A policy limits demand is a written settlement offer that gives the insurance company a firm deadline to pay the full limits of its policy. California law calls it a time-limited demand and sets the rules in Code of Civil Procedure section 999. If the insurer unreasonably rejects a compliant demand, it can end up owing more than the limits.
A policy limits demand, often called a 999 demand or time-limited demand, is a formal offer to settle an injury claim for everything the at-fault driver’s insurance policy will pay. It is the strongest settlement tool an injured person has before a lawsuit is filed. This article explains what the demand is, what California law requires it to include, and why insurance companies take it seriously. It applies to California claims. Every case is different.
What is a policy limits demand in California?
A policy limits demand tells the insurance company: pay the full amount your policy covers by a set date, and in exchange our client will release your insured from the claim. It is used when the injuries are serious enough that the case is likely worth as much as the policy, or more.
Every liability policy has a limit. In California, drivers must carry at least $30,000 per person and $60,000 per crash in bodily injury coverage under Vehicle Code section 16056. Many drivers carry only those minimums. When a broken bone, a surgery, or months of treatment push the value of a claim past the limit, the insurance company’s cheapest way out is to pay its limits and close the file. A well-built demand forces that decision onto a deadline. If you are still working out what your claim might be worth, start with how much a car accident case is worth in California, then look at the limits available.
What is a 999 demand or time-limited demand?
A 999 demand is the same thing as a time-limited policy limits demand. The nickname comes from Code of Civil Procedure section 999, the statute that has governed these demands since January 1, 2023. The law applies to demands made before a lawsuit or arbitration is filed on claims under automobile, motor vehicle, homeowner, and commercial premises liability policies.
Before 2023, time-limited demands were a creature of case law, and insurers often complained that deadlines were traps. The Legislature responded with a clear rulebook. Section 999 declares that prompt settlement of claims is the public policy of this state. The sections that follow spell out what a valid demand contains, where it must be sent, and what the insurer has to do with it. In our practice we see the statute cut both ways: it protects insurers from ambush deadlines, and it protects injured people by making a compliant demand very hard to ignore.
What must a time-limited demand include under section 999.1?
Code of Civil Procedure section 999.1 requires the demand to be in writing, to be labeled as a time-limited demand or reference the statute, and to contain specific material terms. Miss one, and the demand may not count. The required terms are:
- 1A lawful deadline. The insurer must get at least 30 days to accept if the demand goes out by email, fax, or certified mail, or at least 33 days if it goes out by regular mail.
- 2An offer to settle within the limits. The demand must clearly offer to resolve all claims for an amount within the policy limits, including satisfaction of all liens.
- 3A complete release. The demand must offer the insured a full release from all present and future liability for the crash.
- 4The loss details. The date and location of the crash, and the claim number if it is known.
- 5A description of known injuries. Every injury the claimant knows about at the time of the demand.
- 6Reasonable proof. Medical records, bills, and other documentation sufficient to support the claim.
Under section 999.2, the demand also has to reach the right hands: the address the insurer designated for time-limited demands or the adjuster assigned to the claim. Because the offer must promise that liens will be satisfied, you need to know what those liens are before the demand goes out. We cover that in how a medical lien affects your settlement.
Why does a policy limits demand put pressure on the insurance company?
Because rejecting one is risky. Every insurer in California owes its policyholder a duty of good faith, which includes accepting a reasonable settlement demand within the limits when liability is clear and the injuries support it. Insurance Code section 790.03(h)(5) separately requires insurers to attempt good faith settlements once liability is reasonably clear.
Here is where the leverage comes from. If the insurer unreasonably refuses to pay its limits and a jury later returns a verdict above those limits, California courts have long held that the insurer can be responsible for the entire judgment, not just the policy. Cases like Comunale v. Traders and General Insurance Company and Crisci v. Security Insurance Company built that rule decades ago, and section 999 now defines when a pre-lawsuit demand counts as the kind of reasonable offer that opens the door. The statute calls the amount above the limits extracontractual damages. A carrier that gambles with its insured’s finances by sitting on a fair demand can lose that bet badly.
Not sure what to do next? You can call Morales Law Firm for a free consultation before speaking with the insurance company, and there is no fee unless we win.
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What happens if the insurer rejects or ignores the demand?
Under Code of Civil Procedure section 999.3, an insurer that does not accept a time-limited demand must notify the claimant in writing of its decision and the basis for it before the deadline runs. That written response, or the lack of one, is relevant evidence in any later lawsuit seeking extracontractual damages against the insurer.
The statute gives insurers some breathing room. Asking for clarification, requesting more records, or proposing an extension is not, by itself, a rejection or a counteroffer. But silence past the deadline is a serious problem for the carrier. On the other side, section 999.4 says a demand that does not comply with the statute will not be treated as a reasonable settlement offer in a later bad faith case, at least when the claimant had a lawyer. That is why the technical requirements matter so much. When the deadline passes without acceptance, the usual next step is filing suit, and the case value conversation changes. Our post on how long a personal injury case takes in California walks through what that timeline looks like.
When is the right time to send a policy limits demand?
