Property damage claims affect lives

My client initially contacted me because her insurance company refused to pay when her car was stolen and smashed.

With no car, she had no way of getting to her 3 to 4 days a week chemotherapy appointments. 

After a fight, the insurance company now agrees to pay.

But their offer comes too late.

My client was forced to discontinue her cancer treatment due to transportation difficulties.

For some, transportation can mean the difference between having a job and having no job — making it to doctor’s appointments and ending necessary treatment.

When insurance companies don’t pay valid claims, people’s lives are affected.

Sometimes irreparably.

Crafting an auto accident demand letter – Part I

Don’t make the mistake of thinking it makes any sense to play Hide the Ball.

Sharing information with the insurance company almost always helps your case.

Preparing your demand letter is a process that begins the first time you learn the facts of a case. Let’s talk specifically about what goes into a good demand letter.

Elements of good car accident Demand Letter:

  1. Accident Overview
  2. Theory of Liability + Proof of Liability
  3. Description of Damages + Proof of Damages
  4. Demand

This post discusses the first element: accident overview.

But first, a caveat: Don’t use this as your opportunity to play a little game of Hide the Ball.

If you walk away from this conversation (or whatever you want to call this) having learned only one thing, let it be this: Sharing information with the insurance company almost always helps your case.

Some bizarre plaintiffs’ lawyers decide that their strategy will be to treat the insurance claims process like a game of poker: They hold their hand close to their vest, put on a poker face, and tell nothing.

Perhaps this made sense back in the day when the ultimate goal was to get to trial (was this ever the goal back in the day?).

Maybe. But who knows?

Those people don’t practice law anymore.

Or, maybe this was a sound approach before litigation discovery was invented.

Or perhaps it was a viable tactic before the advent of sophisticated technology like universal claims databases and the Interwebs.  Maybe.

But what is clear is that today, this approach makes no sense.  Zero.  Less than zero.

It makes even less sense when you stop and realize that the real goal in most auto accident cases is usually settlement: a quick, clean, easy, honest, settlement.  If this is in fact the goal, it is most easily accomplished by giving the insurance company everything it needs (or thinks it needs) to evaluate the claim.

When you hide information, you d – r – a – g –  out your claim.

Moving on to your the writing of your demand letter. Do yourself a favor—save the drama and antics (dramantics) for the courtroom.

Your settlement demand is obviously not admissible, so no jury will ever see it.

What we should be dealing with here is a straightforward, professional document. One that lays out, as simply as possible, the facts of the accident, highlights the strengths of your plaintiff’s case and personal history, acknowledges –to the extent applicable–her weaknesses, sets out her medical claims and past and (if applicable) expected future treatment and wraps it all up by plainly stating how much it will take to make this go away today.

It probably goes without saying that the more money you’re asking for, the longer more support your letter should provide – and the greater the volume of accompanying documents.

1. Accident overview

Above all, begin by remembering who you are talking to. First rule of writing: consider your audience.

Whether you send your demand letter to the adjuster or an attorney — whether you send it before or after you file suit, your letter will ultimately be redirected to an insurance attorney.

In other words, your final recipient is (a) a lawyer (b) who deals with car wreck, after car wreck… after car wreck.

In laying out the accident, do not feel compelled to launch into painstaking detail that the car was blue, well, an off-blue really, and it had been given to the plaintiff on his 32nd birthday, by his wife – well his wife at the time, now his ex-wife – and due to the accident caused by your insured hurtling into him at an extremely high rate of speed the defendant’s car caused a scratch – a deep one – on the right side, in the front, right by the right front fender, and the scratch was not only deep but long, about the length of the distance from your fingertips to your elbow (assuming you are shorter than 5’2” but no shorter than 4’11”) but if you happen to be taller than 5’2” then….

Look. It was a car accident.

Unless either party was driving the batmobile at the time of the collision, there are only so many possible ways the accident could have occurred.

Either your client was rear-ended, caught between two cars, domino-style, or your client was hit from some other direction.  Two options: either your client was stopped or moving at the time.  The point here is describe the accident briefly. Explain who was at fault and why. Attach a police report and move on.

–         Plaintiff’s rate of speed
–         Defendant’s Mph.
–         Citations issued, and to the extent known, how they were resolved.

On that last point, remember that citations generally are not admissible evidence.  You’ll recall that the only time these are admissible as proof in Georgia is when the defendant pled guilty. 

