How to Write a Settlement Demand Letter

June 2, 2022 | Personal Injury

How to Write a Settlement Demand Letter

Injury victims resolve most personal injury claims via out-of-court settlement negotiations rather than litigation and trial. One of the first steps in securing a settlement is to send a settlement demand letter to the opposing party. The opposing party is the party who will pay the claim—typically an insurance company, rather than the defendant.  

What Are the Basic Components of a Settlement Demand Letter?

Almost any settlement demand letter will include the following elements:

  • Why the defendant is at fault or otherwise liable for the claim
  • A description of your injuries
  • A description of your losses (medical expenses, pain and suffering, etc.)
  • A demand for compensation, which may or may not include an exact amount

It is unlikely that the opposing party’s initial response to your demand letter will agree to your terms. If it does, you almost certainly asked for far too little. Instead, the settlement demand letter kicks off the negotiating process.

Tips on Writing an Effective Settlement Demand Letter

The following is some time-tested advice on drafting settlement demand letters. 

Err on the Side of Brevity

It doesn’t do you any good to write a long and complex settlement demand letter if the opposing party doesn’t read it. Insurance adjusters, for example, read many demand letters each day, and they look for ways to save time. The settlement demand letter for a small, simple claim should be a page long or less.

The larger and more complex your claim is, the more you can afford to write. Some claims cannot be adequately described in a page or less. Nevertheless, try to be concise and make every sentence count.

Include All of Your Damages

Perform an investigation to learn the actual value of your claim before you begin writing a settlement demand letter. Include all of your damages. Claimants often forget items such as projected future medical expenses. Take a liberal attitude towards what counts as ‘damages’ to give yourself some bargaining room. Nevertheless, don’t include any ludicrous demands.

Focus on Facts That Don’t Appear in Your Medical Records

The insurance adjuster will have access to the medical records surrounding your claim. If you focus only on these facts, your letter will seem redundant, and your case will seem typical. 

Instead, accentuate the unique aspects of your case by changing your focus. Talk about how your injuries might prevent you from returning to your former occupation, for example.

Demand Policy Limits if Your Claim is Anywhere in the Ballpark

No matter how much your claim is worth, insurance policy limits are the ultimate limit on how much you can receive from any individual insurer. You should know these limits, and if your claim is within the ballpark of these limits, you should demand precisely this amount. However, don’t do this unless the policy limit represents a plausible value for your claim.

Don’t Be Too Confrontational

The tone of your letter should be professional but firm. Experienced insurance adjusters have dealt with many confrontational people before, and they are immune to intimidation tactics. In particular, don’t threaten to sue for punitive damages unless you have a good case that the opposing party is liable for them. 

Read the Demand Letter Before You Send it

Assume that anything you say in the letter will be used against you. Even if it isn’t, it will certainly be used against you at the bargaining table.

The opposing party in your settlement negotiations will probably be an insurance adjuster – or, if the defendant is a corporation, a lawyer from the corporate legal department. Both can be considered professional negotiators. 

Hire an experienced personal injury lawyer, and you will have a professional negotiator on your side as well. In addition to negotiating, however, a personal injury lawyer can draft legal documents (such as demand letters and settlement agreements) for you to ensure that you receive the compensation you need and deserve. 

If you’ve been injured in a personal injury, please contact Marzzacco Niven & Associates at the nearest location to schedule a free consultation today:

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