Policy-Limits Demand Toolkit: Demand Letters, Insurer Responses, and Excess Exposure Letters

Summary. This toolkit supplies the working papers of a time-limited policy-limits demand, each introduced by its purpose, its owner, and when to use it, and each followed by drafting commentary tied to the governing authority. The claimant's templates are a demand decision worksheet, a limits disclosure request, a time-limited demand letter with California, Georgia, and Florida riders, and a release outline. The insurer's templates are an intake log and acknowledgment, an excess exposure letter to the insured, a request for clarification or extension, an acceptance or limits tender letter, and a written explanation of non-acceptance. Defense counsel and the insured get a report-and-advisory letter and a letter demanding that the insurer settle within limits. Further templates cover a multiple-claimant global settlement invitation with an interpleader decision memo and an outline of an assignment, covenant not to execute, and Coblentz-type agreement. A deadline tracker, an FAQ, and takeaways close the toolkit.

A policy-limits demand is won or lost on paper. The claimant's letter decides whether there was ever a real opportunity to settle. The insurer's acknowledgment, questions, and answer decide whether it took that opportunity seriously. The excess letter decides whether the insured knew what was at stake. The templates below are written so that each document, read by a judge two years later, shows exactly what its author knew and did.

The short answer

• The demand should be accepted easily if the insurer is reasonable. Within limits, a full release of all insureds, lien satisfaction, complete proof, a statutory-length deadline, and conditions limited to written acceptance and timely payment.
• The insurer's papers show diligence. Same-day acknowledgment, an excess letter to the insured within days, specific questions and a specific extension request early in the window, and an acceptance that matches every term, or a written explanation of non-acceptance.
• Defense counsel's and the insured's papers protect the insured. A report that values the case candidly, a letter telling the insured to consult personal counsel, and a letter from the insured demanding settlement within limits.
• When it goes wrong, the assignment papers matter. A covenant not to execute and an assignment are routine after an excess verdict; pre-trial consent judgments work only in some states and only on some facts.

How to use this toolkit

Each template states its purpose, its owner, and when to use it, then gives the template and drafting commentary. Bracketed capitals are placeholders. The templates assume a single state's law governs; where a state statute imposes specific requirements, a rider follows the main template. Confirm the current text of any statute before use; demand statutes have been amended repeatedly.

The doctrine behind the templates is in Policy-Limits Demands and Insurer Bad Faith: How Time-Limited Demands Set Up Excess Verdicts; the order of tasks is in the Policy-Limits Demand Checklist: A Practical Checklist; and the step-by-step narrative is in Making or Responding to a Time-Limited Policy-Limits Demand: A Practical Guide.

Running example. Aisha Morrow, a 34-year-old dental hygienist, was rear-ended at a red light in San Jose, California, on [DATE], by a van owned by Delgado Plumbing, Inc. and driven by its employee, Victor Ruiz. Morrow has a lumbar disc herniation that required a microdiscectomy, $164,000 in billed charges, and a surgeon's opinion that she will need a fusion within ten years. Delgado's commercial auto policy with Westmark Casualty has a $250,000 per-person limit. Morrow's husband, Daniel, has a consortium claim. Morrow's health plan is an ERISA plan with a reimbursement claim. No complaint has been filed. Morrow's lawyers are Hart & Lin LLP. Westmark's adjuster is Carla Benson.

Template 1: Demand decision worksheet

Purpose: decide whether a policy-limits demand fits the case, what law governs, and what must be gathered first. Owner: claimant's lead counsel, shared with the client. When to use: at intake and again before drafting.

Commentary. The worksheet forces the two questions that decide most later bad-faith cases: was liability reasonably clear, and did damages plainly exceed the limits? If either answer is no, the insurer has a defensible reason to decline, and courts in demanding jurisdictions will say so (Pavia v. State Farm Mutual Automobile Insurance Co., 82 N.Y.2d 445 (1993)). The client-authority line matters because the client, not the lawyer, decides whether to settle (ABA Model Rule 1.2(a)); never send a demand the client would not accept. For valuation methods, see the Settlement Negotiation Toolkit: Case Valuation Worksheets, Concession Plans, and Offer Letters.

Template 2: Policy limits disclosure request

Purpose: confirm every policy and limit before demanding them. Owner: claimant's counsel. When to use: soon after retention.

[FIRM LETTERHEAD]
[DATE]
VIA EMAIL AND CERTIFIED MAIL
[ADJUSTER NAME], [INSURER]
[ADDRESS]

Re: Claimant: [CLAIMANT]; Your insured(s): [INSURED NAMES]
    Date of loss: [DATE]; Claim No.: [NUMBER]

Dear [ADJUSTER]:

We represent [CLAIMANT] and [DERIVATIVE CLAIMANT] in connection with the
[DESCRIBE OCCURRENCE] on [DATE] at [LOCATION].

Please provide, for every policy issued by [INSURER] or any affiliate that
may provide liability coverage to any person or entity for this occurrence,
including [NAMED INSURED], [DRIVER], and [VEHICLE OWNER/EMPLOYER]:

1. The declarations page(s) and policy number(s);
2. The per-person and per-occurrence bodily injury limits;
3. Any umbrella, excess, or other coverage of which you are aware;
4. Any self-insured retention or deductible; and
5. The name of each person or entity you consider an insured for this
   occurrence.

