INSURANCE BAD FAITH DEMAND LETTER

[LAW FIRM LETTERHEAD]

PRIVILEGED AND CONFIDENTIAL
SETTLEMENT COMMUNICATION - FOR RESOLUTION PURPOSES ONLY
PROTECTED UNDER [STATE] RULE OF EVIDENCE [___] AND F.R.E. 408

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

Date: [DATE]

[INSURANCE_COMPANY_NAME]
[CLAIMS_DEPARTMENT_ADDRESS]
[CITY], [STATE] [ZIP]

Attention: [ADJUSTER_NAME], [ADJUSTER_TITLE]
Re: FORMAL BAD FAITH DEMAND
Insured: [INSURED_NAME]
Claimant: [CLAIMANT_NAME]
Policy Number: [POLICY_NUMBER]
Claim Number: [CLAIM_NUMBER]
Date of Loss: [DATE_OF_LOSS]
Policy Limits: [POLICY_LIMITS]
Response Deadline: [RESPONSE_DEADLINE] (This is a Time-Limited Demand)

Dear [ADJUSTER_NAME]:

I. INTRODUCTION AND NATURE OF DEMAND

This firm represents [CLIENT_NAME] ("our client") in connection with the above-referenced insurance claim. This letter constitutes a formal demand for payment of policy benefits wrongfully withheld and serves as notice of [INSURANCE_COMPANY_NAME]'s ("the Company" or "[CARRIER_SHORT_NAME]") bad faith conduct in handling our client's claim.

After thirty years of litigating insurance disputes against major carriers, I have rarely encountered claim handling as egregious as the conduct exhibited by [CARRIER_SHORT_NAME] in this matter. The Company's actions constitute a textbook example of bad faith claims practices that courts and juries routinely punish with substantial compensatory and punitive damage awards.

This is a time-limited demand. The Company has until [RESPONSE_DEADLINE] to tender the full policy limits of [POLICY_LIMITS] and resolve all claims arising from this loss. Failure to do so will result in immediate litigation seeking all available remedies, including but not limited to:

• Full policy benefits owed
• Consequential damages
• Emotional distress damages
• Statutory penalties and interest
• Punitive/exemplary damages
• Attorney's fees and costs

II. POLICY INFORMATION AND COVERAGE

A. Policy Details

B. Coverage Analysis

The policy at issue provides coverage for [DESCRIBE_COVERED_LOSS_TYPE]. The loss at issue clearly falls within the policy's insuring agreement, which states:

"[QUOTE_RELEVANT_POLICY_LANGUAGE]"

[CARRIER_SHORT_NAME] has acknowledged coverage by [DESCRIBE_COVERAGE_ACKNOWLEDGMENT]. Having accepted coverage, the Company is obligated to:

☐ Conduct a thorough, fair, and objective investigation
☐ Evaluate the claim in good faith
☐ Promptly pay all amounts owed under the policy
☐ Communicate honestly and transparently with the insured
☐ Avoid unreasonable delays in claim handling
☐ Refrain from compelling litigation through unreasonable conduct

III. FACTUAL BACKGROUND AND CLAIM HISTORY

A. The Underlying Loss

On [DATE_OF_LOSS], [DESCRIBE_LOSS_EVENT_IN_DETAIL].

[ADDITIONAL_LOSS_DETAILS]

B. Claim Submission and Initial Handling

Our client promptly reported this loss to [CARRIER_SHORT_NAME] on [DATE_OF_CLAIM_SUBMISSION]. The Company assigned Claim Number [CLAIM_NUMBER] and initially assigned adjuster [ORIGINAL_ADJUSTER_NAME] to handle the claim.

C. Chronological Timeline of Claim Handling

The following timeline documents [CARRIER_SHORT_NAME]'s systematic bad faith conduct:

IV. BAD FAITH CONDUCT ANALYSIS

A. Standard for Bad Faith

[STATE] recognizes [COMMON_LAW/STATUTORY/BOTH] causes of action for insurance bad faith. Under [STATE] law, an insurer acts in bad faith when it [STATE_SPECIFIC_BAD_FAITH_STANDARD].

