Insurance Bad Faith Demand Letter - New Jersey

NEW JERSEY LIABILITY-POLICY DEFENSE AND SETTLEMENT REVIEW DEMAND

THIS PRODUCT IS FOR A CLAIM AGAINST AN INSURED UNDER A LIABILITY POLICY. FOR FIRST-PARTY POLICY BENEFITS OR UM/UIM CLAIMS, USE A DIFFERENT TEMPLATE.

1. COUNSEL SCOPE AND STANDING RECORD

A. User Status

• ☐ Insured or additional insured seeking protection under a liability policy
• ☐ Defense counsel authorized to communicate for the insured
• ☐ Underlying claimant making a settlement proposal
• ☐ Assignee of an insured's rights
• ☐ Excess insurer or other participant
• ☐ Other: [________________________________]

Authority to send this demand:

[________________________________]

Standing, assignment, consent, privilege, and conflict issues reviewed: ☐ Yes

B. Policy and Underlying Claim

• Insurer legal name: [________________________________]
• Policyholder: [________________________________]
• Insured seeking protection: [________________________________]
• Policy number and period: [________________________________]
• Liability coverage part: [________________________________]
• Primary limit: $[________________]
• Excess or umbrella coverage: [________________________________]
• Self-insured retention or deductible: $[________________]
• Underlying claimant: [________________________________]
• Underlying matter and docket: [________________________________]
• Defense counsel: [________________________________]
• Current trial or hearing date: [__/__/____]

C. Coverage and Control

• Defense status:
• ☐ Accepted
• ☐ Accepted under reservation of rights
• ☐ Denied
• ☐ Unresolved
• Indemnity position: [________________________________]
• Reservation or denial reviewed: ☐ Yes
• Policy language governing defense, settlement, cooperation, consent, control, limits, exhaustion, and notice reviewed: ☐ Yes
• Who controls settlement under the policy and current posture: [________________________________]
• Who may contribute above limits: [________________________________]
• Coverage action or other related proceeding: [________________________________]

D. Settlement and Exposure Record

• Current demand or opportunity: $[________________]
• Demand expiration: [__/__/____] at [____]
• Policy-limit relationship: [________________________________]
• Liability assessment: [________________________________]
• Causation assessment: [________________________________]
• Damages range: [________________________________]
• Comparable outcomes or expert analysis: [________________________________]
• Foreseeable excess exposure: [________________________________]
• Insured contribution position: [________________________________]
• Excess-carrier position: [________________________________]
• Settlement authority requested: $[________________]
• Counsel's controlling-law memorandum attached: ☐ Yes

E. Legal Checkpoint

The New Jersey Supreme Court has stated that every insurance contract contains an implied covenant of good faith and fair dealing. Current New Jersey Model Civil Jury Charge 4.10J treats a general covenant claim as contractual and fact-sensitive: the claimant must establish a contract, bad-faith conduct intended to deprive contractual rights or benefits, and resulting injury or loss.

This template does not declare that rejection of any one demand is automatically bad faith or that an excess result is guaranteed. Counsel must identify the precise liability-policy duty, the user's right to assert it, the settlement opportunity, the contemporaneous record, causation, and available relief.

2. SENDER AND DELIVERY

DATE: [__/__/____]

FROM:

[Name]

[Firm or Organization]

[Role and Client]

[Address]

[Email]

[Telephone]

TO:

[Insurer]

[Claims Professional, Supervisor, or Counsel]

[Address]

[Email]

COPIES TO:

[Insured, defense counsel, excess carrier, broker, claimant's counsel, or other authorized recipient]

DELIVERY METHOD:

• ☐ Policy-required method
• ☐ Certified mail
• ☐ Courier
• ☐ Email
• ☐ Other: [________________________________]

RE: LIABILITY-POLICY DEFENSE AND SETTLEMENT REVIEW

Insured: [________________________________]

Underlying claimant: [________________________________]

Policy number: [________________________________]

Claim number: [________________________________]

Matter and docket: [________________________________]

Current settlement proposal: $[________________]

Proposal deadline: [__/__/____] at [____]

Dear [Recipient Name]:

This communication requests a documented review of the defense, coverage, settlement, and exposure issues identified below. It is sent by [identify sender and authority]. It does not waive any policy term, claim, defense, objection, privilege, deadline, or right.

