A demand letter, or LOD, ie. a Letter Of Demand (of payment), is letter stating a legal claim (usually drafted by a lawyer) which makes a demand for restitution or performance of some obligation, owing to the recipients' alleged breach of contract, or for a legal wrong.
In personal injury claims, the settlement negotiation process begins by the victim submitting a demand letter to the insurance companies. The purpose of the demand letter is to present facts about the accident in order to persuade the insurance companies to provide adequate compensation. A typical demand letter is structured in the following manner:
The personal injury demand letter is then sent to the insurance companies with supplemental documents that are referenced in the letter. This may include copies of accident reports, photographs of the accident/injuries, medical bills, doctor’s statements etc.
The insurance company will then analyze the arguments made in the demand letter and respond with a counter settlement offer. [1]
In the United States, demand letters from a debt collector relating to a consumer debt must comply with the Fair Debt Collection Practices Act.[2]
In some cases in Canada, a demand letter is mandatory; without it, a person could lose his or her case.[3]