In other words, if the defendant pled nolo contendere, then it is not admissible.

If he pled Not Guilty, the case went to trial, and he was either convicted or acquitted … well then, nope. Sorry. Still not admissible.

Ah!! But if he just plain ol’ didn’t show up for trial (and had notice ), this is considered a guilty plea: admissible.

You will recall from first year Torts that a car accident can be just that: An accident.  That being the case, you must identify exactly why you allege the defendant should be the one made to pay for it.

The mere fact that the defendant was driving is not enough.

You do not need to include citations to universally known rules of the road (a la, “…in the city of Atlanta, running a red light is in direct contravention of Municipal Ordinance —-“).

No. To the contrary, spare the adjuster any legal citations to municipal code – this is not a law review audition.

Instead, to the extent you are alleging that a commonly known rule of the road was violated, it suffices to say “your client ran a red light…”  Everyone get what that means.

Give your overview, then move on.


Watch video How to write a great demand letter.


Understanding The Auto Insurance Company

What the insurance company sells

An auto liability insurance company is engaged in the business of selling responsibility.

To be more clear, an insurer sells responsibility for having to clean up the mess should something scary happen.

Something scary like a cracked windshield.  Something scary like a fender-bender.

Something scary like a lawsuit.  

Since life can be scary, the insurance company exchanges cash for responsibility.

Or, if you prefer, you could say the insurer is in the business of buying problems.

For the low, low price of $79.99 (a month), the customer can sleep easy, knowing that this month if her Toyota Highlander ends up in a wreck, it will not be her responsibility.  Nope, this month—well, assuming she paid on time . . . or, if she didn’t, assuming there was no effective Cancellation—this month, that will be the insurance company’s problem.

How the insurance company makes money

Since auto liability insurance is a business, the insurance company is interested in making money.  And insurers obtain money by selling, as noted above, Responsibility.

At first glance, you may think their sales pitch: “You give me a little money now, and, in exchange, I’ll give you big money later” does not seem like much of a business.

You’d be wrong.

But, to be fair, the very nature of the company’s product means that making a profit can be tricky. . . .

The quick and dirty:

Step One: The insurance company must carefully decide what risks to take on, and how much to charge for taking on those risks.  

Risks, here, refers to the ways you could get hurt and your car could get damaged.

And, just to be extra clear: One of the ways you can get injured in a car accident is by getting sued.

The insurer determines the risks for which it is willing to assume responsibility.  In exchange for doing so, it charges a particular policyholder, a particular price—referred to as a premium.  The premium is closely tied to the type and size of the risks the insurer takes on: The bigger the risk, the bigger the premium.

But the premiums alone do not bring the insurance company a profit.

Step Two: The insurer must be fruitful and multiply.

The insurer must then multiply the cash (premiums) it obtained in Step One, by investing it in money-generating stuff.  Stocks, bonds, and other fancy financial things.

If it does this well, the insurance company will make enough to have money left over (i.e., profits) after Step Three.

Step Three: The insurer must give back to its policyholders what they purchased, and only what they purchased.

In this step, the insurance company is the 7-11® store manager making sure those darn juvenile delinquents don’t run out with fistfuls of slushies and Funyans.

As briefly mentioned, the insurance company decided how much to charge for its product based on a Formula—it took a highly educated guess as to the likelihood that the scary event might happen to a particular policyholder. Then, it took a highly educated as to how much, if it happened, the scary event would likely cost.

Then it charged that much. 


Well, that much, or more. Preferably more.

If the insurer does its job right, the money generated in Step One (from all of its policyholders), and the money paid out in Step Three (in all of its claims) will just about balance each other out.

Therefore, in terms of generating profit, an insurance company is only as good as how well it performs Step Two.

Simply put, the insurance company is not getting rich from premiums.

And, despite what you may hear, the insurer cannot get rich by holding on to money and refusing to pay valid claims.  

To the contrary, insurance is a highly-regulated industry. That means the government is all up in their business.

So, as you will see later, many laws assist policyholders in recovering all to which they are entitled and penalize insurance companies for purposely dragging their feet, playing games, or even just moving too slowly.

So, ultimately, an insurance company’s profitability really hinges on Step Two: its financial investments. To make money, the insurance company’s investments must make money between the time they leave the customers’ hands (as premiums) and the time they return to the customers’ hands (as paid claims).

