Why You Should Consult with a Tampa Car Accident Lawyer about Writing Demand Letters to Auto Insurance Companies

If you have been involved in a serious car accident in the Tampa, Florida area, you and your lawyer may eventually discuss the need to send something called a “demand letter” to the insurance company covering your accident injuries. Basically, a demand letter notifies the insurance company about the total losses you suffered in the car accident, and demands payment for those losses. After receiving the demand letter, the insurance company will usually make an offer to settle the claim, which often begins a negotiation process before a final settlement is reached.

A demand letter is one of the latter steps in the settlement process between you and the insurance company. You and your attorney typically will not be ready to send a demand letter until several other stages in your case have passed.

Before writing and sending a demand letter, you and your Tampa car accident lawyer will have to cover quite a bit of groundwork. For example, you and your attorney will need to:

(1) Have a full accounting of your injuries and losses caused by the accident. This means you can't write a demand letter until you've reached maximum medical improvement, or MMI, indicating that your doctors feel your condition has stabilized and is not expected to improve over the next year. MMI essentially shows the insurance company that you have recovered as much as you can from your injuries. Reaching MMI does not mean you are completely healed, it just means the healing process is essentially over and your condition is not expected to improve significantly from that point. If you write a demand letter before you reach MMI, the insurance company may say, “Given more time, how do you know you're not going to recover 100 percent from your car accident injuries?” Also, if you submit a demand letter too soon, you may demand from the insurance company far less than you deserve. Before writing a demand letter, you must keep in mind that you may need significantly more treatment for your car accident injuries and, as a result, incur significantly more medical bills and wage losses.

(2) Gather up all medical records from the health care providers that treated you for your car accident injuries. You are entitled to reimbursement for all of your medical costs, whether they come from your emergency room visit in Tampa or an orthopedic surgeon in Clearwater. Medical bills also may include rehabilitation, nursing care, and a life care plan.

(3) Calculate your past and future wage losses. In addition to wage losses, you may also demand reimbursement for career retraining if the car accident left you unable to follow your original career path.

(4) Address issues of pain and suffering in your demand letter, but keep in mind that it is difficult to prove how much these are worth in monetary terms. Demands for pain and suffering reimbursement are best handled by an attorney who is experienced in these types of losses. But if the injury or resulting pain caused difficulties with your spouse, your kids or significant others, or if they caused you to be unable to continue important activities or hobbies, these are things that need to be brought to the attention of the insurance adjuster.

Once you and your attorney have tallied your losses and future financial needs related to the accident, it is time to request reimbursement for those losses in a well-crafted demand letter to the insurance company. The insurance company will typically respond to the letter with an offer that is lower than your demand, but regardless of what the insurance company's first offer is, it has little to do with what the final offer will be.

To illustrate this point, let's say your demand letter calls for $200,000, and the insurance company has policy limits of $200,000. It would be extremely unusual for an insurance company to offer you the $200,000 right off the bat, unless your claim was actually worth significantly more than $200,000. For example, given the injuries, the medical bills and any wage loss, your claim was actually worth $500,000, but the demand is for $200,000 only because that is the insurance company's policy limits. In that situation, the insurance company might just pay out the $200,000 in policy limits knowing that if they don't, your attorney may file a lawsuit and eventually obtain the $500,000, something called extra contractual liability because the insurance company failed to pay the $200,000 when they should and could have.

Other than in the situation described above, the understanding of the insurance company will be that you believe the claim is worth less than $200,000 and that the $200,000 is a starting point for negotiation on your end. Meanwhile, the insurance company will privately calculate a range they believe your claim is worth, for example, $50,000 to $75,000. With this range in mind, the insurance company will offer you $5,000 to start their side of the negotiation, knowing that perhaps one day they might have to pay somewhere between $50,000 and $75,000.

This begins a negotiation process between you, your attorney, and the insurance company. At this stage of the claim, the insurance company is only required to pay up to the maximum policy limits, and no more. It is quite possible that policy limits will fall short of what you need for your injuries, but unfortunately, you cannot demand more than what the policy limits provide at this point in the process. If the insurance company refuses to pay maximum policy coverage—even though you have shown that you need the full amount—you may decide to take your case to trial. After the lawsuit is filed, you can demand more than the policy limits if you want, with the hope that if the insurance company doesn't settle. This typically results in a jury giving you a judgment in excess enough over the insurance company's policy limits to make a bad faith trial worthwhile, in which a new jury will decide if the insurance company is going to have to pay the “excess” over the policy limits.

Because the insurance company failed to fulfill its contractual obligation to pay up to policy limits during the settlement process, at the second trial, the jury may decide the insurance company acted in bad faith. Under the bad faith doctrine, the jury can require the insurance company to pay what the previous jury determined was the appropriate amount for your auto accident injuries regardless of insurance policy limits.

While it is true that just about anyone can write a demand letter, not many people know how to write this letter correctly. Furthermore, if you try to write a demand letter yourself and make a mistake on it, there is a good chance that you will permanently damage your personal injury case to the point where an attorney cannot make it right again. You may be familiar with the story of the car owner that tries to save money by getting a $5 brake repair and then has to go to another mechanic who charges $250 to fix the damage done by the prior “cheap” brake repair.

Your car accident demand letter is best handled by a professional. If you have been in a car accident in the greater Tampa, Florida area and you would like more information about writing a demand letter in your personal injury case, please contact Tampa car accident lawyer Dale Appell, P.A. and our law firm will be glad to provide you a free initial consultation.