Insurance Bad Faith Demand Letter - Louisiana

INSURANCE BAD FAITH DEMAND LETTER

State of Louisiana

[LAW FIRM LETTERHEAD]

SETTLEMENT COMMUNICATION — FOR RESOLUTION PURPOSES ONLY
ADMISSIBILITY SUBJECT TO LA. CODE OF EVIDENCE ART. 408 WHERE APPLICABLE; NOT A GENERAL PRIVILEGE OR CONFIDENTIALITY RULE

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

Date: [__/__/____]

[INSURANCE_COMPANY_NAME]
[CLAIMS_DEPARTMENT_ADDRESS]
[________________________________]

Attention: [ADJUSTER_NAME], [ADJUSTER_TITLE]
Copy to: General Counsel, [INSURANCE_COMPANY_NAME]

Re: FORMAL BAD-FAITH DEMAND — LOUISIANA LAW
Insured/Claimant: [INSURED_NAME]
Policy Number: [POLICY_NUMBER]
Claim Number: [CLAIM_NUMBER]
Date of Loss: [__/__/____]
Parish of Loss: [PARISH_NAME] Parish, Louisiana
Policy Limits: $[POLICY_LIMITS]
Amount Presently in Dispute: $[DEMAND_AMOUNT]
Response Deadline: [__/__/____] (time-limited demand)

Dear [ADJUSTER_NAME]:

I. INTRODUCTION

This firm represents [CLIENT_NAME] ("our client") in connection with the above-referenced insurance claim arising under the laws of Louisiana. This letter constitutes a formal demand for payment of policy benefits wrongfully withheld and serves as notice that [INSURANCE_COMPANY_NAME]'s ("the Company" or "[CARRIER_SHORT_NAME]") claim-handling conduct has violated its duties under Louisiana insurance law — in particular, La. R.S. 22:1892 as comprehensively restructured by Act 3 of the 2024 Regular Session (SB 323), signed by Governor Landry on May 7, 2024, and effective July 1, 2024.

This is a time-limited demand. The Company has until [__/__/____] to tender the full amount owed of $[DEMAND_AMOUNT]. Failure to do so will result in immediate litigation seeking all available remedies under Louisiana law.

II. THE 2024 RESTRUCTURING OF LOUISIANA BAD-FAITH LAW

A. Act 3 of 2024 — Comprehensive Overhaul

Effective July 1, 2024, the Louisiana Legislature enacted Act 3 (SB 323), which:

1. Repealed former La. R.S. 22:1973 (which previously imposed liability for "up to two times the damages sustained" for breach of the insurer's duty of good faith and fair dealing);
2. Consolidated the good-faith duty into La. R.S. 22:1892;
3. Enacted La. R.S. 22:1892.2, which imposes a mandatory 60-day pre-suit cure period for claims arising from catastrophic losses to immovable property;
4. Preserved the "arbitrary, capricious, or without probable cause" standard;
5. Retained the § 1892 penalty framework (50% of the amount found due plus reasonable attorney fees).

This overhaul changes both the available remedies and the procedural prerequisites for bad-faith litigation in Louisiana. Counsel must confirm whether the underlying claim's date of loss falls under the pre-July 1, 2024 regime (where § 1973's "up to 2x damages" penalty is still available) or the post-July 1, 2024 regime (where § 1892 and § 1892.2 govern).

B. Applicable Regime for This Claim

Based on the date of loss ([__/__/____]):

☐ Pre-July 1, 2024 — Assess § 1892 and former § 1973 separately. Penalties for the same misconduct are not cumulative; seek the greater supported penalty. Former § 1973(C) permits up to twice the damages sustained or $5,000, whichever is greater. Attorney fees require an independent § 1892 basis.
☐ On or after July 1, 2024 — La. R.S. 22:1892 (as amended) governs; § 1892.2 cure notice required for catastrophic immovable property claims
☐ Non-catastrophic post-7/1/24 loss — La. R.S. 22:1892 applies without § 1892.2 cure requirement

III. LOUISIANA STATUTORY FRAMEWORK

A. La. R.S. 22:1892 — The Core Prompt-Payment and Bad-Faith Statute

La. R.S. 22:1892(A)(1) requires insurers to pay an amount due an insured within thirty days after receipt of satisfactory proofs of loss. Section 1892(A)(4) separately governs written settlement offers for property-damage claims within the applicable period supplied by § 1892 or § 1892.2. First-party UM benefits fall under § 1892(A)(1), not the property-offer provision.

