In most personal injury cases where insurance coverage has been triggered by the underlying accident, the demand letter is the centerpiece of the injury settlement negotiation process. In it, the injured person sets out to the insurance company his or her strongest arguments related to:
The letter concludes with a demand on the insurance company for a lump sum (damages) to settle the entire claim.
The insurance company uses this demand letter to compare your claim with the information it has about the case, and then to make a counteroffer of settlement. The process of back-and-forth negotiating from there on—usually a combination of phone calls and letters—will determine the final amount of your personal injury settlement.
Because a demand letter is the beginning of the negotiation process, it's important to make your case as strong and convincing as possible. Even if you know of weaknesses in your argument, do not discuss them in the demand letter. If an insurance adjuster spots a weakness, it will come up during negotiations and you can deal with it then. If the insurance adjuster does not bring up the weakness in your argument, you are under no obligation to point it out to them.
The demand letter sets out your theory of the case and the range of your demand. It can also demonstrate to the insurance company your understanding, organization, and preparation of your claim. In other words, a good demand letter—clear, organized, including all useful information—sets the tone for a good settlement.
If more than one person or business could be liable for your injuries, that means more than one insurance company might have to deal with a claim from you. By the time you prepare your demand letter, you will probably have received a notice from one or both insurance companies indicating which company will provide the primary coverage—the one with which you will settle your claim—and which will provide only excess coverage. You need to send your demand letter only to the primary company.
But if you have not received a notice of primary coverage when you are ready to make your settlement demand, prepare two demand letters—each one tailored to the particular liable conduct of that company’s insured. After sending both demand letters, you should receive a response from one or both insurance companies indicating which one assumes responsibility for primary coverage. That insurance company will then be the one with which you negotiate.
If you have not received written acknowledgment of primary coverage by the time you are ready to begin settlement negotiations, you will need to resort to other negotiation tactics.
If you are injured in an accident in which other people were also involved, like family members or friends, each person will have a separate claim against the responsible parties or insurance companies. How many demand letters you have to write depends on the relationships among the injured people.
If several people in the same family were injured in the same accident, they will all be dealing with the same insurance company for the other party. In that case, it's fine to include information on all the claims in one demand letter— describing the accident once and then setting out each person's injuries, treatment, medical expenses, and demand for compensation in separate sections of the letter. Usually, the insurance company will want to settle all the claims at the same time.
If two people who are unrelated are injured in the same accident, they will have to write separate demand letters. Of course, there's nothing to keep them from working together to gather records, deciding how much to demand, and preparing their demand letters. But the insurance company will treat the two claims separately.
To get an idea of what this kind of correspondence might look like, check out our sample personal injury demand letters.
This article is an excerpt from How to Win Your Personal Injury Claim by Attorney Joseph Matthews (Nolo).