Definition - What does Demand Letter mean?
Demand letter is a formal act of correspondence that aims to solicit action from the recipient. This action might seek a solution to a grievance such as payment for a debt or a settlement of a complaint. This is usually written after attempting to contact the indebted or grievous party but such contact has not achieved the desired results.
Insuranceopedia explains Demand Letter
When you have a problem with someone over debt payment that is already overdue or you are dissatisfied with the service provided to you, then you contact the person through a phone call or send a reminder about the missed payment. If it is a company, call its customer service department or drop a note in its complaint box (if there is one). If doing any of these still has not produced a response, then it is time to write the person or the company a demand letter.
The demand letter contains the facts about your problem and the way you want it resolved. If someone owes you money, then the letter will contain the amount that is due to you and the date that you want it paid.
A demand letter is also written when making insurance claims. If you were involved in a car accident and the insured has not yet made any effort of paying the cost of the damage (which might include damage to your car and injury to your body), then you describe in detail the accident and how much financial, mental, and physical strain it has caused you. Note that the latter two can actually be translated into monetary terms. A physical harm might have you hospitalized and consequently incur medical bills and you want the insured to reimburse your payments.
A demand letter will always alarm the person being written to because not only is the next step possibly a lawsuit but that in case of a lawsuit, the demand letter is an evidence in court that you have done a good legal step in conflict resolution and your adversary has done nothing or otherwise.