Yep, an insurance company is basically your Uncle Alvin borrowing cash to fund his casino habit.  When ol’ Al borrows cash, he only ends up ahead if his luck at the casino outpaces the 38% interest you will be tacking on each day.  Likewise, an insurer succeeds only if the cash in its hands grows faster than the rate at which it must pay it back.

Except, when a policyholder demands payment, mere excuses won’t cut it—unlike ol’ Uncle Al, the insurance company must ante up. Ok, it’s just like your Uncle Al.

It’s all about control

Since the insurer does not make big money through premiums, to keep its situation running smoothly, the insurer must control what it can.

Control Risks

Starting with Step One, the insurer must carefully agree only to take responsibility for true risks.

This is because insurance company can only predict the odds of true risks.

True risks are a product of pure chance.  

By only agreeing in Step One to take on responsibility for events that are the pure product of chance, an insurance company can more closely calculate how much it will later have to pay out overall, in Step Three.

It’s like a coin toss.  The outcome of a single coin toss cannot really be predicted.  But, the overall outcome of a million coin tosses can be pretty well estimated.

As long as no funny business is going on (ahem, cheating), out of a million coin tosses, you can be pretty sure that will end up with somewhere in the neighborhood of 500,000 heads. And probably around 500,000 tails.

Try it and see.

By only taking on true risks, the insurance  company can make sure it charges each policyholder a premium that makes sense.

Control Investments

For Step Two, the only control the insurer has is to hire stellar money pros to hedge its bets and increase the likelihood that its investments will pay dividends.

But, the insurer only has so much control here. Just like any investor, an insurance company is subject to the ebb and flow of the economy and the financial markets.

Control Claims 

Finally, when it comes to Step Three the insurer must make sure that it pays only for the risks it agreed to take on in the first place.

Remember, to avoid losing money, but not quite to make money, the insurer exchanged cash for those true risks it took on—it was betting on those risks, and no other.

So, to make money, the insurance company must pay only what those risks are really worth.

This is where the process of claims settlement come in and where understanding how an insurer views and assess those claims helps make the difference when it comes time to negotiate.

But more on that later.

Understanding Auto Liability Insurance

An insurance policy is a contract. 

That’s all. 

It’s a contract between a person and her insurance company.  

So, insurance being a contract, the buyer gets what she paid for—no more, no less.

What she would have paid for—for purposes of this discussion—is one or both of the following flavors of auto insurance: Liability or Uninsured Motorists (UM).

The first type, Liability Insurance, is not optional.

All—yes all—auto insurance policies provide Liability Insurance.  It is the basic form of car insurance that jurisdictions (Georgia being one) require cars to carry.

UM, on the other hand, is different: The buyer has this type of insurance only if she wanted it. (Or, more likely, only if she did not notice she was agreeing to buy it…)  So, only some—yes some—auto insurance policies provide UM Insurance.

Liability Insurance

Time for a quick refresher.

The universe of auto insurance can be divided into two types: Liability and UM.

  • All insured cars carry Liability Insurance.
  • Some insured cars also carry UM Insurance.


But what is auto Liability Insurance?

Liability Insurance is the defendant’s insurance. That is to say, it is the type of insurance that protects a person when they are defending a lawsuit (i.e., when somebody else sued them).

Liability insurance guards against blame; it kicks in to rescue its people (its insureds) when someone tries to blame them for an accident or tries to sue them for money.

In a lawsuit, liability insurance protects the defendant.

It is “Liability” insurance because it cloaks the insured with protection against having to pay a judgment out of their own assets—it protects them against liability.

Depending on the number and nature of the auto insurance policies that a defendant, or people connected to a defendant, may have taken out, the defendant can find himself protected by multiple cloaks of Liability Insurance.

So Liability Insurance protects the defendant. But how?

Well, in a few ways.

But to understand how, you have to start by accepting as a general proposition, that in our system of civil justice, a defendant is liable for a judgment entered against him.


By liable I mean if a person is sued and a judgment is entered against him—whether by a default judgment or following a trial, or even by agreement of the parties—his assets can will be used to pay that judgment.

So, in a plain ole suit for money damages from a car accident, (in Georgia) a plaintiff does not sue the insurance company.

This bears repeating.

In Georgia, the plaintiff does not sue the defendant’s insurer.  
The plaintiff sues the person or business 
he claims caused his injuries.

If Plaintiff wins, a judgment is then entered against Defendant.

