A Guide to Subrogation Pre-Suit Demand Packages

Purpose

A pre-suit demand package puts the tortfeasor and/or their carrier on notice of a subrogation claim. It serves as the first formal step in the process for an insurance carrier to inform the at-fault party of the claim and offers an opportunity to settle the claim without litigation. Moreover, it signifies the carrier’s readiness to proceed with litigation if there is no response to the demand or if the claim does not resolve.

Contents

The contents of a pre-suit demand package usually include a pre-suit demand letter and an accompanying damage package. Let’s take a look at each component in more detail.

1. 1. “Notice of Claim,” “Demand,” or “Pre-Suit” letter should include the following information:
      • Preliminary information: date of loss, loss location, claim number, insured’s name and insurer’s name.
        • If the demand letter is addressed to the tortfeasor’s carrier, include the tortfeasor’s name and
          their claim number and/or policy number so the adverse carrier can review the claim more
          efficiently.
      • Basis to pursue the at-fault party: Important identifying facts surrounding the loss and reasoning for
        pursuing the tortfeasor. Some examples include:
        • Automobile incident: Be sure to include the vehicle year, make, model and VIN so there is no
          confusion that the tortfeasor owned and/or operated the vehicle that caused the damage to your
          insured’s vehicle and/or property.
        • Product liability: Be sure to include identifying information about the product that is
          defective, for example, the model and serial number of the product.
      • Amount of damages that are being sought: this should include the deductible that is being pursued on
        behalf of the client insurance carrier.
      • Prejudgment interest – if you do not ask, you do not get!
        • Look into whether the subrogating insurer is entitled to prejudgment interest in the state where
          the loss occurred. If the insurance carrier is entitled to prejudgment interest in the specific
          jurisdiction where the loss occurred, this, at the very least, provides a higher starting number
          when discussing settlement negotiations. At the most, the insurance carrier may recover more
          than they paid out, which makes for a very happy subrogating insurance carrier!
      • Deadline for a response: Usually a pre-suit demand package provides a thirty-day deadline to respond and
        highlights that if no response is received within that time frame, litigation will be initiated. This
        puts pressure on the tortfeasor and/or their carrier to investigate the claim immediately and to timely
        respond to the demand.
      • Specific requests or notifications of examinations may be included in the demand letter.
        • A demand for preservation of evidence can be included in the initial demand package if the
          tortfeasor is in possession of any crucial evidence that may be the subject of potential
          litigation.
        • A notification of a site examination, joint destructive examination, or removal of the evidence
          may also be presented in the initial demand letter. This allows the claim to move faster without
          the need to wait for the deadline for the initial demand letter to lapse.
      • Delivery of demand letter: Another consideration when sending out a demand letter is proof of delivery,
        such as sending out the letter via certified mail or requesting a delivery/read receipt if the letter is
        sent out via e-mail. This is particularly helpful when the demand letter is a “condition precedent” to
        filing suit and when the case is up against an approaching statute of limitations deadline and to avoid
        any dispute that the demand letter was delivered and received.

1. Damage Package: A damage package should at minimum include proof of payment/copies of check and supporting
   documentation for each payment made.
   • Proof of payments made by the insurance carrier;
   • Supporting documentation for each of the payments made;
   • Photographs of the damage;
   • Police report/fire report (if favorable);
   • Expert report (if favorable);
   • Any other documentation that could help support your subrogation case, for instance, a repair receipt
     showing the negligent work performed by the tortfeasor.

Review State Requirements for Pre-Suit Demand Packages

The specific requirements for a pre-suit demand package can vary depending on the jurisdiction and the specific circumstances of the case, so it is crucial to review state law prior to sending out a demand letter.

Some states allow a request for insurance information from the tortfeasor. For instance, Florida Statutes, Section 627.4137, requires the disclosure of the following information within 30 days of the written request:

• The name of the insurer.
• The name of each insured.
• The limits of the liability coverage.
• A statement of any policy or coverage defense which such insurer reasonably believes is available to such insurer at the time of filing such statement.
• A copy of the policy.

This is useful to determine whether the client’s insured is an additional insured under the tortfeasor’s policy and establishing the tortfeasor’s policy limits.

Additionally, some states require a demand letter prior to filing suit depending on the type of loss. For instance, Georgia, Florida, and Idaho require a written notice of claim for a construction defect claim prior to commencing an action in litigation against a construction professional. It is therefore crucial that the pertinent state law is reviewed to determine how the notice of claim should be sent to the construction professional, the required contents for the notice of claim, and the deadlines associated with sending out and responding to a notice of claim.

It is also important to note that pre-suit requirements may vary depending on the tortfeasor you are pursuing. For instance, if you are pursuing a governmental entity there may be state specific requirements as to who you should send the notice of claim to and as to any notice deadlines.

Conclusion

A well-crafted pre-suit demand package can be a powerful tool in subrogation cases. It not only sets the stage for negotiations but can also expedite the settlement process and pave the way for a successful resolution in favor of your client.