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A demand letter to an insurance company is a letter written to an insurance company seeking money for a claim normally related to personal injury or property damage. The goal of the letter is to inform the insurance company that you demand monetary compensation for damages after something like a car accident. To learn more about insurance company demand letters and how to write a demand letter to an insurance company read the article below.
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Common Reasons to Send a Demand Letter to an Insurance Company
Are you wondering when would you send a demand letter to an insurance company? Here are some of the most common reasons people send demand letters to insurance companies:
If you were involved in a car accident, afterward you would send a demand letter to the other driver's insurance company to cover your vehicle damage.
If you were personally injured (a broken bone, herniated disc, etc.) you would want to write a demand letter to the other party’s insurance company to cover damages you suffered due to the injury. For example, if you were in a serious car accident and hurt your neck.
To your own insurance company for failing to cover a claim. For example, if your house was damaged and you have homeowner’s insurance but the insurance company denies your claim when they should be covering it.
Why is Sending a Demand Letter to an Insurance Company Important?
Here are at least four reasons we recommend sending a demand letter to an insurance company before you take legal action:
Depending on the state you are filing a lawsuit in, you may be required to demand payment from the insurance company before filing. For example, in California small claims court demanding payment is a requirement. A demand letter is an effective way of completing this requirement.
A demand letter can help you better organize your case. If you end up filing a lawsuit you will need to make a concise claim and prove your case to a judge. Writing a demand letter will help you think through every aspect of your case, including the important facts, your legal arguments, and the evidence you'll need to prove your claim. A demand letter will prepare you for litigation even before you file a lawsuit.
Sending a written demand letter to an insurance company assures you there is a record of how much you are demanding for damages and why you are asking for that amount. So while demands can be made orally, we recommend written demands.
The demand letter may lead to a settlement without further legal action (and legal costs)!
Do I Need to Hire an Attorney to Write a Demand Letter to an Insurance Company?
Many of our clients ask us if they need an attorney to write a demand letter. Ultimately, the decision is up to you. There is no formal requirement that states you need a lawyer to write your demand letter, you can do it on your own.
Here are some considerations when deciding whether to hire a lawyer to help you write a demand letter to an insurance company:
Legal fees can add up quickly. Even if you just need a lawyer to help you write a demand letter this could end up costing you more in the long run.
If you have a complicated legal case you may need help understanding the law. For example, if you were in a car accident that resulted in personal injuries you may want to consider speaking with a personal injury attorney as personal injury law can be quite nuanced. Personal injury attorneys also normally take cases on a “contingency” which means you only pay them if you win and they will write a demand letter as part of the process.
What to Avoid in Your Demand Letter to an Insurance Company
There are no set rules for demand letter writing, however, these are general tips for what to avoid when writing a demand letter for an insurance claim.
Do not use disparaging language. In general, try not to use language that will convey to the insurance company you are angry or hostile.
Avoid making threats. This letter could end up in court if you and the insurance company do not come to a settlement. Any threats or made-up facts can be used against you later.
Do not fabricate facts. As mentioned above, if you end up going to court over the dispute the judge will read your letter at the hearing. Any facts you claim in the demand letter may be brought up in court and will require further explanation. Avoid looking petty or shady in your letter and in court by being as professional as possible throughout the whole process.
Remember the goal of an insurance demand letter is to be able to come to a settlement outside of court. You want your demands to be met, however, you do not want to further escalate the situation.
What to Include in Your Demand Letter to an Insurance Company
Unsure of what to include in your demand letter? Below we have included a sample letter to an insurance company for claim settlement as well as some considerations.
Here are a few things to consider adding to your insurance company demand letter:
Explain what happened. It is very important that you establish the basic facts of the accident that lead to your personal or property damage.
What are you demanding payment for? This is a specific dollar amount that will compensate you for all of your financial losses, including your medical bills, out-of-pocket expenses, lost wages, and any non-economic damages you wish to be compensated for like pain and suffering. Of course, this is dependent on what your case is about. Medical bill information would only be relevant in the case of a serious car accident where you sustained injuries, not for a claim about property damage to your home.
Add as many case-specific details about the damage. For example, if your house flooded include which parts of your house flooded, how much flooding occurred, and what other personal belongings were damaged due to the water damage. If you are writing a demand letter because you were personally harmed, make sure to discuss your injuries in detail.
