When to Use This Template
A bad faith demand letter is appropriate when your insurance company has failed to
handle your claim fairly and in good faith. This isn't just for denied claims - it
applies whenever the insurer's conduct falls below reasonable standards.
Common Situations for a Bad Faith Demand
- Unreasonable denial - Your valid claim was denied without a legitimate basis
- Excessive delays - The insurer is dragging its feet without explanation
- Lowball offers - Settlement offers far below the actual value of your loss
- Failure to investigate - The insurer didn't properly investigate before deciding
- Misrepresenting policy terms - Claiming coverage doesn't exist when it does
- Requiring excessive documentation - Demanding proof beyond what's reasonable
A demand letter is a serious step. Make sure you've first tried to resolve the issue
through normal channels (appeals, supervisor requests) and have documented all interactions.
This letter essentially accuses the insurer of acting in bad faith, which can escalate the dispute.
California's Fair Claims Settlement Practices Regulations (Cal. Code Regs. tit. 10, Section 2695.1 et seq.)
provide specific standards that insurers must follow. Key violations to cite include:
- Section 2695.5(e) - Failure to respond to communications within 15 days
- Section 2695.7(b) - Failure to accept/deny claim within 40 days
- Section 2695.7(d) - Failure to provide written explanation for denial
- Section 2695.7(g) - Failure to pay undisputed amounts promptly
California also allows recovery of attorney's fees in bad faith cases under Brandt v. Superior Court.
The Template
Copy this template and replace all bracketed placeholders with your specific information.
Remove any sections that don't apply to your situation.
[YOUR NAME]
[YOUR ADDRESS]
[CITY, STATE ZIP]
[YOUR EMAIL]
[YOUR PHONE]
[DATE]
VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED
[INSURANCE COMPANY NAME]
[CLAIMS DEPARTMENT ADDRESS]
[CITY, STATE ZIP]
Re: Demand for Payment - Bad Faith Claim Handling
Policy Number: [POLICY NUMBER]
Claim Number: [CLAIM NUMBER]
Date of Loss: [DATE OF LOSS]
Insured: [YOUR NAME / POLICYHOLDER NAME]
Dear Claims Manager:
I am writing to formally demand payment of my insurance claim and to put [INSURANCE COMPANY NAME] on notice that its handling of my claim constitutes bad faith under applicable law.
BACKGROUND
On [DATE OF LOSS], I suffered a covered loss when [BRIEF DESCRIPTION OF LOSS - e.g., "my vehicle was struck by an uninsured motorist" or "my home sustained water damage from a burst pipe"]. I promptly reported this loss to [INSURANCE COMPANY NAME] on [DATE CLAIM FILED] and was assigned Claim Number [CLAIM NUMBER].
My policy, Number [POLICY NUMBER], provides coverage for this type of loss under [SPECIFIC COVERAGE TYPE - e.g., "the Uninsured Motorist provision" or "Coverage A - Dwelling"]. The policy limits for this coverage are [POLICY LIMITS].
CLAIM HANDLING FAILURES
Despite my cooperation and the clear coverage under my policy, [INSURANCE COMPANY NAME] has failed to handle my claim in good faith. Specifically:
[SELECT AND CUSTOMIZE THE APPLICABLE VIOLATIONS:]
1. UNREASONABLE DENIAL: On [DATE OF DENIAL], you denied my claim stating [STATED REASON FOR DENIAL]. This denial is unreasonable because [EXPLAIN WHY - e.g., "the policy clearly covers this type of loss" or "the exclusion you cited does not apply to these facts"].
2. UNREASONABLE DELAY: It has been [NUMBER] days since I filed my claim, and you have failed to [make a coverage determination / issue payment / complete your investigation]. This delay is unreasonable and has caused me ongoing harm including [DESCRIBE HARM - e.g., "inability to repair my vehicle" or "continuing to live in damaged conditions"].
3. LOWBALL OFFER: Your settlement offer of $[AMOUNT OFFERED] is far below the actual value of my loss, which is $[ACTUAL VALUE]. This valuation is unsupported by [the evidence / industry standards / comparable sales] and appears designed to force me to accept less than I am owed.
