Insurance Bad Faith Demand Letter - Wyoming

INSURANCE BAD FAITH DEMAND LETTER

State of Wyoming

[LAW FIRM LETTERHEAD]

SETTLEMENT COMMUNICATION — FOR RESOLUTION PURPOSES ONLY
W.R.E. 408 MAY LIMIT ADMISSIBILITY FOR SPECIFIED PURPOSES

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

Date: [__/__/____]

[________________________________]
[________________________________] (Claims Department)
[________________________________], [____] [____]

Attention: [________________________________], [________________________________]
Re: FORMAL BAD FAITH DEMAND AND NOTICE OF CLAIM — WYOMING COMMON LAW
Insured: [________________________________]
Claimant: [________________________________]
Policy Number: [________________________________]
Claim Number: [________________________________]
Date of Loss: [__/__/____]
Policy Limits: $[________________________________]
Response Deadline: [__/__/____] at 5:00 p.m. Mountain Time

Dear [________________________________]:

I. INTRODUCTION AND NATURE OF DEMAND

This firm represents [________________________________] ("our client") in connection with the above-referenced insurance claim arising under the laws of Wyoming. This letter constitutes a formal bad faith demand and places [________________________________] ("[________________________________]" or "the Company") on notice of its exposure under Wyoming's common law duty of good faith and fair dealing.

The Company has [________________________________] in connection with our client's claim. As detailed below, this conduct lacks any reasonable basis under Wyoming law and exposes the Company to substantial extra-contractual liability, including punitive damages, consequential damages, and emotional distress damages.

This is a time-sensitive demand. The Company must tender the full amount owed of $[________________________________] and resolve all outstanding claim issues by [__/__/____]. Failure to do so will result in immediate litigation in Wyoming District Court asserting breach of contract and tortious bad faith, with a full demand for all available remedies under Wyoming law.

II. WYOMING BAD FAITH LAW — CONTROLLING PRINCIPLES

A. Recognition of First-Party Bad Faith — McCullough v. Golden Rule Insurance Co.

The Wyoming Supreme Court formally recognized the first-party bad faith tort in McCullough v. Golden Rule Ins. Co., 789 P.2d 855 (Wyo. 1990), a landmark decision that established:

• An insurance company owes its insured a duty of good faith and fair dealing that is implied in every insurance contract
• When an insurer unreasonably denies or delays a claim without a proper cause, the insured may bring an independent tort action for bad faith
• The claimant must prove: (1) the absence of a reasonable basis for denying or delaying the claim, and (2) the insurer's knowledge or reckless disregard of the absence of a reasonable basis
• Bad faith may give rise to punitive damages where the insurer's conduct is willful and wanton (McCullough, 789 P.2d at 860–861)

B. The Objective "Fairly Debatable" Standard — Shrader

In State Farm Mut. Auto. Ins. Co. v. Shrader, 882 P.2d 813 (Wyo. 1994), the Wyoming Supreme Court refined the standard, applying an objective test:

• A claim is evaluated from the perspective of what a reasonable insurer would have done under the same circumstances
• A claim is fairly debatable when a reasonable insurer would have denied or delayed benefits under the facts and circumstances
• Bad faith requires both the absence of a reasonable basis and the insurer's knowledge or reckless disregard of that absence — Shrader, 1994 WY 89, ¶ 47, 882 P.2d 813

The claimant must prove the full bad-faith standard; an unfavorable claim decision alone does not establish liability.

C. No Implied Private Right of Action Under Wyo. Stat. § 26-13-124

The Wyoming Supreme Court held in Herrig v. Herrig, 844 P.2d 487, 494 (Wyo. 1992), that Wyo. Stat. § 26-13-124 does not create an implied private right of action. The statute regulates conduct occurring with such frequency as to indicate a general business practice; evidentiary use in a particular case remains subject to the Wyoming Rules of Evidence and the claims actually pleaded.

D. Claim Decision, Attorney Fee, and Interest — Wyo. Stat. § 26-15-124

Under Wyo. Stat. § 26-15-124(b), a property or casualty insurer generally must accept and pay or reject a claim within 45 days after receiving the claim and supporting bills. Subsection (c) reaches actions against an insurer on a policy of any type, including first-party claims; if a court renders judgment for a claimant and determines that the insurer's refusal to pay the full covered loss was unreasonable or without cause, the court may also award:

• A reasonable attorney's fee
• Interest at 10% per year from the date payment was due

E. Claims Handling Standards — Wyo. Stat. § 26-13-124 (Evidence)

The following conduct, prohibited by § 26-13-124, is alleged as evidence of bad faith in this matter:

