UM/UIM Demand Letter - Arkansas

UM/UIM (UNINSURED/UNDERINSURED MOTORIST) DEMAND LETTER

State of Arkansas

[LAW FIRM LETTERHEAD]

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

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

Date: [__/__/____]

[INSURANCE COMPANY NAME]
[________________________________]
[________________________________], AR [____]

Attention: [________________________________], Claims Adjuster
Re: UM/UIM POLICY LIMITS DEMAND — ARKANSAS LAW
Insured/Claimant: [________________________________]
Policy Number: [________________________________]
Claim Number: [________________________________]
Date of Loss: [__/__/____]
UM/UIM Policy Limits: $[________________________________]
Tortfeasor: [________________________________]
Tortfeasor's Carrier: [________________________________]
Tortfeasor's Limits: $[________________________________]
Response Deadline: [__/__/____] at 5:00 p.m. Central Time

Dear [________________________________]:

I. INTRODUCTION AND NATURE OF DEMAND

This firm represents [________________________________] ("our client") in connection with a claim for [☐ uninsured / ☐ underinsured] motorist benefits arising from a motor vehicle collision on [__/__/____] in [________________________________] County, Arkansas. This letter constitutes a formal demand for payment of the full UM/UIM policy limits of $[________________________________].

Under Ark. Code Ann. § 23-89-403, every automobile liability policy delivered or issued in Arkansas must provide uninsured motorist coverage at least equal to the statutory minimums established under Ark. Code Ann. § 27-19-605 ($25,000 per person / $50,000 per accident for bodily injury). UM/UIM coverage exists precisely to protect your insured when the negligent party lacks sufficient insurance to compensate the injured victim. That is the situation here.

Our client's damages substantially exceed all available coverage. This is a policy limits demand.

II. ARKANSAS UM/UIM STATUTORY FRAMEWORK

A. Mandatory UM Coverage — Ark. Code Ann. § 23-89-403

Arkansas law mandates that no automobile liability policy may be delivered in this state unless it includes UM coverage at limits not less than those prescribed under § 27-19-605 ($25,000/$50,000 bodily injury). Coverage is automatic unless the named insured rejects it in writing. Absent a valid written rejection, UM coverage attaches by operation of law.

If your insured did not execute a written rejection of UM coverage, the coverage exists regardless of what any policy endorsement may say to the contrary.

B. Underinsured Motorist Coverage — Ark. Code Ann. § 23-89-209

For a private-passenger automobile principally garaged in Arkansas, the insured must have an opportunity to purchase UIM coverage and may reject it in writing. UIM is available only in coordination with UM coverage. Where purchased or implied after a deficient rejection, it applies when the other driver's liability limits are less than the insured's damages. The statutory UIM limit must be at least the § 27-19-605 bodily-injury minimum. Coverage is not reduced by the tortfeasor's insurance except to prevent compensation exceeding actual damages. Confirm the policy type because § 23-89-209 does not impose this offer rule on every commercial automobile policy.

C. Offer of Higher UM Limits — Ark. Code Ann. § 23-89-403(a)(3)

Where a named insured purchases third-party liability coverage greater than the statutory minimum, the insurer must have available and the agent must offer UM limits up to the third-party liability limits. An applicant who declines increased UM limits must reject them in writing. Do not apply this matching-limit rule to UIM: § 23-89-209 requires an opportunity to purchase UIM and a minimum limit, but does not impose § 23-89-403(a)(3)'s higher-limit offer rule.

D. Stacking

Arkansas statutes do not categorically prohibit stacking, but clear applicable anti-stacking or other-insurance language may preclude it. Compare Ross v. United Services Automobile Ass'n, 320 Ark. 604, 899 S.W.2d 53 (1995) (stacking minimum UIM coverages implied by law where the clause did not reach multiple vehicles) with Shelter Mutual Insurance Co. v. Williams, 69 Ark. App. 35, 9 S.W.3d 545 (2000) (stacking may be barred by an applicable policy clause). Analyze each policy, vehicle, rejection, and clause before stating the available aggregate.