[FLORIDA: This request is made under Fla. Stat. § 627.4137.]
[GEORGIA: This request is made under O.C.G.A. § 33-3-28.]

Please also ask your insured(s) whether they have any other liability
insurance that may apply, and tell us their response.

Sincerely,
[ATTORNEY]

Commentary. A demand is effective only if it is within limits, and Texas's trigger requires a demand within the limits of coverage (American Physicians Insurance Exchange v. Garcia, 876 S.W.2d 842 (Tex. 1994)). An undisclosed umbrella turns a primary-limit demand into a demand for less than the available coverage, which changes the analysis for both insurers. Florida's Fla. Stat. § 627.4137 requires disclosure within 30 days of a proper written request, and the response must be a sworn statement, for each known policy including excess and umbrella coverage, of the insurer's name, each insured, the limits, any coverage defense, and a copy of the policy. Georgia's O.C.G.A. § 33-3-28 provides a similar mechanism. Once suit is filed in federal court, Fed. R. Civ. P. 26(a)(1)(A)(iv) requires initial disclosure of insurance agreements.

Template 3: Time-limited demand letter

Purpose: make a clear, complete, statutorily compliant offer to settle within limits. Owner: claimant's counsel. When to use: when the evaluation package is complete and the client has authorized the demand.

[FIRM LETTERHEAD]
[DATE]

TIME-LIMITED DEMAND [CALIFORNIA: PURSUANT TO CODE OF CIVIL PROCEDURE
SECTION 999.1] [GEORGIA: OFFER TO SETTLE TORT CLAIMS PURSUANT TO O.C.G.A.
§ 9-11-67.1] [MISSOURI: TIME-LIMITED DEMAND PURSUANT TO RSMo § 537.058]

DELIVERED BY [EMAIL TO DESIGNATED ADDRESS: ____] AND [CERTIFIED MAIL,
RETURN RECEIPT REQUESTED / STATUTORY OVERNIGHT DELIVERY]

[INSURER], Attn: [ADJUSTER / DESIGNATED DEMAND ADDRESS]
Re: Claimants: [CLAIMANT], [DERIVATIVE CLAIMANT]
    Insured(s): [ALL INSUREDS]
    Policy No. [___]; Claim No. [___]
    Date of loss: [DATE]; Location: [LOCATION]

1. OFFER. [CLAIMANTS] offer to settle all of their claims against [ALL
   INSUREDS] arising from the [DATE] occurrence for $[AMOUNT], which is
   the bodily injury limit of Policy No. [___] [and the limits of all other
   policies identified in your letter of [DATE]]. This is a clear and
   unequivocal offer to settle all claims within policy limits, including
   the satisfaction of all liens.

2. RELEASE. On timely acceptance and payment, [CLAIMANTS] will execute the
   enclosed release, which completely releases [ALL INSUREDS] from all
   present and future liability for the occurrence.

3. LIENS. [CLAIMANTS] will satisfy all liens and reimbursement claims from
   the settlement proceeds, including [LIST: ERISA plan, hospital lien,
   Medicare / Medicaid if any], and will indemnify and hold harmless the
   releasees and [INSURER] against any such lien or claim.

4. INJURIES. [CLAIMANT] sustained the following known injuries: [LIST].
   [DERIVATIVE CLAIMANT] asserts [loss of consortium / wrongful death].

5. PROOF. Enclosed and indexed at Exhibit A are: [police report;
   photographs; witness statements; complete medical records from (list
   providers); itemized bills totaling $____; wage documentation; surgeon's
   report on future care].

6. TIME FOR ACCEPTANCE. This offer may be accepted only by written
   acceptance of its material terms in their entirety, delivered to the
   undersigned at [EMAIL] no later than [TIME, TIME ZONE] on [DATE], which
   is [30/__] days after [transmission / receipt] of this letter.

7. PAYMENT. Payment of $[AMOUNT] shall be made by check payable to
   "[CLAIMANTS] and [FIRM], their attorneys" [or by wire to (firm trust
   account)] delivered within [21/30] days after written acceptance.
   [GEORGIA: delivered on or before (DATE), not less than 40 days after
   your receipt of this offer.] [MISSOURI: delivered within (__) days,
   not fewer than 10, after you receive the executed release.]
   [OPTIONAL: Upon request, we will accept separate payment of an agreed
   lien amount directly to the lienholder.]

8. OTHER INSURANCE. [OPTIONAL: Within [__] days after acceptance, please
   provide a statement signed by [NAMED INSURED] identifying any other
   liability insurance that may apply, or stating that there is none.]
   [GEORGIA: By (DATE), not less than 40 days after your receipt of this
   offer, provide a statement under oath on whether all liability and
   casualty insurance you issued that provides or may provide coverage
   for this claim has been disclosed to us.]

9. QUESTIONS. If you need clarification or additional information to
   evaluate this offer, please contact me promptly. We will respond within
   [3] business days.

