📋 Overview

You've received a personal injury demand letter on behalf of an insured's claimant. California's Unfair Claims Settlement Practices Act (Insurance Code 790.03) requires prompt, good faith handling of all claims. This guide helps you evaluate liability, assess damages, and formulate an appropriate response.

⚠ Regulatory Compliance

IC 790.03 prohibits unreasonable delays, inadequate investigation, and failure to communicate. Document everything.

🕒 Time Requirements

Acknowledge claims within 15 days. Accept or deny within 40 days of receiving proof of claim.

💰 Bad Faith Exposure

Unreasonable claims handling can expose insurer to bad faith liability with consequential and punitive damages.

Key Evaluation Factors

  • Liability assessment - Clear, disputed, or comparative fault
  • Policy coverage - Limits, exclusions, and reservations of rights
  • Damages documentation - Medical records, bills, lost wages proof
  • General damages - Pain and suffering, emotional distress claims
  • Demand reasonableness - Compare to verdict research and similar claims
$450
Professional Response Letter

Liability analysis, damages evaluation, and formal response on attorney letterhead.

Schedule Review

🔍 Evaluate the Claim

Conduct a thorough investigation before responding. Document all findings in your claim file.

Liability Assessment Matrix

Liability Scenario Response Strategy Settlement Approach
Clear liability (insured at fault) Focus on damages evaluation Negotiate damages only
Comparative fault Document claimant's contribution Reduce by fault percentage
Disputed liability Gather evidence, witness statements Nuisance value or deny
No liability Document basis for denial Deny with explanation

📄 Liability Investigation

  • ✓ Police report obtained
  • ✓ Insured's statement taken
  • ✓ Witness statements gathered
  • ✓ Scene photos/video reviewed

📝 Damages Documentation

  • ✓ All medical records received
  • ✓ Medical bills itemized and verified
  • ✓ Lost wage documentation
  • ✓ Prior medical history checked

⚠ Investigation Requirements

Under 10 CCR 2695.7, you must conduct a thorough investigation before denying a claim. Inadequate investigation is itself an unfair claims practice.

🛡 Liability Defenses

Evaluate potential defenses that may reduce or eliminate liability.

Comparative Negligence (CC 1714)

California uses pure comparative fault. Claimant's recovery is reduced by their percentage of fault, but not eliminated. Document any evidence of claimant's contributing negligence.

When to use: Claimant was speeding, distracted, failed to yield, or otherwise contributed to accident.

Pre-Existing Condition

While the "eggshell plaintiff" rule means you take claimants as you find them, you only owe damages for aggravation of pre-existing conditions, not the underlying condition.

When to use: Medical records show treatment for same body part before accident.

Failure to Mitigate

Claimants must take reasonable steps to minimize damages. Failure to follow medical advice, missed appointments, or delay in treatment may reduce recovery.

When to use: Gap in treatment, non-compliance with medical recommendations.

Causation Issues

Injuries must be proximately caused by the accident. Intervening events, subsequent accidents, or unrelated conditions may break causation chain.

When to use: Multiple accidents, delayed symptom onset, inconsistent mechanism of injury.

🚨 Defenses Requiring Careful Handling

  • Don't deny legitimate claims based on weak defenses
  • Document objective basis for any coverage or liability dispute
  • Consider excess exposure before taking aggressive positions
  • Consult coverage counsel when policy issues arise

💰 Damages Analysis

Evaluate special and general damages using accepted methodologies.

📊 Sample Damages Calculation

Soft tissue injury with 6 months treatment

Medical specials (actual bills) $15,000
Future medical (if documented) $2,000
Lost wages (verified) $5,000
General damages (1.5-3x specials) $22,500-$45,000
REASONABLE SETTLEMENT RANGE $44,500-$67,000

Damages Evaluation Factors

Injury Severity

Objective findings, treatment duration, permanency indicators, impact on daily activities.

Treatment Reasonableness

Medical necessity, frequency, duration, provider qualifications, billing rates.

Venue Considerations

Local verdict values, judicial attitudes, jury demographics in likely trial venue.

Claimant Credibility

Consistency of complaints, social media activity, prior claims history.

💡 Verdict Research

Review comparable verdicts and settlements in the jurisdiction. Consider both plaintiff and defense verdicts to establish a reasonable range for evaluation.

📝 Sample Responses

Professional response templates for various scenarios.

Acknowledgment of Demand
We acknowledge receipt of your demand letter dated [DATE] on behalf of [CLAIMANT] arising from the [DATE OF LOSS] incident. We are currently evaluating the claim and require the following additional documentation to complete our assessment: (1) complete medical records from all treating providers, (2) itemized billing statements, (3) verification of lost wages, and (4) evidence of any claimed future damages. Upon receipt of complete documentation, we will provide a substantive response within the timeframes required by California law.
Counter-Offer Response
We have completed our evaluation of your client's claim. Based on our investigation, we accept liability for this loss. Your demand of [$DEMAND AMOUNT] significantly exceeds the reasonable value of this claim. Our analysis of the medical documentation supports special damages of [$SPECIALS]. Considering the nature and duration of treatment, we believe general damages in the range of [$RANGE] are appropriate. We are prepared to offer [$OFFER] in full settlement of all claims. This offer is open for [30] days and is contingent upon execution of a standard release.
Comparative Fault Response
We have completed our liability investigation. Based on the evidence, including [police report/witness statements/traffic camera footage], we conclude that your client bears significant comparative fault for this accident. Specifically, your client [describe negligent conduct], which contributed to the collision. Under California's pure comparative negligence standard (Civil Code 1714), your client's recovery must be reduced by their percentage of fault. We assess your client's comparative fault at [X]%. Accordingly, we are prepared to offer [$AMOUNT], representing our evaluation of damages reduced by comparative fault.
Denial - No Liability
We have completed our investigation of your client's claim. Based on the evidence, we must respectfully deny liability. Our investigation reveals that [explain basis - e.g., our insured had the right of way, claimant rear-ended our insured, etc.]. The police report, witness statements, and physical evidence support our conclusion that our insured was not negligent. Accordingly, we are unable to offer compensation for your client's claimed damages. If you have additional evidence that would support a different liability conclusion, please provide it for our consideration.

🚀 Next Steps

Strategic considerations after receiving a PI demand.

Step 1: Acknowledge

Send acknowledgment within 15 days per IC 790.03. Request any missing documentation.

Step 2: Investigate

Complete liability and damages investigation. Document all findings in claim file.

Step 3: Evaluate

Set reserves based on exposure analysis. Consider policy limits and excess exposure.

Step 4: Respond

Provide substantive response within 40 days with clear explanation of position.

If Litigation Is Filed

  • Tender defense immediately - Forward suit papers to defense counsel
  • Issue reservation of rights - If any coverage issues exist
  • Monitor discovery - New information may change evaluation
  • Consider mediation - Often required before trial

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California Resources

  • Insurance Code 790.03: Unfair Claims Settlement Practices Act
  • 10 CCR 2695: Fair Claims Settlement Practices Regulations
  • Civil Code 3333: Measure of damages for personal injury
  • CACI 3900 series: Jury instructions on damages