What is a Bad Faith Insurance Demand Letter?
When an insurance carrier attempts to renege on the obligations that they owe their client, this could be considered bad faith insurance practices. It is not uncommon for insurance carriers to refuse to pay a policyholder’s legitimate claim. When this occurs, it may be necessary to work with an attorney to send a bad faith insurance demand letter asking for payment and letting the insurance carrier know that a lawsuit will be forthcoming if payment is not made.
The Tone of the Letter
When you are writing a payment demand letter to an insurance carrier (or when your attorney is drafting the letter), there will be specific factors that need to be present. First, the language you use matters. Even if you are angry at the insurance carrier, you will need to take emotion out of the letter altogether. It is important to be polite and businesslike, and you will need to stick to the facts.
Language in the bad faith insurance demand letter will need to be specific regarding what you consider to be the acceptable resolution for the case. It is important to list the amount of money you were seeking in damages and the date you expect to receive payment, as well as other actions that you may take against the defendant to recover compensation. You will aim high with your additional number because this will be the starting point of negotiations.
Remember, you are writing a bad faith insurance letter because you believe the insurance carrier has wrongfully denied the claim or purposely offered an inadequate settlement amount.
Here, we want to provide a basic outline of a sample bad faith insurance letter for a vehicle accident claim (all names associated with this letter are completely made up).
Sample Bad Faith Insurance Letter
Adam J. Jackson, Esquire
Jackson & Kirk
4000 Main Street, Suite 13
San Diego, CA 22400
Re: Richard v. Allens, et al.
Case No. CAP07-38746
Dear Mr. Richards:
Please accept this correspondence as Plaintiff’s written demand for your client’s maximum policy limits for this claim. It is our understanding that your client has $500,000 in coverage available for this particular type of loss. Taking into consideration the negligence established by your insured policyholder’s failure to stop at a traffic signal, which subsequently led to them impacting our client’s vehicle, and given the extent of our client’s injuries, it is difficult to argue that a verdict against your client would not greatly exceed this available policy limit.
We fully expect you to offer the total $500,000 policy limit to protect your client’s best interests and insulate them from possible judgment in civil court. Our client will accept $500,000 as the full and final settlement for this claim.
Please expect that we intend to present evidence and arguments at trial to a jury that this case is worth more than the total policy amount. Please be on notice that because this claim is more than the available policy limits, any of your client’s personal assets may be at risk, and his wages may be in danger of garnishment when an excess verdict is issued.
We trust that you will promptly convey this demand to your client and the representatives from the insurance carrier. It is your duty to protect your client and his best interests, and we encourage you to notify his insurance carrier that we believe their failure to offer the full policy amount is tantamount to them operating in bad faith.
We advise your client to retain separate counsel to represent them in this matter and have enclosed separate copies of this correspondence (one for the insurance carrier, one for your client, and one for an attorney your client retains to represent them for excess exposure).
Please let us know the insurance carrier’s response to this settlement demand within 30 days. We look forward to hearing from you.
Adam J. Jackson
Working with an Attorney
Due to their expertise, it is best to let your San Diego bad faith insurance attorney write the demand letter. Having guidance and insight throughout this process is invaluable, and having the letter come from an attorney via certified mail will hold more weight. Contact our law firm today to begin discussing your case.