The seminal case of [LEADING_STATE_CASE] establishes that [QUOTE_OR_PARAPHRASE_HOLDING].

B. Specific Bad Faith Conduct

[CARRIER_SHORT_NAME]'s handling of this claim violates both the express and implied covenants of good faith and fair dealing in the following specific ways:

1. Unreasonable Delay

The Company has unreasonably delayed the investigation, evaluation, and payment of this claim. Specifically:

• [DESCRIBE_SPECIFIC_DELAY_1]
• [DESCRIBE_SPECIFIC_DELAY_2]
• [DESCRIBE_SPECIFIC_DELAY_3]

These delays are not attributable to any legitimate coverage dispute or investigation necessity. Rather, they reflect a calculated strategy to pressure our client into accepting an inadequate settlement or abandoning the claim entirely.

2. Inadequate Investigation

[CARRIER_SHORT_NAME] failed to conduct a thorough, fair, and objective investigation. The Company:

• [INVESTIGATION_FAILURE_1]
• [INVESTIGATION_FAILURE_2]
• [INVESTIGATION_FAILURE_3]

A reasonable insurer would have [DESCRIBE_REASONABLE_INVESTIGATION_STEPS].

3. Lowball Settlement Offers

The Company's settlement offers have been grossly inadequate and not based on any reasonable evaluation of the claim:

These offers demonstrate that [CARRIER_SHORT_NAME] is not negotiating in good faith but rather attempting to coerce our client into accepting far less than the claim is worth.

4. Misrepresentation of Policy Provisions

The Company has misrepresented the terms and conditions of the policy by [DESCRIBE_MISREPRESENTATIONS].

5. Failure to Communicate

[CARRIER_SHORT_NAME] has failed to respond to communications, provide claim status updates, and explain the basis for its positions, including:

• [COMMUNICATION_FAILURE_1]
• [COMMUNICATION_FAILURE_2]
• [COMMUNICATION_FAILURE_3]

6. Unreasonable Interpretation of Policy Language

The Company has adopted an unreasonable interpretation of the policy that [DESCRIBE_UNREASONABLE_INTERPRETATION]. This interpretation:

• Contradicts the plain language of the policy
• Is inconsistent with [STATE] law on policy interpretation
• Was adopted in bad faith to avoid payment

V. STATUTORY VIOLATIONS

A. Unfair Claims Settlement Practices Act

[CARRIER_SHORT_NAME]'s conduct violates [STATE]'s Unfair Claims Settlement Practices Act, [CITE_STATE_STATUTE], which prohibits:

☐ Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue (Section [___])

☐ Failing to acknowledge and act reasonably promptly upon communications with respect to claims (Section [___])

☐ Failing to adopt and implement reasonable standards for the prompt investigation of claims (Section [___])

☐ Refusing to pay claims without conducting a reasonable investigation (Section [___])

☐ Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear (Section [___])

☐ Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered (Section [___])

☐ Attempting to settle a claim for less than the amount to which a reasonable person would have believed he or she was entitled (Section [___])

☐ Failing to promptly settle claims where liability has become reasonably clear under one portion of the policy in order to influence settlements under other portions of the policy (Section [___])

☐ Failing to promptly provide a reasonable explanation of the basis in the policy for denial or inadequate offer (Section [___])

☐ Delaying investigation or payment of claims by requiring submission of duplicative or unnecessary documentation (Section [___])

B. Prompt Payment Statute Violations

[CARRIER_SHORT_NAME] has violated [STATE]'s prompt payment statute, [CITE_PROMPT_PAYMENT_STATUTE], by failing to:

☐ Acknowledge receipt of the claim within [___] days
☐ Begin investigation within [___] days
☐ Accept or deny the claim within [___] days
☐ Pay the claim within [___] days of acceptance
☐ Provide written explanation for denial or delay

These violations subject [CARRIER_SHORT_NAME] to statutory penalties including:

• Interest at [___]% per annum
• [ADDITIONAL_STATUTORY_PENALTIES]
• Attorney's fees and costs

C. Additional Regulatory Violations

[CARRIER_SHORT_NAME]'s conduct also violates [ADDITIONAL_REGULATIONS_OR_STATUTES].

