A demand letter is an official notification that an accident victim is making a claim against the at-fault party. The “demand” is typically for monetary compensation to make up for the victim’s losses. It holds the recipient legally accountable for those losses.
It is not always easy for accident victims to secure fair compensation for their injuries. Some may file a personal injury lawsuit against the at-fault party or their insurance company seeking payment for their losses.
Before going to court, the victim’s attorney often attempts to settle the claim with the other party. This process typically begins with a demand letter.
What Does a Demand Letter Do?
A demand letter formally notifies the other party (the potential defendant) of a claim and opens settlement negotiations. It outlines the injuries and costs of the victim (the potential plaintiff), states why the opposing party is responsible, and indicates how the matter can be resolved out of court. In most cases, this involves a demand for compensation.
Most personal injury claims never see the inside of a courtroom. Instead, the at-fault party’s insurer often agrees to a settlement, sometimes even before the victim files a lawsuit. In a settlement, the at-fault party and the potential plaintiff reach an agreement without the intervention of a judge or jury.
However, the demand letter may not propose the final compensation amount. The demand letter is a starting point for negotiations.
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What Does a Demand Letter Include?
Experienced attorneys know that a successful demand letter is persuasive, professional, and legally sound. Demand letters typically include the following key components:
- Introduction — A summary of the incident, including basic facts like the date, location, and parties involved
- Liability — A discussion of why the recipient is at fault
- Injuries — A description of the victim’s injuries, including the medical treatments received and how the injury has affected them
- Costs — A detailed account of the costs incurred, including medical bills, lost income, and property damage
- Demand — A request for a specific amount of money to settle the case
- Deadline — A fair and reasonable date for the recipient to respond
- Warning — A warning about what action will occur if the recipient fails to respond appropriately, including filing a personal injury lawsuit
What Compensation Can a Demand Letter Request?
Before an attorney sends a demand letter, they should understand the facts of the accident and the nature of the damages. In legal terms, damages refer to compensation for the physical, emotional, and financial consequences of an accident.
While the exact damages requested can vary by case and state, the following are common in personal injury claims:
Economic Damages
These include an accident’s direct monetary costs, which are typically proven with receipts, invoices, and other financial documentation. Economic damages include the following:
- Property damage, such as home repairs or vehicle replacement
- Emergency treatment, including ambulance costs and emergency department care
- Other medical treatment, including hospital bills, rehabilitation costs, and doctor’s visits
- Other medical expenses, such as prescription medication, medical devices, and in-home care
- Future medical costs, which estimate the victim’s medical needs for the rest of their life
- Lost income, which includes wages lost while recovering from an injury and lost earning capacity if the victim can no longer perform the same work
These damages are relatively easy to quantify, as the accident victim can directly calculate the amount of money the accident caused them to lose. However, estimating future costs beyond the settlement date can sometimes be more challenging and requires professional assistance from an attorney.
Non-Economic Damages
Non-economic damages cover the less tangible emotional and physical consequences of an accident. They are not easy to calculate but may substantially impact compensation amounts.
Non-economic damages include the following:
- Pain and suffering
- Long-term disability
- Permanent disfigurement
- Emotional distress
- Loss of enjoyment
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How Can the Other Party Respond to a Demand Letter?
After receiving a demand letter, the other party typically does one of three things:
- Accepts the demand: While this is the ideal scenario for the victim, it rarely happens. More often, the other party will negotiate for a lower settlement amount.
- Proposes a counteroffer: Many recipients propose a lower sum. This starts the negotiation process, which may involve numerous offers and counteroffers before settling. To help resolve disputes, some parties enlist a neutral third party via mediation or arbitration.
- Denies the claim: The recipient can reject the claim and refuse to negotiate. When this happens, the victim may file a lawsuit to seek compensation.
Sometimes, recipients ignore demand letters. If the claim ends up in court, a judge may ask them to explain why they refused to make a good-faith attempt to resolve the matter.
If an insurance company denies valid claims without a reasonable explanation or offers unreasonably low settlement amounts, a bad-faith insurance lawyer can help accident victims take legal action.
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How Can a Lawyer Help With a Demand Letter?
Attorneys write most demand letters on behalf of injured parties. Working with an attorney on a demand letter helps do the following:
- Protect the victim’s rights: Injured people don’t always understand their legal rights and options after an accident. An attorney works to protect their rights throughout the claim process.
- Provide legal guidance: Lawyers ensure that demand letters cover all legal bases and follow state laws. They also provide legal advice throughout the negotiation process.
- Document the losses: Personal injury attorneys help investigate the accident, gather evidence to support the claim, and present the documentation effectively.
- Calculate the demand amount: Compensation must be fair and reasonable, but defining those parameters isn’t always easy. Attorneys can help calculate damages after an injury and propose a dollar amount to start negotiations.
- Craft compelling arguments: To convince the other side to negotiate, lawyers may argue that the recipient is legally liable, stands a low chance of winning litigation, or shouldn’t risk the time and expense of defending a lawsuit.
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Accident Hotline connects injured people nationwide with qualified local attorneys. With 24/7 support, you can speak with a lawyer in minutes instead of hours. For help with a demand letter or injury lawsuit, call (844) 343-9609 for a free consultation with a personal injury attorney.
For a free consultation, call 844-343-9609