And, legally the defendant is the one responsible for the judgment; technically, he’s the one on the hook for making sure the judgment is paid. Even if that means his personal assets (savings, paycheck, kids’ college funds) are tapped.

Stated differently, the defendant is personally liable.

And if you have taken nothing else away from this, just remember: there is no “judge” in judgment.


Moving on…

In personam v. In rem judgment

What the what? Yes, I’m taking it there. . . .

Now, you may vaguely recall hearing mention of these in law school.

For now, suffice it to say that the type of judgment we are talking about here—i.e., the kind that makes a defendant personally liable—is an in personam judgment.

This tidbit matters because, as stated earlier, the defendant must be personally liable—or, at the very least, must be at risk of being personally liable—in order for Liability Insurance to kick in.

For now, just remember this: To hold a defendant personally liable—and, by extension, to ensure that Liability Insurance will come into play—the plaintiff must secure an in personam judgment against the defendant.

In personam judgment requires personal service of process.

Tuck this away in spare part of your brain—you’ll need it later when it comes time to think about serving the Complaint.

Back to Liability Insurance.

So, the defendant is facing personal liability in the form of an actual or threatened in personam judgment against him.

How does Liability Insurance come into play?

Liability Insurance is used to pay the judgment.

Let’s assume the defendant—back before the accident, lawsuit, and all this messy business got started—purchased car insurance.

As you know, the car insurance policy provides Liability Insurance.  Always.

This notion—that is, the concept of Liability Insurance—is really just shorthand for “The insurance company agrees to take care of its people if they sued for a car accident.

So, the Liability Insurer will pay an in personam judgment entered against its people.

Up to a certain point.

That certain point is determined by the amount of coverage the defendant bought.

Liability Insurance pays the judgment up to the coverage limit.

If the defendant purchased $25,000 in liability coverage, then the liability carrier must pay the judgment; but only up to $25,000.

If, under this same scenario, the defendant ends up with a judgment against him in the amount of $25,000.01, then that additional penny is not the responsibility of the Liability Insurer.

By default, therefore, that penny remains the defendant’s problem.

Because (remember) the defendant is the one who is personally liable for the judgment.

Liability Insurance supplies a lawyer.


Remember that insurance policy the defendant bought back before the accident happened?  By the terms of that contract, in addition to agreeing to pay the judgment (up to the policy limits), the insurance company also agreed to supply a lawyer to defend its insured (the defendant) in the lawsuit.

That was part of the product that the Insurer sold.

That’s right.  An auto policy is, in part, like a contract for pre-paid legal services.

So, by issuing a policy to the defendant (or someone connected in the right way to the defendant) the Liability Insurer agreed to defend the defendant against a lawsuit. . . .

. . . AND it agreed to pay the judgment (up to the policy limits).

Not bad, huh?

But this, of course, assumes the defendant is, in fact, covered by the auto insurance policy.

Hmmm.. Is the Defendant covered by the Liability Insurance policy?

That’s a good thing to find out because figuring out whether a defendant is ‘covered’ by liability insurance is a two-for-one. As we just discussed, it will tell you:

  • Whether the insurer will supply a lawyer to defend him.
  • (here’s the one you really care about) Whether the Liability Insurer will pay a judgment on his behalf.

Well, it will tell you that most of the time. . . .

Sometimes it kinda won’t. Because sometimes the Liability Insurer will issue what’s called a Reservation of Rights.

A Reservation of Rights means “We’ll defend, but we might not pay.

When a defendant is sued—or faces the threat of being sued—a Liability Insurer must move quickly.

As you already know, investigating, gathering evidence, and filing pleadings often starts soon after an accident; and doing these things on time can make or break a case.

As such, oftentimes a Liability Insurer cannot spend too long trying to determine whether the defendant is really covered under a policy.  The Insurer must often move first—and ask questions later.

In these situations, the Liability Insurer may be willing to supply a lawyer to immediately get to work protecting the defendant, but may first send the defendant a ‘Reservation of Rights’ letter.

The letter strikes a deal with the defendant.  What a Reservation of Rights letter says is that the Liability Insurer is willing, for now, to assume that the defendant is entitled to Liability Insurance protection, but it needs to look into it some more—so even though it is stepping up and putting up a defense for the defendant, it is nonetheless reserving the right not to pay the judgment.