§ 1892(B)(1) Penalty: Failure to pay within the statutory period "when such failure is found to be arbitrary, capricious, or without probable cause" subjects the insurer to:

• The greater of the statutory fifty-percent measure or $1,000;
• Any proven economic damages sustained as a result of the breach; and
• Reasonable attorney fees and costs.

Section 1892(I)'s separate 50%-of-damages-or-$5,000 penalty applies to claims not involving loss to an insured's immovable property. Immovable-property claims are instead subject to § 1892(B) or § 1892.2, as appropriate.

B. La. R.S. 22:1892.2 — Cure Period for Catastrophic Immovable Property Losses

For catastrophic losses to immovable property, La. R.S. 22:1892.2 requires a claimant to provide written cure-period notice before filing suit for penalties and attorney fees. The insurer has sixty (60) days to tender the full amount. If the insurer pays within the cure period, no § 1892.2 penalty lies. Partial payment within the cure period halves any penalty. This letter [CONSTITUTES / DOES NOT CONSTITUTE] the § 1892.2 cure notice, as noted in the caption.

C. La. R.S. 22:1964 — Unfair Trade Practices

La. R.S. 22:1964(14) addresses the following claim-settlement practices when committed or performed with enough frequency to indicate a general business practice:

• (a) Misrepresenting pertinent facts or policy provisions;
• (b) Failing to acknowledge and act reasonably promptly upon communications;
• (c) Failing to adopt and implement reasonable standards for prompt claim investigation;
• (d) Refusing to pay without a reasonable investigation;
• (e) Failing to affirm or deny coverage within a reasonable time after completed proof of loss;
• (f) Failing to attempt a prompt, fair settlement in good faith when liability is reasonably clear;
• (g) Compelling insureds to sue by offering substantially less than they ultimately recover in those actions;
• (h) Attempting to settle for less than a reasonable person would believe owed by reference to written or printed advertising material accompanying or made part of an application;
• (n) Failing to promptly explain the policy, facts, or law behind a denial or compromise offer.

D. The Reed v. State Farm Standard — "Arbitrary, Capricious, or Without Probable Cause"

The Louisiana Supreme Court in Reed v. State Farm Mut. Auto. Ins. Co., 857 So. 2d 1012 (La. 2003), defined "arbitrary, capricious, or without probable cause" as synonymous with "vexatious refusal to pay" — that is, unjustified conduct "without reasonable or probable cause or excuse." The Court emphasized that the bad-faith statutes are penal in nature and must be strictly construed, but also affirmed that penalties are appropriate where the insurer's refusal lacks a good-faith defense.

E. Obligation of Good Faith Under the Louisiana Civil Code

Beyond Title 22, Louisiana's Civil Code imposes an overarching duty of good faith in every contract. La. C.C. art. 1983 provides that "contracts have the effect of law for the parties and may be dissolved only through the consent of the parties or on grounds provided by law. Contracts must be performed in good faith." La. C.C. art. 1997 provides that "an obligor in bad faith is liable for all the damages, foreseeable or not, that are a direct consequence of his failure to perform." Louisiana courts have held that the Civil Code duty of good faith supplements, but does not replace, Title 22 remedies.

IV. POLICY INFORMATION AND COVERAGE

A. Policy Details

B. Coverage Analysis

The policy provides coverage for [DESCRIBE_COVERED_LOSS_TYPE]. The loss clearly falls within the insuring agreement. Any ambiguity must be construed against [CARRIER_SHORT_NAME] as drafter per La. C.C. art. 2056 and Cadwallader v. Allstate Ins. Co., 848 So. 2d 577 (La. 2003).