E. Coverage Analysis

III. COVERAGE TRIGGER

A. For Uninsured Motorist (UM) Claims

The tortfeasor qualifies under the statute and the governing UM endorsement because:

☐ The tortfeasor carried no liability insurance at the time of the collision
☐ The tortfeasor's liability limits were below the statutory bodily-injury minimum
☐ The tortfeasor's liability insurer is unable to pay because of insolvency (Ark. Code Ann. § 23-89-401)
☐ The governing endorsement treats the coverage denial as an uninsured-motorist event
☐ The tortfeasor was unidentified and the claim satisfies the endorsement's hit-and-run terms; a physical-contact condition is enforceable under Ward v. Consolidated Underwriters, 259 Ark. 696, 535 S.W.2d 830 (1976)

Supporting documentation: [________________________________]

The claimant bears the burden of proving the other vehicle's uninsured status. Attach carrier confirmations, search results, police materials, and the endorsement-specific hit-and-run proof.

B. For Underinsured Motorist (UIM) Claims

The tortfeasor qualifies as an "underinsured motorist" under Ark. Code Ann. § 23-89-209 because:

☐ The tortfeasor's liability limits of $[________________________________] are insufficient to compensate our client's damages of $[________________________________]
☐ A tentative liability-limits settlement of $[________________________________] has been documented for the § 23-89-209(c)-(d) notice procedure
☐ Our client's total damages exceed all available liability coverage by $[________________________________]

C. Limitations Preservation

Calendar the underlying tort claim separately from the policy claim. Arkansas generally applies a three-year period to the personal-injury claim under § 16-56-105. A UIM action against the insurer is a written-contract action subject to § 16-56-111's five-year period, accruing when the insurer breaches the policy rather than automatically on the accident date. Shelter Mutual Insurance Co. v. Nash, 357 Ark. 581, 184 S.W.3d 425 (2004). Nash does not excuse failure to preserve the underlying tort rights and proof needed to establish legal entitlement.

IV. THE COLLISION AND LIABILITY

A. Facts of the Collision

On [__/__/____], at approximately [____]:00 [☐ a.m. / ☐ p.m.], our client was [________________________________] at or near [________________________________] in [________________________________] County, Arkansas.

[________________________________]
[PROVIDE DETAILED NARRATIVE OF COLLISION — sequence of events, road/weather conditions, directions of travel, point of impact, post-impact movement of vehicles]
[________________________________]

B. Tortfeasor's Negligence Under Arkansas Law

[________________________________] was negligent under Arkansas law in the following respects:

☐ Operating a vehicle at an excessive or unreasonable speed (Ark. Code Ann. § 27-51-201)
☐ Failure to stop or yield at an intersection (Ark. Code Ann. §§ 27-51-503, 27-51-601(d)-(e))
☐ Following too closely (Ark. Code Ann. § 27-51-305)
☐ Failure to obey a traffic-control device (Ark. Code Ann. § 27-52-103)
☐ Improper lane change (Ark. Code Ann. § 27-51-302)
☐ Driving while intoxicated (Ark. Code Ann. § 5-65-103)
☐ Texting while driving (Ark. Code Ann. § 27-51-1504)
☐ Failure to maintain a proper lookout
☐ Other: [________________________________]

C. Evidence of Liability

1. Police / Crash Report
[________________________________] Police/Sheriff Report No. [________________________________], which [☐ cites tortfeasor for / ☐ identifies tortfeasor as at-fault for] [________________________________].

2. Witness Statements
[________________________________] independent witnesses confirmed the tortfeasor's fault. Statements attached.

3. Physical Evidence
Point of impact, vehicle damage patterns, debris field, and [☐ photographs / ☐ video footage / ☐ black box data] establish liability.

4. Expert Analysis
☐ [________________________________], accident reconstruction expert, has concluded: [________________________________]

D. Comparative Fault Analysis

Arkansas applies modified comparative fault under Ark. Code Ann. § 16-64-122. A claimant's recovery is reduced in proportion to the claimant's own fault and is entirely barred if the claimant is 50% or more at fault.

Our client bears zero comparative fault for the following reasons:
[________________________________]

[IF PARTIAL FAULT IS ANTICIPATED: Our client's fault is estimated at [____]%, reducing a gross verdict of $[________________________________] to a net recovery of $[________________________________], which still vastly exceeds the available UM/UIM limits.]