☐ Misrepresenting pertinent facts or policy provisions relating to coverage
☐ Failing to acknowledge and act reasonably promptly on communications
☐ Failing to adopt and implement reasonable standards for prompt investigation
☐ Refusing to pay claims without conducting a reasonable investigation
☐ Failing in good faith to effectuate prompt, fair, and equitable settlement when liability is reasonably clear
☐ Compelling the insured to litigate to recover amounts clearly due under the policy
☐ Attempting to settle for substantially less than a reasonable person would believe is owed
☐ Failing to promptly provide a reasonable explanation for a denial or inadequate offer

F. Punitive Damages — Wyoming Common Law

Wyoming permits punitive damages in a proper bad-faith case upon proof of willful and wanton misconduct. McCullough, 789 P.2d at 860–61. Entitlement uses the preponderance standard. Lompe v. Sunridge Partners, LLC, 818 F.3d 1041, 1068–72 (10th Cir. 2016) (applying Wyoming law). Wyo. Stat. § 1-1-123 governs assumption of inherent risks in sports and recreational opportunities; it is not punitive-damages authority. No generally applicable statutory punitive cap was identified, but state-law review and constitutional limits constrain awards.

G. Statute of Limitations

All claims in this matter are timely. The date of loss was [__/__/____], and the Company's bad faith conduct began no earlier than [__/__/____].

III. POLICY INFORMATION AND COVERAGE

A. Policy Details

B. Coverage Is Not Legitimately in Dispute

The policy provides coverage for [________________________________]. The claimed loss clearly falls within the policy's insuring agreement based on the following analysis:

1. Insuring Agreement: The policy's insuring agreement covers [________________________________], and the loss event falls squarely within this language
2. Covered Cause of Loss: The loss was caused by [________________________________], a covered peril
3. Policy Period: The loss occurred within the policy period
4. No Applicable Exclusion: [________________________________] has invoked the exclusion at Policy Section [____], but that exclusion does not apply because [________________________________]
5. Conditions Satisfied: Our client timely reported the loss, cooperated in the investigation, submitted proof of loss, and satisfied all other policy conditions

[________________________________] has acknowledged coverage by [________________________________]. Having accepted coverage, Wyoming law required the Company to investigate fairly, evaluate honestly, and pay promptly.

IV. FACTUAL BACKGROUND AND CHRONOLOGY OF BAD FAITH CONDUCT

A. The Underlying Loss and Claim

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

[________________________________]
[________________________________]
[________________________________]
(Describe the underlying loss event in detail, including any injury, property damage, or other insured event giving rise to the claim.)

Our client reported the loss to the Company on [__/__/____] and cooperated fully with all requested investigation, inspections, examinations under oath, and document production.

B. Detailed Timeline of the Company's Bad Faith Conduct

(Complete this timeline with all material events: inspection dates, adjuster changes, written communications, denial letters, underpayment offers, requests for additional documentation, EUO demands, reserve changes, and internal decisions.)

V. SPECIFIC BAD FAITH CONDUCT

A. Unreasonable Delay in Investigation and Payment

The Company has unreasonably delayed this claim without legitimate basis, in violation of the good faith standard established in McCullough and Shrader:

• [________________________________]
• [________________________________]
• [________________________________]
• The claim has been pending for [____] [days / weeks / months] without resolution. A reasonable Wyoming insurer would have [________________________________] within [____] days of [________________________________].

B. Inadequate and Biased Investigation

[________________________________] failed to conduct the thorough, fair, and objective investigation required under Wyoming common law:

• [________________________________]
• [________________________________]
• [________________________________]
• The Company retained [________________________________] as its [expert / consultant / examiner], whose [report / opinion] was [biased / incomplete / contradicted by objective evidence] because [________________________________]
• The Company failed to [________________________________] despite our client's repeated requests

C. Unreasonable Denial or Underpayment

The Company [☐ denied / ☐ underpaid] this claim as follows:

The Company's basis for [denial / underpayment] — [________________________________] — is unreasonable because [________________________________]. No reasonable Wyoming insurer would have [denied / delayed / undervalued] this claim under these facts and circumstances.

