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A car accident demand letter requests payment for costs related to an accident involving drivers or pedestrians. It serves as an invoice for medical and property damage expenses, sent to the at-fault driver or their insurance. This video covers the significance of demand letters, emphasizing that they are essential for initiating settlement negotiations outside of court. The letter details the sender's account of the accident, outlines all incurred costs, and documents the demanding party's claims. Additionally, the video offers guidance on obtaining a free official template for creating a demand letter.