V. OUR CLIENT'S INJURIES AND MEDICAL TREATMENT

A. Injury Summary

As a direct and proximate result of this collision, our client sustained the following injuries, which have been diagnosed and documented by treating physicians:

Primary Diagnoses:

• [________________________________]
• [________________________________]
• [________________________________]

B. Medical Treatment Timeline

C. Permanent Impairment

Pursuant to a formal impairment evaluation performed by [________________________________], M.D., our client has sustained the following permanent impairments:

D. Current Condition and Prognosis

[________________________________]
[DESCRIBE: current functional limitations, ongoing treatment needs, life-care plan if applicable, impact on daily activities, work, and relationships]
[________________________________]

VI. DAMAGES

A. Past Medical Expenses

B. Future Medical Expenses (Present Value)

Based on the life-care plan prepared by [________________________________] and the medical opinions of [________________________________], our client will require:

C. Lost Income and Earning Capacity

Past Lost Wages/Income:
Our client was employed as [________________________________] earning $[________________________________] per [week/month/year]. Our client was unable to work from [__/__/____] to [__/__/____], a period of [____] weeks, resulting in past lost income of $[________________________________].

Documentation: ☐ Pay stubs ☐ Employer letter ☐ Tax returns ☐ Vocational report

Future Lost Earning Capacity (Present Value):
Based on the vocational assessment by [________________________________] and economic analysis by [________________________________], our client's future lost earning capacity has a present value of $[________________________________].

D. Pain, Suffering, and Non-Economic Damages

Arkansas imposes no statutory cap on non-economic damages in an ordinary personal-injury action. See Ark. Const. art. 5, § 32. Our client has endured and will continue to endure:

[________________________________]
[DESCRIBE: physical pain, emotional distress, loss of enjoyment of life, sleep disruption, loss of consortium, impact on family relationships, daily limitations, psychological sequelae]
[________________________________]

Non-economic damages are reasonably valued at $[________________________________].

E. Damages Summary

VII. TORTFEASOR SETTLEMENT AND STATUTORY UIM NOTICE

A. Status of Claim Against Tortfeasor's Carrier

☐ Our client has settled with the tortfeasor's carrier, [________________________________], for $[________________________________] (tortfeasor's full policy limits).
☐ Our client is pursuing settlement with the tortfeasor's carrier and expects to receive $[________________________________] (tortfeasor's full policy limits).
☐ Litigation against the tortfeasor is pending in [________________________________] County Circuit Court, Case No. [________________________________].

B. Certified-Mail Notice / Preservation of Subrogation

To invoke Ark. Code Ann. § 23-89-209(c)-(d), this letter provides certified-mail, return-receipt-requested notice of a tentative agreement to settle for the tortfeasor's liability limits of $[________________________________]. The required supporting material is enclosed or identified below:

☐ Written documentation of pecuniary losses, including medical bills
☐ Written medical/employment authorizations or an authorizing court order
☐ Written confirmation from the liability insurer of its limits and the tentative settlement terms, with no punitive or exemplary component

Within 30 days after receipt of a compliant notice, [CARRIER SHORT NAME] may advance an amount equal to the tentative settlement. If it advances that amount, it receives the statutory subrogation rights described in § 23-89-209(d)(2). If it does not advance the amount within 30 days, § 23-89-209(d)(3) removes its right to the settlement or judgment proceeds, its right to recoup from the tortfeasor or liability insurer, and its right to refuse UIM payment because of the settlement. If the same insurer provides both liability and UIM coverage, subsections (c)-(d) are waived under subsection (e).

VIII. CALCULATION OF UIM BENEFITS DUE

Our client's damages of $[________________________________] vastly exceed all available coverage. We demand payment of the full UIM policy limits of $[________________________________].