D. Misrepresentation of Policy Provisions

The Company misrepresented the policy's terms in the following respects, in violation of § 26-13-124 and Wyoming common law:

• [________________________________]
• [________________________________]
• [________________________________]

E. Procedural Bad Faith — Manner of Handling

The Company's investigation and handling are relevant to whether it lacked a reasonable basis and knew or recklessly disregarded that absence under Shrader, 1994 WY 89, ¶ 47. The conduct at issue includes:

• Inadequate communication: [________________________________]
• Adjuster misconduct: [________________________________]
• Improper reserve practices: [________________________________]
• Pattern of delay tactics: [________________________________]
• Failure to follow own claims guidelines: [________________________________]

F. Failure to Communicate

The Company's communication failures have compounded the harm to our client:

• [________________________________]
• [________________________________]
• [________________________________]

VI. DAMAGES

A. Contract Damages — Benefits Owed Under the Policy

B. Consequential / Extra-Contractual Damages

Wyoming law recognizes consequential damages flowing directly from the bad faith denial or delay. McCullough, 789 P.2d 855. Our client has suffered the following consequential damages:

(Examples: financing costs due to delayed claim payment; cost escalation caused by delayed repairs; lost business income; mortgage default; lost investment opportunity; medical expenses caused by stress-related conditions.)

C. Emotional Distress Damages

Wyoming recognizes emotional distress damages as recoverable in first-party bad faith claims. McCullough, 789 P.2d at 860. Our client has suffered:

[________________________________]
[________________________________]
(Describe specific emotional harm: anxiety, depression, inability to sleep, impact on family, medical treatment for stress-related conditions, therapist involvement, etc.)

Emotional distress damages are estimated at $[________________________________], based on [________________________________].

D. Punitive Damages — Wyoming Common Law

Punitive damages are warranted under Wyoming law based on the following facts demonstrating willful and wanton conduct:

• [________________________________]
• [________________________________]
• [________________________________]
• [________________________________]

The Company's conduct was not merely negligent; it was deliberate and in conscious disregard of our client's rights. The purpose of punitive damages — to punish and deter — is squarely implicated here.

Punitive damages are estimated at $[________________________________] (representing a [____]:1 ratio to compensatory damages), consistent with Wyoming constitutional limitations and Wyoming Supreme Court guidance on proportionality.

E. Attorney's Fees and Interest — Wyo. Stat. § 26-15-124 (If Applicable)

If a court renders judgment for our client and finds that the Company's refusal to pay the full covered loss was unreasonable or without cause, Wyo. Stat. § 26-15-124(c) permits the court to award:

• Reasonable attorney's fees
• Interest at 10% per year from the date payment was due

Attorney's fees to date: $[____________]
Interest at 10%/year on $[____________] from [__/__/____]: $[____________]

F. Total Demand Summary

VII. FORMAL DEMAND

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

A. Monetary Payment

Tender the sum of $[________________________________] representing all policy benefits, consequential damages, attorney's fees, and statutory interest, on or before [__/__/____].

B. Settlement Conditions

In addition to monetary payment:

☐ Execute a full and complete release of all claims against our client by the Company
☐ Provide a letter confirming no adverse information has been reported or will be reported to ISO ClaimSearch, CLUE, or any industry database in connection with this claim
☐ ☐ [Confidentiality agreement as to settlement terms, if desired by the parties]

VIII. TIME-LIMITED NATURE OF THIS DEMAND AND CONSEQUENCES OF NON-RESPONSE

THIS DEMAND IS TIME-LIMITED AND EXPIRES AT 5:00 P.M. MOUNTAIN TIME ON [__/__/____].

Wyoming does not have a statutory time-limited demand doctrine equivalent to Georgia's O.C.G.A. § 9-11-67.1 or similar statutes. This demand is made as a good-faith effort to resolve the matter before litigation. If the Company fails to respond adequately:

1. Litigation will be filed immediately in the District Court of [________________________________] County, Wyoming asserting:
   - Breach of contract (insurance policy)
   - Tortious bad faith under McCullough and Shrader
   - Relief available under Wyo. Stat. § 26-15-124(c), if its conditions are satisfied
   - All available common law and statutory remedies

2. This demand will be withdrawn and our client will seek at trial:
   - Full policy benefits plus interest
   - All consequential and emotional distress damages
   - Punitive damages without limitation (subject only to Wyoming constitutional proportionality review)
   - Attorney's fees and costs

3. Regulatory complaints will be filed with:
   - Wyoming Department of Insurance, 106 E. 6th Avenue, Cheyenne, WY 82002, Tel: (307) 777-7401
   - National Association of Insurance Commissioners (NAIC)

4. Demand for complete claim file: This letter also constitutes a formal demand for a complete copy of the claim file, including all documents, notes, communications, reserve records, and internal analyses, pursuant to the insured's rights under Wyoming law. Please provide a complete copy within [____] days.

