UM/UIM Demand Letter - Alabama

UM/UIM (UNINSURED/UNDERINSURED MOTORIST) POLICY LIMITS DEMAND

State of Alabama

[LAW FIRM LETTERHEAD]

SETTLEMENT COMMUNICATION — FOR RESOLUTION PURPOSES ONLY
ADMISSIBILITY GOVERNED BY ALA. R. EVID. 408 AND, IF APPLICABLE, FED. R. EVID. 408

VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED
AND VIA EMAIL TO: [ADJUSTER_EMAIL]

Date: [__/__/____]

[INSURANCE_COMPANY_NAME]
[UM_UIM_CLAIMS_DEPARTMENT_ADDRESS]
[________________________________]

Attention: [ADJUSTER_NAME], [ADJUSTER_TITLE]

Re: UM/UIM POLICY LIMITS DEMAND — ALABAMA LAW (Ala. Code § 32-7-23)

Dear [ADJUSTER_NAME]:

I. INTRODUCTION AND NATURE OF DEMAND

This firm represents [CLIENT_NAME] ("our client"), your insured, in connection with a claim for [UNINSURED / UNDERINSURED] motorist benefits under the above-referenced policy issued pursuant to Ala. Code § 32-7-23. This letter constitutes a formal demand for payment of the full available UM/UIM policy limits — including all stackable coverages permitted under Ala. Code § 32-7-23(c) — to compensate our client for damages arising from the motor vehicle collision of [__/__/____] in [COUNTY] County, Alabama.

Our client's damages substantially exceed the amounts paid or proposed to be paid on behalf of the tortfeasor and the available UM/UIM limits. The enclosed records provide the information needed to evaluate fault, damages, insured status, available coverage, and any policy conditions.

II. ALABAMA UM/UIM STATUTORY FRAMEWORK

A. Mandatory Offer and Minimum Limits — Ala. Code § 32-7-23

For an automobile or motor-vehicle liability policy delivered or issued for delivery in Alabama with respect to a vehicle registered or principally garaged in Alabama, Ala. Code § 32-7-23(a) requires bodily-injury UM coverage at the limits specified in § 32-7-6(c), unless the named insured rejects the coverage. The current minimum is $25,000 per person / $50,000 per accident for bodily injury. The $25,000 property-damage figure in § 32-7-6(c) is a liability-insurance minimum; § 32-7-23 does not create matching property-damage UM coverage.

The right to reject appears in § 32-7-23(a) itself. Whether a rejection or selection is valid and what limit applies must be determined from the signed application, policy, renewal history, and controlling Alabama decisions. Do not assume that UM/UIM limits automatically equal the policy's bodily-injury liability limits.

In Alabama, "underinsured motorist" coverage is a statutory component of uninsured motorist coverage. The tortfeasor qualifies as "underinsured" where the tortfeasor's available liability limits are insufficient to fully compensate the insured's damages. Ala. Code § 32-7-23(b).

B. Stacking Under Ala. Code § 32-7-23(c)

Alabama's statute sets the following ceiling on aggregation within any one contract:

"The recovery by an injured person under the uninsured provisions of any one contract of automobile insurance shall be limited to the primary coverage plus such additional coverage as may be provided for additional vehicles, but not to exceed two additional coverages within such contract." Ala. Code § 32-7-23(c).

Under this provision, recovery under any one contract is limited to the primary coverage plus no more than two additional vehicle coverages. Potential coverage under a different contract is not automatic; it depends on the claimant's insured status, the policy language, exclusions or other-insurance provisions, and the facts of the loss. Each contract must be analyzed separately before stating an aggregate limit.

C. Coverage Trigger for This Claim

D. Coverage Inventory and Stacking Analysis

III. THE COLLISION AND TORTFEASOR LIABILITY

A. Facts of the Collision

On [__/__/____], at approximately [____] [AM/PM], our client was [DESCRIBE CLIENT ACTIVITY — e.g., "lawfully operating a 20[__] [MAKE/MODEL] northbound on U.S. Highway [___]"] at or near [LOCATION] in [CITY], [COUNTY] County, Alabama.

[DETAILED_NARRATIVE_OF_COLLISION — include direction of travel, signal/sign control, weather, road conditions, speeds, and impact sequence.]

