Glossary

Demand letter

A written request to an at-fault driver's insurer that sets out your injuries and losses and asks for a specific settlement amount.

Also called: settlement demand, demand package, claim demand

A demand letter formally asks an insurance company to pay a claim for a specific amount. In auto claims it is usually sent to the at-fault driver's liability insurer on a third-party claim, by the injured person or their attorney, once treatment is finished or the injuries have stabilized.

A typical demand package includes a summary of the crash and why the insured driver was at fault; a description of injuries and treatment; medical bills and records; proof of lost wages; property damage and other out-of-pocket costs; a statement of pain, suffering and effect on daily life; and the amount demanded, often with a deadline to respond. The adjuster reviews it and usually answers with a lower counteroffer, and negotiation begins.

Demands work best when they are well documented and realistic. A policy limits demand, which offers to settle for the full limits of the other driver's policy, carries special weight, because an insurer that unreasonably refuses one can face a bad faith claim. Before accepting any settlement, understand that you will sign a release of liability ending the claim. For serious injuries or a disputed demand, a licensed attorney can advise; smaller property claims can often be handled yourself or in small claims court.

Last reviewed October 4, 2026

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Related terms

Policy limits demand An injured person's offer to settle for the at-fault driver's full liability limit by a deadline; mishandling it can expose the insurer to bad faith. Third-party claim A claim you make against another driver's insurance for damage or injuries that driver caused, rather than against your own policy. Bad faith An insurer's unreasonable handling of a claim, such as denying, delaying or underpaying without a proper basis, which can expose it to damages. Release of liability A document an injured person signs to accept a settlement and give up further claims against the at-fault party for that accident. Bodily injury liability The part of auto liability insurance that pays for injuries or deaths you cause to other people in a crash, plus your legal defense.

Related guides

Diminished value claims Why a repaired car can be worth less after a crash, when you can claim that loss from the at-fault driver's insurer, and how to document the claim. Small claims court after a car accident When to sue the at-fault driver in small claims, state dollar limits, who to name, the evidence to bring, and how to collect if you win. When to hire a lawyer after a car accident Which crashes you can handle yourself, when an attorney is worth the fee, how contingency fees work, and what to do if you are the one being sued.