Legal Disclaimer: This article provides general information for educational purposes only and does not constitute legal advice. Consult a licensed attorney for advice specific to your situation.
Your insurance company is supposed to have your back. You pay premiums. You file a claim. They pay out.
Except it doesn't always work that way. Insurance companies deny valid claims. They lowball settlements. They delay and delay hoping you'll give up.
A demand letter changes that dynamic. Here's how to write one that gets your claim paid.
In This Guide
When to Send a Demand Letter to Your Insurance Company
A demand letter is appropriate when:
- Your claim was denied — and you believe it was covered
- They're lowballing — offering far less than your actual damages
- They're delaying — weeks or months with no resolution
- They're not responding — to calls, emails, or requests
- They're requesting unreasonable documentation — that you can't provide or that isn't relevant
A formal demand letter signals you're serious and creates documentation for any future legal action or regulatory complaint.
Types of Insurance Disputes
Auto Insurance
- Claim denied after accident
- Total loss valuation too low
- Repair estimate disputes
- Uninsured motorist claim delays
- Rental car coverage denials
Homeowners/Renters Insurance
- Storm damage denied as "pre-existing"
- Water damage denied as "flood" (requires separate policy)
- Theft claims denied for "insufficient documentation"
- Lowball estimates for repairs
- Living expenses (loss of use) denied
Health Insurance
- Medically necessary treatment denied
- Out-of-network emergency claims denied
- Pre-authorization retroactively denied
- "Experimental treatment" denials
- Mental health parity violations
Life Insurance
- Claim denied for "misrepresentation on application"
- Contestability period disputes
- Suicide exclusion beyond the contestability period
- Beneficiary disputes
Disability Insurance
- Claims denied as "not totally disabled"
- Benefits terminated prematurely
- "Pre-existing condition" denials
- Surveillance-based denials
What to Include in Your Insurance Demand Letter
1. Policy Information
- Policy number
- Claim number
- Date of loss/incident
- Type of coverage at issue
2. Factual Background
- What happened (the loss or incident)
- When you filed the claim
- What the insurance company has done (or failed to do)
- Communications timeline
3. Why the Claim Is Covered
- Quote the specific policy language that covers your loss
- Explain why their denial reason doesn't apply
- Cite any state laws or regulations they're violating
4. Your Damages
- Itemized list of covered losses
- Supporting documentation
- How their delay/denial has caused additional harm
5. Your Demand
- Specific dollar amount
- Response deadline (30 days is standard)
- What you'll do if they don't comply
6. Bad Faith Warning (If Applicable)
If their conduct has been egregious, put them on notice that you consider their actions bad faith (more on this below).
Insurance Bad Faith: Your Secret Weapon
Insurance companies have a legal duty to act in good faith with their policyholders. When they don't, you may be able to sue for bad faith and recover:
- The original claim amount — what they should have paid
- Consequential damages — additional losses caused by their denial
- Emotional distress — in some states
- Punitive damages — to punish particularly bad conduct
- Attorney's fees — in some states
Examples of Bad Faith
| Conduct | Why It's Bad Faith |
|---|---|
| Denying without investigating | Insurers must investigate before denying |
| Ignoring evidence | Can't cherry-pick evidence against you |
| Unreasonable delay | Most states require timely decisions (30-45 days) |
| Lowballing to force settlement | Must offer reasonable amounts |
| Denying for reasons not in policy | Can only deny based on policy language |
| Failing to explain denial | Must provide clear reasons |
| Misrepresenting policy language | Can't lie about what's covered |
Mentioning "bad faith" in your demand letter often changes the insurance company's behavior. They know bad faith lawsuits can be expensive, so they'll often settle legitimate claims to avoid the risk.
State Laws Vary
Bad faith laws vary significantly by state. Some states (California, Montana, Oklahoma) have strong consumer protections. Others (New York) only allow bad faith claims in limited circumstances. Check your state's laws or consult an attorney.
Insurance Demand Letter Template
[Your Name]
[Your Address]
[City, State ZIP]
[Date]
SENT VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED
[Insurance Company Name]
Attn: Claims Manager
[Address]
[City, State ZIP]
Re: DEMAND FOR PAYMENT
Policy Number: [NUMBER]
Claim Number: [NUMBER]
Date of Loss: [DATE]
Insured: [YOUR NAME]
Dear Claims Manager:
This letter constitutes a formal demand for immediate payment of my claim under the above-referenced policy. Your company's handling of this claim has been unreasonable, and I am prepared to pursue all available remedies if the claim is not resolved promptly.
Background
On [DATE], [describe the loss — e.g., "a tree fell on my home during a windstorm, causing significant damage to the roof and interior"]. I promptly reported this claim to your company on [DATE]. My policy provides coverage for [type of loss — e.g., "windstorm damage to the dwelling and personal property"].
