What Is a Demand Letter in a Personal Injury Case?

If you've hired a personal injury attorney — or are navigating your claim yourself — you'll hear the term "demand letter" come up early in the process. This document is the formal starting point of settlement negotiations, and getting it right significantly affects how much you recover.

What Is a Demand Letter?

A demand letter is a written document sent by you (or your attorney) to the at-fault party's insurance company formally demanding compensation for your injuries and damages. It is not a lawsuit — it's the professional starting point for settlement negotiations before any litigation begins.

A well-crafted demand letter tells the insurance company:

• What happened (the facts of the accident)
• Why their insured was at fault
• What injuries you suffered
• What medical treatment you received (and at what cost)
• What your non-economic damages are (pain and suffering)
• What total dollar amount you're demanding in settlement

When Is a Demand Letter Sent?

The demand letter is typically sent after you've reached maximum medical improvement (MMI) — or at least after your medical treatment is substantially complete. Sending it too early risks undervaluing your case because future medical costs aren't yet known.

In straightforward cases with clear liability and resolved injuries, a demand letter may go out 8–16 weeks after the accident. In complex cases with surgery or ongoing treatment, it may take a year or more.

What a Strong Demand Letter Includes

1. Liability Section

This explains how the accident happened and establishes fault. A strong liability section includes:

• A clear narrative of the accident with specific facts (date, time, location, what each driver did)
• References to the police report and any citations issued
• Witness statements
• Traffic laws violated by the at-fault driver
• Photos of the scene and vehicle damage

2. Injury and Treatment Section

This section documents every injury, every provider, and every treatment:

• Emergency room visit and initial diagnosis
• Specialist evaluations (orthopedic, neurological, pain management)
• Imaging results (X-ray, MRI, CT scan findings)
• Physical therapy sessions and outcomes
• Surgery (if applicable)
• Current status and any ongoing limitations

3. Economic Damages

A precise itemized list of all out-of-pocket financial losses:

• All medical bills (itemized by provider)
• Lost wages with documentation (pay stubs, employer letter)
• Future medical expenses (if treatment is ongoing)
• Property damage
• Out-of-pocket expenses

4. Non-Economic Damages

A compelling narrative — not just a number — describing how the injury has affected your life:

• Daily pain levels and how they've changed over time
• Activities you could no longer do (sports, hobbies, playing with your children)
• Sleep disruption
• Emotional distress and anxiety
• Impact on your marriage or relationships
• Lost enjoyment of life

5. The Demand

The letter concludes with a specific dollar demand and a response deadline (typically 30 days). The initial demand is intentionally set above your minimum acceptable number — because negotiation will reduce it.

What Happens After the Letter Is Sent

Under California Insurance Code § 790.03, the insurer must respond within 40 days. They will either:

• Accept your demand (rare — usually only for clearly undervalued demands)
• Make a counter-offer (most common)
• Deny liability or request additional information

Negotiation then proceeds — usually through multiple rounds of offers and counter-offers until the parties reach agreement or an impasse. If impasse occurs, your attorney files a lawsuit.