3. UNDERLYING MATTER

A. Claims and Parties

[Describe the underlying allegations, causes of action, parties, and procedural posture.]

B. Liability and Causation Record

C. Damages and Exposure

Identify allocation, comparative-fault, coverage, contribution, lien, setoff, and collectability issues:

[________________________________]

4. POLICY AND DEFENSE STATUS

Relevant policy terms:

• Defense: [________________________________]
• Indemnity: [________________________________]
• Settlement authority or consent: [________________________________]
• Cooperation: [________________________________]
• Limits and erosion: [________________________________]
• Other insurance: [________________________________]
• Excess notice: [________________________________]
• Reservation or denial issue: [________________________________]

Defense activity and material case developments:

5. SETTLEMENT OPPORTUNITY

The current settlement proposal is:

[State every material term, amount, release, protected party, lien or approval condition, payment timing, confidentiality term, and dismissal sequence.]

The proposal is supported by:

[________________________________]

Issues requiring clarification before acceptance:

[________________________________]

Authority or contribution requested from the insurer:

[________________________________]

This proposal remains open until [time] on [__/__/____], unless withdrawn or extended in a signed writing. The stated date is a settlement term; it does not alter another legal or policy deadline.

6. REQUESTED INSURER ACTION

Please complete the following before the proposal expires:

• ☐ Confirm the correct policy, insureds, limits, and remaining limits
• ☐ Confirm defense and indemnity positions
• ☐ Identify every reservation, exclusion, condition, or allocation relied upon
• ☐ State the current liability, causation, and damages evaluation
• ☐ State settlement authority
• ☐ Tender the supported amount of $[________________]
• ☐ Request additional information and explain its relevance
• ☐ Notify and coordinate with excess or other insurers
• ☐ Advise the insured of any reasonably foreseeable personal exposure
• ☐ Address contribution above limits
• ☐ Other: [________________________________]

7. RECORD FOR FURTHER REVIEW

The sender requests that the insurer preserve and consider the contemporaneous policy, defense, claim, evaluation, communication, authority, and settlement records relevant to the matter. This request does not assert an automatic sanction or evidentiary consequence.

Known records, custodians, or systems:

[________________________________]

8. NON-SETTLEMENT POSITION

If the proposal is not accepted, please provide a written response stating:

1. The policy and factual basis for the decision;
2. The liability, causation, and damages evaluation;
3. The authority requested and granted;
4. Any missing information material to settlement;
5. Any proposed counteroffer or alternative resolution;
6. The insurer's plan to protect the insured from asserted exposure; and
7. The next review date or decision point.

No statement in this template should be used to threaten automatic excess liability, fees, punitive damages, discovery sanctions, regulatory action, or evidentiary consequences. Counsel must separately establish any claim and remedy.

9. RESPONSE

Please respond to:

[Name]

[Address]

[Email]

[Telephone]

Sincerely,

__________________________________

[Name]

[Role]

[New Jersey Attorney ID, if applicable]

10. FINAL REVIEW

• ☐ Product used only for a liability-policy underlying claim
• ☐ User status and authority verified
• ☐ Standing and assignment analyzed
• ☐ Complete policy and endorsements reviewed
• ☐ Defense, indemnity, reservation, settlement-control, and cooperation terms reviewed
• ☐ Underlying liability, causation, damages, and procedure accurately summarized
• ☐ Settlement proposal includes every material term
• ☐ Insured and excess interests addressed
• ☐ Privilege and disclosure issues reviewed
• ☐ No automatic bad-faith or excess-liability conclusion stated
• ☐ No first-party benefits, CFA, IFCA, or UCSPA theory imported
• ☐ Response date does not replace another deadline
• ☐ Unused alternatives and drafting notes removed
• ☐ New Jersey attorney approved final demand

Sources and References

• Wadeer v. New Jersey Manufacturers Insurance Co., official New Jersey Supreme Court opinion quoting Wood
• New Jersey Model Civil Jury Charge 4.10J — Covenant of Good Faith and Fair Dealing