10. EXPIRATION. If this offer is not accepted as stated, it will be
    withdrawn, and [CLAIMANTS] will pursue [ALL INSUREDS] for the full value
    of their claims, which we believe substantially exceeds the available
    limits.

Sincerely,
[ATTORNEY]
cc: [DEFENSE COUNSEL / INSURED'S PERSONAL COUNSEL, if known]
Enclosures: Exhibit A (index and records); Exhibit B (release)

California rider. The demand must be in writing, labeled as a time-limited demand or reference § 999.1, and contain the material terms in Cal. Civ. Proc. Code § 999.1: an acceptance period of not fewer than 30 days from transmission by email, fax, or certified mail (33 days by regular mail); a clear and unequivocal offer to settle all claims within limits including the satisfaction of all liens; a complete release of the insurer's insureds from all present and future liability for the occurrence; the date and location of loss; the claim number if known; a description of all known injuries; and reasonable proof. Send it to the insurer's address designated with the Department of Insurance or to the assigned representative (Cal. Civ. Proc. Code § 999.2). The chapter applies to pre-complaint demands on auto, motor vehicle, homeowner, and commercial premises liability policies, by represented claimants, transmitted on or after January 1, 2023 (Cal. Civ. Proc. Code § 999.5; Cal. Civ. Proc. Code § 999.4). A demand that does not substantially comply is not a reasonable offer to settle for purposes of a later suit seeking extracontractual damages (Cal. Civ. Proc. Code § 999.4).

Georgia rider. O.C.G.A. § 9-11-67.1 was rewritten in 2024 (Senate Bill 83, signed April 22, 2024), and by its terms the new version applies to offers made on or after that date, other than product liability claims. Every offer to settle a motor vehicle injury or death claim is an offer to enter a bilateral contract. For an attorney-prepared offer made before the defendants answer, include the seven terms the statute declares "the only material terms": (A) an acceptance date not less than 30 days from receipt; (B) the amount; (C) the parties to be released; (D) whether each release is full or limited, with an itemization of what the claimant will provide each releasee; (E) the claims to be released; (F) a payment date not less than 40 days from receipt; and (G) unless you waive it, a requirement that the recipient provide, by a date not less than 40 days from receipt, a sworn statement on whether all of its applicable coverage has been disclosed. Enclose the medical or other records needed to evaluate the claim. Send by certified mail or statutory overnight delivery, return receipt requested, reference the Code section, and state where a written acceptance may be sent. Any term outside the list is immaterial, so put lien and indemnity provisions into the release itemization under (D) rather than adding conditions. Under the 2013 version, the Georgia Supreme Court held that an offeror could condition acceptance on timely payment (Grange Mutual Casualty Co. v. Woodard, 300 Ga. 848 (2017)); the payment date is now a statutory term with a 40-day floor. Note also the insurer's safe harbor: no failure-to-settle action lies if, by the dates in the offer, the recipient accepts the material terms other than amount in writing, provides any required sworn statement, and pays the lesser of the demand or its bodily injury limits.

Missouri rider. For demands governed by Mo. Rev. Stat. § 537.058, send the letter to the liability insurer by certified mail, return receipt requested, reference the section, and keep the offer open at least 90 days from the insurer's receipt. State the amount or request the limits, the date and location of loss, the claim number if known, all known injuries, the parties and claims to be released, and an unconditional release of the insureds. Enclose a list of the claimant's treating providers with HIPAA-compliant authorizations, and a list of employers with authorizations if lost earnings are claimed. Any payment deadline must be at least 10 days after the insurer receives the executed release. A noncompliant demand is not a reasonable opportunity to settle and is inadmissible in a later suit for extracontractual damages, and the section does not apply to demands issued within 90 days of a jury trial in a filed case.

Florida rider. Florida has no demand-content statute, but its 2023 amendments to Fla. Stat. § 624.155 reshape the response window. Under section 624.155(4) and (5), which apply to bad-faith actions filed after March 24, 2023, an insurer that tenders the lesser of its limits or the amount demanded within 90 days after receiving actual notice of a claim accompanied by sufficient evidence to support the amount of the claim is protected from a bad-faith action, and claimants and their representatives owe a duty of good faith in furnishing information, making demands, setting deadlines, and attempting to settle, and the trier of fact may reduce damages for a failure. Practically, a Florida demand should (a) state when the claimant believes the insurer received sufficient evidence, (b) enclose that evidence, and (c) avoid deadlines and conditions that a court could view as inconsistent with the claimant's good-faith duty. Florida courts treat an offer requiring later court approval as valid (Berges v. Infinity Insurance Co., 896 So. 2d 665 (Fla. 2004)).