[CARRIER_SHORT_NAME] has [ACKNOWLEDGED/DISPUTED/DENIED] coverage by [DESCRIBE_COVERAGE_POSITION]. Having accepted that a covered loss occurred, the Company owes the following duties under Louisiana law:

• Conduct a thorough, fair, and objective investigation (§ 1964);
• Make a written settlement offer for a property-damage claim within the applicable statutory period (§ 1892(A)(4));
• Pay undisputed amounts within 30 days of satisfactory proofs of loss (§ 1892(A)(1));
• Communicate honestly and transparently with the insured (§ 1964);
• Avoid offers that may compel insureds to sue for amounts ultimately recovered substantially above those offers (La. R.S. 22:1964(14)(g));
• Perform the contract in good faith (La. C.C. art. 1983).

V. FACTUAL BACKGROUND AND CLAIM-HANDLING CHRONOLOGY

A. The Underlying Loss

On [__/__/____], [DESCRIBE_LOSS_EVENT_IN_DETAIL].

[ADDITIONAL_LOSS_DETAILS: _____________________________________________]

B. Chronology of Bad-Faith Conduct

VI. SPECIFIC BAD-FAITH CONDUCT

A. Unreasonable Delay (§ 1892(A)(1), (A)(3))

Despite receipt of satisfactory proofs of loss on [__/__/____], [CARRIER_SHORT_NAME] has failed to:

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

The 30-day statutory clock has elapsed. Each additional day of non-payment strengthens the "arbitrary and capricious" showing under Reed.

B. Inadequate Investigation (§ 1964(14)(c), (d))

[CARRIER_SHORT_NAME] failed to conduct a reasonable investigation:

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

C. Low Settlement Offers (§ 1964(14)(g); (h) only if its advertising condition applies)

The gap between the Company's offers and the documented value warrants review. La. R.S. 22:1964(14)(g) addresses offers that compel an insured to sue when the amount ultimately recovered in the action is substantially higher; the current offer record alone does not establish that element.

D. Misrepresentation of Policy Provisions (§ 1964(14)(a))

[DESCRIBE_SPECIFIC_MISREPRESENTATIONS: ______________________________]

E. Failure to Explain Denial (§ 1964(14)(n))

[DESCRIBE_COMMUNICATION_FAILURES: ______________________________]

VII. STATUTORY VIOLATIONS — CONSOLIDATED

[CARRIER_SHORT_NAME]'s conduct should be assessed under the following provisions of Louisiana law. A § 1964(14) claim-settlement practice requires the frequency specified in that subsection:

☐ La. R.S. 22:1892(A)(1) — failure to pay within 30 days of satisfactory proofs of loss
☐ La. R.S. 22:1892(A)(3) — failure to initiate loss adjustment within the applicable period
☐ La. R.S. 22:1892(A)(4) — failure to make a written property-damage settlement offer within the applicable period
☐ La. R.S. 22:1892(B)(1) — arbitrary, capricious, or without-probable-cause refusal to pay
☐ La. R.S. 22:1964(14)(a) — misrepresentation of policy provisions
☐ La. R.S. 22:1964(14)(b) — failure to promptly acknowledge/act upon communications
☐ La. R.S. 22:1964(14)(c) — failure to adopt reasonable investigation standards
☐ La. R.S. 22:1964(14)(d) — refusal to pay without reasonable investigation
☐ La. R.S. 22:1964(14)(f) — failure to attempt good-faith settlement when liability is clear
☐ La. R.S. 22:1964(14)(g) — compelling litigation through offers substantially below amounts ultimately recovered in suit, if those facts develop
☐ La. R.S. 22:1964(14)(h) — attempting to settle below an amount reasonably expected from advertising material accompanying or made part of the application, if applicable
☐ La. R.S. 22:1964(14)(n) — failure to explain a denial or compromise offer
☐ La. C.C. art. 1983 — breach of good-faith contract performance
☐ La. C.C. art. 1997 — bad-faith obligor liability for all damages

VIII. DAMAGES

A. Contract Damages (Policy Benefits)

B. Consequential Damages

Under La. C.C. art. 1997, a bad-faith obligor is liable for all damages, foreseeable or not, that are a direct consequence of the failure to perform. Recoverable consequential damages include:

C. Mental Anguish (Former § 1973 Cases Only)

For causes of action arising before July 1, 2024, Louisiana courts permitted recovery of mental anguish damages under former § 1973 in appropriate cases. See Goins v. State Farm Fire & Cas. Co., 994 So. 2d 106 (La. App. 2d Cir. 2008). For claims under current § 1892 only, mental anguish recovery is limited.