[________________________________]

B. Tortfeasor's Negligence

The tortfeasor, [TORTFEASOR_NAME], breached the duty of reasonable care owed to our client in the following ways. Include only grounds supported by the evidence and verify any statute cited in the final letter:

☐ Failure to yield right-of-way
☐ Failure to keep a proper lookout
☐ Following too closely
☐ Driving at an excessive or unreasonable speed for conditions
☐ Disregarding a traffic signal or stop sign
☐ Making an unsafe lane change
☐ Driving under the influence
☐ Driving while distracted
☐ Driving recklessly or wantonly
☐ [OTHER: ________________________________]

C. Evidence of Liability

1. Alabama Uniform Traffic Crash Report issued by [AGENCY — e.g., Alabama Law Enforcement Agency / Birmingham Police Department / [COUNTY] County Sheriff's Office], Report No. [________], citing [TORTFEASOR] for [________].
2. Witness statements from [NUMBER] independent witnesses, including [WITNESS_1] and [WITNESS_2], all of whom corroborate the tortfeasor's fault.
3. Physical evidence — point of impact, debris field, vehicle damage patterns, and post-collision vehicle positions all consistent with our reconstruction.
4. Accident reconstruction by [EXPERT_NAME], [CREDENTIALS], whose report is enclosed.
5. [Tortfeasor's citation / guilty plea / criminal conviction, if applicable]

D. Our Client's Freedom From Contributory Fault

Alabama retains contributory negligence rather than comparative negligence. Williams v. Delta International Machinery Corp., 619 So. 2d 1330 (Ala. 1993). Contributory negligence that proximately contributes to the injury can bar an ordinary-negligence recovery. Counsel should separately evaluate whether the evidence supports a distinct wantonness or subsequent-negligence theory rather than treating every fault dispute as dispositive.

We have thoroughly investigated our client's conduct, and the evidence is uniform: our client bears zero comparative fault for this collision. Our client:

• Was operating [HIS/HER] vehicle within the posted speed limit;
• Had the right-of-way at the time of impact;
• Was not impaired, distracted, or violating any Rule of the Road;
• Was properly restrained by seatbelt;
• Had a valid Alabama driver license and operational vehicle.

Should [CARRIER_SHORT_NAME] contend otherwise, please identify the specific facts, witnesses, records, and policy provisions supporting that position.

IV. OUR CLIENT'S INJURIES AND MEDICAL TREATMENT

A. Injury Summary

As a direct and proximate result of the collision, our client sustained the following injuries:

Primary Injuries:

• [INJURY_1 — e.g., C5-C6 herniated disc with radiculopathy]
• [INJURY_2]
• [INJURY_3]

Secondary / Sequelae:

• [CONDITION_1]
• [CONDITION_2]

B. Treatment Timeline

C. Current Condition and Prognosis

[TREATING_PHYSICIAN], M.D., has rendered the following opinion to a reasonable degree of medical certainty: [OPINION_SUMMARY]. [CLIENT] has reached maximum medical improvement / continues in active treatment, and the anticipated future course is [DESCRIBE].

D. Permanent Impairment

Using the AMA Guides to the Evaluation of Permanent Impairment (6th ed.), [PHYSICIAN] has assigned the following impairment ratings:

V. DAMAGES

A. Past Medical Expenses and Payment Evidence

Under Ala. Code § 12-21-45, evidence that claimed medical or hospital expenses have been or will be paid or reimbursed is admissible. The plaintiff may offer responsive evidence concerning the cost of obtaining reimbursement or payment and, upon the required proof, any obligation to repay those amounts. Do not characterize every billed charge as automatically recoverable; document the amount billed, amount paid, amount outstanding, write-offs, liens, and reimbursement obligations.

B. Future Medical Expenses (Present Value)

C. Past and Future Lost Earnings / Earning Capacity

• Past Lost Wages: $[__________] ([NUMBER] weeks at $[RATE]/week)
• Future Lost Earning Capacity (PV): $[__________] per [ECONOMIST_NAME]'s report of [__/__/____]

D. Non-Economic Damages (Pain, Suffering, Mental Anguish, Loss of Enjoyment)

Our client claims damages supported by the enclosed evidence for physical pain, mental anguish, disfigurement, and loss of enjoyment of life. [CLIENT]'s life has been substantially and permanently altered: [DESCRIBE IMPACT ON DAILY LIFE, HOBBIES, FAMILY, WORK].

