Insurance Bad Faith Demand Letter - New Hampshire

INSURANCE BAD FAITH DEMAND LETTER

State of New Hampshire

[LAW FIRM LETTERHEAD]

SETTLEMENT COMMUNICATION — FOR RESOLUTION PURPOSES ONLY
ADMISSIBILITY GOVERNED BY NEW HAMPSHIRE RULE OF EVIDENCE 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.

We may separately file a complaint with the New Hampshire Insurance Department (NHID). This letter does not itself satisfy RSA 417:19, I. A consumer action under that section requires a final violation finding or cease-and-desist order in an action or proceeding brought by the Insurance Commissioner; a consumer claiming adverse effects from the underlying practice may then seek resulting damages or loss. RSA 417:20, III provides suit costs and reasonable attorneys' fees if the consumer prevails in that action.

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. A breach supports contract remedies, including consequential financial damages the insurer had reason to foresee as a probable result when the contract was made. Lawton rejected an independent first-party bad-faith tort and dismissed mental-suffering and emotional-distress damages in that contract action.

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 may file a complaint with the New Hampshire Insurance Department. For the procedural rights under RSA 541 and RSA 541-A, RSA 417:19, II treats Commissioner inaction under RSA 417:6 or RSA 417:12 for 120 days after receipt as a finding of no violation, which may be appealed under RSA 541. A complaint alone does not establish a private claim.

Step 2 — Private Lawsuit (RSA 417:19): If a violation finding or cease-and-desist order in a Commissioner-brought action or proceeding becomes final, a consumer claiming adverse effects from the underlying act or practice may sue the supplier for resulting damages or loss. If a no-violation finding from 120-day inaction is reversed on appeal, RSA 417:19, II also permits the petitioner to proceed under subsection I. RSA 417:20, III awards suit costs and reasonable attorneys' fees to a consumer who prevails in that action.

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

RSA 507:16 provides: "No punitive damages shall be awarded in any action, unless otherwise provided by statute." No punitive damages are sought. This demand preserves policy benefits, proven foreseeable consequential contract damages, interest if authorized, and fees or costs where independently available, including RSA 417:20, III when its prerequisites are met.

6. Prejudgment Interest — RSA 336:1

Under RSA 336:1, II, the annual simple rate on judgments, including prejudgment interest, is set by the State Treasurer's annual 26-week Treasury-bill formula. Under RSA 524:1-b, prejudgment interest on a qualifying damages award generally runs from the writ or petition filing—not from 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

The following facts may support a contract claim under Lawton. They should be assessed separately under RSA 417:4, XV, which applies to listed acts committed without just cause and not merely inadvertently or accidentally:

A. Unreasonable Delay in Investigation and Payment

RSA 417:4, XV(a)(2)-(3) addresses failure to act promptly on claim communications and failure to adopt and implement standards for prompt and 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. Investigation Supporting the Contract Claim

The following facts may support the asserted breach of policy or implied covenant; counsel should not characterize them as a standalone RSA 417:4 violation unless a listed statutory act and threshold are established:

☐ 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. Coverage Position and Communications

RSA 417:4, XV(a)(2) addresses prompt action on communications, subsection (11) addresses timely affirmation or denial after proof-of-loss forms, and subsection (1) addresses knowing misrepresentation. Although the statute does not separately list a general duty to give a "reasonable explanation," the carrier's stated grounds and responsiveness remain relevant to the contract claim and any applicable listed act:

☐ 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

Under Lawton, proven consequential financial damages may be recovered when the insurer had reason to foresee them as a probable result of breach when the contract was made. Potential categories, subject to proof, include:

C. Mental-Suffering and Emotional-Distress Limitation

Lawton dismissed mental-suffering and emotional-distress damages after rejecting an independent first-party bad-faith tort. This template therefore does not demand those damages under the first-party contract theory. Counsel must identify independent current authority before adding any different claim.

D. Attorneys' Fees Under RSA 417:20, III

If the final finding or order prerequisite in RSA 417:19, I is satisfied and our client prevails in the resulting action, RSA 417:20, III authorizes reasonable attorneys' fees and costs of suit in addition to damages.

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

E. Prejudgment Interest — RSA 336:1, II and RSA 524:1-b

If litigation produces a qualifying damages award, prejudgment interest is calculated at the annual judgment rate under RSA 336:1, II and generally runs from the writ or petition filing under RSA 524:1-b.

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

F. No Punitive Damages Available

RSA 507:16 prohibits punitive damages unless otherwise provided by statute. No punitive damages are sought.

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. For the procedural rights in RSA 417:19, II, inaction for 120 days after Commissioner receipt is treated as a no-violation finding that may be appealed under RSA 541
4. If the final finding or order required by RSA 417:19, I is entered in a Commissioner-brought action or proceeding, our client may pursue the consumer action that section permits
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; a separate RSA 417:19 consumer action depends on the final Commissioner finding or order specified there, and suit costs and reasonable attorneys' fees depend on the consumer prevailing under RSA 417:20, III

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 Claim Settlement Practices: https://gc.nh.gov/rsa/html/XXXVII/417/417-4.htm
• RSA 417:19 — Action Against Supplier: https://gc.nh.gov/rsa/html/XXXVII/417/417-19.htm
• RSA 417:20 — Administration of Actions: https://gc.nh.gov/rsa/html/XXXVII/417/417-20.htm
• RSA 417 — Full Chapter: https://gencourt.state.nh.us/rsa/html/XXXVII/417/417-mrg.htm
• RSA 507:16 — Punitive Damages Outlawed: https://gc.nh.gov/rsa/html/LII/507/507-16.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
• RSA 524:1-b — Interest From Date of Writ: https://gc.nh.gov/rsa/html/LIII/524/524-1-b.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