Insurance Demand Letter - Texas

NOTE TO PRACTITIONER
Classify the claim before drafting. A third-party liability settlement offer,
a first-party policy claim, a Chapter 541 presuit notice, and a Chapter 542A
property-claim notice are not interchangeable. Review the complete policy,
endorsements, claim correspondence, current law, limitations periods, liens,
and authority to release every claimant and insured. Delete every unused option.

TEXAS INSURANCE CLAIM SETTLEMENT DEMAND

1. Claim and Law Profile — Complete Before Drafting

• Claim type: ☐ First-party policy claim ☐ Third-party liability claim ☐ Other: [TYPE]
• Intended legal function: ☐ Settlement offer ☐ Chapter 541 notice ☐ Chapter 542A notice ☐ Policy notice/proof of loss ☐ Other
• Claimant and capacity: [NAME / INSURED / POLICYHOLDER / BENEFICIARY / THIRD PARTY]
• Insured(s): [NAME(S)]
• Insurer and issuing entity: [FULL LEGAL NAME]
• Policy number, period, coverage part, endorsements, and claim number: [DETAILS]
• Date, location, and description of loss: [DETAILS]
• Limits, deductibles, retentions, exhaustion, and other insurance: [DETAILS]

• Policy definitions, conditions, exclusions, notice, proof-of-loss, appraisal,
  cooperation, consent, and suit-limitation terms reviewed: [DETAILS]

• Current controlling authority checked as of [DATE]: [AUTHORITY]

• Independent limitations, presentment, and presuit dates: [DATES AND BASIS]
• Required recipient, address, portal, form, and delivery method: [DETAILS]
• Liens, subrogation, reimbursement, probate, minor, bankruptcy, or approval issues: [DETAILS]

2. Texas Claim-Type Gates

A. Third-party liability / potential Stowers offer

The Texas Supreme Court states that the Stowers duty arises when the third
party's claim against the insured is within coverage, the settlement demand is
within policy limits, and the terms are such that an ordinarily prudent insurer
would accept them considering the likelihood and degree of potential exposure
to an excess judgment. A Stowers cause of action requires the insured's
liability to exceed policy limits, through judgment or settlement. In re
Farmers Texas County Mutual Insurance Co., No. 19-0701, slip op. at 6-9
(Tex. Apr. 23, 2021). Do not label the letter a Stowers demand until counsel has
verified coverage, limits, parties, release scope, allocation, liens, acceptance
method, timing, and every material condition.

B. First-party prompt-payment claim

Chapter 542 defines a covered "claim" as a first-party claim made by an insured,
policyholder, or named beneficiary that must be paid directly to that person.
Tex. Ins. Code § 542.051. For a claim within the subchapter, verify and calendar:

Section 542.060 supplies statutory damages only when the insurer is liable for
the claim and not in compliance. Chapter 542A changes the interest measure for
actions within that chapter. Calculate any requested amount from the current
statute and the actual due date; do not insert a penalty automatically.

C. Chapter 541 presuit notice — optional separate function

If this letter is intended as notice before a damages action under Chapter 541,
§ 541.154 generally requires written notice not later than the 61st day before
filing. The notice must state the specific complaint and the amount of actual
damages and expenses, including reasonably incurred attorney's fees. The
limitations/counterclaim exceptions and abatement provisions require separate
review. A settlement demand is not automatically a compliant Chapter 541 notice.

D. Chapter 542A nature-related real-property claim — optional separate function

Chapter 542A applies to specified first-party claims under property insurance
for covered real property or improvements when damage or loss was caused wholly
or partly by listed forces of nature. §§ 542A.001-.002. Its presuit notice is
generally due not later than the 61st day before filing and must state the acts
or omissions, the specific amount allegedly owed for covered property damage,
and calculated attorney's fees; a representative must copy the claimant and say
so in the notice. § 542A.003. The recipient may request inspection within 30
days and, if reasonably possible, complete it within 60 days after receiving
notice. § 542A.004. Do not use this route for a claim outside the statutory
definition.

3. Delivery Header

[DATE]

Via [CERTIFIED MAIL / COURIER / ELECTRONIC DELIVERY]
Return-Receipt Requested

[INSURANCE COMPANY NAME]
Attn: [CLAIMS ADJUSTER NAME / LEGAL DEPARTMENT]
[STREET ADDRESS]
[CITY, STATE ZIP]

Re: Formal Demand for Payment Under Policy No. [POLICY NUMBER]
Claim No. [CLAIM NUMBER] | Date of Loss: [DATE OF LOSS] | Insured: [INSURED NAME]

Dear [MR./MS.] [ADJUSTER LAST NAME]:

I represent [CLAIMANT NAME] concerning [DESCRIBE THE LOSS AND CLAIM]. This
letter presents the available facts, coverage position, and damages material
and offers to resolve [IDENTIFY THE CLAIMS AND PARTIES] on the terms stated
below. Its intended legal function is the option selected in Section 1. No
coverage, liability, deadline, penalty, or remedy is conceded or established
merely because this form refers to it.

4. Factual and Liability Presentation

A. Chronology

[STATE MATERIAL EVENTS IN DATE ORDER. DISTINGUISH DOCUMENTED FACT,
PERSONAL KNOWLEDGE, WITNESS INFORMATION, AND CONTENTIONS.]

B. Liability or entitlement position

[FOR A THIRD-PARTY CLAIM, EXPLAIN THE CLAIM AGAINST THE INSURED AND ADDRESS
KNOWN DEFENSES, COMPARATIVE RESPONSIBILITY, CAUSATION, AND EXCESS EXPOSURE.]

