Friendly reminder that this isn’t legal advice, but “lawyer ramblings” on demand letters.
Once you are through with your medical treatment, or you’ve reached maximum medical improvement, and gathered all the documents necessary to make your settlement demand, it’s time to write a settlement demand letter.
Here’s a common format:
- Quick intro, and usually the settlement demand dollar amount (some people prefer to have it at the end)
- How the wreck/incidence occurred
- Summary of the damages sustained (Medical Treatment/Bills, Lost Income, Pain & Suffering)
- Conclusion with summary on how the insured’s client is at fault, and a deadline to respond.
The Demand Letter
In theory, you could just call the defendant’s insurance company and tell them how much money you demand to settle your claim. This is not how lawyers do it, and for good reason. By presenting the offer in the form of a demand letter, you get to present not only your initial settlement offer, but also the grounds for making such an offer in a well-thought-out, organized fashion. It lets the insurer know that you’ve actually put some thought into your offer and that you’re more sophisticated than the average claimant making a demand. In other words, you are prepared.
My suggestion for how to organize and present your demand letter is just that — a suggestion. Some demand letters seem to be effective that are short, while long form ones sometimes work better. Sometimes, it just seems to depend on which adjuster is reviewing the case. I prefer the to condense everything as much as possible. An adjuster, with hundreds of claim files, has no interest in reading a 20 page demand letter – especially if a 5 page one would cover all of the relevant information.
Here’s how a lot of demand letters are structured for a personal injury claim:
The Claims Information Section: Between the insurer’s address and “Dear Sir or Madam”, you should have a block of information that quickly lets the adjuster know the following:
Name of Claimant: <your full name>
Name of Insured: <the name of the tortfeasor — either a person or business>
Policy Number: <the policy number of the tortfeasor if you have it>
Claim Number: <if the insurer gave you a claim number, enter it here>
Date of Loss: <the date of the accident>
The Introduction: In the first paragraph, depending on who you ask, you want to state that this is a time-limited demand to settle the above-referenced claim and that the offer to settle will lapse and be revoked unless you receive a settlement check in the amount demanded (don’t specify an amount here — wait until the end of the letter) within 30 days. Thirty days is a common standard. I’ve seen some attorneys put “within fourteen (14),” but I think that is read as an empty promise to the insurance adjuster. The file may not even get to the adjuster’s desk in that amount of time.
Give a very brief description of the accident, such as “the automobile accident which occurred on “X” date, or the “slip & fall accident which occurred in “X” store. You then begin your section-by-section description of the claim. For each of the following sections, I suggest you use actual bold headings in the letter so the adjuster knows how the claim is organized. The goal here is to make it easier, not overcomplicate it, for the adjuster to evaluate the claim.
The Claimant: Here, you state your full name, age and gender (e.g., John Doe is a 35-year-old white man) and provide any useful information about yourself from prior to the accident, such as your occupation and the status of your health (e.g. who worked as a truck driver for the past 10 years and was in excellent health). If you had no prior medical conditions, say so. If you did, here’s a chance to try to minimize their impact. It really depends on the type of prior medical conditions if it’s useful here.
If you are married and/or have children, include that here. I don’t know if this helps, but feel free to include anything that humanizes you so that the adjuster may see you as more than a number (charity work, community activities, etc.) or anything that may be relevant to the claim that you are making (hobbies or sports that you like that you will later say have been affected by the accident).
Description of the Accident: This is fairly self-explanatory, only give the level of detail needed to convey the essential facts. If you were in a car accident, for example, you wouldn’t need to say where you had been or where you were going at the time of the accident. You don’t need to describe your emotions or what a horrible person their insured is. Think more along the lines of what appears in an accident report — the who, what, when, where and the how.
Liability: Because this follows the accident description, this should just be a very short statement of why their insured is at fault for the accident. For example, “It is clear from the above description of the accident that your insured is 100% at fault and that there was nothing I could do to avoid the accident.”
Injuries Suffered and Medical Treatment Received: This section is also fairly self-explanatory. Be thorough as to what parts of your body were injured. Include everything injured, not just the worst injury. Use your medical records (which you should have gotten before you started writing) to help you give a summary of the treatment and tests you received, as well as their level of success (keep it to a summary — you’ll be sending the medical records with your demand). Identify any prescription medications you have taken due to the incident and if you will need to take them in the future.
When you’ve finished describing all of your past care, describe the types of future care you will need (according to your doctor). Include any drugs you will have to take, any physical therapy or follow-up doctor appointments you will need. If you will need to do daily exercises at home from now on to maintain your current level of functioning, include that as well.
Economic Damages: In this section you will describe both your past and future “economic damages,” which will mainly be your medical costs and lost income. Use the information from your medical billing documentation to add up your health care costs. Be sure to include your drug costs (your health insurance info should help). Remember to include the cost of all of your anticipated future medical care, including drugs you will need to take.
For your wage loss claim, include any “sick time” that you needed to use due to your injuries. If you lost your job, or had to take a less physically demanding job, include the total loss or difference in your pay going forward into the future as part of your future wage loss claim. Guesstimate if you don’t have exact numbers — just be reasonable in your estimation.
Finish this section by totaling your past and future economic damages (for easy reference).
