The demand letter is the centerpiece of the negotiation process. In it, you set out to the insurance company your strongest arguments concerning:
The letter concludes with a demand on the insurance company for a lump sum to settle your 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 settlement.
Because a demand letter is the beginning of the negotiation process, make your claim 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 do so.
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 injury settlement.
There may be more than one person or business liable for your injuries, and therefore more than one insurance company that 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 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, decide how much to demand, and prepare their demand letters. But the insurance company will treat the two claims separately.
If you need help structuring your written demand, or are unsure about how to frame it, see this page with Sample Injury Demand Letters.
This article is an excerpt from How to Win Your Personal Injury Claim by Attorney Joseph Matthews (Nolo).