IX. DOCUMENT PRESERVATION NOTICE

This letter constitutes formal notice to immediately preserve all documents and electronically stored information related to this claim, including:

☐ Complete claim file — all versions, drafts, and prior iterations
☐ All internal communications regarding this claim (email, instant message, voicemail, text)
☐ All adjuster notes, diary entries, and activity logs
☐ All supervisor and management approvals, directives, and overrides
☐ Reserve documentation and all reserve change history with justification
☐ Claim handling guidelines, desk procedures, and adjuster training materials applicable to this claim type
☐ Quality assurance reviews, audits, or performance evaluations involving this claim
☐ All expert reports, consultant opinions, and underlying data
☐ All documents provided to or received from the insured/claimant
☐ Reinsurance communications (if applicable)
☐ Financial analyses of the claim
☐ Communications with legal counsel regarding coverage positions taken

Failure to preserve this information will be brought to the court's attention and may result in adverse inference instructions and/or sanctions under Wyoming Rules of Civil Procedure Rule 37.

X. COMPLAINT TO WYOMING DEPARTMENT OF INSURANCE

Regardless of whether this matter resolves, we reserve the right to file a complaint with the Wyoming Department of Insurance documenting the Company's violations of Wyo. Stat. § 26-13-124 and Wyoming claims handling standards. The DOI has authority to:

• Investigate complaint allegations
• Require the Company to provide complete claim files for review
• Impose administrative sanctions including fines and license actions
• Refer egregious conduct for additional regulatory action

Wyoming Department of Insurance
106 E. 6th Avenue
Cheyenne, WY 82002
Telephone: (307) 777-7401
Website: https://doi.wyo.gov/

XI. CONCLUSION

[________________________________]'s handling of this claim represents precisely the type of bad faith conduct that the Wyoming Supreme Court addressed in McCullough v. Golden Rule Ins. Co. — unreasonable denial and delay in the face of a legitimate claim, with full knowledge that no reasonable basis for its conduct exists.

Our client purchased this insurance policy in good faith, paid premiums in reliance on the Company's promises, and suffered a covered loss. Wyoming law requires more from an insurer than what the Company has provided here.

We strongly encourage the Company to use this opportunity to resolve this matter fairly and fully. The alternative — litigation in Wyoming District Court seeking all available remedies including punitive damages — will cost the Company significantly more.

Please direct all communications regarding this matter to the undersigned. We are available to discuss resolution of this claim.

Respectfully submitted,

[________________________________]

By: ___________________________________
[________________________________], Esq.
Wyoming Bar No. [____]
[________________________________]
[________________________________], WY [____]
Tel: [________________________________]
Fax: [________________________________]
Email: [________________________________]

Counsel for [________________________________]

ENCLOSURES:

☐ Policy declarations page
☐ Relevant policy provisions and endorsements
☐ Complete claim correspondence chronology (Exhibit A)
☐ Damage documentation and supporting evidence (Exhibit B)
☐ Medical records and bills (if applicable) (Exhibit C)
☐ Expert reports (Exhibit D)
☐ Documentation supporting consequential damages (Exhibit E)
☐ Documentation of emotional distress damages (Exhibit F)
☐ [________________________________]

CC:

• [________________________________] (Client)
• Wyoming Department of Insurance, 106 E. 6th Avenue, Cheyenne, WY 82002

WYOMING BAD FAITH LAW QUICK REFERENCE

SOURCES AND REFERENCES

• McCullough v. Golden Rule Ins. Co., 789 P.2d 855 (Wyo. 1990): https://law.justia.com/cases/wyoming/supreme-court/1990/122383.html
• State Farm Mut. Auto. Ins. Co. v. Shrader, 882 P.2d 813 (Wyo. 1994): https://law.justia.com/cases/wyoming/supreme-court/1994/123072.html
• Herrig v. Herrig, 844 P.2d 487 (Wyo. 1992): https://law.justia.com/cases/wyoming/supreme-court/1992/122987.html
• Jarvis v. Farmers Insurance Exchange, 948 P.2d 898 (Wyo. 1997): https://caselaw.findlaw.com/court/wy-supreme-court/1001298.html
• Wyo. Stat. § 26-13-124 — Unfair Claims Settlement Practices: https://law.justia.com/codes/wyoming/title-26/chapter-13/article-1/section-26-13-124/
• Wyo. Stat. § 1-1-123 — Sports and recreational assumption of risk (not punitive-damages authority): https://wyoleg.gov/statutes/compress/title01.pdf
• Wyo. Stat. § 1-3-105 — Statute of Limitations: https://law.justia.com/codes/wyoming/title-1/chapter-3/section-1-3-105/
• ALFA International — Wyoming Insurance Law Compendium: https://www.alfainternational.com/compendium/insurance-law/wyoming/
• Chartwell Law — Wyoming Bad Faith Guide: https://www.chartwelllaw.com/bad-faith-claims-map/wyoming
• Wyoming Department of Insurance: https://doi.wyo.gov/
• R. Connor Law — Wyoming Coverage: https://rconnorlaw.com/coverage/wyoming/