If the defendant agrees to this deal, wha he is saying is: “Yes, yes, we can battle that question out later, whatever! But for now, please, PLEASE help me…!”

You are now probably thinking: “What does this mean for me?”

The answer: Probably nothing.

Knowing this, however, enables you to understand what may be going on behind the scenes, should it crop up in conversation.

Plus rarely, maybe even very rarely, it may come to affect you in that you may succeed in getting a judgment against a defendant . . . only to find that the Liability Insurer—who had been defending the insured until this point—is now refusing to pay the judgment on behalf of its insured.

But more on that later.

Read now about UM (Uninsured Motorists) Insurance

Notify insurance carriers of the accident

To settle or sue? That is often the question.

But whether you decide to sue or not, in all cases you will need to present your case in such a way as to maximize its value in the eyes of the insurer.  You accomplish this by researching, preparing, and presenting … your Demand.

But more on that later…

To quote the Cheshire Cat (or was it the Mad Hatter..?)  “Start at the beginning and when you come to the end, stop.”

In that spirit, let us begin at the start: Start by tracking down insurance.

Yes. If you have not already done so, you need to track down the car insurance policies that may potentially apply.


The Police Report.

Or, if you have already initiated litigation, in your discovery requests ask for the identification of any and all insurance policies that may apply.

Then, before you do anything else; before you send your demand, before you eat, before you breathe, before anything—give the defendant’s insurer a heads-up that your claim is coming their way.

You will thank yourself later.

1. Notify Carriers of the Claim

In Georgia, the defendant’s insurance company is entitled to notice.

But not just any notice—timely notice.

And not just any ‘timely notice’: Timely written notice.

(e) Each policy of motor vehicle liability insurance issued in this state on or after October 1, 1991, shall provide that the requirement for giving notice of a claim, if not satisfied by the insured within 30 days of the date of the accident, may be satisfied by an injured third party who, as the result of such accident, has a claim against the insured; provided, however, notice of a claim given by an injured third party to an insurer under this subsection shall be accomplished by mail. Each policy of motor vehicle liability insurance issued or renewed in this state on and after October 1, 1991, shall be deemed to include and construed as including the provision regarding the notice requirements provided in this subsection.

OCGA 33-34-3(e)

You see, if the liability insurer does not get timely written notice of the claim from somebody (anybody), it may not—just may not—have to pay up on the defendant’s behalf.

Which is a problem for the defendant.

But, let’s be real here, it’s a problem for you.

To be sure, by the time you hop onto the case, the defendant’s insurer may already know you are coming for them.

Yes, of course, their insured probably notified them of the accident. Maybe it was even your client.

And one of them may have even done so in writing.

But, making certain is what lawyers do best.

So go ahead, feed your little carrier pigeon and send him off with his first mission: To notify the defendant’s insurer of the claim. You will also need to know whether the defendant had valid insurance at the time of the accident.  And, if so, what the limits are.

And, depending on the extent of the plaintiff’s damages, you will need to find this information out for each and every car insurance policy that potentially insured the defendant. You need this information not for your own vacation planning, but because you must determine whether the amount of available liability insurance is enough to cover the plaintiff’s claim.

You should therefore send this request to each insurer that issued a policy potentially providing coverage for the defendant.

This step becomes absolutely critical if you intend to make a UM claim.

See, the thing is you cannot just hit up one liability carrier—or skip them altogether—then look to UM for coverage. To the contrary, in Georgia all available liability insurance must be exhausted before UM can be tapped.

2. Request a Certificate of Coverage from the Plaintiff’s Insurer

If it becomes necessary to pursue a UM claim, you will also need to know ahead of time whether your client had UM coverage. … And, if so, how much.

You’re feeling good.  You’re feeling great.

You drafted an air-tight Notice of Claim, and you’re in a writing mood.  You are looking for something to add that will save you time and effort down the road.

Do yourself a favor: Request a Certificate of Coverage from the plaintiff’s own insurer.

It sounds like it would be something you could frame, and hang on your refrigerator next to your law degree, but is really just the insurance carrier’s official acknowledgment that your guy was insured on the date and time in question. And, since you are corresponding with insurance companies anyway, why not just make them your pen pals?

Send a note to find out precisely with how much money you are dealing with.

Whoever is first in the field and awaits the coming of the enemy, will be fresh for the fight; whoever is second in the field and has to hasten to battle will arrive exhausted.

~Sun Tzu, The Art of War.