First-Party Property Damage Demand Letter - Tennessee

FIRST-PARTY PROPERTY DAMAGE DEMAND LETTER

State of Tennessee

[LAW FIRM LETTERHEAD]

PRIVILEGED AND CONFIDENTIAL
SETTLEMENT COMMUNICATION — FOR COMPROMISE PURPOSES ONLY
PROTECTED UNDER TENN. R. EVID. 408 AND FED. R. EVID. 408
FORMAL DEMAND UNDER TENN. CODE ANN. § 56-7-105

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 FOR FIRST-PARTY PROPERTY BENEFITS — TENNESSEE LAW
Insured: [________________________________]
Property Address: [________________________________]
County: [________________________________], Tennessee
Policy Number: [________________________________]
Claim Number: [________________________________]
Date of Loss: [__/__/____]
Type of Loss: ☐ Fire ☐ Wind/Hail ☐ Tornado ☐ Water ☐ Theft ☐ Vandalism ☐ Other: [____]
Policy Limits: $[________________________________]
Formal Demand Amount: $[________________________________]
Response Deadline: [__/__/____] (60 days per Tenn. Code Ann. § 56-7-105)

Dear [ADJUSTER_NAME]:

I. INTRODUCTION AND FORMAL DEMAND

This firm represents [CLIENT_NAME] ("our client" or "the Insured") in connection with the above-referenced first-party property damage claim under a policy of insurance issued in Tennessee and governed by Tennessee law. This letter constitutes the formal written demand for payment required under Tenn. Code Ann. § 56-7-105 and triggers the 60-day waiting period before our client may file suit and pursue the statutory 25% bad-faith penalty.

We hereby demand payment of $[TOTAL_DEMAND] within sixty (60) days of the Company's receipt of this letter.

Tennessee is not a "prompt pay" state with fixed-day requirements like Texas or Florida. Instead, Tennessee regulates first-party claim handling through two overlapping mechanisms: (1) the statutory bad-faith penalty of Tenn. Code Ann. § 56-7-105, which requires formal demand and a 60-day waiting period; and (2) the Unfair Trade Practices and Unfair Claims Settlement Act of 2009, Tenn. Code Ann. §§ 56-8-101 through 56-8-114, which is enforced exclusively by the Commissioner of Commerce and Insurance and does not create a private right of action. This letter places the Company on notice under both.

II. TENNESSEE FIRST-PARTY PROPERTY INSURANCE LAW

A. Bad-Faith Failure to Pay — Tenn. Code Ann. § 56-7-105

Tennessee's statutory bad-faith remedy is codified at Tenn. Code Ann. § 56-7-105. The statute provides:

"The insurance companies of this state . . . in all cases when a loss occurs and they refuse to pay the loss within sixty (60) days after a demand has been made by the holder of the policy or fidelity bond on which the loss occurred, shall be liable to pay the holder of the policy or fidelity bond, in addition to the loss and interest on the loss, a sum not exceeding twenty-five percent (25%) on the liability for the loss; provided, that it is made to appear to the court or jury trying the case that the refusal to pay the loss was not in good faith, and that the failure to pay inflicted additional expense, loss, or injury including attorney fees upon the holder of the policy or fidelity bond . . . ."

Four elements must be proven to recover the 25% statutory penalty:

1. The policy has become due and payable;
2. A formal demand for payment has been made;
3. The insured has waited sixty (60) days after making the demand before filing suit (unless the insurer refused to pay within the 60 days); and
4. The refusal to pay was not in good faith.

This letter is the formal demand required by element (2). The 60-day clock begins upon receipt.