VI. DAMAGES

A. Contract Damages

Our client is entitled to the following contract damages:

B. Consequential Damages

As a direct and proximate result of [CARRIER_SHORT_NAME]'s bad faith, our client has suffered the following consequential damages:

C. Emotional Distress Damages

[CARRIER_SHORT_NAME]'s bad faith conduct has caused our client severe emotional distress, including [DESCRIBE_EMOTIONAL_DISTRESS_SYMPTOMS]. Under [STATE] law, emotional distress damages are recoverable in bad faith actions. See [CITE_AUTHORITY].

D. Punitive/Exemplary Damages

[CARRIER_SHORT_NAME]'s conduct rises to the level of [MALICE/OPPRESSION/FRAUD/RECKLESS_DISREGARD] warranting punitive damages. The Company's actions demonstrate:

• [AGGRAVATING_FACTOR_1]
• [AGGRAVATING_FACTOR_2]
• [AGGRAVATING_FACTOR_3]

Under [STATE] law, punitive damages may be awarded when [STATE_PUNITIVE_DAMAGE_STANDARD]. Given [CARRIER_SHORT_NAME]'s [DESCRIBE_NET_WORTH_OR_FINANCIAL_CONDITION_IF_KNOWN], a substantial punitive award is warranted to deter similar conduct.

E. Attorney's Fees and Costs

Under [STATE] law, [CITE_AUTHORITY_FOR_FEES], our client is entitled to recover attorney's fees and costs incurred in pursuing this claim.

F. Statutory Penalties and Interest

Pursuant to [CITE_STATUTORY_AUTHORITY], our client is entitled to:

• Statutory interest at [___]% per annum from [DATE]
• [ADDITIONAL_STATUTORY_PENALTIES]

VII. DEMAND

Based on the foregoing, we hereby demand that [CARRIER_SHORT_NAME]:

A. Monetary Demand

Pay the total sum of $[TOTAL_DEMAND_AMOUNT] as follows:

B. Additional Terms

In addition to the monetary payment, we require:

☐ Full and complete release of all claims by [CARRIER_SHORT_NAME] against our client arising from this claim

☐ Confidentiality agreement regarding settlement terms (if desired by our client)

☐ Correction of any adverse information reported to industry databases (e.g., CLUE, A-PLUS, ISO ClaimSearch)

☐ [ADDITIONAL_TERMS]

VIII. TIME-LIMITED NATURE OF THIS DEMAND

THIS DEMAND EXPIRES AT 5:00 P.M. [TIME_ZONE] ON [RESPONSE_DEADLINE].

This deadline is firm and will not be extended. The time provided is more than sufficient for [CARRIER_SHORT_NAME] to evaluate this demand and respond. We have already provided all documentation necessary to evaluate this claim.

If [CARRIER_SHORT_NAME] requires any additional information to respond to this demand, such request must be made in writing within [NUMBER] days of receipt of this letter. Any request for information already provided will be deemed evidence of bad faith delay.

A. Consequences of Non-Response or Inadequate Response

If [CARRIER_SHORT_NAME] fails to accept this demand by the deadline:

1. Litigation will be filed immediately seeking all available remedies under [STATE] law

2. This demand will be withdrawn and our client will seek:
   - Full policy benefits plus prejudgment interest
   - All consequential and emotional distress damages
   - Punitive damages without limitation
   - Attorney's fees and costs
   - Statutory penalties

3. The bad faith claim will be prosecuted to judgment, and we will seek to recover:
   - Damages in excess of policy limits
   - Discovery into [CARRIER_SHORT_NAME]'s claim handling practices, training materials, and similar claims
   - Testimony from corporate representatives regarding claims practices

4. Regulatory complaints will be filed with:
   - [STATE] Department of Insurance
   - National Association of Insurance Commissioners
   - [OTHER_REGULATORY_BODIES]

B. Settlement Authority Requirement

We require confirmation that the individual accepting this demand has full settlement authority. If this matter must be referred to higher authority, that process must be completed within the deadline.