Commentary. Each numbered paragraph answers one of the questions courts ask. Paragraph 1 places the offer within limits (American Physicians Insurance Exchange v. Garcia, 876 S.W.2d 842 (Tex. 1994)). Paragraph 2 satisfies Texas's requirement that a demand propose to release the insured fully (Texas Farmers Insurance Co. v. Soriano, 881 S.W.2d 312 (Tex. 1994)). Paragraph 3 addresses Medicare's right to recover conditional payments from a liability insurer that has already paid (42 U.S.C. § 1395y(b); 42 C.F.R. part 411) and the ERISA plan's reimbursement rights (Sereboff v. Mid Atlantic Medical Services, Inc., 547 U.S. 356 (2006); US Airways, Inc. v. McCutchen, 569 U.S. 88 (2013)). Paragraph 5 supplies the record that, in Southern General Insurance Co. v. Holt, 262 Ga. 267 (1992), left the insurer without an excuse. Paragraph 9 invites questions, which helps show the demand was a real opportunity. Keep conditions few: in Cotton States Mutual Insurance Co. v. Brightman, 276 Ga. 683 (2003), a demand that also sought another insurer's limits did not excuse the first insurer's failure to tender, but conditions that require the impossible give insurers a defense and give courts a reason to call the demand a setup.

Template 4: Release outline

Purpose: show the insurer exactly what it is buying. Owner: claimant's counsel. When to use: enclose with the demand.

Commentary. The release must match the demand. Terms not disclosed in the demand (confidentiality, broad indemnities beyond liens, releases of nonparties) invite the argument that the insurer was asked to accept terms it never saw. For release drafting generally, see Drafting a Settlement Agreement and Release: A Practical Guide and the Settlement Agreement Checklist: A Practical Checklist.

Template 5: Demand intake log and acknowledgment letter

Purpose: fix the deadline in the file and in writing on day one. Owner: insurer (adjuster and supervisor). When to use: the day the demand arrives.

[INSURER LETTERHEAD]
[DATE]
VIA EMAIL
[CLAIMANT'S COUNSEL]

Re: Time-limited demand dated [DATE]; Claim No. [___]

Dear [COUNSEL]:

We received your time-limited demand on [DATE] by [METHOD]. We understand
the deadline for written acceptance to be [TIME, TIME ZONE] on [DATE]. If
you calculate it differently, please let me know.

We are evaluating the demand and will respond before the deadline. If we
need clarification or additional information, we will contact you promptly.

This letter is an acknowledgment only and is not a rejection of, or
counteroffer to, your demand.

Sincerely,
[ADJUSTER]

Commentary. The acknowledgment does three things: it shows the insurer received and calendared the demand, it surfaces any dispute about the deadline while there is time to fix it, and it disclaims any rejection or counteroffer. In Pavia v. State Farm Mutual Automobile Insurance Co., 82 N.Y.2d 445 (1993), months passed before the insurer's claims committee met; New York's gross-disregard standard saved the insurer, but in most states a delay like that is a jury question.

Template 6: Excess exposure letter to insured

Purpose: tell the insured, in plain language, about the demand, the risk, and the insured's options. Owner: insurer. When to use: within one to three business days of receipt, and again whenever the risk changes.

[INSURER LETTERHEAD]
[DATE]
VIA EMAIL AND FIRST-CLASS MAIL
[INSURED NAME(S)]

Re: Claim by [CLAIMANT]; Date of loss [DATE]; Claim No. [___]
    IMPORTANT: SETTLEMENT DEMAND AND POSSIBLE PERSONAL EXPOSURE

Dear [INSURED]:

On [DATE], we received a written offer from [CLAIMANT]'s attorney to settle
all claims against you for $[AMOUNT], which is the limit of your policy.
A copy is enclosed. The offer expires at [TIME] on [DATE].

The claim may be worth more than your policy limit of $[LIMIT]. If the
claim is not settled and a judgment is entered for more than that limit,
you could be personally responsible for the amount above the limit.

We are evaluating the offer now and will tell you our decision before it
expires.

You have the right to hire your own attorney, at your own expense, to
advise you about your personal exposure. We recommend that you consider
doing so.

Please tell us as soon as possible:
1. Whether you have any other insurance (including an umbrella policy, a
   business policy, or coverage through an employer) that may apply;
2. [IF REQUESTED BY CLAIMANT: whether you will provide a statement about
   your assets / other insurance, which the claimant's attorney has
   requested]; and
3. Whether you want us to accept the offer, or have any information that
   would help us evaluate it.

[IF APPLICABLE: If the claimant later makes an offer above your policy
limit, we will tell you, so you can decide whether to contribute.]

Please call me at [PHONE] with any questions.

Sincerely,
[ADJUSTER]
Enclosure: Settlement demand dated [DATE]

Commentary. Florida's duties to the insured include advising of settlement opportunities, warning of the possibility of an excess judgment, and advising the insured of steps to avoid it (Boston Old Colony Insurance Co. v. Gutierrez, 386 So. 2d 783 (Fla. 1980)); Harvey v. GEICO General Insurance Co., 259 So. 3d 1 (Fla. 2018) adds that these duties are "not a mere checklist" and that failure to relay a claimant's request for the insured's statement and asset information can support a verdict. Nevada requires insurers to inform insureds adequately of settlement offers, including offers above limits (Allstate Insurance Co. v. Miller, 125 Nev. 300 (2009)). Send the letter in the insured's language, and send a follow-up if the insured does not respond. In Ilias v. USAA General Indemnity Co., 61 F.4th 1338 (11th Cir. 2023), the insurer sent an early excess letter asking about other coverage, but whether it then did enough to confirm the absence of other coverage for the claimant's lawyer was for a jury.

