Demands & Offers in California PI Cases.

Overview

The demand letter is one of the most important documents in your case. It presents your injuries, treatment, and damages to the insurance company and sets the stage for negotiation.

The Role of Demands in PI Practice

Demand letters serve multiple purposes:

1. Initiate settlement negotiations: Most PI cases begin with a demand letter, not a lawsuit
2. Establish case value: The demand anchors the negotiation (see Settlement Negotiation)
3. Demonstrate case strength: A thorough, well-supported demand signals trial readiness
4. Create a record: The demand and response (or lack thereof) may become evidence in a bad faith claim
5. Preserve rights: Time-limited demands and policy limits demands create specific obligations for the carrier

Pre-Litigation Demands

When to Send a Pre-Litigation Demand

A pre-litigation demand is appropriate when:

• The client has reached maximum medical improvement (MMI) or treatment is substantially complete
• Liability is clear or strong
• All medical records and bills have been compiled
• The damages picture is complete enough to support a demand amount
• You have identified the applicable insurance coverage

Assembling the Demand Package

A complete demand package typically includes:

The Demand Letter Itself

1. Introduction: Identify your client, the incident, and the claim
2. Factual narrative: Tell the story of the incident compellingly and accurately
3. Liability analysis: Establish fault with specific evidence
4. Injury and treatment history: Chronological summary of all medical treatment
5. Damages breakdown:
6. Past medical expenses (itemized)
7. Future medical expenses (with expert support if available)
8. Past lost earnings (with documentation)
9. Future lost earning capacity (with expert support if available)
10. General damages (pain and suffering, loss of enjoyment of life, emotional distress)
11. Verdict/settlement research: Comparable cases in the relevant jurisdiction
12. Demand amount: A specific dollar amount with reasoning

Supporting Documentation

• [ ] Police/incident report
• [ ] Photographs (scene, injuries, vehicle damage)
• [ ] Medical records (organized chronologically)
• [ ] Medical bills summary (spreadsheet format)
• [ ] Proof of lost earnings (pay stubs, employer letter, tax returns)
• [ ] Expert reports (if obtained)
• [ ] Declarations from the client, family members, or witnesses
• [ ] Property damage documentation
• [ ] Insurance policy information (if available)

Demand Letter Best Practices

• [ ] Lead with the human story -- adjusters are people, and compelling narratives matter
• [ ] Be specific about damages -- vague demands invite lowball responses
• [ ] Address weaknesses proactively -- a demand that ignores obvious problems loses credibility
• [ ] Support general damages with specific examples of daily impact
• [ ] Include photographs (injury photos are powerful; day-in-the-life descriptions work when photos are unavailable)
• [ ] Keep the letter to 5-15 pages (longer for catastrophic cases)
• [ ] Send by certified mail with return receipt (and by email for speed)
• [ ] Set a response deadline (typically 30 days)

Policy Limits Demands

What Is a Policy Limits Demand?

A policy limits demand is a demand for the full amount of the defendant's liability insurance policy. It is used when the case value clearly exceeds the available coverage.

When to Make a Policy Limits Demand

• Damages clearly exceed the policy limits
• Liability is clear or very strong
• The goal is to obtain the full policy as quickly as possible
• You want to create bad faith exposure for the carrier if it fails to tender limits

Elements of an Effective Policy Limits Demand

A policy limits demand should include everything in a standard demand package, plus:

• [ ] Express demand for the full policy limits (specify the amount if known)
• [ ] Statement that damages exceed the available coverage
• [ ] Request for confirmation of all applicable coverage (primary, umbrella, excess)
• [ ] Request for disclosure of policy limits under CCP 2017.210 (if in litigation)
• [ ] Clear statement that the demand is intended to protect the insured from personal exposure
• [ ] Identification of the specific policies being demanded against

California Insurance Code 790.03(h)

Under California Insurance Code 790.03(h), it is an unfair claims practice for an insurer to:

• Fail to accept or deny claims within a reasonable time
• Fail to attempt in good faith to effectuate prompt, fair, and equitable settlement of claims in which liability has become reasonably clear
• Refuse to pay claims without conducting a reasonable investigation

A policy limits demand, when properly made, activates these obligations and creates a record of the carrier's response (or failure to respond).

Time-Limited Demands

The California Framework

California does not have a formal "Stowers doctrine" (which originates from Texas law), but California case law imposes similar obligations through the duty of good faith and fair dealing owed by the insurer to its insured.

The key California cases establishing these principles include:

• Comunale v. Traders & General Ins. Co. (1958) 50 Cal.2d 654: The insurer has a duty to accept a reasonable settlement offer within policy limits when a prudent insurer would do so
• Crisci v. Security Ins. Co. (1967) 66 Cal.2d 425: The insurer's duty to settle is measured by whether a prudent insurer without policy limits would have accepted the settlement demand
• Hamilton v. Maryland Casualty Co. (2002) 27 Cal.4th 718: Addressed the allocation of the insurer's duty to settle when multiple policies or claimants are involved

Drafting a Time-Limited Demand

A time-limited demand imposes a deadline for acceptance, after which the offer is withdrawn. This is the plaintiff's most powerful tool for creating bad faith exposure.

