How Much Should You Ask For in Your Demand Letter?

Putting together and sending a demand letter to the other side is a crucial step toward settling a personal injury case. And a demand letter typically closes with a statement of the dollar amount that you'll accept in order to resolve your injury 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 the basics on this kind of correspondence, learn more about the personal injury settlement demand letter.)

Coming Up With a Dollar Amount to Ask For

To arrive at the final number for your demand, review how the personal injury 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 a number of key factors:

• the nature and extent of your injuries
• issues of fault for the accident that led to the claim (How clear is the other side's liability? Is there contributory negligence on your part?)
• existence of witnesses, and what those witnesses will say if asked to appear at a deposition or in court
• the potential of jury sympathy for you (or for the other side) if your personal injury lawsuit goes to trial, and
• your willingness to be patient through the personal injury settlement process.

Your Injury Settlement Demand Should Start High

In the demand letter, a claimant often begins the negotiating process with a request for compensation that might be considerably higher than the amount they'd be satisfied to accept in the end.

The letter is only the beginning of a settlement negotiation process that is similar to bargaining at a swap meet. You start too high, the insurance adjuster's first offer comes in 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'll do depends on the personalities involved—yours and the insurance adjuster's—and on how many variables there are in your claim, such as fuzzy liability or uncertainty as to whether your injuries are going to be long-lasting.

So, start with a settlement number that's on the higher end, but...

Keep Your Injury Settlement Demand Realistic

Don't make your initial settlement demand outrageously high, because the adjuster will probably see through that tactic. When the insurance adjuster responds to your demand letter, and you've asked for the proverbial moon, they'll likely just come back with an outrageously low number, and you'll be back at square one. The number in your demand letter should be higher than what you think your claim is worth, but still realistic.

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 $15,000 and $20,000, make your first demand for $25,000 or $35,000.

An insurance adjuster doesn't know how much you know about what your claim is worth. Making an appropriate (but again, not too high) first demand announces that you know your claim shouldn't 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" In a Personal Injury Demand Letter

In the last paragraph of your letter, demand a specific sum of money as total compensation for your pain and suffering, lost income, and other losses (all of which are considered your "damages").

Before naming the amount, very briefly repeat the strongest parts 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 boost the value of your case. (Understand the importance of detailing your damages in a demand letter.)

Once you arrive at an appropriate initial demand and send the letter out, what's next? Learn more about what happens after you send a personal injury settlement demand letter.

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