Template 7: Request for clarification, information, or extension

Purpose: obtain what the insurer genuinely needs without rejecting the demand. Owner: insurer. When to use: in the first third of the response window, and never on the last day.

[INSURER LETTERHEAD]
[DATE]
VIA EMAIL
[CLAIMANT'S COUNSEL]

Re: Time-limited demand dated [DATE]; Claim No. [___]

Dear [COUNSEL]:

We are continuing to evaluate your demand. To complete our evaluation,
we request the following:

1. [SPECIFIC ITEM, e.g., "The operative report for the [DATE] surgery, which
   is referenced in Dr. [___]'s note of [DATE] but is not in Exhibit A."]
2. [SPECIFIC ITEM, e.g., "Confirmation of the amount of the ERISA plan's
   reimbursement claim and the plan's contact information."]
3. [SPECIFIC ITEM, e.g., "Confirmation that Daniel Morrow will sign the
   release."]

[EXTENSION, IF NEEDED:] Because [ITEM 1] is needed to evaluate the claimed
future surgery, we request a [10]-day extension of the deadline, to [DATE],
or [__] days after we receive the requested items, whichever is earlier.

This letter seeks clarification and additional information and requests
an extension due to the need for further information. It is not a
rejection of, or counteroffer to, your demand. [CALIFORNIA: See Code Civ.
Proc. § 999.3(b).]

Sincerely,
[ADJUSTER]

Commentary. California provides that a request "to seek clarification or additional information or a request for an extension due to the need for further information or investigation," made during the acceptance period, is not "in and of itself" a counteroffer or rejection (Cal. Civ. Proc. Code § 999.3). Georgia's statute similarly permits a request for reasonable clarification without converting an acceptance into a counteroffer (Grange Mutual Casualty Co. v. Woodard, 300 Ga. 848 (2017) discusses the provision). Elsewhere, the disclaimer still helps, but phrase every request so it cannot be read as a new term. Ask only for what you do not have. In Southern General Insurance Co. v. Holt, 262 Ga. 267 (1992), the insurer "did not seek more time to evaluate the claim or respond to the offer before it expired," and the jury's bad-faith finding was affirmed. Keep working the claim while waiting; an extension request is not a stop-work order.

Template 8: Acceptance or limits tender letter

Purpose: accept the demand unconditionally, or tender the limits with only the conditions needed to cure a genuine defect. Owner: insurer, with authority holder approval. When to use: before the internal deadline.

[INSURER LETTERHEAD]
[DATE]
VIA EMAIL [AND OVERNIGHT DELIVERY IF THE DEMAND REQUIRES]
[CLAIMANT'S COUNSEL]

Re: Time-limited demand dated [DATE]; Claim No. [___]

Dear [COUNSEL]:

OPTION A (ACCEPTANCE):
On behalf of our insureds, [ALL INSUREDS], [INSURER] accepts the material
terms of your time-limited demand dated [DATE] in their entirety.
Payment of $[AMOUNT], payable as stated in paragraph [7] of your demand,
will be delivered no later than [DATE]. [We will deliver the statement
requested in paragraph [8] by [DATE].] Please return the executed release
in the form enclosed with your demand.

[OPTIONAL, ONLY IF CONSISTENT WITH THE DEMAND: As you offered in paragraph
[7], please tell us whether you would like the agreed ERISA reimbursement
amount paid directly to the plan from the settlement amount.]

OPTION B (TENDER WITH CONDITIONS, WHERE THE DEMAND HAS A DEFECT):
[INSURER] tenders its full policy limit of $[AMOUNT] to settle all claims
of [CLAIMANTS] against [ALL INSUREDS]. Your demand [does not include a
release of [INSURED] / does not address the [LIENHOLDER] claim of $____].
To protect our insureds, the tender is conditioned only on: (1) a release
of all of our insureds, including [___]; and (2) [satisfaction of the
[LIENHOLDER] claim from the proceeds, with indemnity / a two-party check
including [LIENHOLDER]]. We are not requesting any other change to your
terms. Please let us know if you will accept these terms by [DATE].

Sincerely,
[ADJUSTER]

Commentary. Acceptance must be of the material terms "in their entirety" in California (Cal. Civ. Proc. Code § 999.3), and in every state a conditional acceptance is a counteroffer. Match every condition exactly: in Grange Mutual Casualty Co. v. Woodard, 300 Ga. 848 (2017), a payment condition under Georgia's 2013 statute meant that a late check defeated settlement. Use Option B only when the demand itself is defective, for example where it omits an insured (Texas Farmers Insurance Co. v. Soriano, 881 S.W.2d 312 (Tex. 1994)) or ignores a known lien that could expose the insurer to double payment (42 U.S.C. § 1395y(b)). Florida insurers should note the 90-day safe harbor in Fla. Stat. § 624.155 for tendering the lesser of limits or the amount demanded after notice with sufficient evidence (Fla. Stat. § 624.155(4)). A timely, full-limit tender with only curative conditions is the strongest position an insurer can occupy; in Graciano v. Mercury General Corp., 231 Cal. App. 4th 414 (2014), a prompt full-limits offer defeated a bad-faith verdict as a matter of law.

