hostile to first-party bad faith tort claims; the seminal case Farris v. U.S. Fidelity & Guaranty Co., 284 Or. 453 (1978), restricted recovery for emotional distress in first-party denials to contract damages. Employers' Fire Ins. Co. v. Love It Ice Cream Co., 64 Or. App. 784 (1983), reinforced that approach.

That restrictive view was substantially overhauled in Moody v. Oregon Community Credit Union, 371 Or. 772, 542 P.3d 24 (2023). In Moody, the Oregon Supreme Court held that an insured may pursue a negligence per se claim against a first-party insurer for violation of ORS 746.230, and may recover emotional distress damages without a physical impact, where:

1. A relationship of mutual reliance exists between the insured and insurer;
2. The insurer assumed a role that includes avoiding financial and emotional harm; and
3. The facts give objective indicators of potentially serious emotional injury.

Moody has since been applied in Butters v. Travelers Home and Marine Ins. Co., Hinzman v. Foremost Ins. Co., Mohammad v. Liberty Ins. Corp., and Thanh Huynh v. Truck Ins. Exchange, each denying insurer motions to dismiss negligence per se claims grounded in ORS 746.230. The days of Oregon as a "no bad faith" state are over.

III. POLICY INFORMATION

A. Policy Details

B. Applicable Coverage and Limits

C. Coverage Applies

The loss is covered. The cause of loss is a covered peril under the policy's insuring agreement; the damage occurred during the policy period; the property is covered property; no exclusion applies (and to the extent any is asserted, [INSURANCE_COMPANY_NAME] bears the burden of proof); all conditions precedent (prompt notice, cooperation, proof of loss, mitigation) have been satisfied.

IV. THE LOSS

A. Description

On [__/__/____], the insured property at [________________________________] sustained substantial damage when [DETAILED_NARRATIVE_OF_LOSS_EVENT_WITH_CAUSE_AND_ORIGIN].

[ADDITIONAL_NARRATIVE]

B. Cause of Loss

The cause of loss is:

☐ Fire
☐ Windstorm / Pacific Northwest storm event
☐ Ice/snow (atmospheric load)
☐ Water (sudden and accidental discharge / plumbing failure / appliance failure)
☐ Tree fall
☐ Vehicle impact
☐ Vandalism / theft
☐ Lightning
☐ Smoke
☐ Other: [________________________________]

C. Mitigation by Insured

As required by the policy and Oregon common law, our client undertook reasonable mitigation to prevent further damage:

All mitigation costs are recoverable as part of the loss.

V. CLAIM HISTORY

A. Carrier's Position

[INSURANCE_COMPANY_NAME]'s current position is: [________________________________]

B. Why That Position Violates Oregon Law

The carrier's position is untenable because:

1. [LEGAL_FACTUAL_REASON_1]
2. [LEGAL_FACTUAL_REASON_2]
3. [LEGAL_FACTUAL_REASON_3]

VI. DAMAGES AND AMOUNTS CLAIMED

A. Dwelling (Coverage A)

Our licensed Oregon general contractor, [CONTRACTOR_NAME], CCB # [____], prepared a detailed Xactimate/scope estimate reflecting the true cost to repair to pre-loss condition using like-kind-and-quality materials with appropriate overhead and profit.

B. Other Structures (Coverage B)

$[____] ([DESCRIPTION: fence, detached garage, shed, etc.])

C. Personal Property (Coverage C)

D. Loss of Use / ALE (Coverage D)

E. Claim Summary

VII. OVERHEAD AND PROFIT (O&P)

Under Oregon insurance practice and the standard of reasonable replacement cost, general contractor overhead and profit (typically 20%) is recoverable when the scope of repair requires coordination of three or more trades — the recognized "three-trade rule." Here, the repair requires coordination of [NUMBER] trades, including [TRADE_1], [TRADE_2], [TRADE_3]. O&P is owed at replacement cost and may not be held back pending completion absent specific policy language that complies with Oregon law. Holding back O&P on an ACV tender without contractual justification constitutes a material breach and violates ORS 746.230(1)(d) and (f).

VIII. APPRAISAL

A. Invoking Appraisal

To the extent the only remaining dispute is the amount of loss, we hereby demand appraisal under the terms of the policy. Oregon enforces appraisal clauses in property policies as valid and binding. MKB Constructors v. American Zurich Ins. Co., 49 F. Supp. 3d 814 (D. Or. 2014); Davis v. State Farm Fire & Cas. Co., 59 Or. App. 294 (1982).

Our client appoints [APPRAISER_NAME] as their appraiser. Please designate your appraiser in writing within twenty (20) days. The two appraisers shall then select a competent, impartial umpire, and the amount of loss will be set in accordance with the policy.

B. Scope of Appraisal

Submitted to appraisal:

• Amount of loss to dwelling (Coverage A)
• Scope and cost of repair
• Scope and valuation of other structures (Coverage B)
• Scope and valuation of personal property (Coverage C)

Reserved for court: all coverage questions, causation disputes, application of exclusions, bad faith conduct, and statutory claims.

