How to Write a Demand Letter for an Insurance Company
If you suffered minor damages, writing an effective demand letter gives you the opportunity to clearly and comprehensively outline your case for compensation.
You’re driving down the road one day and – wham! You’ve been rear-ended. You feel immediate pain in your back and neck, and over the next few days the pain gets much worse. There is so much damage to your vehicle that it must be towed from the scene (see The First Steps You Need to Take After Wrecking Your Car to find out what you should do if this ever happens to you).
You might eventually need to submit a demand letter. I will give you advice on how to write an effective one. But first, let's review the steps you should take before that point.
Before the Letter
So, what comes next? Your insurance company has probably given you a document with a name like "What to Do in Case of an Accident." Refer to it, but in general if you are physically able to do so while still at the scene, get the insurance, driver’s license, and vehicle registration information of the driver who hit you.
If you have a smartphone or camera with you, take many photographs, from every conceivable angle, of the vehicles, the damage to them, and the scene. If possible, take them before the vehicles are moved, although in some cases this will not be possible because you will have to pull your vehicle over to the side for safety reasons, if it can still be driven.
If the police come, write down what department the officer is from and get their badge number. Later, you will be able to obtain a copy of the officer's report. Over the coming days, if you have extensive bruising take photographs of yourself to document this.
Obviously your health comes first and you will need to treat your injuries. At some point, however, you will want compensation for your injuries. To get paid, you'll need to provide documentation of your losses, either to the other party's insurance company or to yours, under your policy's UM (uninsured motorist) coverage, if they don't have insurance.
You can hire a lawyer at this stage, but be aware that a lawyer will typically pocket one third of the recovery even if all it takes to get it is a few letters. While insurers tend to take individuals writing on their own behalf less seriously than they take those represented by lawyers, you can still often do better at this stage of the game by doing the work yourself. There are exceptions, however. In complex cases with severe injuries—especially those involving future losses, such as future medical treatment or future income loss—consulting a lawyer at the outset is highly recommended. I only recommend writing demand letters yourself for cases involving relatively minor injuries.
If you opt to represent yourself at this stage, you must keep the statute of limitations in mind. All causes of action (bases for lawsuits), aside from murder and perhaps one or two other very particular issues, have time limits within which the suit must be filed (see Insurance and Lawsuits to learn more about lawsuits from an insurance angle). In most states, the time limit for personal injury actions is two years from the date of injury. If you come within a month of the statute and you are still negotiating with the insurer, consult a lawyer or get a written extension of time from the insurer. Insurers in most states are required to advise you of the statutory cut-off but don’t rely on them – do your own research on the cut-off date and be aware of it.
Types of Damages to Be Compensated
So after all that we finally get to the meat of this article: what goes into an effective demand letter? We'll start by looking at the types of damages you will be seeking compensation for.
First, there are what in the old days were called special damages, or specials. Today they're usually called economic damages. These are losses that are concrete, provable amounts. If you go to an emergency room and are billed $2,500, this is a special damage. If the ambulance service charges $500 to take you there, this also is a special damage. So is any treatment with licensed professional health care providers following this is, as well as medication and tests such as X-ray exams.
If you miss work for a month, your wage loss is a special damage. If you are unable to return to your former type of work, however, you should get a lawyer involved rather than write a demand letter for yourself.
Damage to personal property is also a special damage, including the cost of replacing your vehicle or anything else that was inside of it at the time of the accident.
The other damages are general, or non-economic damages. These are essentially "pain and suffering," which can be defined as the physical pain resulting from your accident, psychological and emotional injury that causes things like anxiety and sleeplessness, and the inability to partake in hobbies or activities that you previously participated in.
It is difficult to put a precise dollar amount on these damages. As a rule, however, the amount of general damages in small cases—those with special damages of, say, $10,000 or less—will be roughly equal to the value of the special damages, or perhaps a bit more.
The Structure of Your Demand Letter
Open your letter with a statement regarding the time and place of the accident and the drivers involved.
Next, discuss liability, that is, the fact that the other driver was at fault and you were not.
If the investigating officer states in the police report that the other driver is at fault, this is your best piece of evidence. Attach a copy of the report to your letter and summarize its key findings.
If the officers did not prepare a report, set out the facts of the accident yourself. Provide a concise account of who was traveling in what direction at what speed, the sequence of events, whether there were signals or signs, and any other relevant details.
Summary of Special Damages
The next section of the letter should be a discussion of your special damages and your evidence of them.
Summarize all the treatments you underwent, from paramedics at the scene to your last visit to a doctor, physical therapist, or other specialist. Summarize the treatment in your own language and attach copies of all bills and any reports prepared by those who treated you.
Summary of General Damages
Then write a section about the general damages you incurred. These include pain, anxiety, and loss of ability to participate in activities.
Spell these issues out carefully. Do not exaggerate, but do include an accounting of all of your losses. If you were afraid to drive for a month and had to take a cab everywhere you went, this fear would be a general damage (and the cab fare would be a special damage — get receipts!) If you had to take sleeping pills every night for two weeks and were groggy every morning, this is a general damage (and the cost of the sleeping pills is a special damage).
End with a conclusion that summarizes what you have written and a dollar amount for your demand. The amount includes all of the damages set out above: health care, property damage, wage loss, pain and suffering, and anything else that you have suffered.
The Tone of Your Letter
The tone of your letter should be polite and business-like. It should be accurate and without exaggeration but nevertheless complete in its description of the injuries you have suffered.
Be concise and stick to the facts. The person at the insurance company who will read and respond to your letter will probably have read hundreds, if not thousands, of them and will not be persuaded by embellishment. If you have suffered injury the facts themselves will best represent your case.
I have focused on auto accident claims, but these guidelines are applicable to any case involving relatively minor damages. By following them, you will be able to write a demand letter that doesn't leave out anything important and that improves your chances of getting the compensation you are owed.