E. Damages Summary

VI. LAMBERT CONSENT-TO-SETTLE PROCEDURE (Ala. 1991)

A. Status of Underlying Liability Settlement

Our client [HAS REACHED / IS IN NEGOTIATIONS REGARDING] a settlement with the tortfeasor's liability carrier, [TORTFEASOR_CARRIER], for policy limits of $[__________]. The tortfeasor's limits are grossly insufficient to compensate our client's damages of approximately $[__________].

B. Notice Under Lambert v. State Farm Mut. Auto. Ins. Co., 576 So. 2d 160 (Ala. 1991)

Pursuant to Lambert, our client hereby formally notifies [CARRIER_SHORT_NAME] of the tortfeasor's settlement offer and requests written consent to settle with the tortfeasor's liability carrier and execute a limited release of the tortfeasor.

The Lambert procedure is fact-specific and does not impose a fixed 14-day statutory deadline. The insured should disclose the tentative settlement, proposed release, and intent to pursue UIM benefits; the UIM carrier should promptly investigate and respond within a reasonable time. To preserve subrogation, the carrier must advance the amount of the tortfeasor's settlement offer within a reasonable time and before the tortfeasor is released.

Please state in writing whether [CARRIER_SHORT_NAME]:

1. Consents to the proposed settlement and release;
2. Will advance $[__________], the amount of the tentative settlement, before release to preserve subrogation; or
3. Needs specified additional information to complete a reasonable investigation.

We request a response by [__/__/____], selected to provide a reasonable investigation period under the circumstances and before any contemplated release. Under Lambert, an unreasonable refusal to consent, a denial without a good-faith investigation, or failure to investigate within a reasonable time may waive subrogation. Do not execute a release based solely on expiration of a private demand deadline; counsel should evaluate the carrier's response and the actual Lambert timeline.

VII. DEMAND FOR UM/UIM POLICY LIMITS

A. Calculation of Underinsured Damages

B. Policy Limits Demand

We hereby demand payment of the full UM/UIM policy limits totaling $[__________], consisting of:

• Primary UM/UIM coverage: $[__________]
• Stacked additional vehicle coverage (per Ala. Code § 32-7-23(c)): $[__________]

Our client's compensable damages of $[__________] dramatically exceed the available stacked coverage. Under any reasonable evaluation of this claim, it is a textbook policy limits case. Tender of less than full limits will be rejected.

VIII. ALABAMA UM/UIM CLAIM-HANDLING STANDARD

A. Legal Entitlement and Adverse Posture — LeFevre

Under LeFevre v. Westberry, 590 So. 2d 154 (Ala. 1991), the claimant must establish the uninsured motorist's fault and the extent of damages before becoming legally entitled to recover UM benefits. The insurer and insured occupy adverse positions while fault and damages remain unresolved, and bad-faith liability cannot rest on conduct arising before that legal entitlement is established. The carrier must nevertheless investigate the facts, evaluate the claim, and act promptly and reasonably as the evidence develops.

B. One Bad-Faith Tort — Brechbill

State Farm Fire & Casualty Co. v. Brechbill, 144 So. 3d 248 (Ala. 2013), recognizes one bad-faith tort with refusal-to-pay and failure-to-investigate methods of proof. A legitimate or arguable reason for denial defeats either method. An imperfect investigation, standing alone, is not enough where a debatable reason existed at the time of denial.

The enclosed evidence is submitted so [CARRIER_SHORT_NAME] can determine insured status, fault, damages, applicable limits, offsets, and any policy defenses. If additional information is reasonably needed, identify it specifically and promptly. This demand does not presume that disagreement over value, coverage, or timing alone establishes bad faith.

IX. POLICY DISPUTE-RESOLUTION PROVISION (IF APPLICABLE)

Review the policy for any arbitration, appraisal, suit, notice, cooperation, or other dispute-resolution provision. If an applicable provision exists, this letter preserves the insured's rights to the extent permitted by the policy and law; it does not assume that arbitration is either required or unavailable.

X. RESPONSE REQUEST AND RIGHTS PRESERVATION

THIS DEMAND EXPIRES AT 5:00 P.M. CENTRAL TIME ON [__/__/____].

Please respond by the stated date with the carrier's coverage position, valuation, any request for additional information, and—if a tentative liability settlement is pending—the carrier's Lambert election. Depending on the response and all applicable deadlines, our client may:

☐ File an action permitted by the policy and Alabama law;
☐ Invoke an applicable policy dispute-resolution provision;
☐ Contact the Alabama Department of Insurance Consumer Services Division if eligible for assistance (the Department states that it cannot assist a complainant who has an attorney);
☐ Pursue all available discovery on claim handling, reserves, and supervisor reviews.