[Describe what's happened since: claim assigned to adjuster, inspections, communications, offers or denials.]
Why This Claim Is Covered
Your denial/offer is improper for the following reasons:
[If denied, explain why the denial is wrong:]
- Your denial letter states [their reason]. However, this is incorrect because [your explanation].
- My policy states: "[quote the relevant coverage language]." The loss clearly falls within this coverage.
- The exclusion you cite does not apply because [explanation].
[If lowballed, explain why the offer is inadequate:]
- Your offer of $[AMOUNT] does not reflect the actual cost to repair/replace the damaged property.
- I have obtained [number] estimates from licensed contractors, with an average of $[AMOUNT].
- Your adjuster's estimate omits [list omitted items or uses improper methods].
Damages
| [Damage category 1] | $[AMOUNT] |
| [Damage category 2] | $[AMOUNT] |
| [Additional damages] | $[AMOUNT] |
| TOTAL | $[TOTAL] |
Bad Faith Concerns
I am concerned that your company's handling of this claim may constitute bad faith under [STATE] law. Specifically, [describe the conduct — e.g., "your company has failed to conduct a reasonable investigation," "has unreasonably delayed a decision for over 90 days," "has misrepresented the policy language," etc.].
Under [STATE] law, insurers have a duty to act in good faith and deal fairly with their policyholders. [Cite specific statute if known, e.g., "Under California Insurance Code § 790.03(h), the practices described above are unfair claim settlement practices."]. I reserve all rights to pursue a bad faith claim, including consequential damages, punitive damages, and attorney's fees.
Demand
I demand payment in the amount of $[TOTAL AMOUNT] within thirty (30) days of the date of this letter.
If I do not receive satisfactory resolution within this timeframe, I intend to:
- File a complaint with the [STATE] Department of Insurance
- Pursue legal action including a claim for insurance bad faith
- Report this matter to [any applicable regulatory body]
I trust your company will reconsider its position and resolve this matter fairly. Please direct all future correspondence to me at the address above.
Sincerely,
[Your Signature]
[Your Printed Name]
[Phone Number]
[Email Address]
Enclosures:
- Policy declarations page
- Claim denial letter (if applicable)
- Repair estimates
- Photos/documentation of loss
- Communications log
What Happens After You Send Your Demand Letter
Best Case: They Pay
Sometimes a demand letter — especially one mentioning bad faith — prompts an insurance company to reconsider. They'd rather pay a legitimate claim than risk a lawsuit.
They Negotiate
The claims manager may call to discuss the claim. Be prepared to negotiate but don't accept a lowball. Get any settlement offers in writing.
They Hold Firm
If they don't budge, you have options (see below).
They Escalate to Their Legal Department
Mentioning "bad faith" may trigger a response from their legal team. This is often a sign they're taking you seriously.
How to File a Complaint With Your State
Every state has an insurance department that regulates insurance companies. Filing a complaint can:
- Prompt the insurance company to resolve your claim
- Create an official record of their conduct
- Help regulators identify patterns of bad behavior
- In some cases, result in fines against the insurer
Major State Insurance Departments
| State | Agency | Website |
|---|---|---|
| California | CA Dept. of Insurance | insurance.ca.gov |
| Texas | TX Dept. of Insurance | tdi.texas.gov |
| Florida | FL Office of Insurance Regulation | floir.com |
| New York | NY Dept. of Financial Services | dfs.ny.gov |
| Illinois | IL Dept. of Insurance | insurance.illinois.gov |
For health insurance, you can also file complaints with:
- CMS (Centers for Medicare & Medicaid) — for Medicare/Medicaid issues
- Your state's HMO/PPO regulator — varies by state
- DOL (Department of Labor) — for employer-provided health plans (ERISA)
When to File a Lawsuit
If the demand letter and regulatory complaint don't work, a lawsuit may be your best option. For smaller amounts, consider small claims court. For larger claims or bad faith cases, consult an insurance attorney. Many work on contingency for bad faith claims.
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Start Your Demand LetterKey Takeaways
- Send a demand letter when your claim is denied, lowballed, or unreasonably delayed
- Quote the specific policy language that covers your loss
- Mention 'bad faith' if their conduct has been egregious — it often changes their behavior
- Bad faith lawsuits can recover extra damages including punitive damages in some states
- File a complaint with your state insurance department if they don't respond
- Keep a log of all communications — it's evidence for any future action
Related Articles
- Demand Letter for Car Accident: How to Get Paid
- How to Write a Demand Letter: Complete Guide
- What Happens After You Send a Demand Letter
- Demand Letter for Money Owed
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