Organize your expenses. If you are claiming various medical-related damages consider organizing your expenses in a list. Insurance adjusters will typically base their settlement offers on expenses that have been incurred as a result of the accident, such as medical bills, loss of earnings from inability to work, repair bills to any property damage sustained, etc.
Where should the insurance company send you the payment? Consider including your address in the demand letter so the insurance company knows where to send a check.
Estimates or invoices for repairs done to your property to be reimbursed for those repairs. For example, if your car was damaged after a car accident and you had to pay a mechanic out of pocket include how much you paid the mechanic.
Relevant insurance information like your homeowner’s insurance policy number.
Discuss any medically relevant information. This will be important if your claim is for personal injuries and you want to cover your medical costs, as well as other costs associated with your injuries.
Include supporting documents if you have any. This could include pictures of property damage, your insurance policy, medical bills, etc.
Consider giving the insurance company 14 days to respond to you. Include this in your letter, and state that if they do not respond within that time, you intend to file a small claims lawsuit.
Once you have sent a demand letter to the insurance company, keep it in your records. In the event you do end up filing a small claims lawsuit you can bring it to the hearing and show it to the judge. This is especially handy if the insurance company states they didn't receive the letter.
Sample Demand Letter to an Insurance Company
Below you will find a template demand letter for property damage. This sample demand letter is addressed to a home insurance company to cover property damage to a homeowner’s home. Remember this is only a sample of a demand letter. Use as many case-specific details when writing your demand letter to an insurance company for property damage or personal injury.
Sample demand letter to an insurance company for a minor car accident
Was there property damage to your car after a minor car accident? For information on vehicle damage, and a sample minor car accident settlement letter read the article we wrote about No-Injury Car Accidents.
How to Send a Demand Letter to an Insurance Company
We recommend sending your demand letter to an insurance company via email or mail.
For letters that you mail, consider the following:
Tracking. Make sure to track your insurance company demand letter. With tracking, you will know if the letter reached the insurance company.
Signature Required. You do not necessarily need a signature request. When you send a letter with a signature request, the postal carrier must hand-deliver the letter and the insurance company must sign the letter.
Once the post office attempts delivery 2-3 times, the post office returns the letter to the sender as "undeliverable."
Next Steps After Sending a Demand Letter to an Insurance Company
If you sent the insurance company a demand letter and do not receive a response at that point consider filing a lawsuit against the insurance company in . Small claims courts handle a variety of cases at a low cost. This is because small claims courts were intended to be affordable and user-friendly. In some small claims courts, attorneys are not even allowed to represent you! Consider filing a small claims lawsuit if you are not able to settle with an insurance company outside of court. Learn more in our California small claims guide and New York small claims guide.
Common types of small claims lawsuits against insurance companies
Small claims courts handle a wide variety of cases. You can sue in small claims court so long as there isn't another court better suited to hear the case. The most common types of small claims cases against insurance companies are:
Breach of contract. An insurance policy is a type of contract and most small claims court handle breach of contract cases. For example, if the insurance company is violating a term in your homeowner’s insurance policy you can sue the insurance company in small claims and the judge will determine if there has in fact been a breach of contract.
Failure to pay on a covered claim. For example, your motorcycle insurance company and its adjusters have denied a claim that is within the insurance policy you purchased. You can sue the insurance company in small claims and the judge will determine if the claim falls under your insurance policy.
Failure to reimburse you for all out-of-pocket expenses incurred after a car accident. For example, you were in a car accident and had to take your car to the mechanic. The repairs cost you $4,000. Your insurance only wants to pay you $1,000. You can sue your insurance company in small claims and the judge will determine if they should have paid you the full $4,000.
Failure to communicate with you. After an accident, you have tried to reach your insurance company multiple times and they have ignored all requests to reimburse you for your damages. You can sue your insurance company in small claims. More likely than not, the insurance company will respond before the hearing date. If they do not respond, a judge will determine if you should win your lawsuit and have a valid judgment against the insurance company!
Legal Educator @ People Clerk. Claudia holds a J.D. degree and is a certified mediator in New York and Florida. She has participated in dozens of small claims mediations in New York City courts.