Insurance Bad Faith Demand Letter - New Hampshire

INSURANCE BAD FAITH DEMAND LETTER

State of New Hampshire

[LAW FIRM LETTERHEAD]

PRIVILEGED AND CONFIDENTIAL
SETTLEMENT COMMUNICATION — FOR RESOLUTION PURPOSES ONLY
PROTECTED UNDER N.H. R. EVID. 408 AND F.R.E. 408

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

Date: [__/__/____]

[INSURANCE COMPANY NAME]
[________________________________]
[________________________________]
[________________________________], [____] [________]

Attention: [CLAIMS SUPERVISOR / VICE PRESIDENT OF CLAIMS]
[________________________________], [________________________________]
Re: FORMAL BAD FAITH DEMAND AND NOTICE — NEW HAMPSHIRE LAW
Insured: [________________________________]
Claimant: [________________________________]
Policy Number: [________________________________]
Claim Number: [________________________________]
Date of Loss: [__/__/____]
Policy Limits: $[________________________________]
Claimed Value of Loss: $[________________________________]
Response Deadline: [__/__/____] at 5:00 p.m. EST

Dear [________________________________]:

I. INTRODUCTION AND NATURE OF DEMAND

This firm represents [________________________________] ("our client") in connection with the above-referenced insurance claim governed by the laws of New Hampshire. This letter constitutes a formal demand for payment of all 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.

This letter also serves as the predicate notice under New Hampshire law for all available remedies, including a formal complaint to the New Hampshire Insurance Department (NHID), which — if it results in a Commissioner's finding of violation — will entitle our client to bring a private action under RSA 417:19 seeking all damages, costs, and attorneys' fees.

This is a time-sensitive demand. [CARRIER SHORT NAME] has until [__/__/____] to tender the full amount owed of $[________________________________] and resolve all claims arising from this loss. Failure to do so will result in immediate litigation and regulatory action.

II. NEW HAMPSHIRE BAD FAITH LAW — A FRANK ASSESSMENT

A. New Hampshire's Unique Bad Faith Framework

New Hampshire's bad faith insurance law is meaningfully different from most states. Every practitioner handling bad faith claims in this state must understand the following critical distinctions:

1. No Independent First-Party Bad Faith Tort

The New Hampshire Supreme Court squarely held in Lawton v. Great Southwest Fire Insurance Company, 392 A.2d 576 (N.H. 1978), that an insurer's wrongful or bad-faith refusal to settle or pay a first-party insurance claim does not give rise to an independent cause of action in tort. This remains controlling authority. New Hampshire does not follow the majority rule that permits a standalone tort action for first-party insurer bad faith.

Jarvis v. Prudential Insurance Co. of America, 448 A.2d 407 (N.H. 1982), reaffirmed this rule. In Jarvis, the court confirmed that New Hampshire courts will not impose an independent tort duty on insurers in favor of their own first-party insureds.

Practical Consequence: Our client's bad faith remedies are grounded in (a) contract law (breach of the implied covenant of good faith and fair dealing); (b) the statutory framework of RSA Chapter 417 via the NHID complaint process; and (c) consequential damages flowing from [CARRIER SHORT NAME]'s breach.

2. Third-Party Claims — Negligence Standard Available

In contrast, New Hampshire does recognize a negligence cause of action against an insurer that fails to settle a third-party liability claim within policy limits. Dumas v. State Farm Mutual Automobile Insurance Company, 274 A.2d 781 (N.H. 1971). If this claim involves a third-party context (liability insurer failing to settle a claim against its insured within limits), the negligence standard under Dumas applies and provides a broader avenue for recovery.

☐ This claim involves a first-party dispute (insured vs. own insurer). Lawton/Jarvis framework applies.
☐ This claim involves a third-party failure to settle. Dumas negligence framework applies.

3. Contractual Implied Covenant of Good Faith

Every New Hampshire insurance contract contains an implied covenant of good faith and fair dealing. Lawton, 392 A.2d at 579. The insurer's breach of this covenant is actionable as a contract claim, entitling the insured to policy benefits plus all consequential damages proximately caused by the breach. This includes financial losses, additional costs, and emotional harm damages where sufficiently established.