4. FAILURE TO INVESTIGATE: You failed to conduct an adequate investigation before denying my claim. Specifically, you [DESCRIBE INVESTIGATION FAILURES - e.g., "never inspected the property" or "ignored the documentation I provided"].
5. MISREPRESENTATION OF POLICY TERMS: Your denial letter misrepresents my policy coverage by claiming [WHAT THEY CLAIMED]. In fact, my policy states [ACTUAL POLICY LANGUAGE].
[FOR CALIFORNIA CLAIMS, ADD:]
VIOLATIONS OF CALIFORNIA LAW
Your conduct violates California's Fair Claims Settlement Practices Regulations (Cal. Code Regs. tit. 10, § 2695.1 et seq.), including but not limited to:
- Section 2695.5(e): Failure to respond to my communications within 15 days
- Section 2695.7(b): Failure to accept or deny my claim within 40 days of receiving proof of claim
- Section 2695.7(d): Failure to provide a written explanation for the denial
- Section 2695.7(g): Failure to pay undisputed portions of my claim promptly
These violations constitute bad faith under California Insurance Code Section 790.03 and give rise to liability for damages beyond my policy benefits.
DEMAND
I hereby demand that [INSURANCE COMPANY NAME]:
1. Pay the full value of my claim in the amount of $[AMOUNT DEMANDED] within [15/30] days of this letter;
2. Pay all consequential damages I have suffered as a result of your bad faith handling, including but not limited to [LIST DAMAGES - e.g., "rental car expenses," "temporary housing costs," "lost wages," "emotional distress"];
3. Provide a complete copy of my claim file, including all internal communications, adjuster notes, and documents relied upon in evaluating my claim.
CONSEQUENCES OF NON-COMPLIANCE
If [INSURANCE COMPANY NAME] fails to resolve this matter within [15/30] days, I will pursue all available legal remedies, which may include:
- Filing a complaint with the [STATE] Department of Insurance
- Initiating a civil lawsuit for breach of contract and bad faith
- Seeking punitive damages for your oppressive and malicious conduct
- Recovering attorney's fees and costs [FOR CA: "pursuant to Brandt v. Superior Court"]
I reserve all rights and remedies available to me under law and equity.
Please direct all future communications regarding this matter to me at the address above. I expect your written response no later than [DEADLINE DATE - typically 15-30 days from letter date].
Sincerely,
[YOUR SIGNATURE]
[YOUR NAME (printed)]
Enclosures:
- Copy of insurance policy declarations page
- Copy of denial letter dated [DATE]
- [LIST OTHER SUPPORTING DOCUMENTS]
cc: [STATE] Department of Insurance [OPTIONAL - ONLY IF ALSO FILING DOI COMPLAINT]
Customization Tips
Make It Specific
Generic letters are less effective. Include specific dates, amounts, and policy language.
Reference actual correspondence by date. Quote the exact language from denial letters.
Document Your Damages
Beyond the claim itself, list all damages you've suffered from the delay or denial:
out-of-pocket expenses, lost income, emotional distress, credit impacts, and any other
consequences of the insurer's conduct.
Attach Supporting Evidence
Include copies (not originals) of key documents: the denial letter, relevant policy pages,
photos, estimates, medical records, or other evidence supporting your claim.
Resist the urge to express anger or make personal attacks. A calm, factual,
well-documented letter is far more effective than an emotional one. Let the
facts speak for themselves.
How to Send Your Letter
- Use certified mail with return receipt requested. This proves the insurer received your letter and when.
- Keep copies of everything. Copy the letter itself, all enclosures, the certified mail receipt, and the return receipt when you get it back.
- Consider sending to multiple addresses. Send to the claims department, the company's registered agent, and optionally to the CEO's office.
- Note the deadline. Mark your calendar for the response deadline. If they don't respond, you may need to take further action.
Don't be surprised if you don't get an immediate response. Insurers often take
time to review demand letters with their legal department. However, if the deadline
passes without response, be prepared to follow through on your stated consequences.