Template 9: Written explanation of non-acceptance

Purpose: explain, before the deadline, why the insurer is not accepting. Owner: insurer, reviewed by coverage or claims counsel. When to use: only after the steps in Templates 5 through 8 have been considered, and before expiration.

[INSURER LETTERHEAD]
[DATE]
VIA EMAIL
[CLAIMANT'S COUNSEL]

Re: Time-limited demand dated [DATE]; Claim No. [___]

Dear [COUNSEL]:

[INSURER] has carefully evaluated your demand and is not able to accept it
as written, for the following reasons:

1. [SPECIFIC REASON WITH EVIDENCE, e.g., "The demand releases Victor Ruiz
   but not Delgado Plumbing, Inc., which is a named insured and a defendant
   in any suit arising from this occurrence."]
2. [SPECIFIC REASON, e.g., "Two eyewitness statements and the intersection
   video, enclosed, show the claimant's vehicle entering on a red signal.
   Liability is disputed."]

We remain willing to discuss resolution. [IF APPLICABLE: We would accept a
demand that [cures the defect], and we invite you to make one.] [IF
APPLICABLE: We offer $[AMOUNT] and explain that figure as follows: ___.]

[CALIFORNIA: This notification is provided under Code Civ. Proc.
§ 999.3(c).]

Sincerely,
[ADJUSTER]

Commentary. California requires an insurer that does not accept a time-limited demand "for any reason" to notify the claimant in writing of its decision and the basis for it before the demand expires, including any agreed extension, and that notice "shall be relevant" in any later suit seeking extracontractual damages (Cal. Civ. Proc. Code § 999.3). Write it as though a jury will read it, because one may. A reason that is specific, supported, and curable (an omitted insured, a genuine liability dispute with evidence) is persuasive. A reason that is generic ("causation questions") is an exhibit for the other side. An unreasonable refusal is what makes bad faith; the failure to accept, by itself, is not (Pinto v. Farmers Insurance Exchange, 61 Cal. App. 5th 676 (2021)).

Template 10: Defense counsel report and personal counsel advisory letter

Purpose: give the insurer a candid evaluation and give the insured the information needed to protect itself. Owner: defense counsel retained by the insurer for the insured. When to use: promptly after learning of any demand within or above limits.

PART A: REPORT TO INSURER (PRIVILEGED AND CONFIDENTIAL)
Re: [CASE]; Demand of $[AMOUNT] expiring [DATE]
1. Demand summary and deadline.
2. Liability evaluation: [facts, witnesses, comparative fault, defenses].
3. Damages evaluation: [specials, future care, noneconomic range, venue].
4. Probable verdict range and probability of an adverse liability finding.
5. Recommendation: [accept / request specific information / other], with
   reasons.
6. Insured's position: [insured has asked that the claim be settled within
   limits / insured's view].

PART B: LETTER TO INSURED
[DATE]
[INSURED]
Re: [CASE]; Settlement demand

Dear [INSURED]:

As you know, [INSURER] retained me to defend you in this matter. On [DATE],
the plaintiff offered to settle all claims against you for $[AMOUNT], your
policy limit. The offer expires on [DATE]. A copy is enclosed.

In my opinion, a verdict could exceed your policy limit. If that happened,
you could be personally responsible for the excess. I have given [INSURER]
my evaluation [and recommended that it accept the offer].

Because your personal assets may be at risk, and because your interests and
[INSURER]'s interests may differ on this decision, I recommend that you
consult a lawyer of your own choosing, at your own expense, about your
personal exposure and your rights against [INSURER]. I cannot advise you
about any dispute between you and [INSURER].

If you want [INSURER] to accept the offer, I recommend that you or your
personal lawyer tell [INSURER] so in writing. I will also tell [INSURER]
your position.

Sincerely,
[DEFENSE COUNSEL]

Commentary. In Texas, the lawyer the insurer hires represents the insured, not the insurer (American Physicians Insurance Exchange v. Garcia, 876 S.W.2d 842 (Tex. 1994)). Elsewhere, the lawyer may represent both, but the duties of loyalty and communication to the insured are not diminished (ABA Model Rules 1.4, 1.7, and 1.8(f)). ABA Formal Opinion 96-403 addresses the defense lawyer's obligations when the insured and insurer differ about a settlement within limits. Where a reservation of rights creates a conflict, California requires the insurer to provide independent counsel (Cal. Civ. Code § 2860, codifying San Diego Navy Federal Credit Union v. Cumis Insurance Society, Inc., 162 Cal. App. 3d 358 (1984)). Assume Part A will be produced in any bad-faith case. See also Legal Ethics in Practice: Conflicts, Confidentiality, Fees, and the Duty of Technological Competence.

Template 11: Insured's letter demanding settlement within limits

Purpose: put the insured's position on the record. Owner: the insured or its personal counsel. When to use: as soon as the insured learns of a within-limits demand.

