How Much Should You Ask For in Your Demand Letter?

The personal injury settlement process starts with your demand letter. How much you ask for sets the tone for negotiations.

Putting together and sending a demand letter to the other side is a crucial step toward settling your injury case. And every demand letter includes a dollar amount that you will accept in order to resolve your claim and release the other side of any liability. But where does this number come from? In this article we'll explain how to arrive at the right settlement demand figure for your case. (For tips on what to cover in other sections of your demand letter, read Writing Your Injury Demand Letter.)

Coming Up With a Dollar Amount

To arrive at the final number for your demand, review how the damages formula works. Then plug in the figures for your medical treatment and lost income and choose a higher or lower range of the formula -- whichever is more realistic given the nature of your injuries and the difficulty in proving who was at fault. You will arrive at a range of figures that would be a fair settlement amount. Whether you believe your settlement is worth a figure at the higher or lower end of that range depends on several ­additional facts: how obvious the other person’s fault is, your comparative negligence, existence of witnesses, sympathy or dramatic advantage for you or against the other person, and your willingness to be patient through the negotiation period.

Start With a Higher Figure…

In the demand letter, you begin the negotiating process with a request for compensation considerably higher than the amount you would be ­satisfied accepting in the end. The letter is only the beginning of a settlement negotiation process similar to bar­gaining at a swap meet. You start too high, the insur­ance adjuster will start too low, and then you both bluff and counteroffer until you agree on a number somewhere in between. How much bluffing and counter-offering you will do depends on your personality and that of the insurance ­adjuster you are dealing with, and on how many variables there are in your claim, such as unclear liability or uncertain long-term injury.

…But Not Too High

Do not make the figure outrageously high, because the insurance adjuster will know that it is a meaningless number. The adjuster will just come back with an equally meaningless low number, and you will be back at square one. The number in your demand letter should be higher than what you think your claim is worth, but still believable. A general rule is 75% to 100% higher than what you would actually be satisfied with. For example, if you think your claim is worth between $1,500 and $2,000, make your first ­demand for $3,000 or $4,000. If you think your claim is worth $4,000 to $5,000, make your first demand for $8,000 or $10,000.

An insurance adjuster does not know how much you know about what the claim is worth. Making a high first demand announces that you know your claim should not be settled for a small sum. And it also gives the adjuster room to maneuver you downward while keeping the ­figure within a fair settlement range.

Where to Include the Demand Amount

In the last paragraph of your letter, demand a specific sum of money as total compensation for your pain, suffering, lost income, and other losses. Before naming the amount, very briefly repeat the strongest part of your argument and any ­special facts -- particularly dangerous behavior by the insured, extreme pain, extensive treatment, a long period of recovery and permanent injury -- that should increase your compensation.

This article is an excerpt from How to Win Your Personal Injury Claim by Attorney Joseph Matthews (Nolo).

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