4. Statutory Remedies — RSA 417 (Two-Step Process)

New Hampshire's Unfair Insurance Trade Practices Act, RSA Chapter 417, provides a statutory framework for combating unfair claims practices. The private remedy under this chapter operates in two steps:

Step 1 — NHID Complaint: The insured files a formal complaint with the New Hampshire Insurance Department. The Commissioner investigates under RSA 417:6 (for defined unfair practices under RSA 417:4) or RSA 417:12 (for undefined practices). The NHID must act within 120 days of receiving the complaint; failure to act within 120 days constitutes a finding that no violation occurred. If the Commissioner issues a finding of violation or a final cease-and-desist order, this triggers Step 2.

Step 2 — Private Lawsuit (RSA 417:19): Once a final Commissioner finding exists, "any consumer claiming to be adversely affected by the act or practice giving rise to such finding or order may bring suit against said supplier to recover any damages or loss suffered because of such action or practice." Upon prevailing, the plaintiff recovers damages, costs of suit, and reasonable attorneys' fees under RSA 417:19.

This demand letter serves as the precursor to Step 1. We will file a formal NHID complaint if this demand is not resolved.

5. Punitive Damages — Broadly Prohibited in New Hampshire

New Hampshire is one of a small number of states that broadly prohibits punitive damages. RSA 507-D:1 provides without qualification: "No punitive damages shall be awarded in any action, unless otherwise provided by statute." This prohibition has applied since July 1, 1986, and no statutory exception exists for insurance bad faith. Courts have consistently applied this prohibition to insurance disputes.

This is a defining feature of New Hampshire bad faith litigation that sets it apart from states like California, Florida, or Texas. Insurers in New Hampshire cannot be exposed to the open-ended punitive damage awards common in other jurisdictions. Our client does not seek punitive damages; however, the full scope of compensatory damages, consequential damages, contractual interest, and attorneys' fees (via RSA 417:19) is available and will be pursued.

6. Prejudgment Interest — RSA 336:1

Under RSA 336:1(II), prejudgment interest on judgments accrues at a variable annual rate equal to the prevailing 26-week U.S. Treasury bill discount rate plus 2 percentage points, set each year by the State Treasurer. The current applicable rate (effective January 1, [____]) is [____]% per annum. All amounts wrongfully withheld will accrue interest from the date of this demand.

7. Statute of Limitations — RSA 508:4

The limitations period for contract and tort claims in New Hampshire is three (3) years under RSA 508:4, measured from the act or omission complained of (or discovery, whichever is later under the discovery rule). Our client's claims expire approximately [__/__/____]. We will file suit before that date if necessary.

III. POLICY INFORMATION AND COVERAGE

A. Policy Details

B. Coverage Confirmation

The policy provides coverage for [________________________________]. The loss falls squarely within the policy's insuring agreement. [CARRIER SHORT NAME] has [☐ acknowledged / ☐ not disputed / ☐ improperly disputed] coverage.

[CARRIER SHORT NAME] is obligated under its policy and New Hampshire law to:

• Conduct a prompt, thorough, and objective investigation
• Evaluate the claim fairly and without placing [CARRIER SHORT NAME]'s financial interest above our client's
• Pay all amounts reasonably owed without compelling litigation
• Provide prompt, honest communications regarding coverage positions
• Avoid unreasonable delays in claim handling and payment

IV. FACTUAL BACKGROUND AND CLAIM HISTORY

A. The Underlying Loss

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

B. Chronological Timeline of [CARRIER SHORT NAME]'s Conduct

The following timeline documents [CARRIER SHORT NAME]'s claim handling conduct and identifies specific bad faith indicators:

V. SPECIFIC BAD FAITH CONDUCT — RSA 417:4 ANALYSIS

[CARRIER SHORT NAME]'s claim handling has violated the implied covenant of good faith and fair dealing and constitutes unfair claims practices prohibited under RSA 417:4. Specifically:

A. Unreasonable Delay in Investigation and Payment

RSA 417:4 prohibits failing to acknowledge and act reasonably promptly upon communications and failing to adopt standards for prompt, reasonable investigation. [CARRIER SHORT NAME] has:

☐ Failed to acknowledge receipt of [________________________________] submitted on [__/__/____]
☐ Allowed [____] days to pass without completing a reasonable investigation
☐ Requested [________________________________] without reasonable basis
☐ Repeatedly "assigned" this claim to new adjusters without explanation
☐ Other: [________________________________]

