How to Write an Insurance Demand Letter: Template and Step-by-Step Guide

How to Write an Insurance Demand Letter: Template and Step-by-Step Guide

An insurance demand letter (also called an insurance appeal letter or formal demand) is one of the most powerful tools available when your insurer has denied or underpaid a legitimate claim. A well-structured demand letter forces your insurer to respond formally, creates a documented legal record, and significantly increases the probability of a favourable outcome.

This guide walks through exactly how to write an effective insurance demand letter, including what to include, what to avoid, and a template structure you can use.

What Is an Insurance Demand Letter?

An insurance demand letter is a formal written document sent to your insurer — or, for at-fault accident claims, to the other party's insurer — demanding a specific payment or coverage decision. It:

• States your position with supporting evidence
• Cites the applicable policy provisions, law, and facts
• Demands a specific remedy by a specific deadline
• Creates a formal, documented record of your claim

Demand letters are used in:

• Health insurance denials: Appealing a medical claim denial or requesting reversal of a coverage decision
• Auto and property insurance underpayments: Demanding fair settlement of property damage, personal injury, or loss-of-use claims
• Life and disability insurance denials: Formally contesting a benefit denial
• Travel and other specialty insurance: Disputing trip cancellation, lost baggage, or medical expense denials

What Makes an Effective Demand Letter?

The most effective demand letters share these qualities:

Specific, not general: Reference specific policy provisions, specific denial reasons, and specific evidence. Generic letters get generic responses.

Evidence-based: Every claim in your letter should be supported by attached documentation (medical records, repair estimates, photographs, physician letters, clinical guidelines).

Calm and professional: Emotional appeals weaken your legal position. Present facts, cite law, and request specific remedies.

Clear demand: State exactly what you are requesting — approval of the specific service, payment of the specific amount — and by when.

Structured: A well-organised letter is easier for the claims handler to process and harder to dismiss.

The Insurance Demand Letter Structure

Section 1: Your Information and the Insurer's Information

Include:

• Your full name, address, phone number, email
• Your policy number and claim reference number
• Your insurer's name, mailing address, and relevant department
• Date of the letter

Section 2: Subject Line

Clearly identify the letter as a formal appeal or demand:

• "Subject: Formal Appeal of Claim Denial — Policy No. [XXXXX], Claim No. [XXXXX]"
• "Subject: Formal Demand for Payment — Policy No. [XXXXX]"

Section 3: Opening Statement

State clearly and concisely what you are appealing and what you are requesting:

"I am writing to formally appeal [Insurer Name]'s denial of my claim for [service/treatment/loss], as set forth in your denial notice dated [DATE]. This letter sets out the grounds for my appeal and demands that [Insurer Name] approve [the claim/pay $X/reverse the denial]."

Section 4: Background / Facts

Chronologically set out the relevant facts:

• Date of loss, treatment, or service
• What service was provided, or what loss occurred
• When the claim was submitted and when you received the denial
• Brief summary of the denial reason

Keep this section factual and chronological. Avoid emotional language.

Section 5: Denial Is Incorrect — Your Arguments

This is the core of your demand letter. For each denial ground stated by the insurer, provide your counter-argument with supporting evidence.

For health insurance medical necessity denials:

"Your denial states that [treatment] is not medically necessary. This determination is incorrect for the following reasons:

1. My treating physician, Dr. [Name], has specifically certified that [treatment] is medically necessary for my diagnosis of [Condition]. Dr. [Name]'s letter, attached as Exhibit A, explains the clinical basis for this conclusion.
2. [Insurer Name]'s own clinical criteria for [treatment] state [quote criteria]. My condition meets each of these criteria as demonstrated by the attached medical records (Exhibit B).
3. Clinical guidelines issued by the [American College of X / relevant professional body] recommend [treatment] for patients with [Condition] presenting with [symptoms]. A copy of these guidelines is attached as Exhibit C."

For property insurance underpayment:

"Your settlement offer of $[X] is inadequate to cover the documented cost of repairing/replacing [item/property]. I obtained an independent estimate from [contractor/appraiser], which is attached as Exhibit A, totalling $[Y]. The difference between your offer and the documented repair cost is $[Z], which I am demanding be paid."

For policy exclusion disputes:

"Your denial cites the exclusion at Policy Section [X.X] as the basis for denial. However, this exclusion does not apply to my claim for the following reasons: [Explanation of why the exclusion doesn't apply, with reference to the specific exclusion language]."

Section 6: Legal and Regulatory Framework (Where Applicable)

Cite applicable law supporting your position:

• ACA: "Under the Affordable Care Act, [service] is an Essential Health Benefit that must be covered by my plan."
• MHPAEA: "Under the Mental Health Parity and Addiction Equity Act, [insurer] cannot apply more restrictive criteria to [mental health/SUD treatment] than to comparable medical/surgical treatment."
• NMHPA: "Under the Newborns' and Mothers' Health Protection Act, my plan must cover a minimum [48/96]-hour hospital stay following [vaginal/caesarean] delivery."
• State mandate: "Under [State] law [cite statute], [service] is a mandated benefit that [Insurer] is required to provide."
• ACA external review: "I am aware of my right to an external review by an Independent Review Organisation, which produces a decision binding on [Insurer]."

Section 7: Summary of Supporting Documents

List all documents attached to the letter:

"The following documents are attached in support of this appeal:

• Exhibit A: Letter from Dr. [Name] dated [Date]
• Exhibit B: Medical records from [Date] to [Date]
• Exhibit C: [Clinical guideline/professional body recommendation]
• Exhibit D: [Independent repair estimate / additional documentation]"

Section 8: Your Demand

State clearly and specifically what you are demanding:

"Based on the foregoing, I demand that [Insurer Name]:

1. Approve coverage for [service/treatment/loss] under Policy No. [XXXXX]; and
2. Provide written confirmation of this decision within [14/30] days of the date of this letter.

If I do not receive a satisfactory response within [X] days, I will pursue all available remedies, including filing a complaint with [State Department of Insurance / Financial Ombudsman / FIDREC / AFCA] and requesting an independent external review of this decision."

Section 9: Closing

"I look forward to [Insurer Name]'s prompt resolution of this matter. I am available to discuss this appeal by telephone at [phone number] or by email at [email].

Yours sincerely, [Your Name] [Signature]"

After Sending the Demand Letter

Send by certified mail: This creates proof of delivery and a legal record.

Keep copies: Keep copies of the letter and all attachments.

Note the deadline: If the insurer doesn't respond within your stated timeframe, escalate — file your external review request, state insurance complaint, or other remedy.

Follow up in writing: If you speak with the insurer after sending the letter, follow up with a written summary of the conversation.

Using ClaimBack to Generate Your Appeal Letter

Writing a comprehensive, evidence-based demand letter takes time and requires careful attention to detail. ClaimBack at claimback.app helps you generate a professionally structured, jurisdiction-aware insurance appeal letter based on your specific case details. The generated letter can be used as the basis for your demand, customised with your specific physician letters, clinical guidelines, and policy references, and submitted to your insurer as a formal appeal.

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Related Reading:

• How to Negotiate with Your Insurance Company
• How to Write a Second Insurance Appeal Letter
• Insurance Bad Faith: Your Rights When an Insurer Wrongfully Denies
• Can You Sue Your Insurance Company?