The demand letter

The demand letter is the document that opens serious settlement negotiation. It sets out the case for liability and damages in one place and asks the insurer to pay a specific amount by a specific date. A strong demand does a lot of the work of the whole claim.

It is general information, not legal advice.

When it goes out

The demand is sent after treatment is complete or your condition has stabilized. Until then, the future-care and permanent-effect parts of the claim are unknown, and a demand built on guesses is weak. The one common exception is an early policy-limits demand in a clear-liability, serious-injury, low-limits case.

What is in it

• Liability. A factual account of how the incident happened, the traffic or safety law the other party violated, and the evidence — the report, photos, witness statements, any citation.
• The injuries. A medical summary from the records: diagnosis, treatment, procedures, providers, and the current status and prognosis.
• Economic losses. Medical bills, out-of-pocket costs, lost income with employer documentation, and future care or lost earning capacity where supported.
• The effect on daily life. How the injury changed work, activities, and function, often with short statements from people who know the person.
• The demand. A specific dollar amount and a deadline to respond, with supporting records attached.

How the insurer responds

The adjuster reviews the package, often for a month or more, and comes back with a first offer that is well below the demand and a list of disputes — a fault argument, a gap in treatment, a pre-existing condition, a claim that the bills are inflated. Negotiation is a few rounds of narrowing that gap. If it closes to a fair number, the case settles. If it does not, the next step is a lawsuit.

The policy-limits demand

When liability is clear and the damages plainly exceed the at-fault party's insurance, the demand can offer to settle for the full policy limit, with a reasonable deadline and the information the insurer needs to evaluate it. An insurer owes its own insured a duty to accept a reasonable within-limits demand to protect them from a larger judgment. If the insurer unreasonably rejects such a demand and a judgment later comes in above the limit, the insurer can be liable for the entire judgment. That exposure is real leverage, and it is why a policy-limits demand is drafted carefully.

Common questions

When does the demand letter go out?

After you finish treatment or your condition is stable, so the demand can describe the full injury and all the losses. Sending it while you are still treating means guessing at the parts that are not known yet.

Do I write the demand or does my lawyer?

Your lawyer writes it. It is built from your medical records, bills, wage documentation, and the liability evidence, and it makes legal arguments about fault and damages.

What is a policy-limits demand?

A demand that offers to settle for the at-fault party’s full insurance limit, usually with a deadline. If the insurer unreasonably rejects a supported policy-limits demand and a later judgment exceeds the limit, the insurer may be exposed for the full judgment, not just the limit.

How long does the insurer take to respond?

Commonly a month or more to review the demand, then a first offer that is usually well below the demand. A few rounds of negotiation follow. If that does not close the gap, the next step is filing suit.