B. Unfair Trade Practices and Unfair Claims Settlement Act — Tenn. Code Ann. § 56-8-104

Tennessee's Unfair Trade Practices and Unfair Claims Settlement Act of 2009, Tenn. Code Ann. §§ 56-8-101 through 56-8-114, prohibits a wide range of unfair practices in claim handling, including:

• § 56-8-104(8)(A) — Misrepresenting pertinent facts or insurance policy provisions
• § 56-8-104(8)(B) — Failing to acknowledge and act reasonably promptly upon communications
• § 56-8-104(8)(C) — Failing to adopt and implement reasonable standards for prompt investigation
• § 56-8-104(8)(D) — Refusing to pay claims without conducting a reasonable investigation
• § 56-8-104(8)(F) — Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear
• § 56-8-104(8)(G) — Compelling insureds to institute litigation to recover amounts due by offering substantially less than the amounts ultimately recovered
• § 56-8-104(8)(N) — Failing to promptly provide a reasonable explanation of the basis in the policy for denial or offer

Although § 56-8-104 creates no private right of action (enforcement is reserved to the Commissioner under § 56-8-108), Tennessee courts have acknowledged that violations are relevant evidence of bad faith for purposes of § 56-7-105 and common-law claims.

C. Department of Commerce and Insurance Rules

Tennessee's Unfair Claims Settlement Practices Rules, codified at Tenn. Comp. R. & Regs. 0780-01-05, require insurers to acknowledge communications within 15 working days, conduct reasonable investigations, and notify claimants of acceptance or denial within 30 working days of receiving proof of loss. Violations may be reported to the Commissioner for enforcement.

D. TCPA Inapplicable to Insurance — Tenn. Code Ann. § 56-8-113

Effective 2011, Tenn. Code Ann. § 56-8-113 made Title 56 the "sole and exclusive statutory remedy . . . for alleged unfair or deceptive acts or practices by the insurer . . . in connection with a contract of insurance." This provision legislatively superseded Myint v. Allstate Ins. Co., 970 S.W.2d 920 (Tenn. 1998), which had left open the possibility of a Tennessee Consumer Protection Act (TCPA) claim against an insurer. Accordingly, our client will not pursue TCPA remedies but will rely on Tenn. Code Ann. § 56-7-105, common-law bad faith, and regulatory action.

E. Appraisal — Enforceable for Amount-of-Loss Disputes

Tennessee courts enforce appraisal clauses when properly invoked. Appraisal is limited to valuation disputes, not coverage determinations. See generally Tennessee Farmers Mut. Ins. Co. v. Rader, 410 S.W.3d 795 (Tenn. 2013). Coverage questions must be reserved for litigation or declaratory action. Tennessee does not have a statutory appraisal mechanism — appraisal arises from the policy contract and is governed by the Tennessee Uniform Arbitration Act where applicable, Tenn. Code Ann. § 29-5-301 et seq.

F. Statute of Limitations — Six Years, Subject to Policy Suit-Limitation Clauses

Contract claims against an insurer are governed by Tennessee's six-year statute of limitations, Tenn. Code Ann. § 28-3-109(a)(3). However, Tennessee courts will enforce a policy's contractual suit-limitation clause (commonly one year from date of loss) where reasonable and unambiguous. See Certain Underwriters at Lloyd's, London v. Transcarriers, Inc., 107 S.W.3d 496 (Tenn. Ct. App. 2002).

G. Valued Policy Law for Total Fire Loss — Tenn. Code Ann. § 56-7-110

For total losses by fire, Tennessee's valued policy law, Tenn. Code Ann. § 56-7-110, requires the insurer to pay the full policy limit (excluding personal property) unless the insurer can affirmatively rebut the stated value. This applies only to real property destroyed by fire and not to wind, water, or other perils.

III. POLICY INFORMATION AND COVERAGE

A. Policy Details

B. Coverage Limits

C. Coverage Confirmation

The loss is clearly covered under the policy:

1. The cause of loss ([PERIL]) is a named / open peril under the policy
2. The damage occurred during the policy period on [DATE_OF_LOSS]
3. The Insured has satisfied all conditions precedent, including:
   - ☐ Prompt notice of loss given on [__/__/____]
   - ☐ Sworn proof of loss submitted on [__/__/____]
   - ☐ Examinations under oath (if requested) completed
   - ☐ Documentation provided upon request
   - ☐ Mitigation of further damage performed
4. No applicable exclusion removes coverage

IV. THE LOSS EVENT

A. Description of Loss

On [__/__/____], the insured property at [PROPERTY_ADDRESS] in [COUNTY] County, Tennessee, sustained damage as a result of [DESCRIBE_LOSS_EVENT]. The property is located [DESCRIBE_GEOGRAPHIC_CONTEXT — e.g., "in the path of the April 2026 tornado outbreak that prompted Governor's Executive Order No. __"].

