Oh no—you’ve been involved in a minor car accident and are determined to be at fault. After confirming that everyone is safe, you contact law enforcement and report the accident to your insurance carrier. You receive a citation for careless driving, but fortunately, neither you nor the other individual involved suffered any serious injuries. Time passes, and the accident gradually fades from your mind. Then, one day, you receive a demand letter from an attorney alleging that you caused a devastating crash and that the other driver sustained multiple injuries as a result.
In a personal injury matter, a demand letter is a formal written communication sent on behalf of an allegedly injured claimant by the claimant’s attorney. The letter outlines the factual and legal basis of the claim, describes the claimant’s alleged injuries and damages, and specifies the amount or other relief sought to resolve the claim. Although receiving a demand letter can be concerning, a demand letter can also be helpful in quite a few ways.
First, a demand letter serves to initiate settlement negotiations between the plaintiff’s counsel and the insurance carrier for the allegedly at-fault driver. This reduces the likelihood of litigation by allowing the parties involved an opportunity to negotiate a settlement before filing a lawsuit becomes necessary. Additionally, a demand letter often provides supporting documentation, such as medical records and medical bills, to assist the insurance carrier in evaluating the claimant’s damages and the amount of the settlement demand. Providing this information before litigation enables the insurance carrier to make an informed and reasonable settlement offer without the time and expense associated with filing a lawsuit and conducting discovery. Overall, a demand letter creates an opportunity to resolve a claim before litigation by facilitating settlement negotiations between an allegedly injured claimant and the allegedly at-fault party’s insurance carrier. If the parties reach a settlement, the insurance carrier and its insured may avoid the costs and burdens of defending a lawsuit.
Demand letters in car accident claims typically seek payment from the allegedly at-fault insured’s policy to cover medical expenses and other losses. They may also request information related to the accident. For example, opposing counsel may ask for affidavits confirming that the at-fault driver was not working at the time of the accident and has no additional insurance available to benefit the claimant. In some cases, plaintiffs’ firms may request a personal contribution from the insured in addition to policy benefits to resolve the matter, or seek a financial affidavit to assess the insured’s ability to satisfy an excess judgment.
If you receive a demand letter associated with a car accident you were involved in – do not stress! Instead, immediately contact your insurance company and notify them of the demand. From that point, your insurance carrier will hire a defense attorney to defend you against the claims in the demand letter. The defense attorney is available to you to discuss the demand letter and the various conditions laid out in the demand, including affidavits or personal contributions requested. As an insured, you are also able to retain your own personal counsel to review and advise if they feel it is necessary.