Essential elements:

• [ ] State the demand amount (typically policy limits)
• [ ] State a reasonable deadline for acceptance (typically 30 days; shorter may be appropriate in exigent circumstances)
• [ ] Clearly state that the offer expires at the deadline and will not be renewed
• [ ] State that after the deadline, the plaintiff will seek a judgment against the insured personally for the full amount of damages
• [ ] Include all supporting documentation
• [ ] Address the letter to both the insurer and the insured (or insured's counsel)
• [ ] Request written confirmation of acceptance or rejection
• [ ] State any conditions clearly (e.g., release language, payment deadline after acceptance)

The Time-Limited Demand as Bad Faith Setup

A properly served time-limited demand creates the foundation for a subsequent bad faith claim if:

1. The demand was reasonable (within or at policy limits, supported by evidence)
2. The deadline was reasonable (adequate time for the carrier to investigate and respond)
3. The conditions were clear and reasonable
4. The carrier failed to accept within the deadline
5. A judgment is subsequently obtained against the insured in excess of policy limits

See Insurance Bad Faith for detailed guidance on bad faith claims.

Excess Exposure Letters

Purpose

An excess exposure letter notifies the insured (the defendant) that their insurance carrier's failure to settle within policy limits may expose them to personal liability for a judgment exceeding the policy limits.

When to Send

• After a policy limits demand has been rejected or ignored
• When the case value clearly exceeds the available coverage
• Before trial, to create a record and to prompt the insured to pressure the carrier

Content of an Excess Exposure Letter

• [ ] Identify the pending claim and the defendant's policy limits
• [ ] State that a reasonable settlement demand was made within policy limits
• [ ] State that the carrier rejected or failed to respond to the demand
• [ ] Explain that the defendant faces personal liability for any judgment exceeding the policy limits
• [ ] Advise the defendant to contact the carrier and/or retain personal counsel
• [ ] State that you are sending this letter as a courtesy to protect the defendant's interests
• [ ] Do not threaten or harass -- maintain a professional, factual tone

Strategic Effect

The excess exposure letter:

• Prompts the insured to demand that the carrier settle
• Creates a record for a future bad faith claim
• May cause the carrier to reassess its settlement position
• Puts the defense attorney in the position of advising the client about the carrier's conduct
• Can lead to a Cumis counsel situation if the insured's interests diverge from the carrier's

Opening Demand Strategy

Setting the Opening Demand Amount

Your opening demand must balance several competing considerations:

Too Low	Too High
Leaves money on the table	Loses credibility with the adjuster
Signals lack of confidence	May be dismissed as unrealistic
Limits upside negotiation room	Adjuster may not engage seriously
May anchor the negotiation too low	Delays negotiation as positions are far apart

Demand Amount Guidelines

General formula for opening demand:

Opening Demand = (Realistic Case Value) x (Multiplier based on case type and negotiation style)

Typical multipliers:

Case Type	Demand Multiplier
Clear liability, well-documented	1.5x - 2x expected settlement
Disputed liability	2x - 3x expected settlement
Catastrophic injury (policy limits case)	Full policy limits
Government entity	1.5x - 2x (government entities often negotiate more conservatively)

Demand Amount vs. Special Damages Ratio

While there is no universal formula, many practitioners use the special damages multiplier as a rough cross-check:

Injury Severity	General Damages Multiplier (of Specials)
Minor soft tissue	1.5x - 3x
Moderate injury (fractures, herniated discs)	3x - 5x
Serious injury (surgery, permanent impairment)	5x - 10x
Catastrophic injury (TBI, spinal cord, amputation)	10x - 25x+

Demand Package Assembly

Organization

A professional, well-organized demand package makes a stronger impression than a disorganized stack of records. Consider this format:

DEMAND PACKAGE TABLE OF CONTENTS
1. Demand Letter (5-15 pages)
2. Medical Records Summary / Chronology
3. Medical Bills Summary (spreadsheet)
4. Supporting Documents
a. Police/Incident Report
b. Photographs (scene, injuries, vehicles)
c. Declarations / Witness Statements
d. Employment/Earnings Documentation
e. Expert Reports (if any)
5. Verdict/Settlement Research
6. Medical Records (organized by provider, chronological)
7. Medical Bills (organized by provider)

Digital vs. Physical Demands

Digital delivery (email with PDF attachments or cloud link):

• Faster delivery
• Easier for the adjuster to review and share internally
• Searchable
• Cost-effective
• Maintains formatting

Physical delivery (binder or folder by certified mail):

• More impactful for high-value cases
• Harder for the adjuster to ignore
• Demonstrates thoroughness and investment
• Consider for policy limits demands and catastrophic cases

Responding to Defense Offers

Evaluating an Offer

When the carrier responds with an offer:

1. Compare to your case valuation: Is the offer within the range of reasonable outcomes?
2. Assess the gap: How far is the offer from your demand?
3. Evaluate the signal: Is this a serious opening or a token offer?
4. Consider the timing: Where are you in the case lifecycle?
5. Factor in costs: What additional costs will be incurred to improve the offer?
6. Client communication: Present the offer to the client with analysis (see Settlement Negotiation)

