On January 1, 2023, a new California statute went into effect governing time-limited pre-suit settlement demands within the policy limits.  California Civil Procedure Code § 999 governs demands made under auto, homeowner, and commercial premises liability insurance policies covering claims for bodily injury or property damage.  The new statute sets a very specific list of boxes which must be ticked:

  • A time-limited demand is defined as one made BEFORE a suit or arbitration is filed;
  • The demand must be in writing and identified as a time limit demand;
  • It must allow 30 days to respond (or 33 if sent by mail);
  • It must state the date and location of the loss;
  • It must state the claim number, if known;
  • It must include a description of all known injuries sustained by the claimant;
  • It must contain a clear and unequivocal offer to settle all claims for an amount within policy limits;
  • It must offer to satisfy all liens;
  • It must offer a complete release for all insureds from all present and future liability for the occurrence;
  • It must include reasonable proof to support the claim, which may include medical records or bills;
  • It must be sent directly to the insurer at its designated address for receiving such demands OR to the adjuster assigned to the handle the claim, if known;

A demand that fails to meet all of these requirements is presumed unreasonable in any resulting lawsuit for damages (but this does not apply to pro se claimants).

The insurer must respond by the deadline, whether it accepts the demand or not.  Failure to respond by the deadline will be considered relevant evidence in a resulting suit for extra-contractual damages.  The insurer may request clarification or additional information, and the claimant may not deem those requests a rejection in and of themselves.

Editor’s Note:  Although our Newsbrief focuses first and foremost on Texas insurance law, we know many of our clients handle claims and litigation in many states; therefore, we bring this important California development to your attention.  (The Texas equivalent is known as a Stowers demand after the 1929 case which first imposed liability on an insurer for negligently failing to accept a reasonable demand within policy limits.  In California, these will likely become known as 999 demands.  A key difference is that a Texas Stowers demand may be made either before or during litigation, while § 999 is specific to pre-suit demands.)  Many thanks to a good friend and client for the tip.

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