Insurance Demand Letter Response Time

Posted: March 29, 2021

If you or somebody you love has been injured due to the careless or negligent actions of another individual in Colorado, it is understandable that you want compensation for your injuries and other expenses as quickly as possible. Unfortunately, insurance carriers tend to operate on their own time frame when it comes to paying out settlements.

In fact, insurance carriers do not want to pay out a settlement at all, and they will do everything they can to avoid having to do so. Here, we want to discuss one of the most common questions that we receive from clients – “How long will it take the insurance carrier to respond to a compensation demand?”

What is a Demand Letter?

A demand letter will be sent by an injury victim (or more likely their personal injury attorney) to the insurance carrier of the person who caused their injury. The demand letter will include:

  • A brief synopsis of what happened
  • A list of all injuries and expenses (with proof shown through medical records, bills, and receipts)
  • Actual demand for a certain amount of compensation
  • A statement conveying that the injury victim is ready to proceed forward with a trial if necessary

When is a Demand Letter Send?

There is a difference between when a demand letter is sent and when the injury has to be reported to the insurance carrier. In general, injuries need to be reported to an insurance carrier very soon after the incident occurs.

However, a demand letter should not be sent until after the injury victim and their attorney have a full understanding of the severity of the injuries and the total compensation that is required to make the victim “whole.” This can take some time after the injury occurs.

After a demand letter is sent, there is no actual law that states how quickly the insurance carrier has to respond. There are various factors that can affect this response time. This includes:

  • The size of the claim. In general, we will find that the more compensation that is being requested by the injury victim, the longer the response time from the insurance carrier will take. Larger claims will trigger more intense scrutiny from the insurance carrier.
  • The size of the insurance carrier. Smaller insurance carriers will not have the same resources as larger insurance carriers, and it could take them more time to respond to a demand letter.
  • Previous communication with the insurance carrier. If an injury victim or their attorney has already had communication with the insurance carrier, this could help expedite the demand letter response time.
  • The size of the policy. Claims made against larger insurance policies will usually carry more financial liability for the insurance carrier, thus increasing the demand letter response time.

What Will the Insurance Carrier Say in Response?

There are various ways that insurance carriers could respond to demand letters. The ideal scenario would be the insurance carrier accepting the full demand made in the letter and paying the claim. However, what is much more likely to happen is that the demand better response will include a counteroffer for a much lower amount.

This will be where the negotiations between the two parties start. Finally, the insurance carrier could deny a claim altogether in their response to a demand letter. If this occurs, it may be necessary to automatically proceed forward with a personal injury lawsuit against the at-fault party and the insurance carrier.