How a Demand Letter Gets Written — and Why the Number Matters

This article is educational information, not legal advice. If you have a specific legal situation, talk to a licensed attorney in your state.

At some point after your injury, your attorney's office is going to send a letter to the insurance company. That letter will have a number in it. The number is not random. It's not a gut feeling. And it's definitely not whatever you told the intake coordinator you thought you deserved. It's a constructed argument, and the quality of that construction is often the difference between a $40,000 settlement and a $400,000 one — for the same broken arm.

Nobody explains this part. So let's go through it.

What the demand letter actually is

Think of it as a legal brief crossed with a sales pitch. The goal is to convince an insurance adjuster — and, behind the adjuster, the insurance company's lawyers — that if this case goes to trial, a jury is going to hand your client a number at least as large as what's being demanded. That's the only thing that matters to them. They're not reading it to be fair. They're reading it to calculate risk.

A good demand letter does three things. It tells a story. It documents every dollar of economic loss. And it builds the case for what lawyers call "general damages" — the pain, the suffering, the life you had before versus the life you have now. A bad demand letter lists your medical bills and asks for money. Those are not the same document, and they don't produce the same result.

The economic damages section — this part is math

Medical bills come first. Every bill, every provider, every date of service. But here's something most people don't know: the number that goes in the letter is usually not what you actually paid. It's the billed amount, sometimes called the "chargemaster rate" — the full retail price before your health insurance negotiated it down. If your surgery cost $80,000 and your insurer paid $22,000, a skilled attorney puts $80,000 in the demand, not $22,000. There's a legal doctrine behind this (the collateral source rule), but the practical effect is that the demand number is almost always larger than your out-of-pocket experience would suggest.

Lost wages come next. If you missed six weeks of work at $1,400 a week, that's $8,400 — and it needs to be documented with pay stubs, employer letters, and tax returns, not just your word for it. Adjusters discount undocumented wage claims heavily. They've seen people inflate this number a hundred times. If you're self-employed, it gets more complicated and the documentation burden goes way up.

Future medical expenses are where things get expensive to prove but important to include. If your orthopedist says you'll need a second surgery in four years, that cost goes in the demand. If a physical therapist projects ongoing treatment, that goes in too. These projections usually require a letter from the treating physician, and sometimes a life care planner — which is exactly what it sounds like, a specialist who maps out the cost of your medical future.

The general damages section — this is where the real money lives

Pain and suffering, emotional distress, loss of enjoyment of life. These don't have receipts. And that's the challenge.

The old multiplier method — take your medical bills, multiply by 2 or 3 or 5 — still gets used, but adjusters know it's coming and they're not impressed by it standing alone. What actually moves the needle is narrative. Specific, documented narrative.

Here's what that looks like in practice. A letter that says "our client suffered significant pain and was unable to enjoy her normal activities" is worth roughly nothing. A letter that says "our client was training for the Chicago Marathon when the accident occurred, had completed three prior marathons, and has been told by her orthopedic surgeon that she will not run competitively again" is worth real money. Same injury. Different story. The adjuster reading the second version has to imagine explaining to a jury why that woman's loss of her athletic identity doesn't matter.

The best demand letters I've seen include journal entries, photos from before and after, statements from family members about what changed, and letters from treating physicians that go beyond diagnosis into impact. The worst ones have a paragraph that reads like it was copied from a form. It might have been.

Liability — you have to win this argument first

None of the damages math matters if the letter doesn't establish that the other party is actually responsible. This section needs to be airtight. Police reports, witness statements, photos of the scene, expert opinions if necessary. If liability is disputed, the demand number gets discounted by whatever percentage the adjuster thinks they'd win at trial. A $400,000 demand where liability is 50/50 is functionally a $200,000 demand, and the adjuster will treat it that way.

This is also why timing matters. Sending a demand letter before you've gathered all the liability evidence is a mistake a lot of people make when they're trying to settle fast. The adjuster gets a weak letter, makes a low offer, and now you've anchored the negotiation in the wrong place.

The number itself — how it gets chosen

The demand number is not the settlement number. It's the opening position. Experienced attorneys set it high enough to leave room to negotiate down to a number they'd actually accept, but not so high that the adjuster laughs and stops taking the case seriously. There's genuine art to this, and it varies by jurisdiction. What juries in rural Georgia award for a herniated disc is different from what juries in Los Angeles award for the same injury. Your attorney should know that number for your county. If they don't, that's a problem.

The demand also has to account for your attorney's fee and any liens — medical providers, health insurers, and Medicare all have the right to get paid back out of your settlement. A $400,000 demand might net you $180,000 after fees and liens. Your attorney should be walking you through that math before the letter goes out, not after the check arrives.

Why two identical injuries produce different demands

Same car accident. Same broken wrist. Same surgery. One person gets a demand for $45,000. The other gets one for $380,000.

The difference is almost never the injury itself. It's documentation. It's the story built around the injury. It's whether the attorney sent a preservation letter to get the dashcam footage before it was overwritten. It's whether anyone took photos of the car before it was repaired. It's whether the client followed medical advice consistently or had a six-week gap in treatment that the adjuster will call "evidence of recovery." It's whether the demand letter was written by a paralegal following a template or by someone who actually read the medical records and found the line where the surgeon noted "permanent limitation of motion."

And honestly? It's the attorney's reputation. Adjusters know which firms go to trial and which ones fold. A demand letter from a firm that has never taken a case to verdict is worth less than the same letter from a firm that just won a $2 million verdict in the same courthouse. The adjuster knows this. The attorney knows this. Most clients don't.

What you can actually do about this

Ask your attorney to walk you through the demand before it goes out. Not a summary. The actual document. Ask what the basis is for the general damages number. Ask what comparable verdicts in your county look like. Ask who wrote the letter — the attorney or a paralegal. Ask what liens exist and how they'll affect your net recovery.

If your attorney can't or won't answer those questions, that tells you something.

Keep your own records too. A journal you started the week after your injury, documenting pain levels and what you couldn't do, is evidence. Photos of your physical therapy sessions, screenshots of events you had to skip, emails to your employer about modified duty — all of it can go in the demand. Your attorney can only use what exists. Help them build it.

The demand letter is not a formality. It's the foundation of everything that comes after. A weak one doesn't just produce a lower first offer — it sets a ceiling on where the whole negotiation goes.