What Is a Policy Limits Demand in California?

If your injuries are worth more than the at fault driver’s insurance policy, there is a tool your attorney can use that changes the insurance company’s calculation entirely. It is called a policy limits demand, and California put specific rules around it in Code of Civil Procedure § 999.1.

This article explains what the statute requires and why the demand matters.

The basic problem it solves

Insurance policies have limits. California requires drivers to carry at least $30,000 per person under Vehicle Code § 16056, and plenty of drivers carry exactly that. If you have $150,000 in medical bills and the driver has a $30,000 policy, the insurer’s incentive is simply to wait. Their maximum exposure is $30,000 either way.

A properly made policy limits demand changes that. If the insurer refuses a reasonable demand within limits and a jury later returns a verdict above the policy, the insurer may face exposure beyond the policy for having failed to settle when it could have. That possibility is what gets a claim taken seriously.

What Code of Civil Procedure 999.1 requires

The statute sets out what a time limited demand to settle must contain. It must be in writing, it must be labeled as a time limited demand, and it must include all of the following:

A deadline of at least 30 days from the date the demand is transmitted, if sent by email, facsimile or certified mail, or at least 33 days if sent by ordinary mail. Section 999.1(a).
A clear and unequivocal offer to settle all claims within policy limits, including the satisfaction of all liens. Section 999.1(b).
An offer of a complete release for the insurer’s insureds from all present and future liability for the occurrence. Section 999.1(c).
The date and location of the loss. Section 999.1(d).
The claim number, if known. Section 999.1(e).
A description of all known injuries sustained by the claimant. Section 999.1(f).
Reasonable proof sufficient to support the claim, which may include medical records or bills. Section 999.1(g).

These requirements took effect January 1, 2023. A demand that leaves out an element is a weaker instrument, which is why this is not a letter to write yourself.

Why the timing rules matter

The minimum response windows exist because insurers argued that short fuse demands were being used to manufacture bad faith exposure rather than to settle claims. The statute now gives the insurer a genuine opportunity to evaluate and pay.

That cuts both ways for an injured person. The demand cannot be rushed, and it cannot be sent before the medical picture is developed enough to support it. Sending a policy limits demand too early, before treatment has revealed the full extent of an injury, can lock in a number well below what the claim is actually worth.

When a policy limits demand makes sense

Generally when three things are true at once:

Liability is reasonably clear
The documented damages plainly exceed the available policy
The medical record is developed enough that the injuries can be proven, not just asserted

If the claim is worth less than the policy, a policy limits demand is not the right tool. If the medical record is thin, the demand invites a denial that is easy for the insurer to justify.

What this means for you

You do not need to know the statute. What matters is understanding that there is a mechanism that puts real pressure on an insurer holding a small policy against a large injury, and that using it well depends on timing and documentation.

If you were hurt by a driver who appears to carry minimum limits, that is not the end of the analysis. Your own underinsured motorist coverage may add a layer, and in a rideshare crash the company’s policy may apply instead. Serious injuries such as a traumatic brain injury routinely exceed minimum policies, which is exactly the situation this tool was built for.

If you are in Woodland Hills or anywhere in California and want someone to look at whether your claim exceeds the available coverage, call (213) 800-0706.

How to find out what the policy limits actually are

You cannot make a policy limits demand without knowing the limit. In California, an injured person can request that information, and insurers commonly disclose it once liability is reasonably clear and a request is properly made. Where the insurer will not disclose voluntarily, the limits become discoverable once a lawsuit is filed.

This is a step people skip. Assuming the other driver carries minimums, and settling on that assumption, is one of the more expensive mistakes an unrepresented claimant can make. Drivers sometimes carry considerably more than the statutory floor, and commercial vehicles almost always do.

Where else coverage may be hiding

The at fault driver’s policy is rarely the only place to look:

Your own underinsured motorist coverage. Once the at fault policy is exhausted, this frequently becomes the primary source. Many people carry it without knowing.
An employer’s commercial policy, if the driver was working at the time.
A rideshare company’s policy. During an active trip, at least $1,000,000 applies, and California also requires uninsured and underinsured motorist coverage of $60,000 per person and $300,000 per incident under Public Utilities Code § 5433(b).
An umbrella policy, which sits above the auto policy and is often overlooked entirely.
A public entity, where a road defect contributed. Note the six month claim deadline under Government Code § 911.2.

What a demand cannot do

A policy limits demand does not force an insurer to pay. It changes what refusing costs them. An insurer that reasonably disputes liability may decline and accept the risk, and sometimes that is a rational decision on their part.

It also does not substitute for proof. Section 999.1(g) requires “reasonable proof… sufficient to support the claim.” A demand sent without developed medical documentation invites a denial that the insurer can later defend as reasonable, which undercuts the entire purpose of making it.

About the author. Joshua B. Adelpour is the founder of Not My Fault Law Group, APC, a California personal injury firm based in Woodland Hills. He is licensed by the State Bar of California, Bar No. 318226, and spent nearly a decade defending insurance companies in civil litigation before opening the firm. Call (213) 800-0706 for a free consultation. There are no attorney’s fees unless we win.

This article is general information about California law and is not legal advice. Reading it does not create an attorney client relationship. Every case depends on its own facts.

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