A demand letter is the document that opens settlement negotiations in a personal injury case. It typically includes: the facts of the incident, the legal basis for liability, a complete summary of damages (medical bills, lost wages, pain and suffering, future care), supporting documentation, and a specific dollar demand.
Demand letters are sent after the injured party has reached maximum medical improvement (MMI), so the full extent of damages is known. Sending one too early often locks in a value below what the case is worth.
The number demanded is anchored to the actual case value plus negotiation room. Insurers typically counter at 30-50% of the demand; from there, negotiation either reaches a settlement or stalls and suit is filed.