Policy Limit Demand Letter

Policy limit demand letters are crucial in personal injury cases, as they can mean the difference between a sufficient settlement and a lowball offer. This letter informs the insurance company that your attorney will seek the maximum amount available under applicable policy limits, opening negotiation for a reasonable settlement demand.

Working with a law firm during a personal injury claim protects your legal rights and improves your leverage during negotiations with the insurance company.

Definition of Policy Limit Demand Letter

A policy limit demand letter in personal injury claims is a legal document sent to the responsible insurance carrier requesting the maximum compensation available under the applicable insurance policy limits.

This monetary demand opens negotiations for a fair settlement and prevents insurance bad faith incidents where the company fails to explain the insured’s policy limits clearly. It will also outline a reasonable deadline, which prevents insurance carriers from delaying until the statute of limitations passes.

Using policy limits demand letters may help prevent an expensive and time-consuming personal injury lawsuit, though this is not guaranteed.

When to Send a Policy Limit Demand Letter

As personal injury law and insurance guidelines have a short statute of limitations, it is essential to consult with an attorney as soon as possible after an accident. This consultation allows your legal representation to thoroughly investigate the personal injury case and craft a policy limit demand letter with enough time to enter negotiations.

After Investigation

Generally, it’s best to send the policy limit demand letter shortly after thoroughly investigating the case.

Before writing the demand letter, the attorney must assess the available insurance coverage. There may be more than one insurance policy involved, such as a liability insurance policy from the other driver’s insurance, which covers bodily injury for a victim, and a collision insurance policy from your insurance carrier, which covers property damage to your vehicle.

They must then estimate potential damages, such as medical expenses and lost wages, and gather the documentation necessary to support the claim.

Before Settlement Negotiations With Insurance Company

A policy limits demand letter sets expectations for negotiations with the insurance provider, ensuring that all involved parties are on the same page. This agreement allows time for the victim to reach maximum medical improvement.

A strong assessment of the victim’s future needs and ample documentation of their injuries helps the attorney better support their argument for the highest compensation because the plaintiff’s road to recovery will be more precise.

This letter will include a time-limited demand, putting pressure on companies to respond within a reasonable timeframe. If they fail to do so, the injured victim and their legal team can make a bad-faith claim and take the issue to court.

Components of a Policy Limit Demand Letter

A demand letter includes several key elements that outline the circumstances and the settlement demand. While the letter should stick to the facts and avoid sensationalism, a reasonable policy limit demand notice will also have a narrative structure that makes a compelling argument for why the victim deserves the highest amount of compensation.

The letter must use concise, clear language and adhere to local statutes, which is why victims must work with an attorney familiar with these types of communication.

Clear Identification of Parties

The first component of insurance policy limits demand letters is the clear identification of everyone involved in the case. This list includes the injured plaintiff, the specific insurance company, and the policyholder against whom the plaintiff is making a claim.

If multiple insurance policies are involved, such as if the injured victim needs to make a claim against their own insurance, each company will receive a letter specific to the policy limit being claimed.

Detailed Summary of the Case

In the policy limits letter, the attorney summarizes the facts of the case. This brief includes when the accident happened, who suffered injuries, the damages to the injured person and personal property, and who is liable for the accident.

The information should be clear and accurate, including dates, times, and locations. It will also detail the types of injuries the victim suffered and what medical treatments they needed after the accident. Everything included should be supported with documentation whenever possible.

Insurance Policy Limits

Every insurance policy must provide limits on a declaration page. The attorney will include this with the demand letter to demonstrate that they know what can be claimed under the specific policy.

Compensation

The most important element of a demand letter is the clear and forceful demand for the maximum compensation available under insurance policy limits.

It explains the circumstances of the injured party and discusses the contributing factors that a reasonable person would consider relevant to a case, such as the pain and suffering involved and the impact on the victim’s life.

Supporting Documentation

The policy limit demand will explain the facts of the case and include supporting documents for the claim.

Police reports should be included, showing when the motor vehicle accident happened, who was involved, and how the accident occurred. This report demonstrates liability and proves that the company is responsible for compensating the victim in accordance with policy limits.

The letter should provide medical bills for every treatment related to the accident. All hospital bills or out-of-pocket expenses should be issued from the hospital or the health insurance carrier.

If it is necessary to show that the injuries were unrelated to a pre-existing medical condition, such as a slipped disk, the attorney may present prior medical records demonstrating that the plaintiff did not have a history of medical treatment related to this issue.

This record pre-empts any bad-faith arguments that the policy is not responsible for compensating the victim for this condition.

