A policy limits demand is a written offer to settle your injury claim for the full amount of the at-fault party’s liability insurance. Your attorney may send one when your losses are likely to exceed that coverage, the evidence of fault is strong, and your injuries are well documented. If the other driver’s policy is small and your medical bills keep growing, a demand with a firm deadline may move a stalled claim toward resolution.
Our team at Setareh Law handles car accident cases throughout California, and we review whether a policy limits demand is a sound option for each client. We take that decision carefully, because the amount and the timing are hard to change once the letter goes out.
How a Policy Limits Demand Works in California
Liability insurance pays for injuries and damage that a policyholder causes, up to a stated limit. A policy limits demand asks the insurer to pay that full limit by a set deadline in exchange for a release of the policyholder. If the insurer accepts, the claim against the policyholder is generally resolved without a lawsuit.
California law calls many of these offers time-limited demands. Under California’s time-limited demand statute, which took effect on January 1, 2023, a demand sent before a lawsuit or arbitration is filed needs to meet specific requirements. The statute applies to claims covered by automobile, motor vehicle, homeowner, or commercial premises liability policies, and only when the claimant has an attorney.
What Your Demand Must Include
A time-limited demand must be in writing, and it must either carry a time-limited demand label or reference the statute. It must also contain the following material terms:
- A deadline to accept of at least 30 days if sent by email, fax, or certified mail, or at least 33 days if sent by regular mail
- A clear and unequivocal offer to settle all claims within the policy limits, including the satisfaction of all liens
- An offer of a complete release of the insurer’s insureds from all present and future liability for the accident
- The date and location of the loss, plus the claim number if it is known
- A description of all known injuries
- Reasonable proof to support the claim, such as medical records or bills
The demand must go to the insurance representative handling the claim, if known, or to the address the insurer designated for these demands. A demand that does not substantially comply with the statute may not be treated as a reasonable offer in a later lawsuit seeking damages above the policy limits. Because each term carries weight, we draft these letters carefully and check every detail before one is sent.
When We May Send a Policy Limits Demand
Timing matters because an accepted demand generally ends your claim against the at-fault party, so you cannot go back and ask for more from that policy. For that reason, we want your medical records and bills in hand, and your treatment far enough along that your future needs are clear, before we put a number in writing.
A demand makes the most sense when fault is clear, and your damages likely exceed the available coverage. For example, a driver with a modest policy may cause a crash that leaves you with surgery, months of missed work, and ongoing care. Before we send one, we also confirm how much coverage exists, as the at-fault driver may have more than one insurance policy.
How Insurers Respond to a Time-Limited Demand
An insurer that receives a time-limited demand may accept the terms in writing. It may also ask for clarification, more information, or an extension to investigate, and that kind of request does not, by itself, count as a counteroffer or a rejection.
If the insurer does not accept, it must tell the claimant in writing what it decided and why, before the demand expires. We review that response with you and talk through your options, which may include continuing to negotiate your car accident claim, reviewing your underinsured motorist coverage, or moving toward a lawsuit.
Contact Setareh Law to Discuss a Policy Limits Demand
A policy limits demand can be a useful tool when your losses are serious and the at-fault party’s coverage is limited, but it works best when the timing, the proof, and the paperwork are right. Our attorneys at Setareh Law bring 60 years of combined experience serving injured individuals, and we meet clients where they are, with seven office locations and home visits available.
We are available around the clock, we speak Spanish, and we handle cases on a contingency fee basis, so you pay a fee only if we recover compensation for you. If the other driver’s coverage may fall short of your losses, contact us to schedule a free consultation and tell us about your claim.