What Is a Settlement Demand Letter and How to Write One

The settlement demand letter is a key document in any personal injury claim. But what is a settlement demand letter, and what goes into one?

Here, we explain the purpose of a settlement demand letter and provide tips on how to write a letter that secures you the compensation you deserve.

What Is a Settlement Demand Letter?

As the name suggests, a settlement demand letter is a document that, well, demands a settlement to compensate you after an accident that wasn’t your fault. This is a formal notice sent to the at-fault party’s insurance company stating your intention to file a personal injury lawsuit.

Every accident is unique, whether a car accident, truck accident or slip and fall, so the content of every settlement demand letter will differ accordingly. That said, most settlement demand letters follow a similar structure and will contain specific details.

It’s crucial to note that while the word “demand” might suggest an expectation of receiving a specific settlement amount, the main purpose of a settlement demand letter is to give the insurance company an opportunity to settle the claim before filing a lawsuit and going to trial.

What’s Included in a Settlement Demand Letter?

Because a settlement demand letter formally states your intent to recover compensation, you need to include details about what you’re claiming for and the events that entitle you to claim in the first place.

This means the bulk of your settlement demand should consist of:

• The date, time, and location of the accident
• A description of the accident, such as what happened and how it happened
• The injuries you sustained and their severity
• The medical treatment you have already received
• Any medical treatment you are expected to need in the future
• The amount of income you have lost due to being unable to work after your accident
• Any lost income potential in the future due to needing more time off work or being unable to return to your previous job responsibilities
• The extent of your pain and suffering, mental anguish, loss of enjoyment, and other non-economic damages.

Your settlement demand letter should also outline the evidence supporting your case, which may include:

• Medical records, doctor’s notes, test results, and other documentation of your injuries
• Witness statements
• Photographs and quotes, receipts or bills proving property damage
• Your crash report (if you are in an auto accident)
• Photos of your injuries
• Photos of the accident scene.

How Much Should You Ask For in a Settlement Demand Letter?

Perhaps the most important component of a settlement demand letter — and arguably the main point of the document — is the dollar amount you’re happy to accept in exchange for resolving your claim and not pursuing further legal action. But how much should you ask for?

It’s not advisable to just pluck a number from thin air, so let’s take a look at how to determine how much your claim might be worth.

Personal injury compensation is split into two main categories:

• Economic damages
• Non-economic damages.

There is also a third type of damages — punitive damages, designed to punish a defendant for their behavior — but these only come into play if your case goes to trial, so they’re irrelevant at this stage.

Economic damages are the verifiable losses you’ve experienced due to your injury. They would cover expenses such as medical bills (including long-term rehabilitation and physical therapy) and lost wages.

It’s fairly easy to calculate your economic damages up until the present day if you retain receipts and bills, but you’re also entitled to recover your future costs. This is why it’s beneficial to consult an experienced attorney, as they can tap into their network of medical experts to determine how much further treatment you might need, how much it will cost, and how much longer you can expect to be out of work.

You may also be entitled to non-economic damages, which, as the name suggests, don’t have a definitive value. These compensate you for pain and suffering, loss of enjoyment (if you can no longer undertake tasks that brought you joy), mental anguish, and loss of consortium or companionship if you’re claiming on behalf of a loved one who died.

Non-economic damages are typically calculated by multiplying your total economic damages by a number between one and five. The more significant the impact of your injuries on your life, the higher the multiplier will be and the more total compensation you’ll receive. Several factors determine the multiplier, including the formulas the insurance company uses to make its determination, whether your injuries have had a life-changing impact, and if you’re able to work again.

You can use our personal injury calculator to get an idea of how much compensation you might receive in a settlement, but you should use this as a reference point only.

Depending on the specifics of your case and the strength of your evidence, you may be entitled to less or more.

This is another reason you never want to include a specific dollar amount in your settlement demand letter.

Let’s say you add up the cost of your medical bills, the treatment you still need, and your lost wages, which totals $5,000. With a multiplier applied, you could put down any amount between $5,000 (a multiplier of one) and $25,000 (a multiplier of five).