Non-Economic Damages: Your non-economic damages are your pain and suffering (physical) and emotional distress (mental) damages. Describe both the pain from the accident and from your medical treatment — it’s recoverable, as it should be. Describe your current level of pain and how you will have to live with that for the rest of your life (or if you have fully recovered). If your injuries put you at risk for future arthritis (many injuries do — ask your doctor) state this and describe how this will cause your pain to increase in the future.
Describe any physical limitations that you have now, such as lifting or range of motion restrictions. Identify some of the things that you used to love to do but can’t do now because of these injuries (playing with children, golf, bowling, etc.). If you’ve gotten depressed, especially if you’ve treated with a mental health care provider, include this information (don’t forget to include the bills in the economic damages section, either).
Finish this section with a broad figure that encompasses both your past and future non-economic damages. Remember it’s easier to start negotiations too high vs too low. The main issue with starting way too high is that the adjuster may think you’re unreasonable, and will make a similar unrealistic low-ball counter offer.
The Oklahoma Uniform Jury Instruction No. 4.1 can give you a good starting point to make sure you have included everything:
PERSONAL INJURIES — ADULTS
If you decide for [Plaintiff], you must then fix the amount of damages. This is the amount of money that will reasonably and fairly compensate [him/her] for the injuries sustained as a result of the [negligence/(wrongful conduct)] of [Defendant].
In fixing the amount you will award you may consider the following:
- [His/Her] physical pain and suffering, past and future;
- [His/Her] mental pain and suffering, past and future;
- [His/Her] age;
- [His/Her] physical condition immediately before and after the accident;
- The nature and extent of [his/her] injuries;
- Whether the injuries are permanent;
- The physical impairment;
- The disfigurement;
- Loss of [earnings/time];
- Impairment of earning capacity;
- The reasonable expenses of the necessary medical care, treatment, and
- services, past and future.
Demand for Settlement: This section is your summary, wherein you list the different dollar amounts for the economic and non-economic damages you’ve previously identified and total them into the final demand for settlement. If the number seems too low to you, go back and review some of your other numbers (but not the past medical or wage loss, as those are fixed), such as your pain and suffering or future wage loss.
It’s generally a best practice to start with a number that is higher than you want to receive as your final settlement. Don’t think that you’ll impress the adjuster with your reasonableness. Adjusters know that initial offers are exaggerated and expect you to negotiate down from them. If you start off reasonable, you’ll be negotiating down from “reasonable.” Even at judge-ordered mediations, insurance companies will make an initial offer of 10% or even less of what they end up settling the case for.
When you’ve finished your demand letter, have someone else proofread it for you and make sure it reads well. When you’re satisfied with the letter, send it, along with copies of all of your supporting documentation, to the insurer.
Special Notes for Car Accident Cases
Property Damage: If you were in your own car at the time of the accident, you probably also have a claim for the damage to your car. This is usually handled by a different adjuster at the insurance company than the one handling your bodily injury claim, a “property damage” adjuster. As this article is already quite long (and getting even longer!), I’m not going to address how to settle your property damage claim.
You can handle your property damage claim immediately after your accident without waiting for your bodily injury claim to ripen. Just make sure that you don’t give any recorded statements to the adjuster (assuming the accident report will state that the other driver was at fault). Inspections of your car are fine, and expected. Be sure that any release you sign as part of your property damage settlement does not release the insurer from your bodily injury, or personal injury claim.
What Happens After the Settlement Demand Goes Out?
Mark your calendar to note the day your demand expires. Hopefully, you’ll hear from the insurer before then, either by mail or by phone, with either an acceptance (unlikely) of your offer or a counter-offer. If you do not hear from the insurer by the deadline, it’s up to you whether you want to contact the insurer to check on the status of the demand or just hire a lawyer.
Some attorneys think it is better to not try to trade numbers back and forth with the adjuster during a single phone call to settle your claim. The thought process is that taking some time to consider the counter-offer caries more weight. Once you hear back from the adjuster, make notes about anything the adjuster identifies as weaknesses in your case, or reasons for not offering more money. Look into the claims and form counter-arguments before making a counter-offer of your own. Take your time and don’t try to rush things. Remember that smaller moves may make the process take longer, but they may increase the final settlement number.
Negotiating Tip: With the caveat that these are not hard and fast rules: Often, parties trying to settle a claim use their offers to send a message to the other side about where they ultimately want the settlement to go. This is referred to as the “midpoint” game, and is usually and indicator at mediations. Pay attention to the number in the middle of the two offers (e.g., if you’re at $50,000.00 and the adjuster is at $10,000.00, $30,000.00 is the middle — just add the last two offers and divide that by 2). Looking at the midpoint on the initial demand/offer is generally not very accurate until a few moves back and forth have occurred.
If the adjuster’s offers are increasing at a lower rate than your offers are decreasing, it means the adjuster trying to pull the middle number down.
A common occurrence: the parties in the settlement negotiations want to get to the point where they can “split the baby” and reach a settlement. Keep this in mind when making new offers. If the adjuster isn’t moving enough, make your own moves smaller to send the message that you see the “ultimate settlement figure” as being higher than the adjuster. Note that this “middle seeking behavior” doesn’t really happen until after the first one or two offers, after your opening number has come down into a more reasonable range (and the adjuster has moved off of the nominal starting number). So, don’t be too reluctant to make a large move in the beginning — it may be necessary to start talking real numbers. Use some of the padding you’ve built in to your offer to make that move.