[PERSONAL COUNSEL LETTERHEAD]
[DATE]
VIA EMAIL AND CERTIFIED MAIL
[INSURER CLAIMS MANAGER]

Re: Your insured: [INSURED]; Claimant: [CLAIMANT]; Claim No. [___]
    Demand of $[AMOUNT] expiring [DATE]

Dear [MANAGER]:

We represent [INSURED] personally. [INSURED] has received a copy of the
claimant's offer to settle all claims within your policy limit.

Liability is [clear / reasonably clear], and the claimant's documented
damages of $[___] and future care needs make a verdict above the limit
likely. [INSURED] asks that [INSURER] accept the offer before it expires.

[INSURED] will cooperate fully. [Enclosed is [INSURED]'s statement regarding
other insurance / assets, which the claimant requested.] [INSURED] has no
other liability insurance that applies.

If [INSURER] does not accept the offer and a judgment is entered against
[INSURED] for more than the policy limit, [INSURED] will hold [INSURER]
responsible for the entire judgment, interest, and all resulting damages.

Please send us a copy of [INSURER]'s response to the claimant.

Sincerely,
[PERSONAL COUNSEL]

Commentary. The letter does not create the insurer's duty, which exists anyway, but it eliminates any argument that the insured preferred trial, and it documents the insured's cooperation. Cooperation matters: in Harvey v. GEICO General Insurance Co., 259 So. 3d 1 (Fla. 2018), the claimant's request for the insured's statement about assets and other coverage became the center of the case. In Texas, an insured who contributes personal funds to a settlement the insurer would not fully fund may have a contract indemnity claim but no Stowers claim without an excess judgment (In re Farmers Texas County Mutual Insurance Co., 621 S.W.3d 261 (Tex. 2021)).

Template 12: Global settlement invitation and interpleader decision memo

Purpose: allocate inadequate limits among multiple claimants while protecting the insured. Owner: insurer and its counsel. When to use: when an occurrence produces claims that together exceed the per-accident limit.

PART A: INVITATION TO ALL CLAIMANTS' COUNSEL
[DATE]
Re: [OCCURRENCE] on [DATE]; Insured [___]; Policy limits $[PER PERSON] /
    $[PER ACCIDENT]

[INSURER] has determined that its insured's policy [provides coverage /
provides coverage subject to the reservation in our letter of [DATE]] and
that the claims of the [NUMBER] injured persons may together exceed the
$[PER ACCIDENT] limit. To protect our insured and treat all claimants
fairly, we propose a joint settlement conference [with mediator ___] on
[DATE, within __ days], at which [INSURER] will make its full
$[PER ACCIDENT] limit available for allocation among all claimants. Please
bring documentation of your client's injuries and damages. We ask that any
time-limited demand be extended to permit this conference. This letter is
not a rejection of any pending demand.

Commentary. Courts generally give insurers room to pursue an orderly global settlement, provided they move early and communicate with everyone. In First Acceptance Insurance Co. of Georgia v. Hughes, 305 Ga. 489 (2019), the insurer retained counsel within weeks to pursue a global settlement of five claims, and the Georgia Supreme Court held it did not act unreasonably in failing to accept a no-deadline offer before it was withdrawn. Claimants' counsel representing more than one injured person must comply with ABA Model Rule 1.8(g) on aggregate settlements. For interpleader procedure, see Adding Parties to a Federal Lawsuit: Joinder, Intervention, Impleader, and Interpleader.

Template 13: Assignment, covenant not to execute, and Coblentz-type agreement outline

Purpose: protect the insured and transfer its claims against the insurer after the insurer's refusal to settle or defend. Owner: claimant's counsel and the insured's personal counsel (never insurer-retained defense counsel). When to use: after an excess verdict, or before trial where state law permits and the insurer has refused to defend or reserved rights.

Commentary. A post-verdict assignment for a covenant not to execute is routine: Pavia v. State Farm Mutual Automobile Insurance Co., 82 N.Y.2d 445 (1993) and Southern General Insurance Co. v. Holt, 262 Ga. 267 (1992) both arose that way (and in Southern General Insurance Co. v. Holt, 262 Ga. 267 (1992), the insured who assigned forfeited her own recovery on the assigned claim). Pre-trial consent judgments are another matter. Arizona permits them when the insurer refuses to defend (Damron v. Sims, 105 Ariz. 151 (1969)) or defends under a reservation of rights (United Services Automobile Ass'n v. Morris, 154 Ariz. 113 (1987)); Minnesota when the insurer contests coverage (Miller v. Shugart, 316 N.W.2d 729 (Minn. 1982)); Washington treats a reasonable covenant judgment as the presumptive measure of harm (Besel v. Viking Insurance Co. of Wisconsin, 146 Wash. 2d 730 (2002)); and the Fifth Circuit, applying Florida law, held an insurer that refused to defend bound by a reasonable, non-collusive consent judgment (Coblentz v. American Surety Co. of New York, 416 F.2d 1059 (5th Cir. 1969)). California will not bind a defending insurer to a stipulated judgment it did not join (Hamilton v. Maryland Casualty Co., 27 Cal. 4th 718 (2002)), and Texas invalidates pre-trial assignments where the insurer defended and either accepted coverage or sought in good faith to adjudicate it (State Farm Fire & Casualty Co. v. Gandy, 925 S.W.2d 696 (Tex. 1996)), and will not bind an insurer to a judgment that did not result from a fully adversarial trial (Great American Insurance Co. v. Hamel, 525 S.W.3d 655 (Tex. 2017)). Defense counsel retained by the insurer should not negotiate these agreements; the insured needs its own lawyer. For consent judgment and default mechanics, see Default and Default Judgment in Federal Court: Rules 55 and 60 and the Cost of Ignoring a Lawsuit and Settlement Agreements, Releases, and Rule 68: Ending a Case on Terms That Hold.

