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 amount (some people prefer to have it at the end)
- How the wreck/incident occurred
- Summary of the damages sustained (Medical Treatment/Bills, Lost Income, Pain & Suffering)
- Conclusion with a summary of how the insured’s client is at fault and a response deadline.
The Demand Letter
Theoretically, 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 your initial settlement offer and the grounds for making such an offer in a well-thought-out, organized fashion. It lets the insurer know that you’ve 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 recommendation. Some demand letters are effective and short, while long-form ones sometimes work better. It seems to depend on which adjuster is reviewing the case. I prefer to condense everything down as much as possible. An adjuster with hundreds of claim files is not interested in reading a 20-page demand letter – especially if a 5-page one covers all 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. This includes 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 seven (7)” (lawyers like to say stuff twice!), 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 is to make it easier, not overcomplicating 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). Provide helpful information about yourself before the accident, such as your occupation and health status (e.g., you worked as a truck driver for the past ten years and were in excellent health). If you had no prior medical conditions, say so. If you did, here’s a chance to minimize their impact. It depends on the type of prior medical conditions if it’s useful here.
If you are married or have children, include that here. You can include anything that humanizes you. 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 self-explanatory, only giving 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 about what appears in an accident report — the who, what, when, where, and how.
Liability: Because this follows the accident description, this should be a very short statement of why the 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 summarize 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 your past care, describe the types of future care you will need (according to your doctor). Include any drugs you must take, any physical therapy, or follow-up doctor appointments you will need. If you 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 your past and future “economic damages,” mainly your medical costs and lost income. Use your medical billing documentation information to add up your health care costs. Include your drug costs (your health insurance info should help). Remember to include the cost of your anticipated future medical care, including the drugs you must take.
For your wage loss claim, include any “sick time” 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 from now on into the future as part of your future wage loss claim. Guesstimate if you don’t have exact numbers — 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 pain and suffering (physical) and emotional distress (mental). Describe both the pain from the accident and your medical treatment — it’s recoverable, as it should be. Describe your current pain level 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 you have now, such as lifting or range of motion restrictions. Identify some of the things 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 a mental health care provider has treated you, include this information (don’t forget to include the bills in the economic damages section, either).
Finish this section with a broad figure encompassing your past and future non-economic damages. Remember, it’s easier to start negotiations too high vs. too low. The main issue with starting far too high is that the adjuster may think you’re unreasonable and will make a similar unrealistic low-ball counteroffer.
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, 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 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. If you start reasonable, you’ll negotiate 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 ensure it reads well. When you’re satisfied with the letter, send it to the insurer with copies of all of your supporting documentation.
Special Notes for Car Accident Cases
Property Damage: If you were in your 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 ensure 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 counteroffer. 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 demand status or hire a lawyer.
Some attorneys think it is better not to trade numbers back and forth with the adjuster during a single phone call to settle your claim. The thought process of taking time to consider the counteroffer carries more weight. Once you hear back from the adjuster, note 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 take longer but may increase the final settlement number.
Negotiating Tip: With the warning that these are not hard and fast rules, parties trying to settle a claim often 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 an indicator at mediation. 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 — add the last two offers and divide that by 2). Looking at the midpoint on the initial demand/offer is generally inaccurate 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 is 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 moves smaller to convey that you see the “ultimate settlement figure” as higher than the adjuster. Note that this “middle-seeking behavior” doesn’t happen until after the first one or two offers. This is after your opening number has reached a more reasonable range (and the adjuster has moved off the nominal starting number). So, don’t be too reluctant to make a large move initially — it may be necessary to start talking actual numbers. Use some of the padding you’ve built into your offer to make that move.