Calendar each claim separately. Alabama generally applies two years to the underlying personal-injury claim and to a bad-faith tort claim under Ala. Code § 6-2-38(l), and six years to a simple-contract claim under Ala. Code § 6-2-34(9). Accrual, policy suit limitations, tolling, and preservation of the underlying tort claim are fact-specific. Earliest potential deadline: [__/__/____].

XI. DOCUMENT PRESERVATION NOTICE

This letter serves as formal notice to preserve all documents and electronically stored information related to this claim, including the complete claim file (both paper and electronic), all adjuster diaries, activity logs, reserve history and reserve change documentation, supervisor notes, internal emails, roundtable/committee review notes, claim handling manuals and training materials applicable to UM/UIM claims in Alabama, all communications with the insured, tortfeasor's carrier and any experts, and all medical records, photographs, and recorded statements.

XII. CONCLUSION

This claim presents clear tortfeasor liability, substantial documented injuries, severe economic loss, and damages exceeding the identified coverage. Based on the present record, our client has complied with the policy conditions identified to date. Please complete the evaluation, identify any additional reasonable request, address the Lambert procedure if applicable, and state the carrier's position by the response date.

Respectfully submitted,

[LAW_FIRM_NAME]

By: _______________________________
[ATTORNEY_NAME], Alabama State Bar No. [________]
[ADDRESS]
[CITY], Alabama [ZIP]
Telephone: [________]
Email: [________]

Counsel for [CLIENT_NAME]

ENCLOSURES:

☐ Alabama Uniform Traffic Crash Report
☐ Policy declarations page and UM/UIM endorsement
☐ Medical records and itemized bills
☐ Photographs of vehicles and scene
☐ Tortfeasor's liability limits disclosure
☐ Accident reconstruction report (if applicable)
☐ Employment / lost wage verification
☐ Life care plan / economic loss report (if applicable)

CC:

☐ [CLIENT_NAME]
☐ [TORTFEASOR_CARRIER] (re: Lambert consent)

ALABAMA UM/UIM LAW QUICK REFERENCE

SOURCES AND REFERENCES

• Alabama Legislature, Code of Alabama — https://alison.legislature.state.al.us/code-of-alabama
• Ala. Code § 32-7-23 (current 2025 text mirror) — https://law.justia.com/codes/alabama/title-32/chapter-7/section-32-7-23/
• Ala. Code § 32-7-6 (current 2025 text mirror) — https://law.justia.com/codes/alabama/title-32/chapter-7/section-32-7-6/
• Ala. Code § 12-21-45 (current 2025 text mirror) — https://law.justia.com/codes/alabama/title-12/chapter-21/article-1/division-1/division-2/section-12-21-45/
• Ala. Code § 6-2-34 (current 2025 text mirror) — https://law.justia.com/codes/alabama/title-6/chapter-2/article-2/section-6-2-34/
• Ala. Code § 6-2-38 (current 2025 text mirror) — https://law.justia.com/codes/alabama/title-6/chapter-2/article-2/section-6-2-38/
• Alabama Rule of Evidence 408 — https://judicial.alabama.gov/docs/library/rules/ev408.pdf
• Lambert v. State Farm Mut. Auto. Ins. Co., 576 So. 2d 160 (Ala. 1991)
• LeFevre v. Westberry, 590 So. 2d 154 (Ala. 1991)
• State Farm Fire & Cas. Co. v. Brechbill, 144 So. 3d 248 (Ala. 2013)
• Williams v. Delta International Machinery Corp., 619 So. 2d 1330 (Ala. 1993)
• Alabama Department of Revenue, Mandatory Liability Insurance — https://www.revenue.alabama.gov/tax-types/mandatory-liability-insurance/
• Alabama Department of Insurance, Consumer Resources — https://aldoi.gov/consumers/
• Alabama Department of Insurance, Contact Us — https://aldoi.gov/contactus.aspx

DISCLAIMER: This template is for informational purposes only and does not constitute legal advice. It must be reviewed and customized by an attorney licensed in the State of Alabama before use. Alabama's pure contributory negligence doctrine, statute of limitations, and specific policy language fundamentally affect UM/UIM claim evaluation and strategy.