IX. PRESERVATION OF EVIDENCE

LITIGATION HOLD NOTICE

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

☐ The complete claim file, including all versions and drafts
☐ All internal communications regarding this claim (emails, instant messages, voicemails)
☐ All communications with the insured/claimant
☐ Adjuster notes, diaries, and activity logs
☐ All documents received from or sent to the insured/claimant
☐ All photographs, videos, and inspection reports
☐ All expert reports, estimates, and evaluations
☐ Claim handling guidelines, manuals, and procedures
☐ Training materials relevant to this type of claim
☐ Reserve information and reserve change documentation
☐ Supervisor notes and approvals
☐ Quality assurance or audit reports
☐ Any documents relating to similar claims
☐ Claims committee meeting minutes or notes
☐ All electronic data and metadata associated with this claim

Failure to preserve this evidence may result in sanctions, including adverse inference instructions, and will be cited as additional evidence of bad faith.

X. CONCLUSION

[CARRIER_SHORT_NAME]'s handling of this claim represents precisely the type of conduct that bad faith laws were enacted to prevent and punish. The Company has placed its own financial interests above its contractual and legal obligations to our client.

We strongly encourage [CARRIER_SHORT_NAME] to use this opportunity to resolve this matter fairly. The alternative will be expensive, time-consuming, and will result in a public record of the Company's misconduct.

Please direct all communications regarding this matter to the undersigned. Do not contact our client directly.

We await your response.

Respectfully submitted,

[LAW_FIRM_NAME]

By: _______________________________
[ATTORNEY_NAME]
[BAR_NUMBER]
[ADDRESS]
[CITY], [STATE] [ZIP]
[PHONE]
[FAX]
[EMAIL]

Counsel for [CLIENT_NAME]

ENCLOSURES:
☐ Policy declarations page
☐ Relevant policy provisions
☐ Claim correspondence chronology
☐ Damage documentation
☐ Expert reports
☐ Medical records (if applicable)
☐ Photographs
☐ [ADDITIONAL_ENCLOSURES]

CC:
☐ [CLIENT_NAME]
☐ [STATE] Department of Insurance (via complaint filing)
☐ [INSURED_NAME] (if different from client)
☐ [OTHER_PARTIES]

APPENDIX A: CHECKLIST FOR COMPLETING THIS TEMPLATE

Before sending this demand letter, ensure you have:

☐ Verified all policy information (number, limits, dates, coverages)
☐ Confirmed claim number and adjuster information
☐ Documented complete timeline of claim handling
☐ Identified specific bad faith conduct with dates and details
☐ Researched applicable state law (bad faith standard, statutes, cases)
☐ Calculated all damages with supporting documentation
☐ Set reasonable but firm deadline (typically 15-30 days)
☐ Reviewed for accuracy and completeness
☐ Obtained client approval
☐ Prepared enclosures
☐ Arranged for certified mail delivery
☐ Calendared response deadline
☐ Prepared litigation documents in case of non-response

APPENDIX B: STATE-SPECIFIC CONSIDERATIONS

IMPORTANT: This is a universal template. Before using, you must customize for your specific jurisdiction by researching:

☐ Bad Faith Standard: Does your state recognize first-party bad faith? Is it statutory, common law, or both? What must be proven?

☐ Damages Available: What types of damages are recoverable (compensatory, consequential, emotional distress, punitive, statutory)?

☐ Punitive Damage Standard: What conduct triggers punitive damages? Are there caps?

☐ Attorney's Fee Recovery: Are fees recoverable? Under what circumstances?

☐ Prompt Payment Statute: What are the deadlines and penalties?

☐ Unfair Claims Practices Act: Does it provide a private right of action?

☐ Time-Limited Demand Rules: Does your state have specific rules (Stowers in TX, Holt in GA, etc.)?

☐ Statute of Limitations: What is the limitations period for bad faith claims?

☐ Notice Requirements: Are there pre-suit notice requirements?

☐ Department of Insurance: What is the complaint process and typical response?