Demand Letter
A demand letter is a formal written communication from an injured plaintiff (or their attorney) to the at-fault party or their insurance company, outlining the facts of the accident, the injuries sustained, the evidence supporting the claim, and the amount of compensation being demanded to resolve the matter without litigation. The demand letter typically marks the official start of settlement negotiations and serves as the foundation for the back-and-forth process that often leads to a pre-suit resolution of personal injury claims.
A well-crafted demand letter will include a detailed narrative of how the accident occurred and why the recipient is legally responsible, a comprehensive summary of the plaintiff's medical treatment and prognosis, documentation of all economic losses including medical bills and lost wages, a description of the pain and suffering and other non-economic losses, and a specific dollar amount the plaintiff demands in settlement. Supporting documents — such as medical records, bills, police reports, and photographs — are typically attached.
The timing of a demand letter is strategically important. Most personal injury attorneys wait until the plaintiff has reached maximum medical improvement — the point at which the patient's condition has stabilized and future medical needs can be projected — before sending a demand letter. Sending a demand too early, before the full extent of the injuries is known, risks undervaluing the claim and settling for less than the plaintiff deserves. The demand amount should be realistic yet leave room for negotiation.
The demand letter triggers a response from the insurance company — typically a written counteroffer that is substantially lower than the demand. Multiple rounds of offers and counteroffers may follow before the parties reach an agreement. If negotiations reach an impasse, the plaintiff's attorney will file a complaint to formally begin the lawsuit. Even after a lawsuit is filed, settlement negotiations typically continue, with the pressure of trial serving as an incentive for both sides to reach a compromise.