What Is a Policy Limits Demand in California?
- Tom Feher, Esq.
From Tom Feher, Esq.
“A properly built policy limits demand is the most powerful letter in a serious injury case. Since California wrote the rules into statute in 2023, insurers know exactly what a valid demand looks like, and so do we. When a carrier unreasonably lets one expire, the policy limits stop being the ceiling on the case.”
Thomas Feher, Esq. · Founding Attorney, Feher Law APC · 50+ jury trials to verdict · $170M+ recovered · Super Lawyers 2022-2026
Short answer: a policy limits demand is a written, pre-lawsuit offer to settle your injury claim for the full limit of the at-fault party’s liability insurance, open for a fixed window. Since January 1, 2023, California law formally calls this a time-limited demand and sets its rules in Code of Civil Procedure section 999 through 999.5. Its power is simple: an insurer that unreasonably lets a valid within-limits demand expire can end up on the hook for far more than its policy limits if a jury later awards more.
Key Takeaways
- Codified since 2023: a policy limits demand (time-limited demand) is a pre-suit written offer to settle within the insurer’s policy limits, with an acceptance window of at least 30 days (33 by regular mail) under CCP 999.1.
- Strict contents: the demand must be labeled, offer a clear within-limits settlement including liens, promise a complete release, and include the date and location of the loss, known injuries, and reasonable proof such as medical records.
- The leverage: CCP 999 declares prompt settlement to be California public policy and defines “extracontractual damages”: amounts above the available policy limits.
- Scope: the rules cover claims under automobile, motor vehicle, homeowner, and commercial premises liability policies under CCP 999.5.
- The clock still runs: a demand does not pause your filing deadline, which is two years for most California injury claims under CCP 335.1.
Wondering what your claim is worth before any demand goes out?
Get a grounded range in about a minute with our free personal injury settlement calculator or call (424) 622-3350 for a free case evaluation. You pay nothing unless we win.
What Is a Policy Limits Demand in California?
When the at-fault party’s insurance is small compared to your injuries, the fastest route to the full policy is a time-limited demand: a formal offer to settle everything for the policy limits, open for a fixed window. If the insurer accepts, the case resolves at the policy ceiling without a lawsuit. If it unreasonably lets the demand lapse, the insurer has a problem, because California has declared it public policy that early settlement of meritorious claims benefits everyone, and the carrier was handed a chance to close the file at its own limit.
Before 2023 these letters lived in case law. Senate Bill 1155 codified them, effective January 1, 2023, as Code of Civil Procedure sections 999 through 999.5. That is why the format now matters as much as the idea: a letter that misses a required element may not qualify as a time-limited demand under the statute at all.
What a Valid Time-Limited Demand Must Contain Under CCP 999.1
Under CCP 999.1, the demand must be in writing, labeled as a time-limited demand or reference the statute, and include every material term:
- A real deadline: at least 30 days from transmission by email, fax, or certified mail, or 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 known liens.
- An offer of a complete release of the insured from all present and future liability for the occurrence.
- The date and location of the loss and the claim number, if known.
- A description of all known material injuries sustained by the claimant.
- Reasonable proof supporting the claim, which may include medical records or bills.
Each element exists so an insurer cannot later argue the demand was too vague to evaluate. It is also why the letter is lawyer work: one missing term can hand the carrier an exit, and the demand commits you to settle at the limits if it is accepted.
Why Insurers Take Policy Limits Demands Seriously
A liability insurer’s duties run to its own policyholder, and that is exactly where the leverage comes from. When a valid within-limits demand is unreasonably rejected or ignored and a jury later returns a verdict above the policy limits, the at-fault driver or property owner is personally exposed to every dollar of the excess, and the insurer that refused the chance to settle within limits faces the consequences of putting its own insured in that position. CCP 999 even has a name for money above the policy: extracontractual damages.
In practice, serious cases often resolve at policy limits inside the demand window, or they proceed toward trial with the ceiling effectively off. Our guide to insurance bad faith in California explains how these duties work, and our guide on whether to accept a first settlement offer covers the other side of the same negotiation: when the number on the table is not full value.
Timing matters twice. The demand itself must stay open the full 30 or 33 days the statute requires, and nothing about sending one pauses the two-year filing deadline for most California injury claims under CCP 335.1. Once a lawsuit is filed, settlement pressure shifts to formal offers under CCP 998, which carry their own cost-shifting rules, covered in our guide to settling versus going to trial. The statute also limits the playing field: under CCP 999.5, the time-limited demand rules apply to claims under automobile, motor vehicle, homeowner, and commercial premises liability policies.
What to Expect When You Work With Feher Law
1. Free Case Evaluation: We review the crash or incident, your injuries, and every available policy, including umbrella coverage the insurer may not volunteer.
2. Evidence First: Medical records, bills, and liability proof are assembled before any demand goes out, because CCP 999.1 requires reasonable proof and a thin demand wastes the leverage.
3. The Demand: We draft and serve a statute-compliant time-limited demand with every material term, properly labeled, with the full acceptance window.
4. The Window: The insurer accepts, negotiates, or lets the demand lapse. We document everything, because what happens inside this window shapes the rest of the case.
5. Full Value Either Way: If the demand resolves the case at limits, you are paid without a lawsuit. If not, our trial attorneys file and push toward verdict. You pay nothing unless we win.
Frequently Asked Questions
It is a written, pre-lawsuit offer to settle your entire claim for the full limit of the at-fault party's liability insurance, open for a fixed acceptance window. California codified these as time-limited demands in Code of Civil Procedure sections 999 through 999.5, effective January 1, 2023.
The acceptance window must be at least 30 days from transmission by email, fax, or certified mail, or at least 33 days if the demand is sent by regular mail, under CCP 999.1. A shorter deadline does not qualify as a valid time-limited demand under the statute.
The case moves toward litigation and the rejection becomes part of the record. If a jury later awards more than the policy limits, the at-fault party is personally exposed to the excess judgment, and the insurer that unreasonably refused a within-limits settlement faces the consequences of having put its own policyholder in that position.
No. Under CCP 999.5, the time-limited demand rules apply to claims under automobile, motor vehicle, homeowner, and commercial premises liability insurance policies for property damage, personal or bodily injury, or wrongful death.
You can, but one missing material term, such as an incomplete release, an invalid deadline, or missing proof, can disqualify the demand under CCP 999.1 and hand the insurer an exit. The letter also commits you to settle at the limits if it is accepted, so it should only go out after a real valuation of the case.
No. The two-year statute of limitations for most California injury claims under CCP 335.1 keeps running while the demand is pending, and claims against government entities have a six-month claim deadline. The demand strategy has to fit inside those clocks.
That is when the demand matters most. Accepting limits can still be right when that is all the coverage that exists, but an unreasonably rejected demand can open the door to recovering above the limits, and umbrella policies, additional defendants, and your own underinsured motorist coverage can add layers. Every source of recovery should be mapped before anything is signed.
Get the Demand Right the First Time
Feher Law has recovered more than $170 million for California clients, with more than 50 jury trials to verdict. Call (424) 622-3350 or start a free case evaluation. Free consultation, English or Spanish. You pay nothing unless we win.
Last reviewed by Thomas Feher, Esq. – October 2026