[FOR A FIRST-PARTY CLAIM, QUOTE OR ACCURATELY SUMMARIZE THE RELEVANT INSURING
AGREEMENT AND EXPLAIN THE FACTS SUPPORTING COVERAGE. ADDRESS KNOWN CONDITIONS,
EXCLUSIONS, VALUATION METHODS, DEDUCTIBLES, LIMITS, AND THE INSURER'S POSITION.]

Do not state that liability, coverage, or a condition precedent is established
unless counsel has verified that conclusion from the policy, record, and
current controlling law.

C. Supporting material

• ☐ Policy, declarations, and endorsements
• ☐ Notice of claim, proof of loss, and claim correspondence
• ☐ Incident, crash, fire, police, or agency report
• ☐ Photographs, video, measurements, estimates, or inspection material
• ☐ Witness statements or contact information
• ☐ Medical, wage, tax, repair, replacement, or valuation records
• ☐ Expert material
• ☐ Other: [DESCRIBE]

5. Injury, Loss, and Damages Presentation

Total amount presented: $[AMOUNT].

Confirm which categories are recoverable and whether billed-versus-paid rules,
collateral sources, limitations, offsets, sublimits, depreciation, replacement-
cost conditions, interest, fees, costs, or statutory damages apply. Do not add
an amount solely because it appears in this form.

6. Settlement Offer or Payment Request

[CLAIMANT NAME] ☐ requests payment under [COVERAGE PART] / ☐ offers to resolve
[IDENTIFY CLAIMS] against [IDENTIFY RELEASED PERSONS OR ENTITIES] for
$[AMOUNT], subject to these exact terms:

1. Payment recipient and method after trust, lien, tax, and authority review:
   [DETAILS].

2. Proposed release, dismissal, allocation, confidentiality, indemnity, lien,
   or other consideration: [DESCRIBE PRECISELY / ATTACH PROPOSED RELEASE].

3. Acceptance method: [SIGNED WRITING / DELIVERY / OTHER].

4. Acceptance must be received by [TIME, TIME ZONE, DATE]. The response period
   is an offer term unless Section 1 identifies a separate legal deadline.

5. Offer status after that time: ☐ withdrawn ☐ subject to written withdrawal
   ☐ other: [DETAILS].

No release or additional term is agreed merely by using this template. Identify
promptly any additional nonprivileged material reasonably needed to evaluate
the claim. A request for information does not extend or change the offer unless
the claimant or authorized counsel agrees in writing.

7. Optional Statutory Notice Addendum

Complete only an option selected in Section 1.

☐ Chapter 541 notice

• Specific complaint: [ACTS / OMISSIONS / DATES / PERSONS]
• Actual damages claimed: $[AMOUNT]
• Expenses, including reasonably incurred attorney's fees: $[AMOUNT]
• Proposed filing date and confirmation that notice is at least 61 days before
  filing, or identified § 541.154(c) exception: [DETAILS]

☐ Chapter 542A notice

• Covered real property or improvements: [PROPERTY]
• Force(s) of nature and covered damage or loss: [DETAILS]
• Acts or omissions giving rise to the claim: [DETAILS]
• Specific amount allegedly owed for covered property damage: $[AMOUNT]
• Attorney time, customary hourly rate, and calculated fees: [DETAILS]
• Copy provided to claimant and statement included: ☐ Yes
• Inspection contact and reasonable access proposal: [DETAILS]
• Proposed filing date and confirmation that notice is at least 61 days before
  filing, or identified § 542A.003(d) exception: [DETAILS]

8. Matters Requiring Express Treatment

• Allocation among claimants, insureds, coverages, occurrences, or claims: [DETAILS]
• Exact policy-limits status, if relevant: [CONFIRMED LIMIT / UNKNOWN / DETAILS]
• Minor, estate, guardianship, bankruptcy, or court-approval issue: [DETAILS]

• Medicare, Medicaid, ERISA, workers' compensation, hospital, child-support,
  attorney, subrogation, reimbursement, or other interests: [DETAILS]

• Structured settlement, annuity, confidentiality, or tax issue: [DETAILS]

• Release scope, unknown claims, additional parties, and derivative claims: [DETAILS]
• Authority to bind each claimant or released person: [DETAILS]

9. Qualified Preservation Request — Optional

Because a dispute concerning [SUBJECT] is [PENDING / REASONABLY ANTICIPATED],
please take reasonable steps required by applicable law to preserve relevant
information within your possession, custody, or control, including [TARGETED
CATEGORIES, CUSTODIANS, SYSTEMS, AND DATE RANGE]. This request does not assert
that every claim-file item is discoverable, nonprivileged, or required to be
produced.

10. Closing and Enclosures

Please direct the written response and any acceptance to:

[NAME / FIRM / ADDRESS / EMAIL / PHONE]

Sincerely,

[CLAIMANT OR AUTHORIZED COUNSEL]

11. Texas Sources and Final Review

• Tex. Ins. Code Chapter 541
• Tex. Ins. Code Chapter 542
• Tex. Ins. Code Chapter 542A

• In re Farmers Texas County Mutual Insurance Co., No. 19-0701 (Tex. Apr. 23, 2021)

• ☐ Correct claim type and intended legal function selected

• ☐ Complete policy and endorsements reviewed
• ☐ Every legal proposition checked against current official authority
• ☐ Every factual assertion supported and disputed facts labeled
• ☐ Damages math, records, duplicates, and future-loss support checked
• ☐ Liens, reimbursement interests, authority, and approval issues investigated
• ☐ Release and settlement terms stated precisely
• ☐ Response date is feasible and its legal significance is not overstated
• ☐ Chapter 541 or 542A notice content and timing completed if selected
• ☐ Sensitive information redacted and transmitted securely
• ☐ Independent filing, notice, and policy deadlines calendared
• ☐ Qualified Texas counsel approved the final letter