Attorneys will gather expert witness statements from professionals in various fields, such as deconstructing the police report to provide an expert opinion on liability or doctors explaining how an injury would have occurred during a car accident.

Medical professionals can also comment on future treatments the plaintiff may need and how the injuries suffered will adversely impact their life going forward, better supporting the request for the highest possible compensation. These official statements, called depositions, must be appropriately documented.

Negotiating After a Policy Limits Demand Letter

The demand letter opens the door for a potential settlement by setting the bar high for negotiations, giving victims and their legal team a chance to achieve fair compensation. By issuing a letter with a clear demand supported by relevant evidence, attorneys can ensure insurance companies respond promptly and negotiate in good faith.

If the policy provider refuses to offer a reasonable sum, the demand letter helps the victim and their attorney decide when to file a lawsuit and take the issue to court.

Settlement Negotiations

Once the policy limit demand letter has been sent and received, the insurance provider will reach out with their counteroffer, which is usually lower than the number requested in the original letter. The lawyer will review the offer and, in consultation with the client, consider whether it is a reasonable sum.

If the insurance company has offered an unreasonably low sum, the attorney will return with an offer somewhere in between the original request and the insurance company’s offer. This process may go back and forth until the client is satisfied with the final settlement agreement or until negotiations stall.

In some cases, the company will refuse to negotiate at all. The parties may then take this to mediation, where a neutral third party helps to find a mutually satisfying offer. The mediator does not issue judgments or provide legal advice; they ensure good communication between parties, reframe issues and ensure all perspectives are heard. You may have your lawyers present at these mediations.

It is also possible to move to arbitration, where an arbitrator issues a judgment that must be adhered to by all parties. These are legally binding judgments documented by the relevant court in your jurisdiction; they hold a similar weight to a court verdict.

Going to Trial

Your attorney may take the personal injury claim to court if negotiation and mediation fail, arguing for the highest possible compensation. The litigation process involves presenting the case and the relevant evidence before a court, which will then issue a jury verdict.

The verdict may be higher than initially requested in the demand letter, typically including economic and non-economic damages.

Economic damages cover hard financial losses, such as medical bills, lost wages, out-of-pocket medical costs, and property damage. If the victim died as a result of the accident, the family can request compensation for their medical costs before death, as well as funeral expenses.

Non-economic damages consider the emotional and social struggles that result from a personal injury case, including pain and suffering, emotional distress, and loss of enjoyment of life. For a wrongful death case, this can include loss of companionship.

In some verdicts, the damages may also be punitive. This compensatory damage is not always common in a personal injury trial. Still, it may happen if the defendant acted in a manner beyond gross negligence, such as with road rage or driving under the influence. These damages are only issued by the court and are not available for insurance settlements.

Strategic Consideration

Attorneys must take care when issuing a demand letter and deciding when to take a case to court rather than settling.

The first consideration is the strength of the case. If liability is clear and there is ample supporting evidence, then the insurance company may accept the demand and provide a sum close to the maximum policy limits.

However, if multiple parties share liability or the case is poorly documented, it is more likely that they will refuse to negotiate or offer far less than what was requested.

Additionally, lawyers must weigh the possibility of receiving a favorable verdict at trial, which may offer compensation beyond the limits of a given policy.

For example, if the responsible party broke the law or acted recklessly, the jury could issue punitive damages to punish the defendant. These could represent significant damages, which would not be possible in an insurance settlement.

Lastly, the well-being of the victim must also be considered. While our firm works to reduce the stress of negotiations and a potential trial, it is still a time-consuming process that can add significant stress when you are trying to recover.

Our attorneys will use their experience in similar litigation to advise you on whether to send a demand letter, what a reasonable settlement is, and whether we will likely win at trial.

Contact Rosenfeld Injury Lawyers for Legal Assistance

A personal injury case is complicated and involves many moving parts, including issuing demands to insurance companies and entering negotiations for the highest possible compensation. Our personal injury attorneys have years of experience in personal injury law and have recovered millions in damages for clients nationwide.

We work on a contingency fee basis, meaning that you owe us nothing unless we are able to win your case. Instead, we deduct our legal fees from your settlement, so you pay nothing out of pocket throughout the process.

To schedule your free consultation with an experienced attorney and learn more about the negotiation process, call (888) 424-5757 or use our online contact form.

All content undergoes thorough legal review by experienced attorneys, including Jonathan Rosenfeld. With 25 years of experience in personal injury law and over 100 years of combined legal expertise within our team, we ensure that every article is legally accurate, compliant, and reflects current legal standards.