Specific delay facts: [________________________________________________________________________________________________
________________________________]

B. Failure to Conduct a Reasonable Investigation

[CARRIER SHORT NAME] failed to conduct the thorough, fair, and objective investigation required under New Hampshire law:

☐ Failed to inspect the [property / vehicle / scene] despite repeated requests
☐ Relied on biased or unqualified experts to evaluate the claim
☐ Ignored favorable evidence submitted by our client
☐ Manufactured pretextual bases for delay
☐ Failed to obtain [________________________________] before making a coverage determination
☐ Other: [________________________________]

C. Misrepresentation of Policy Provisions — RSA 417:4

RSA 417:4 prohibits knowingly misrepresenting pertinent facts or policy provisions. [CARRIER SHORT NAME] has misrepresented:

☐ The policy's insuring agreement, claiming coverage does not extend to [________________________________] when it clearly does
☐ The applicable exclusion, asserting that [________________________________] excludes this loss when it does not under controlling NH law
☐ The applicable limits, representing the limit is $[____________] when the policy provides $[____________]
☐ The policy's conditions, asserting our client failed to satisfy [________________________________] when our client complied
☐ Other: [________________________________]

D. Inadequate and Unreasonable Settlement Offers

RSA 417:4 prohibits compelling insureds to litigate by offering substantially less than amounts ultimately recovered. [CARRIER SHORT NAME]'s offers have been unreasonable:

[CARRIER SHORT NAME]'s offer of $[____________] represents only [____]% of our client's documented losses of $[____________]. This is not a good-faith offer — it is a fraction of a fraction of what the policy requires.

E. Failure to Provide Explanation for Denial or Inadequate Offer

RSA 417:4 requires that insurers provide a prompt, reasonable explanation of the basis in the policy for any claim denial or compromise settlement offer. [CARRIER SHORT NAME] has:

☐ Denied this claim without providing any written explanation
☐ Provided an explanation that cites inapplicable or nonexistent policy provisions
☐ Failed to respond to our written requests for a coverage explanation dated [__/__/____], [__/__/____], and [__/__/____]
☐ Other: [________________________________]

F. Third-Party Failure to Settle (If Applicable — Dumas Framework)

[If this is a third-party liability claim:] Under Dumas v. State Farm Mutual Automobile Insurance Company, 274 A.2d 781 (N.H. 1971), New Hampshire recognizes a negligence cause of action against a liability insurer that fails to reasonably settle a third-party claim within the policy limits. [CARRIER SHORT NAME] has negligently failed to settle this claim within limits because:

☐ Liability against the insured is reasonably clear
☐ The claimant has made a demand within policy limits of $[____________]
☐ [CARRIER SHORT NAME] has unreasonably refused to settle, exposing its insured to an excess judgment
☐ [CARRIER SHORT NAME] has failed to inform its insured of the settlement demand and the risk of excess judgment
☐ Other: [________________________________]

VI. DAMAGES UNDER NEW HAMPSHIRE LAW

A. Contract Damages — Policy Benefits

B. Consequential Damages

New Hampshire law permits recovery of consequential damages — those proximately caused by [CARRIER SHORT NAME]'s breach of the implied covenant of good faith and fair dealing — even in first-party claims (the contract remedy). These include:

C. Emotional Distress Damages

Under New Hampshire law, emotional distress damages may be recoverable as consequential damages in a contract claim where the distress was a foreseeable result of the breach. Our client has suffered substantial emotional distress as a direct result of [CARRIER SHORT NAME]'s unreasonable conduct:

[________________________________________________________________________________________________
________________________________________________________________________________________________]

Emotional Distress Damages: $[____________]

D. Attorneys' Fees Under RSA 417:19

Upon a final finding by the NHID Commissioner that [CARRIER SHORT NAME] violated RSA Chapter 417, and upon our client prevailing in a subsequent private action under RSA 417:19, our client is entitled to recover reasonable attorneys' fees and costs of suit in addition to all damages. This is a statutory exception to New Hampshire's general American Rule on attorneys' fees.

Estimated Attorneys' Fees and Costs: $[____________] (subject to increase through litigation)

E. Prejudgment Interest — RSA 336:1

All amounts wrongfully withheld accrue interest at the annual judgment rate under RSA 336:1(II) from the date of this demand. Current annual rate: [____]%.