Counter-Offer Strategy

Your counter-offer should follow the decreasing-move pattern described in the Settlement Negotiation guide:

• Make a meaningful but measured move from your opening demand
• Each successive counter should be smaller than the last
• Support each counter with additional reasoning or evidence
• Consider using brackets to signal your settlement range

Documenting the Negotiation

Maintain a detailed log of all settlement communications:

• [ ] Date and method of each communication (letter, email, phone)
• [ ] Who participated in the communication
• [ ] Offers and counter-offers with specific amounts
• [ ] Arguments made by each side
• [ ] Adjuster statements about authority or evaluation
• [ ] Deadlines set or extended
• [ ] Follow-up actions agreed upon

Special Demand Situations

Multiple Policy Demands

When the defendant has both primary and excess/umbrella coverage:

• Demand the primary limits first
• Once primary limits are tendered, demand the excess limits
• Address each carrier separately
• Be aware that excess carriers may have different claims philosophies

Demands Against Government Entities

Government entity demands require compliance with the Government Claims Act (Gov. Code 900 et seq.):

• [ ] File a timely government tort claim (6 months from the date of injury for most claims)
• [ ] Wait for the claim to be rejected (or 45 days to pass, at which point it is deemed rejected)
• [ ] Only then may you file a lawsuit (Gov. Code 945.4)
• [ ] Demands against government entities often involve risk management departments rather than insurance adjusters
• [ ] Settlement authority may require board or council approval

See Government Claims for the full Government Claims Act procedure.

UM/UIM Demands

Demands against the client's own uninsured/underinsured motorist carrier:

• The carrier has the same duty of good faith to its insured (the plaintiff)
• UM/UIM claims are subject to contractual arbitration in most policies
• The demand should reference the policy, the coverage, and the claim
• Bad faith exposure is heightened because the carrier owes a duty directly to the plaintiff as its insured

Demands Involving Minors

When the injured party is a minor:

• The demand is made on behalf of the minor by the parent or guardian
• Any settlement must be approved by the court (CCP 372, Prob. Code 3500)
• The demand should note the minor's age and the court approval requirement
• See Settlement Agreements for the minor's compromise process

The Demand Letter as Bad Faith Evidence

Building the Record

Every demand letter you send may eventually be exhibit A in a bad faith case. Draft accordingly:

1. Be reasonable: Unreasonable demands undermine bad faith claims
2. Be thorough: Provide all the information the carrier needs to evaluate the claim
3. Be clear: Ambiguous demands give the carrier an excuse to delay
4. Set deadlines: Reasonable deadlines create accountability
5. Follow up: Document the carrier's failure to respond or engage
6. Escalate appropriately: Move from standard demand to policy limits demand to time-limited demand as the case develops

The Bad Faith Timeline

Each step in this progression creates evidence of the carrier's failure to meet its obligations. The pattern of reasonable demands followed by unreasonable responses forms the core of a bad faith case.

See Insurance Bad Faith for the elements and strategy of bad faith claims.

Post-Demand Follow-Up

Response Timeline

Situation	Expected Response Time
Pre-litigation demand	30 days (industry standard)
Litigation demand	30 days or as negotiated
Policy limits demand	30 days (or shorter if exigent circumstances)
Time-limited demand	As stated in the demand (typically 30 days)

If No Response

If the carrier fails to respond within the stated deadline:

• [ ] Send a follow-up letter referencing the original demand and deadline
• [ ] Call the adjuster to confirm receipt and inquire about status
• [ ] Document every failed attempt to obtain a response
• [ ] If pre-litigation, consider filing suit
• [ ] If in litigation, consider filing a motion to compel settlement conference or mediation
• [ ] Consider reporting the carrier's conduct to the California Department of Insurance
• [ ] Evaluate bad faith implications

Cross-References

• Settlement Negotiation -- Comprehensive negotiation strategy
• Mediation -- Mediation preparation and advocacy
• CCP 998 Offers -- Statutory offers with cost-shifting consequences
• Settlement Agreements -- Documenting settlements reached through demands
• Insurance Bad Faith -- Bad faith claims arising from demand responses
• Government Claims -- Government entity demand requirements
• Litigation Funding -- Funding while awaiting demand responses

Cross-References

• Settlement Negotiation
• Mediation
• CCP 998 Offers
• Settlement Agreements
• Litigation Funding
• Structured Settlements

Common Questions

Sources & Legal Citations

1. California Insurance Code § 790.03. Unfair claims settlement practices.
2. Crisci v. Security Insurance Co. (1967) 66 Cal.2d 425. Insurer bad faith for failing to accept reasonable settlement demand.
3. Comunale v. Traders & General Ins. Co. (1958) 50 Cal.2d 654. Insurer's duty to accept reasonable settlement offers.
4. Hamilton v. Maryland Casualty Co. (2002) 27 Cal.4th 718. Excess judgment liability and bad faith.
5. California Code of Civil Procedure § 998. Statutory offer to compromise.
6. California Insurance Code § 790.03(h). Specific unfair claims practices enumerated.