Template 14: Deadline tracker

Purpose: keep every date in one place for every participant. Owner: each side keeps its own. When to use: from the first limits request until payment or judgment.

Running example, completed. Hart & Lin sent Westmark a labeled demand by email to its designated address and by certified mail, releasing Delgado Plumbing and Victor Ruiz, including Daniel Morrow's consortium claim, addressing the ERISA plan's claim, enclosing complete records, and allowing 30 days from email transmission. Westmark's adjuster logged it the same day (Template 5), sent Delgado and Ruiz an excess letter the next day (Template 6), and on day 9 asked for the surgeon's future-care estimate and the ERISA plan's claim amount (Template 7). Hart & Lin answered on day 12. Delgado's personal counsel wrote on day 14 urging acceptance (Template 11). Westmark accepted the material terms in their entirety on day 21 (Template 8, Option A) and paid on day 35. Every document in the file shows what a court would look for, and no one ever needed Templates 9 or 13.

FAQ

Should the demand letter cite case law? Usually no. The letter's job is to be accepted, not to argue. A short reference to the governing statute (and, in Texas, to the Stowers trigger) is enough. Save the case law for the bad-faith complaint, if it comes to that.

Can an insurer use its own release form when accepting? Only if it matches the demand's material terms. If the demand enclosed a release, accept that release. Proposing a different form can turn an acceptance into a counteroffer.

What if the claimant ignores Template 7? Document it, follow up in writing, and continue evaluating. If the deadline approaches without the information, decide on the record you have, and consider Option B of Template 8 or a written explanation under Template 9. Florida's 2023 amendments make the claimant's good faith in furnishing information relevant to damages (Fla. Stat. § 624.155(5)(b)).

Should the excess letter tell the insured the insurer's evaluation? Many insurers do not, but the insured should learn enough to understand the risk and decide whether to hire counsel. Defense counsel's letter (Template 10) is the better place for a candid evaluation.

Who signs Template 13? The claimant, the insured, and their respective lawyers. Insurer-retained defense counsel should not negotiate or sign it.

Practical takeaways

• Draft the demand to be accepted: within limits, a full release, liens addressed, complete proof, a statutory-length deadline, and few conditions.
• Acknowledge, calendar, and notify the insured within days of receipt.
• Ask specific questions early, label them as not counteroffers, and keep working.
• Accept the material terms exactly, tender with only curative conditions, or explain non-acceptance in writing before the deadline.
• Protect the insured with candid defense reports, personal counsel, and a written demand to settle.
• After an excess verdict, use post-verdict assignments; use pre-trial consent judgments only where state law supports them.

This document is general information, not legal advice for any particular situation; the templates must be adapted to the governing state's statutes and case law, which change frequently.

Related Documents

Related Articles

• Policy-Limits Demands and Insurer Bad Faith: How Time-Limited Demands Set Up Excess Verdicts: the doctrine behind each template.
• Car Accident and Personal Injury Claims: From the Crash to the Check: the claim that generates the demand.
• First-Party Insurance Claims and Bad Faith: Coverage, Duties, and Remedies: bad faith when the insured is the claimant.

Related Guides

• Making or Responding to a Time-Limited Policy-Limits Demand: A Practical Guide: when and how each template is used.
• Drafting a Settlement Agreement and Release: A Practical Guide: the release behind Template 4.
• Handling a Personal Injury Claim Without a Lawyer: A Practical Guide: the unrepresented claimant's perspective.

Related Checklists

• Policy-Limits Demand Checklist: A Practical Checklist: the tasks behind these templates, by phase.
• Insurance Claim and Bad Faith Checklist: A Practical Checklist: claim handling more broadly.
• Settlement Agreement Checklist: A Practical Checklist: closing documents after acceptance.

Related Toolkits

• Personal Injury Claim Toolkit: Liability, Damages, Liens, and Settlement: demand packages and lien reduction letters.
• Settlement Negotiation Toolkit: Case Valuation Worksheets, Concession Plans, and Offer Letters: valuation worksheets for Template 1.
• Insurance Coverage Toolkit: Placing, Tendering, and Litigating Claims: reservation-of-rights and tender correspondence.
• Settlement Toolkit: Term Sheets, Releases, Offers of Judgment, and Enforcement: enforcing an accepted settlement.