Interest accrued from [__/__/____] to [__/__/____] ([____] months): $[____________]

F. No Punitive Damages Available

RSA 507-D:1 prohibits punitive damages in all civil actions in New Hampshire, including insurance bad faith claims. No punitive damages are sought. Unlike in states such as California, Florida, Texas, or Colorado, New Hampshire courts cannot impose punishment damages in excess of actual compensatory damages in insurance disputes. This is a fundamental and fixed feature of New Hampshire law that applies regardless of the severity of the insurer's conduct.

G. Total Damages Summary

VII. NOTICE OF INTENT TO FILE NHID COMPLAINT

Under RSA 417:19, a private lawsuit for violations of RSA Chapter 417 requires a prior finding by the Insurance Commissioner or a final cease-and-desist order. We hereby provide notice that if this demand is not resolved, we will file a formal complaint with the New Hampshire Insurance Department (NHID) pursuant to RSA 417:6.

The NHID complaint process:

1. Our complaint will detail each specific violation of RSA 417:4 described in Section V above
2. The NHID will forward the complaint to [CARRIER SHORT NAME] for a response within 10 business days (extensions may be granted for complex claims)
3. The Commissioner must act within 120 days of receiving the complaint under RSA 417:6 and RSA 417:12
4. If the Commissioner issues a finding of violation or cease-and-desist order, our client may immediately bring a private action under RSA 417:19
5. Upon prevailing, our client recovers damages, costs, and attorneys' fees

NHID Contact Information:

New Hampshire Insurance Department
Consumer Services Division
21 South Fruit Street, Suite 14
Concord, NH 03301
Phone: (603) 271-2261 / (800) 852-3416
Fax: (603) 271-1406
Online Complaint: www.insurance.nh.gov/consumers/filing-complaint

VIII. FORMAL DEMAND

Based upon all of the foregoing, we hereby demand that [CARRIER SHORT NAME]:

A. Monetary Payment

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

B. Non-Monetary Demands

In addition to monetary payment, [CARRIER SHORT NAME] must:

☐ Provide a written coverage confirmation and reinstate the claim
☐ Assign a senior claims supervisor to this file immediately
☐ Withdraw any reservation of rights letter and confirm full coverage
☐ Correct any adverse information reported to ISO/CLUE or other industry databases
☐ Issue a written apology to our client for the handling of this claim
☐ Other: [________________________________]

C. Settlement Conditions

• Full release of all claims by [CARRIER SHORT NAME] against our client arising from this loss
• ☐ Confidentiality agreement regarding settlement terms
• ☐ Structured payment: $[____________] immediately and $[____________] by [__/__/____]

IX. TIME-LIMITED NATURE OF THIS DEMAND

THIS DEMAND EXPIRES AT 5:00 P.M. EST ON [__/__/____].

This demand will be withdrawn if not accepted by the stated deadline. Thereafter, this demand will not be reinstated, and our client will seek the full value of all claims without limitation.

Upon expiration of this deadline without acceptance:

1. Litigation will be filed immediately in New Hampshire Superior Court ([________________________________] County) seeking all available contract and consequential damages

2. NHID complaint will be filed to initiate the predicate proceeding for RSA 417:19 private action; if the NHID issues a finding, [CARRIER SHORT NAME] will face additional exposure for attorneys' fees and costs

3. This demand will be submitted to the court as evidence of [CARRIER SHORT NAME]'s refusal to resolve a clearly meritorious claim, and as evidence bearing on the reasonableness of [CARRIER SHORT NAME]'s position under Dumas (if third-party context applies)

4. All rights are reserved, including the right to allege additional violations as they are discovered through litigation

X. DOCUMENT PRESERVATION NOTICE

This letter constitutes formal legal notice to preserve all documents and electronically stored information (ESI) related to this claim and insured. Documents to be preserved include, without limitation:

• Complete claim file in all versions, drafts, and iterations
• All internal emails, instant messages, and communications regarding this claim
• All communications with and from our client or his/her representatives
• Adjuster notes, activity logs, diaries, and field notes
• All photographs, videos, and inspection reports
• All expert reports, estimates, evaluations, and correspondence
• Claim handling guidelines, playbooks, procedures, and training materials applicable to this claim type
• Reserve documentation (opening reserve, all changes, and approvals)
• All supervisor and management approvals or directions regarding this claim
• Quality assurance, audit, and review reports
• Litigation hold communications issued by [CARRIER SHORT NAME]
• Any claim scoring, automated assessment, or artificial intelligence outputs related to this claim

Failure to preserve this information may result in sanctions, adverse inference instructions, and other evidentiary penalties at trial. New Hampshire courts have inherent authority to sanction parties for spoliation of evidence.