Since you likely want to secure the maximum possible compensation, you might be tempted to go all-in with a sky-high offer. The worse the insurance company can do is say no, right? But going too high will likely be perceived as outrageous, and the insurance company will counter with a less-than-reasonable offer.

On the other hand, being too conservative can also be detrimental. The insurance company may bind you to that amount and be unwilling to budge, even if you discover you need additional treatment and are entitled to more.

So what’s the ideal middle ground? As a rule, the figure you include in your settlement demand letter should be more than what your claim is worth but still believable.

This will prevent your desired figure from being outright dismissed as extortive while allowing for inevitable wiggle room, as the insurance company will counter with a lower offer. Some guidance recommends increasing your initial figure by a fixed percentage, but this can be unrealistic. To give you an example, there’s a massive difference between a 50% increase on $2,000 ($3,000) and a 50% increase on $50,000 ($75,000).

Even if you intend to write your settlement demand letter yourself, it’s always worth consulting a personal injury lawyer to determine if your ideal figure is realistic.

More Questions about Writing a Settlement Demand Letter

How long should a settlement demand letter be?

The length of your settlement demand letter will ultimately depend on the complexity of your case. For example, you might be entitled to a six or seven-figure payout if you have sustained life-changing injuries. To achieve a fair settlement, you will need to fully explain all nuances and details of your claim.

For smaller claims, an explanation of how the accident happened and medical records supporting your injuries may suffice. There’s no harm in writing a long letter, but it may signal to the insurance adjuster that you’re inexperienced at negotiating a settlement, and they will take advantage.

Is there anything you should avoid doing in a settlement demand?

There are only two things you must avoid when writing a settlement demand letter:

1. Don’t make threats
2. Avoid admitting guilt.

This may sound like common sense, but it’s easy to fall into the trap. There’s a difference between being firm and confident in your statement and being rude by threatening a lawsuit if the insurance company fails to acquiesce to your every demand. The latter will likely get your letter tossed to the bottom of the priority list, and the insurer may just double down with an unfair offer.

Insurers may resort to tactics to reduce liability and get away with paying out as little as possible, but at the end of the day, the adjuster receiving your letter is human, just like you. Being polite can go a long way to garnering sympathy and respect and make the process that little bit easier.

You should also look over your letter multiple times and assess it for anything that might be used against you, such as admitting you didn’t see the driver who crashed into you in a car accident. An insurer could take this statement and imply that you weren’t paying attention. In addition, if you pad out your letter with rambling language to make it look longer and more impressive, you increase your risk of including something damaging.

Should you include a deadline for a response?

There’s no hard and fast rule when it comes to including a deadline for a response. On the one hand, including a deadline can prevent your letter from dropping to the bottom of the pile. If you have a strong case, it can even bolster your claim and show you’re willing to file a lawsuit if you don’t hear back.

However, this can also backfire. If you include a deadline and the insurance adjuster doesn’t respond — and you continue to sit and wait for them to get back to you — the insurer may continue to drag out the process and not take your claim seriously, as they know there’s little risk of it proceeding further.

You should stand by your word and be prepared to take further action after the deadline if you don’t hear anything.

Should you hire a lawyer to write your settlement demand letter?

Just like you don’t need legal representation to negotiate a fair settlement, you don’t need a lawyer to write your settlement demand letter on your behalf. However, there are many advantages to hiring an attorney.

Our personal injury lawyers in McAllen and San Antonio can help you determine how much your claim is worth and what figure to include in your settlement demand letter. We can also help gather the vital evidence that proves your injuries and shows the other party is liable.

Having a lawyer file your settlement demand also shows that you’re serious about your claim and prepared to go to trial, which is more likely to nudge the insurance company into agreeing to a settlement.

If you’re in an accident that wasn’t your fault, you might be entitled to significant compensation for your injuries. Writing a settlement demand letter is a crucial part of the process. For help writing yours, book a free, no-obligation consultation with our McAllen and San Antonio personal injury lawyers. Call 855-LAW-NINJA or get in touch via our confidential contact page.