What is a policy limits demand?
Where damages clearly exceed the available coverage, a demand for the policy limits gives the insurer the opportunity to protect its insured by paying everything available.
Why it's made. If the insurer refuses a reasonable limits demand and a judgment later exceeds the limits, the refusal can support a bad faith claim exposing the insurer to the excess. That's what makes low-limit cases with serious injuries worth pursuing.
What changed in 2023. The insurer now has a safe harbor if it tenders within 90 days of actual notice of a claim accompanied by sufficient evidence to support the amount. That phrase does real work — a demand unsupported by documentation may not start the clock meaningfully.
⭐ And claimants now owe a good faith duty. The law imposes on claimants and their representatives a duty to act in good faith in furnishing information, making demands, and setting deadlines — and a factfinder may consider a claimant's bad faith conduct in assessing damages.
That constrains the aggressive short-fuse demand strategy that used to drive these cases. Demands now need to be well-documented and reasonable in their terms.
A demand with complete documentation is worth more than a demand with a short deadline. ---
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