How Much Should You Ask For in Your Demand Letter?

The personal injury settlement process often starts with a demand letter, so what's the right dollar amount to ask for?

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 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:

Start With a Higher Figure…

In the demand letter, a claimant often begins the negotiating process with a request for compensation that might be considerably higher than the amount he or she would be satisfied accepting 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 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 fuzzy liability or uncertainty as to whether your injuries are going to be long-lasting.

…But Not Too High

Do not 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, he or she will likely just come back with an outrageously 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 your claim is worth. Making an appropriate (but again, not too 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 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).

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