IX. ARKANSAS STATUTORY PENALTY AND BAD FAITH WARNING

A. 12% Penalty and Attorney Fees — Ark. Code Ann. § 23-79-208

If [CARRIER SHORT NAME] fails to pay this UM/UIM claim within the time specified in the policy after receipt of this demand, Arkansas law imposes a 12% penalty on the amount of the loss plus all reasonable attorney's fees for the prosecution and collection of the claim. See Ark. Code Ann. § 23-79-208(a)(1). Good-faith belief in coverage defenses is not a defense to imposition of the penalty. Home Mut. Fire Ins. Co. v. Jones, 63 Ark. App. 221, 977 S.W.2d 12 (1998).

Under § 23-79-208(d)(1), the penalty and fees are recoverable so long as the amount recovered is within 20% of the amount demanded. For homeowners policies, that threshold is 30% under § 23-79-208(d)(2).

B. Common Law Bad Faith — Aetna Cas. & Sur. Co. v. Broadway Arms Corp.

[CARRIER SHORT NAME] owes our client, its own insured, the duties of good faith and fair dealing. Under Aetna Cas. & Sur. Co. v. Broadway Arms Corp., 281 Ark. 128, 664 S.W.2d 463 (Ark. 1984), an insurer is liable in tort for bad faith where its conduct:

"include[s] affirmative misconduct by the insurance company, without a good faith defense, and . . . the misconduct must be dishonest, malicious, or oppressive in an attempt to avoid its liability under an insurance policy."

Bad faith in UM/UIM handling may support compensatory and punitive damages when the required tort elements and punitive-damages proof are established; an incorrect denial, negligence, or honest error of judgment is not enough.

C. Punitive Damages Exposure — No Statutory Cap

Arkansas's statutory punitive-damages cap (Ark. Code Ann. § 16-55-208) is unenforceable: the Arkansas Supreme Court struck it down as unconstitutional in Bayer CropScience LP v. Schafer, 2011 Ark. 518, 385 S.W.3d 822 (violates Ark. Const. art. 5, § 32). There is no enforceable statutory ceiling, but punitive damages still require clear and convincing proof under Ark. Code Ann. §§ 16-55-206 and -207 and remain subject to applicable state-law and federal constitutional excessiveness limits, including State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003).

D. Rule 43 / 23 CAR Part 15 — Claim-Practice Timelines

The current codification of Arkansas Insurance Department Rule 43 provides:

• Acknowledgment of claim within 15 working days of receipt
• Completion of investigation within 45 calendar days of notification (with written extension notice if more time is needed)
• Acceptance or denial within 15 working days after receipt of a properly executed proof of loss
• Written 45-day follow-up notices while the post-proof investigation remains incomplete
• Mailing or delivery of a claim check within 10 working days after the claim is processed, all investigations are complete, and the file is closed and ready for payment

See 23 CAR §§ 15-105 to -107. Violations with sufficient frequency to indicate a general business practice may constitute unfair claims settlement practices under Ark. Code Ann. §§ 23-66-201 et seq.

X. FORUM AND ARBITRATION CAUTION

Arkansas law does not permit an insurer to compel its insured or beneficiary to arbitrate a dispute arising under an insurance policy. Ark. Code Ann. § 23-79-203 protects the right to a jury trial on policy fact questions, and § 16-108-233(b)(3) excludes insured-policy disputes from the Arkansas Uniform Arbitration Act. Southern Pioneer Life Insurance Co. v. Thomas, 2011 Ark. 490. Do not threaten compulsory arbitration merely because the policy contains an arbitration clause.

☐ The parties may consider a voluntary post-dispute arbitration or mediation agreement after counsel reviews the forum, scope, costs, and waiver consequences.

XI. DEMAND AND RESPONSE DEADLINE

We hereby demand payment of the full UM/UIM policy limits of $[________________________________].