[DETAILED_NARRATIVE_OF_LOSS]

B. Cause and Origin Documentation

☐ National Weather Service storm report dated [__/__/____] confirms [wind speeds / hail size / tornado track]
☐ Fire Marshal report dated [__/__/____] from [FIRE_DEPARTMENT]
☐ Engineer's report by [ENGINEER_NAME], P.E., [TN_PE_NUMBER]
☐ Public adjuster / independent adjuster report by [ADJUSTER_NAME]
☐ Police incident report No. [REPORT_NUMBER] (theft/vandalism claims)

C. Mitigation Efforts

Our client has complied with the policy's duty to mitigate damage, including:

These mitigation expenses are separately reimbursable under the policy.

V. CLAIM HISTORY AND INSURER'S CONDUCT

A. Chronological Timeline

B. Insurer's Position and Deficiencies

[CARRIER_SHORT_NAME] has [DESCRIBE_INSURER_POSITION — denied / underpaid / delayed / failed to investigate]. This position is contrary to Tennessee law and the policy contract because:

1. [SPECIFIC_DEFICIENCY_1]
2. [SPECIFIC_DEFICIENCY_2]
3. [SPECIFIC_DEFICIENCY_3]

The Company's estimate fails to account for the following essential scope items identified by our client's licensed contractor, [CONTRACTOR_NAME] (TN Contractor License No. [LICENSE_NUMBER]):

• [MISSING_SCOPE_ITEM_1]
• [MISSING_SCOPE_ITEM_2]
• [MISSING_SCOPE_ITEM_3]

VI. DAMAGES AND SCOPE OF LOSS

A. Dwelling Damage (Coverage A)

Based on the estimate prepared by [CONTRACTOR_NAME], using Xactimate pricing for the [NASHVILLE/MEMPHIS/KNOXVILLE/CHATTANOOGA] market area:

B. Other Structures (Coverage B)

[DESCRIBE_OTHER_STRUCTURES]

$[TOTAL_OTHER_STRUCTURES]

C. Personal Property (Coverage C)

Inventory attached as Exhibit [_]. Tennessee law permits recovery at replacement cost value where the policy includes an RCV endorsement.

D. Loss of Use / Additional Living Expenses (Coverage D)

Our client has been displaced from the insured property since [__/__/____]. Tennessee courts interpret ALE provisions broadly to include the reasonable costs of maintaining the insured's normal standard of living.

E. Overall Claim Summary

VII. GENERAL CONTRACTOR OVERHEAD AND PROFIT

Tennessee law and industry custom require payment of general contractor overhead and profit (typically 10% and 10%) when the scope of repairs is reasonably complex or involves multiple trades. The Tennessee federal courts have recognized this standard. [CARRIER_SHORT_NAME]'s refusal to include O&P is unreasonable because:

• The repairs require coordination of [NUMBER] trades ([LIST_TRADES])
• The scope is complex and exceeds simple repairs
• A licensed general contractor is reasonably necessary
• The local Nashville/Memphis/Knoxville/Chattanooga market standard is 10%/10%
• Withholding O&P until repairs are "actually incurred" is contrary to the indemnity principle

VIII. APPRAISAL — INVOCATION (IF APPLICABLE)

A. Demand for Appraisal

Due to the dispute over the amount of loss, and pursuant to the appraisal provision of the policy, our client hereby invokes appraisal as to the disputed scope and amount of loss.

Our client appoints [APPRAISER_NAME], a competent and disinterested appraiser with [YEARS] years of experience in Tennessee property claims.

Please provide the name of the Company's appraiser within twenty (20) days. If the parties' appraisers cannot agree on an umpire, one will be selected by the Circuit Court for [COUNTY] County, Tennessee.

