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Legal Procedure

What is Demand Letter?

A formal letter sent to an insurance company or opposing party outlining the facts of the case, injuries sustained, and the amount of compensation being sought.

Understanding Demand Letter

Demand letters typically include a summary of the incident, description of injuries, medical treatment received, documentation of damages, and a specific settlement demand. They often initiate serious negotiations and can serve as evidence of the claim's value if litigation becomes necessary.

Examples

  • 1Sending demand letter after reaching maximum medical improvement
  • 2Including medical records and bills as supporting documentation
  • 3Demanding policy limits in serious injury cases

Why This Matters in Legal Cases

The demand letter is often the first formal step in settlement negotiations and sets the tone for the entire negotiation process. A well-crafted demand letter clearly establishes liability, documents damages, and presents a compelling narrative of the client's injuries and losses. It serves as both a negotiation tool and a preview of the case the attorney will present if the matter goes to trial.

Explaining to Clients

Explain to clients that the demand letter is sent after they have completed treatment or reached maximum medical improvement, so it can include all damages. Help them understand that the initial demand amount is typically higher than the expected settlement—it provides room for negotiation. Setting expectations about the negotiation timeline prevents frustration during what can be a back-and-forth process.

Frequently Asked Questions

When should a demand letter be sent?

In personal injury cases, the demand letter is typically sent after the client has reached maximum medical improvement (MMI)—the point where their condition is stable and the full extent of their injuries is known. Sending it too early may undervalue the claim because future medical needs and permanent impairments have not been fully established.

What should a demand letter include?

A strong demand letter includes a description of the incident and how liability was established, a detailed summary of all injuries and medical treatment, documentation of economic damages (medical bills, lost wages, property damage), a description of non-economic damages (pain, suffering, lifestyle impact), supporting evidence (medical records, bills, photos), and a specific dollar amount being demanded.

What happens after a demand letter is sent?

The insurance company reviews the demand and typically responds with a counteroffer that is lower than the demand. Negotiations go back and forth until both sides reach an agreement or talks break down. If negotiations fail, the next step is usually filing a lawsuit. The demand letter and any responses can become evidence of the parties' positions during litigation.

Sources

Related Terms

Settlement

An agreement between parties to resolve a legal dispute without going to trial. Settlements typically involve the defendant paying the plaintiff an agreed-upon sum in exchange for dropping the lawsuit.

Policy Limits

The maximum amount an insurance company will pay for a covered claim under an insurance policy.

Statute of Limitations

A law that sets the maximum time after an event within which legal proceedings may be initiated. Once the statute of limitations expires, the claim is typically barred forever.

Discovery

The pre-trial phase in a lawsuit where each party can obtain evidence from the opposing party through various methods including interrogatories, depositions, and requests for documents.

Deposition

Sworn, out-of-court testimony given by a witness or party that is recorded for later use in court proceedings. Depositions are a key part of the discovery process.

Last updated: January 24, 2026
Reviewed by: Quilia Legal Content Team

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