What is a time-limited demand letter?
A time-limited demand offers to settle for a stated amount, usually the policy limits, within a stated period. Historically the purpose was partly to create bad faith exposure if the insurer failed to respond.
Why they changed. The Legislature addressed what it viewed as demands engineered to be difficult to accept — short deadlines, unusual conditions, incomplete documentation — designed to manufacture a bad faith claim rather than to settle.
What applies now. The insurer has a safe harbor if it tenders within 90 days of actual notice accompanied by sufficient evidence to support the amount demanded. And claimants and their representatives owe a duty to act in good faith in making demands and setting deadlines, with a claimant's conduct available for the factfinder to consider.
What that means practically. A demand should be complete — records, bills, wage documentation, a permanency opinion where relevant — and its terms should be reasonable. A well-supported demand is now more effective than an aggressive one.
Complete documentation moves these. Short deadlines no longer do. ---
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