Send it when you can prove the claim is worth the limits, and not before. A demand supported by two weeks of chiropractic records will not scare anyone. A demand supported by an MRI, a surgical recommendation, and a clear liability picture is a different letter entirely.
In practice, the right moment usually arrives when treatment has stabilized enough to describe the full injury picture, the records and bills are in hand, the liens are identified, and the at-fault driver’s limits have been confirmed. The deadline clock inside the demand is measured in days, but the deadline around the whole claim is measured in years: most California injury claims must be filed in court within two years under Code of Civil Procedure section 335.1, and claims against government entities require a claim within six months under Government Code section 911.2. We build the demand timeline backward from those dates so the pressure stays on the insurer, not on the client.
What mistakes can weaken a policy limits demand?
The most common problems we see are self-inflicted. A deadline shorter than the statute allows. No claim number and no crash location. A demand that never mentions liens, which makes the release promise incomplete. Proof that does not match the number being demanded. Or a demand sent so early that the insurer can fairly say it had no way to evaluate the injuries.
In our experience, one of the biggest mistakes injured people make after a crash is talking numbers with the adjuster before they know the policy limits or the full extent of their injuries. That mistake can matter because a low early number becomes the ceiling for every later negotiation, and a botched demand can forfeit the leverage section 999 creates. If you are dealing with this issue, save every letter, email, and voicemail from the insurance company, and do not sign a release or accept a check before speaking with an attorney.
Signing paperwork too fast is its own trap. A release usually waives all claims, known and unknown, under Civil Code section 1542. Before you take any early money, read our guide on whether to accept the first settlement offer.
When should you call a lawyer?
Call before the demand goes out, not after it fails. These red flags mean the stakes are high enough that the demand needs to be done right the first time:
- 1Serious injuries. Surgery, fractures, a hospital stay, or treatment that is still ongoing months after the crash.
- 2Low policy limits. When the limits are small and the injuries are not, the bad faith angle becomes the most valuable part of the case.
- 3Disputed fault. The insurer will not pay limits while it thinks it can pin the crash on you.
- 4Multiple injured people. Several claimants competing for one policy changes the strategy completely.
- 5An expiring deadline. A statute of limitations or government claim deadline that is months away, not years.
- 6Insurer silence. An adjuster who will not confirm limits or respond in writing is telling you something.
How does Morales Law Firm handle policy limits demands?
We build the case before we write the letter. That means confirming every available policy, gathering the records and bills, identifying the liens, and documenting liability with photos, witness statements, and the traffic collision report. Then we draft a demand that satisfies every element of section 999.1, send it the way section 999.2 requires, and calendar the deadline. If the insurer pays, we negotiate the liens down and move to disbursement. If it does not, we file, and the insurer’s rejection letter becomes Exhibit A. You can read more about how we handle car accident cases across the San Gabriel Valley.
Our office is at 151 W. Bonita Ave in San Dimas, and most of our injury cases come from the I-210, I-10, and SR-57 corridors through San Dimas, Glendora, Covina, West Covina, La Verne, and Pomona. When a case does not settle, we file at Pomona Courthouse South for Los Angeles County crashes or the San Bernardino Justice Center for Inland Empire cases. The consultation is free, and there is no fee unless we win.
Frequently asked questions
What is a 999 demand in California?
A 999 demand is a time-limited policy limits demand named after Code of Civil Procedure section 999. It is a written pre-lawsuit offer to settle an injury claim within the at-fault party’s insurance policy limits by a set deadline, with the contents and delivery rules spelled out by statute.
How long does the insurance company have to respond?
The demand must give the insurer at least 30 days from transmission if sent by email, fax, or certified mail, or at least 33 days if sent by regular mail. If the insurer does not accept, it must explain its decision in writing before the deadline expires.
Can I send a policy limits demand without a lawyer?
Yes. The statute’s penalty for a non-compliant demand applies to claimants who have lawyers, so unrepresented people get more forgiveness. But insurers rarely pay limits to unrepresented claimants, and a mistake in the demand or the release can cost far more than a fee. Talk to an attorney first.
What happens if the insurer pays the policy limits?
You sign a release of the insured, the liens get paid or negotiated out of the settlement, and the claim against that driver ends. If your damages are bigger than the limits, we then look at underinsured motorist coverage on your own policy and any other policies that might apply.
Does a policy limits demand make sense in every case?
No. It fits cases where the injuries clearly meet or exceed the available limits. If your claim is worth less than the policy, a limits demand overreaches and stalls the negotiation. An honest valuation of the medical records, wage loss, and pain has to come first.
What if my damages are more than the policy limits?
Three paths exist: an insurer that unreasonably rejected a compliant demand may owe the whole judgment, your own underinsured motorist coverage may add a layer, and the at-fault driver can be personally liable. Which path fits depends on the policies and the insurer’s conduct.
Injured in a crash? Call or text Morales Law Firm at (626) 521-5402 for a free consultation. No fee unless we win.
Call or Text (626) 521-5402This article is for general educational purposes only and is not legal advice. Every case is different. Reading this article does not create an attorney-client relationship. If you were injured, speak with a qualified attorney about your specific facts and deadlines. Reviewed by Francisco J. Morales, Esq., California personal injury attorney, SBN 349235. About the author.