B. Scope of Appraisal — Valuation Only

Consistent with Tennessee law, the appraisal is limited to the amount of loss, including the cost to repair/replace:

• Dwelling damage (Coverage A)
• Other structures (Coverage B)
• Personal property (Coverage C)
• [Other disputed items]

Coverage issues are expressly reserved for litigation and are not submitted to the appraisal panel.

IX. STATUTORY AND COMMON-LAW BAD FAITH

A. Violations of Tenn. Code Ann. § 56-8-104

[CARRIER_SHORT_NAME]'s conduct violates the following provisions of the Unfair Trade Practices Act:

☐ § 56-8-104(8)(A) — Misrepresenting pertinent facts or policy provisions
☐ § 56-8-104(8)(B) — Failing to acknowledge and act reasonably promptly
☐ § 56-8-104(8)(C) — Failing to adopt reasonable standards for prompt investigation
☐ § 56-8-104(8)(D) — Refusing to pay without reasonable investigation
☐ § 56-8-104(8)(F) — Failing to attempt good-faith settlement when liability reasonably clear
☐ § 56-8-104(8)(G) — Compelling litigation by offering substantially less than owed
☐ § 56-8-104(8)(N) — Failing to provide reasonable explanation for denial/offer

While § 56-8-104 does not create a private right of action, these violations constitute evidence of bad faith under § 56-7-105 and common-law theories.

B. Entitlement Under Tenn. Code Ann. § 56-7-105

Our client is entitled to recover:

1. Policy benefits wrongfully withheld: $[POLICY_BENEFITS]
2. Statutory penalty of up to 25% of the liability: up to $[25_PERCENT_PENALTY]
3. Consequential damages (additional expense, loss, or injury): $[CONSEQUENTIAL]
4. Attorney's fees incurred to enforce the policy: $[EST_FEES]
5. Prejudgment interest under Tenn. Code Ann. § 47-14-123 (at the prevailing rate set semi-annually by the Secretary of State)

C. Punitive Damages — Tenn. Code Ann. § 29-39-104

For egregious conduct (intentional, fraudulent, malicious, or reckless), punitive damages are available in addition to the § 56-7-105 penalty. The punitive cap is the greater of two (2) times compensatory damages or $500,000. Note that in Lindenberg v. Jackson National Life Insurance Co., 912 F.3d 348 (6th Cir. 2018), the Sixth Circuit held the cap unconstitutional under the Tennessee Constitution — Tennessee state appellate courts have not squarely addressed the issue, and the question remains in flux.

X. DEMAND

A. Monetary Demand

We demand payment of $[TOTAL_DEMAND]:

B. Non-Monetary Terms

• Full release of the claim upon payment
• Correction of any adverse information reported to industry databases (CLUE, A-PLUS)
• Withdrawal of any reservation of rights
• Written acknowledgment that the claim is closed

XI. RESPONSE DEADLINE AND CONSEQUENCES

This formal demand expires sixty (60) days from your receipt of this letter, specifically at 5:00 p.m. Central Time on [__/__/____].

Consequences of Non-Payment

If [CARRIER_SHORT_NAME] fails to tender the full amount demanded by the deadline:

1. Suit will be filed in the Circuit or Chancery Court for [COUNTY] County, Tennessee, seeking:
   - All policy benefits
   - The 25% statutory penalty under Tenn. Code Ann. § 56-7-105
   - Consequential damages
   - Attorney's fees (recoverable under § 56-7-105 upon proof of bad faith)
   - Punitive damages under Hodges standard
   - Prejudgment interest under Tenn. Code Ann. § 47-14-123

2. Regulatory complaint filed with the Tennessee Department of Commerce and Insurance:
   - Consumer Insurance Services Section
   - 500 James Robertson Parkway, Nashville, TN 37243
   - Phone: (615) 741-2218 / (800) 342-4029
   - Email: [email protected]
   - Website: https://www.tn.gov/commerce/insurance/consumer-resources.html

