Demand Letter

What Does Demand Letter Mean?

A demand letter is a formal correspondence designed to prompt action from the recipient. It typically requests a resolution to a grievance, such as payment of a debt or settlement of a complaint. This letter is usually sent after previous attempts to contact the indebted or responsible party have not yielded the desired results.

Insuranceopedia Explains Demand Letter

When you have an issue with someone over overdue debt or are dissatisfied with a service provided, the first step is usually to contact them through a phone call or send a reminder about the missed payment. If it’s a company, you may call its customer service department or leave a note in its complaint box (if available). If these efforts do not yield a response, it may be time to write a demand letter.

A demand letter outlines the facts of your problem and specifies how you want it resolved. If someone owes you money, the letter will state the amount due and the date by which you expect payment.

Demand letters are also used when making insurance claims. For example, if you were involved in a car accident and the insured party has not yet paid for the damage (including vehicle repairs and personal injuries), you would detail the accident and explain the financial, mental, and physical strain it has caused you. These latter two can be converted into monetary terms—such as hospital bills and related medical expenses—requesting reimbursement from the insured.

A demand letter serves as a serious notice to the recipient, as it indicates that further action, such as a lawsuit, may follow. Additionally, in the event of a lawsuit, the demand letter acts as evidence in court, demonstrating that you took the necessary legal steps to resolve the conflict and that the other party failed to take action or respond.