D. Statutory Penalty — § 1892(B)(1)

Under the current § 1892:

• Fifty percent (50%) of $[NET_AMOUNT] = $[PENALTY_AMOUNT], subject to the statutory $1,000 alternative and partial-payment formula
• Proven economic damages, reasonable attorney fees, and costs, if supported

E. Former § 1973 Penalty (Pre-July 1, 2024 Losses Only)

For a qualifying pre-July 1, 2024 cause of action, former § 1973(C) authorized a penalty of up to twice the damages sustained or $5,000, whichever is greater. When the same conduct supports a § 1892 penalty, seek only the greater supported penalty. Former § 1973 did not itself authorize attorney fees:

• Greater supported former § 1973 penalty: $[AMOUNT], subject to the court’s assessment under former § 1973(C)

F. Attorney Fees and Costs

Reasonable attorney fees and costs are sought only when the separate requirements of § 1892(B)(1) are met.

G. Interest on Sums Due (La. C.C. art. 2000)

For a money obligation, interest for delay runs from when each sum is due, at the agreed rate or, absent agreement, the legal rate fixed under La. R.S. 9:3500 (La. C.C. art. 2000). Identify the due date for each overdue policy amount.

IX. DEMAND

A. Monetary Demand

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

B. Non-Monetary Settlement Terms

In addition to payment:

• Full release of all claims by [CARRIER_SHORT_NAME] against our client;
• Confidentiality agreement (optional, at client's discretion);
• Correction of any adverse information reported to ISO, LexisNexis, CLUE, or other industry databases.

X. DEADLINE AND CURE PERIOD

FOR CATASTROPHIC IMMOVABLE PROPERTY LOSSES: Pursuant to La. R.S. 22:1892.2, [CARRIER_SHORT_NAME] has sixty (60) days from receipt of this letter to tender the full amount demanded. Failure to do so preserves all § 1892.2 remedies including penalties and attorney fees. Partial payment within 60 days reduces any penalty by one-half.

FOR NON-CATASTROPHIC CLAIMS: This demand expires at 5:00 p.m. Central Time on [__/__/____].

Consequences of Failure to Cure

If [CARRIER_SHORT_NAME] fails to tender the demanded amount:

1. Litigation will be filed in [PARISH_NAME] Parish District Court or, if removable, the [EASTERN/MIDDLE/WESTERN] District of Louisiana, seeking:

   • Full policy benefits
   • § 1892 statutory penalties and damages supported under the applicable subsection
   • Former § 1973 remedies (if pre-7/1/24 cause of action)
   • Consequential damages under La. C.C. art. 1997
   • Reasonable attorney fees and costs only if independently authorized under § 1892
   • Interest on overdue policy sums from when each sum became due (La. C.C. art. 2000)

2. Regulatory complaint will be filed with the Louisiana Department of Insurance, 1702 N. Third Street, P.O. Box 94214, Baton Rouge, LA 70804-9214.

XI. DOCUMENT PRESERVATION NOTICE

This letter constitutes formal notice to preserve — and the Company is hereby instructed not to delete, alter, or destroy — all documents and electronically stored information related to this claim, including but not limited to:

• Complete claim file, including all versions and drafts;
• All internal communications concerning this claim;
• All communications with the insured/claimant;
• Adjuster notes, diaries, and activity logs (including any F9/audit history in Xactimate or Symbility);
• All photographs, videos, and inspection reports;
• All expert reports, estimates, and evaluations (including engineer reports and peer reviews);
• Claim-handling guidelines, manuals, best practices, and standard operating procedures;
• Training materials relevant to this type of claim;
• Reserve information, reserve change history, and reserve supervisor approvals;
• Quality assurance and audit reports;
• Reinsurance communications referencing this claim;
• All communications with third-party administrators (if any).

Spoliation will be the subject of sanctions and adverse-inference instructions at trial.