3. Appraisal invoked (if not already), with court appointment of umpire if necessary

4. Public Adjusters Licensing and Regulation enforcement for any improper retention/dismissal of the insured's public adjuster

XII. DOCUMENT PRESERVATION NOTICE

This letter constitutes formal notice to preserve all documents and electronically stored information (ESI) related to this claim, including:

• Complete claim file, all drafts and versions
• All internal communications (emails, Teams/Slack messages, voicemails)
• All reserves information and reserve change history
• Adjuster notes, diaries, and activity logs
• Field inspection reports, photographs, drone imagery
• Xactimate estimates and sketches (all versions)
• Weather data, CoreLogic, and Hail Verify reports
• Communications with SIU, defense counsel, coverage counsel, and outside consultants
• Underwriting file and policy issuance documentation
• Claim handling manuals and training materials applicable in Tennessee
• Metadata for all electronic documents

Spoliation will be pursued as a separate basis for sanctions and adverse inference under Tennessee law.

XIII. CONCLUSION

[CARRIER_SHORT_NAME] collected premiums to protect our client against exactly the loss that has occurred. The property is covered; the loss is documented; the proof of loss has been submitted. The only thing missing is full and fair payment. This letter is the formal demand required by Tenn. Code Ann. § 56-7-105. The Company has sixty (60) days to pay the amount owed or face the statutory 25% penalty, attorney's fees, common-law punitive damages, and regulatory consequences.

Respectfully submitted,

[LAW_FIRM_NAME]

By: _______________________________
[ATTORNEY_NAME], BPR No. [BAR_NUMBER]
[ADDRESS]
[CITY], TN [ZIP]
[PHONE]
[EMAIL]

Counsel for [CLIENT_NAME]

ENCLOSURES:

• Policy declarations page
• Policy form and endorsements
• Sworn proof of loss
• Contractor estimate (Xactimate)
• Photographs of damage
• Personal property inventory
• Weather data / storm verification
• Engineer's report
• Mortgagee/lienholder notice
• HIPAA authorization (if health-related claim)

CC:

• [CLIENT_NAME]
• [MORTGAGEE_NAME] — [MORTGAGEE_ADDRESS]
• Tennessee Department of Commerce and Insurance, 500 James Robertson Parkway, Nashville, TN 37243

TENNESSEE FIRST-PARTY PROPERTY LAW QUICK REFERENCE

SOURCES AND REFERENCES

• Tenn. Code Ann. § 56-7-105 — Bad-faith failure to pay
• Tenn. Code Ann. § 56-7-110 — Valued policy law
• Tenn. Code Ann. §§ 56-8-101 to 56-8-114 — Unfair Trade Practices and Unfair Claims Settlement Act of 2009
• Tenn. Code Ann. § 56-8-104 — Unfair trade practices defined
• Tenn. Code Ann. § 56-8-113 — Title 56 as sole remedy
• Tenn. Code Ann. § 28-3-109 — Six-year statute of limitations
• Tenn. Code Ann. § 29-5-301 et seq. — Tennessee Uniform Arbitration Act
• Tenn. Code Ann. § 47-14-123 — Prejudgment interest
• Tenn. Code Ann. § 29-39-104 — Punitive damages cap
• Tenn. Comp. R. & Regs. 0780-01-05 — Unfair claims settlement practices rules
• Hodges v. S.C. Toof & Co., 833 S.W.2d 896 (Tenn. 1992)
• Johnson v. Tenn. Farmers Mut. Ins. Co., 205 S.W.3d 365 (Tenn. 2006)
• Myint v. Allstate Ins. Co., 970 S.W.2d 920 (Tenn. 1998)
• Lindenberg v. Jackson National Life Ins. Co., 912 F.3d 348 (6th Cir. 2018)
• Tennessee Farmers Mut. Ins. Co. v. Rader, 410 S.W.3d 795 (Tenn. 2013)
• Certain Underwriters at Lloyd's v. Transcarriers, Inc., 107 S.W.3d 496 (Tenn. Ct. App. 2002)
• Tennessee Department of Commerce and Insurance: https://www.tn.gov/commerce/insurance.html