IX. VIOLATIONS OF ORS 746.230 AND OAR 836-080

[INSURANCE_COMPANY_NAME] has violated the Unfair Claim Settlement Practices Act and the Oregon Division of Financial Regulation's claim-handling rules by:

• ☐ Failing to acknowledge communications within 10 working days — OAR 836-080-0225;
• ☐ Failing to accept or deny the claim within 30 days of completed proof of loss — OAR 836-080-0230;
• ☐ Failing to conduct a reasonable investigation — ORS 746.230(1)(d);
• ☐ Failing to promptly effectuate fair settlement where liability is reasonably clear — ORS 746.230(1)(f);
• ☐ Offering substantially less than amounts ultimately owed in an attempt to compel litigation — ORS 746.230(1)(g);
• ☐ Failing to provide a reasonable written explanation for denial/lowball — ORS 746.230(1)(h);
• ☐ Systematically issuing estimates below cost of covered repairs and relying on insureds to dispute — recognized as a violation of ORS 746.230.

X. DEMAND

A. Monetary Demand

We demand payment of $[TOTAL_DEMAND] as follows:

B. Additional Demands

• Written withdrawal of any denial or reservation that is not supported by the policy or Oregon law;
• Reopening of the file for supplemental claims;
• Correction of any adverse reporting to industry databases (CLUE / ISO).

XI. RESPONSE DEADLINE AND CONSEQUENCES

This demand must be accepted by 5:00 p.m. Pacific on [__/__/____].

If [INSURANCE_COMPANY_NAME] fails to accept, our client will immediately:

1. File suit in the Circuit Court of the State of Oregon for [COUNTY] County seeking:
   - All policy benefits
   - Attorney fees under ORS 742.061
   - 9% statutory interest under ORS 82.010
   - Negligence per se damages under Moody, including emotional distress
   - Punitive damages under ORS 31.730 (clear and convincing standard; subject to 70/30 distribution under ORS 31.735)

2. File a formal complaint with the Oregon Division of Financial Regulation, Department of Consumer and Business Services, P.O. Box 14480, Salem, OR 97309-0405 (1-888-877-4894);

3. Invoke appraisal as specified above if not already commenced;

4. Preserve claims against the adjusting firm and any independent adjusters for negligence per se.

XII. DOCUMENT PRESERVATION

You are directed to preserve the entire claim file and all ESI, including: adjuster notes and diary entries, reserve history and reserve-change audit trail, all internal communications, photographs and inspection reports, engineering and cause-and-origin reports, estimates (original and all revisions, including Xactimate/Symbility files), telephone recordings, supervisor approval chains, SIU materials, claim-handling guidelines/manuals, reinsurance communications, and training materials applicable to property claims in Oregon.

XIII. CONCLUSION

Our client did everything a policyholder is supposed to do. [INSURANCE_COMPANY_NAME] has not. Oregon law after Moody now provides the remedies that were missing when Farris was decided. The window for paying this claim without fees, interest, and extracontractual exposure is rapidly closing.

Respectfully submitted,

[LAW_FIRM_NAME]

By: _______________________________
[ATTORNEY_NAME], OSB # [____]
[ADDRESS]
[CITY], Oregon [ZIP]
[PHONE] | [EMAIL]

Counsel for [CLIENT_NAME]

ENCLOSURES:
☐ Declarations page and complete policy
☐ Sworn proof of loss
☐ Licensed Oregon contractor estimate (CCB # [____])
☐ Xactimate scope and line-item estimate
☐ Photographs (pre-loss and post-loss)
☐ Personal property inventory
☐ Mitigation invoices and receipts
☐ ALE receipts and housing agreement
☐ Claim correspondence chronology

CC:

• [CLIENT_NAME]
• [MORTGAGEE_NAME] (loss payee, if applicable)
• Oregon Division of Financial Regulation (upon filing of complaint)

OREGON PROPERTY INSURANCE QUICK REFERENCE

SOURCES AND REFERENCES

• ORS 742.061 — Recovery of attorney fees in action on policy — https://oregon.public.law/statutes/ors_742.061
• ORS 746.230 — Unfair claim settlement practices — https://oregon.public.law/statutes/ors_746.230
• ORS 742.230 — Standard fire policy provisions — https://oregon.public.law/statutes/ors_742.230
• ORS 82.010 — Legal rate of interest — https://oregon.public.law/statutes/ors_82.010
• ORS 31.730 — Standards for punitive damages — https://oregon.public.law/statutes/ors_31.730
• ORS 31.735 — Distribution of punitive damages — https://oregon.public.law/statutes/ors_31.735
• ORS 31.600 — Comparative fault — https://oregon.public.law/statutes/ors_31.600
• OAR 836-080-0225 et seq. — Unfair claim settlement rules — https://secure.sos.state.or.us/oard/displayDivisionRules.action?selectedDivision=3030
• Moody v. Oregon Community Credit Union, 371 Or. 772 (2023) — https://law.justia.com/cases/oregon/supreme-court/2023/s069409.html
• Hoffman Construction Co. v. Fred S. James & Co., 313 Or. 464 (1992)
• Farris v. U.S. Fidelity & Guaranty Co., 284 Or. 453 (1978) — https://law.justia.com/cases/oregon/supreme-court/1978/284-or-453-0.html
• Employers' Fire Ins. Co. v. Love It Ice Cream Co., 64 Or. App. 784 (1983)
• Long v. Farmers Ins. Co. of Oregon, 360 Or. 791 (2017)
• Oregon Division of Financial Regulation — https://dfr.oregon.gov/