The demand letter in a car accident claim: when it is sent and what it contains

When a demand letter is sent#

Injury demands often wait until the medical picture is clear. If the letter goes out while treatment is still underway, it can leave out surgery, therapy or time off work that has not happened yet, and a settlement usually cannot be reopened once the release is signed.

Waiting has its own limit: your state's statute of limitationsStatute of limitations. The law that sets the last day to file a lawsuit. After it passes, a court will usually dismiss the case, however strong it is. Glossary. The insurer's pace does not stop that clock. The NAIC model regulation asks insurers to warn unrepresented third-party claimants at least 60 days before a time limit expires, but states adopt their own rules, so it helps to know the date yourself. Our deadline lookup shows the limit in each state.

When treatment will last a long time, some claimants send a demand once doctors can describe future care and its likely cost. Others send one early because the injuries clearly exceed the at-fault driver's policy limitsPolicy limits. The most an insurance policy will pay for one claim or one accident, no matter how large the losses are. Glossary. Each choice has trade-offs that a lawyer can explain.

What a demand letter usually includes#

Demand letters vary, but most follow a similar outline. The tone is calm and specific: it reads like a well-organized summary of evidence, not an angry complaint.

1. Claim details. The insurer's claim number, its customer's name, the date of the crash and the claimant's name, addressed to the assigned adjuster.
2. The facts of the crash. Date, time, place and a short account of what happened, with the police report number.
3. Liability. Why the insurer's customer is responsible: the police report, any ticket, witness statements, photos and the traffic rules that applied. Good letters also answer any claim of shared fault.
4. Injuries and treatment. Each diagnosis, every provider, a timeline of care, current condition and any future care the doctors expect.
5. Medical expenses. A list of charges by provider and date, totaled, drawn from the itemized bills.
6. Lost income. Days missed, the rate of pay and an employer letter, plus any lasting effect on the ability to earn.
7. Other out-of-pocket losses. Prescriptions, equipment, travel to appointments, help at home and any property damage still unpaid.
8. Non-economic losses. How the injury changed daily life: pain, sleep, work, family, hobbies and plans.
9. The demand. The amount requested and how long the offer stays open.
10. Enclosures. A list of every document attached.

Our guide to types of damages explains the economic and non-economic losses a claim can include.

The documents behind the letter#

A demand is only as strong as the proof attached to it, because adjusters compare each figure with the documents.

Our guides to the police report and medical records explain how to get these. Payments already made by others matter too: for example, Medicare must be repaid its conditional payments when a settlement, judgment or award is paid. Our guide to medical liens and subrogation covers those repayments.

Policy limits and disclosure#

The at-fault driver's policy limits are often the practical ceiling on a settlement, because the insurer pays only up to the limits it sold. Knowing them before a demand goes out shapes what is asked for and whether other coverage, such as your own underinsured motorist coverage, may come into play.

Florida requires disclosure. Within 30 days of a claimant's written request, a liability insurer must give a sworn statement listing the insurer's name, each insured's name, the liability limits, any coverage defense the insurer believes it has, and a copy of the policy. The insured, or their agent, must also disclose every known insurer when asked in writing.

Disclosure rules differ from state to state, so how much an insurer will reveal before a lawsuit varies. A licensed attorney in your state can tell you what applies.

Time-limited demands#

A time limited demandTime-limited demand. A settlement offer to an insurer that must be accepted within a stated period. Some states set rules for what such a demand must contain and how long it must stay open. Glossary offers to settle within the policy limits if the insurer accepts by a set date. These demands carry high stakes for insurers: in many states, an insurer that unreasonably passes up a chance to settle within its limits can face a bad faithBad faith. An insurer's unreasonable refusal or delay in paying a valid claim. Many states allow extra penalties for it. Glossary claim for the amount above them.

Some states now set strict rules for these demands. Missouri is one example. There, a time-limited demand must be in writing, refer to the statute and go to the insurer by certified mail, return receipt requested. It must stay open for at least 90 days after the insurer receives it and, among other terms, must state the amount requested or ask for the policy limits, give the date and location of the loss, describe the known injuries, name the people to be released and offer an unconditional release. It must also include a list of treating providers with HIPAA-compliant authorizations, plus a list of employers with authorizations if lost wages are claimed. If it sets a payment deadline, that deadline cannot be less than 10 days after the insurer receives the signed release.

The statute explains why the details matter: a demand that does not follow these rules is not treated as a reasonable opportunity to settle if the insurer is later sued for damages above its limits.

How the insurer responds#

Under the NAIC model regulation, an insurer should reply to a claimant's letter within 15 days, and your state may set its own deadline. The NAIC model act also expects an insurer that denies a claim or offers less to promptly give a reasonable and accurate explanation of the basis for a denial or a compromise offer.

The reply usually takes one of four forms:

• a request for more documents, such as older medical records or wage proof;
• a counteroffer, usually lower than the demand, with the adjuster's reasons;
• a denial of liability, saying its customer was not at fault or that you share the blame;
• acceptance of the demand as written.

A counteroffer starts the negotiation stage, where each side explains its reasons and the numbers move. If talks stall as the deadline approaches, a lawsuit may need to be filed to protect the claim. Our claim process guide shows how these steps fit together.