XII. PRESCRIPTION / LIMITATIONS

Contract actions are subject to a ten (10)-year prescriptive period under La. C.C. art. 3499. A policy may set a shorter suit period. For the first-party coverage classes specified in La. R.S. 22:868(B), that period cannot be less than 24 months after inception of the loss; the standard fire policy in La. R.S. 22:1311(F)(2) uses 24 months. Section 22:868(B) permits a one-year minimum for other insurance unless the Insurance Code provides otherwise. Counsel must identify the coverage class and check the issued policy and applicable limitations before calculating a deadline.

Date of Loss: [__/__/____]
Contractual Suit Limitation Date: [__/__/____]

XIII. CONCLUSION

[CARRIER_SHORT_NAME]'s handling of this claim represents precisely the conduct Louisiana's legislature targeted when enacting and restructuring the bad-faith statutes. Act 3 of 2024 preserved — and in many respects strengthened — the insurer's obligation to pay valid claims promptly and in good faith. The Louisiana Supreme Court in Reed v. State Farm made clear that insurers cannot manufacture defenses to avoid payment of clear claims.

We invite [CARRIER_SHORT_NAME] to use the cure period (or 30-day deadline) to resolve this matter in accordance with its contractual and statutory obligations.

Please direct all further communications regarding this claim to the undersigned.

Respectfully submitted,

[LAW_FIRM_NAME]

By: _______________________________
[ATTORNEY_NAME]
Louisiana Bar Roll No. [BAR_NUMBER]
[ADDRESS]
[CITY], LA [ZIP]
Phone: [PHONE]
Fax: [FAX]
Email: [EMAIL]

Counsel for [CLIENT_NAME]

ENCLOSURES:

• Policy declarations page and relevant provisions
• Sworn Proof of Loss
• Claim correspondence chronology
• Damage documentation (photos, estimates, inventories)
• Expert reports (engineer, contractor, adjuster)
• Proof of mitigation expenses
• Medical records and bills (if bodily injury claim)
• Wage loss documentation (if applicable)

CC:

• [CLIENT_NAME]
• General Counsel, [INSURANCE_COMPANY_NAME]
• Louisiana Department of Insurance, P.O. Box 94214, Baton Rouge, LA 70804-9214 (via forthcoming complaint)

LOUISIANA BAD-FAITH QUICK REFERENCE

SOURCES AND REFERENCES

• La. R.S. 22:1892 — https://legis.la.gov/Legis/Law.aspx?d=509041
• La. R.S. 22:868(B) — contractual suit limitations: https://legis.la.gov/legis/Law.aspx?d=507749
• La. R.S. 22:1311(F)(2) — standard fire policy: https://www.legis.la.gov/legis/Law.aspx?d=508175
• La. R.S. 22:1892.2 — enacted by Act 3 of 2024 Reg. Sess. (SB 323)
• Act 3 of 2024 Regular Session — https://legis.la.gov/legis/ViewDocument.aspx?d=1372369
• La. R.S. 22:1964 — Unfair Trade Practices
• La. R.S. 22:1269 — Direct Action Statute (as amended by Act 275 of 2024): https://legis.la.gov/legis/Law.aspx?d=508142
• La. C.C. arts. 1983, 1997, 2000, 2056, 3499
• La. C.E. art. 408 — Compromise evidence: https://legis.la.gov/legis/Law.aspx?d=72462
• Reed v. State Farm Mut. Auto. Ins. Co., 857 So. 2d 1012 (La. 2003): https://caselaw.findlaw.com/court/la-court-of-appeal/1104532.html
• Theriot v. Midland Risk Ins. Co., 694 So. 2d 184 (La. 1997): https://caselaw.findlaw.com/la-supreme-court/1101894.html
• Cadwallader v. Allstate Ins. Co., 848 So. 2d 577 (La. 2003)
• Goins v. State Farm Fire & Cas. Co., 994 So. 2d 106 (La. App. 2d Cir. 2008)
• Keogh Cox — "Louisiana Legislature Enacts Changes to Bad Faith Statutes": https://keoghcox.com/louisiana-legislature-enacts-changes-to-bad-faith-statutes/
• Phelps — "New Duties for Insurers and Insureds Under LA Overhaul of Bad Faith Statutes": https://www.phelps.com/insights/new-duties-for-insurers-and-insureds-under-la-overhaul-of-bad-faith-statutes.html
• Louisiana Department of Insurance: https://www.ldi.la.gov/