XI. CONCLUSION

[CARRIER SHORT NAME]'s handling of this claim represents the type of conduct that New Hampshire's contract law, the implied covenant of good faith and fair dealing, and RSA Chapter 417 exist to address and remedy.

New Hampshire's bad faith framework differs materially from most states. There is no standalone first-party bad faith tort. Punitive damages are not available. But the contract remedy — full policy benefits, all consequential damages, emotional distress where established, prejudgment interest, and attorneys' fees upon an NHID finding — is substantial, real, and will be pursued with full vigor.

[CARRIER SHORT NAME] has an opportunity to resolve this matter fairly. We strongly urge the Company to use it.

Please direct all communications to the undersigned.

Respectfully submitted,

[________________________________]

By: _______________________________________________
[________________________________]
NH Bar No. [________________________________]
[________________________________]
[________________________________], NH [________]
Tel: [________________________________]
Fax: [________________________________]
Email: [________________________________]

Counsel for [________________________________]

ENCLOSURES:

• Policy declarations page and applicable coverage provisions
• Chronological claim correspondence summary
• All prior demand letters and correspondence
• Damage documentation, estimates, and supporting evidence
• Expert reports (if applicable)
• Documentation of consequential damages
• Medical records pertaining to emotional distress (if applicable)

CC:

• [________________________________] (Client)
• New Hampshire Insurance Department, Consumer Services Division, 21 South Fruit Street, Suite 14, Concord, NH 03301

NEW HAMPSHIRE BAD FAITH — COMPLETE QUICK REFERENCE

SOURCES AND REFERENCES

• RSA 417:4 — Unfair Claims Settlement Practices: https://law.justia.com/codes/new-hampshire/title-xxxvii/chapter-417/section-417-4/
• RSA 417:19 — Private Right of Action: https://law.justia.com/codes/new-hampshire/title-xxxvii/chapter-417/section-417-19/
• RSA 417 — Full Chapter: https://gencourt.state.nh.us/rsa/html/XXXVII/417/417-mrg.htm
• RSA 507-D — Punitive Damages Prohibition: https://gc.nh.gov/rsa/html/LII/507/507-mrg.htm
• RSA 507:7-d — Comparative Fault: https://law.justia.com/codes/new-hampshire/title-lii/chapter-507/section-507-7-d/
• RSA 508:4 — Statute of Limitations: https://law.justia.com/codes/new-hampshire/title-lii/chapter-508/section-508-4/
• RSA 336:1 — Interest Rate: https://gc.nh.gov/rsa/html/xxxi/336/336-1.htm
• Lawton v. Great Southwest Fire Ins. Co., 392 A.2d 576 (N.H. 1978): https://case-law.vlex.com/vid/lawton-v-great-southwest-891490274
• Jarvis v. Prudential Ins. Co., 448 A.2d 407 (N.H. 1982): https://law.justia.com/cases/new-hampshire/supreme-court/1982/80-451-0.html
• Dumas v. State Farm Mut. Auto. Ins. Co., 274 A.2d 781 (N.H. 1971) (third-party negligence)
• Bell v. Liberty Mutual Ins. Co. (N.H. 2001): https://www.courts.state.nh.us/supreme/opinions/2001/bell053.htm
• NH Insurance Department — Complaint Filing: https://www.insurance.nh.gov/consumers/filing-complaint
• ALFA International — NH Insurance Law Compendium: https://www.alfainternational.com/compendium/insurance-law/new-hampshire/
• Sulloway & Hollis — NH Unfair Claims Settlement Practices Compendium: https://www.sulloway.com/wp-content/uploads/2022/02/DRI-Compendium-NH-Chapter-C1799816xA5F95-2.pdf
• United Policyholders — NH Insurance Consumer Rights: https://uphelp.org/claim-guidance-publications/insurance-consumer-rights-in-the-state-of-new-hampshire-2022/
• NH Civil Interest Rates — NH Judicial Branch: https://www.courts.nh.gov/our-courts/superior-court/civil/civil-interest-rates