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

Consequences of Non-Response

If [CARRIER SHORT NAME] fails to accept this demand by the deadline, we will:

1. File suit in the appropriate Arkansas circuit court, unless the parties later execute a valid voluntary post-dispute ADR agreement
2. Assert a claim for 12% statutory penalty and attorney's fees under Ark. Code Ann. § 23-79-208
3. Assert common law bad faith claims under Aetna Cas. & Sur. Co. v. Broadway Arms Corp., 281 Ark. 128, 664 S.W.2d 463 (1984)
4. Seek punitive damages under Ark. Code Ann. §§ 16-55-206 and -207 if the required aggravating conduct is proven by clear and convincing evidence; § 16-55-208's cap is void
5. Submit a complaint through the Arkansas Insurance Department Consumer Services portal at insurance.arkansas.gov/consumer-assistance/consumer-services/file-a-complaint, or by the current email, fax, or mail methods listed there

XII. DOCUMENT PRESERVATION NOTICE

This letter serves as formal notice to [CARRIER SHORT NAME] to preserve all documents and electronically stored information (ESI) related to this claim, including but not limited to: the complete claim file and all drafts; all internal communications regarding coverage, reserves, or handling decisions; all adjuster notes, diaries, and activity logs; all photographs and inspection reports; all communications with the insured; reserve change documentation; and any claim handling guidelines, training materials, or audit reports applicable to UM/UIM claims.

XIII. CONCLUSION

Our client is [CARRIER SHORT NAME]'s own insured. [CARRIER SHORT NAME] accepted premiums in exchange for the promise of UM/UIM protection — protection our client now needs. Our client's injuries are severe, documented, and permanent. Liability is clear. The damages far exceed available coverage. There is no legitimate basis to deny or undervalue this claim.

This is an opportunity for [CARRIER SHORT NAME] to honor its contractual obligation to its insured. We strongly urge acceptance by the deadline.

Respectfully submitted,

[LAW FIRM NAME]

By: ___________________________________
[________________________________]
Arkansas Bar No. [________________________________]
[________________________________]
[________________________________], AR [____]
Phone: [________________________________]
Email: [________________________________]

Counsel for [CLIENT NAME]

ENCLOSURES:
☐ Policy declarations page and UM/UIM endorsements
☐ Police/crash report
☐ Complete medical records and bills
☐ Employer/wage documentation
☐ Life-care plan / vocational assessment (if applicable)
☐ Expert reports
☐ Photographs of scene and vehicles
☐ Tortfeasor's insurance information / denial of coverage

CC:

• [CLIENT NAME]
• [TORTFEASOR'S CARRIER] (re: tentative liability-limits settlement)

ARKANSAS UM/UIM LAW QUICK REFERENCE

SOURCES AND REFERENCES

1. Ark. Code Ann. § 23-89-403 — UM coverage and higher-limit offer: law.justia.com/codes/arkansas/.../23-89-403
2. Ark. Code Ann. § 23-89-209 — UIM coverage and settlement procedure: codes.findlaw.com/ar/.../23-89-209
3. Ark. Code Ann. § 23-79-208 — 12% penalty and attorney fees: law.justia.com/codes/arkansas/.../23-79-208
4. Ark. Code Ann. §§ 16-64-122, 16-56-105, and 16-56-111 — comparative fault and limitations: § 16-64-122 | § 16-56-105 | § 16-56-111
5. Ark. Code Ann. §§ 16-55-206 to -208 — punitive-damages proof rules and void cap: § 16-55-206 | § 16-55-207 | § 16-55-208
6. Ark. Code Ann. §§ 23-79-203 and 16-108-233 — insurance jury-trial/arbitration rules: § 23-79-203 | § 16-108-233
7. Arkansas traffic statutes cited in Section IV — Title 27 current-code index
8. 23 CAR Part 15 (Rule 43) — current official codification: portal.insurance.arkansas.gov/LegalPubsPublic/Documents/Rules/23 car pt 15.pdf
9. Arkansas Insurance Department Bulletin 20-2024 — Rule 43 reminders: bulletin_20-2024.pdf
10. Ross v. United Services Automobile Ass'n, 320 Ark. 604, 899 S.W.2d 53 (1995); Shelter Mutual Insurance Co. v. Williams, 69 Ark. App. 35, 9 S.W.3d 545 (2000) — stacking and policy language
11. Ward v. Consolidated Underwriters, 259 Ark. 696, 535 S.W.2d 830 (1976) — enforceable hit-and-run physical-contact condition
12. Shelter Mutual Insurance Co. v. Nash, 357 Ark. 581, 184 S.W.3d 425 (2004) — five-year contract period accruing on breach
13. Southern Pioneer Life Insurance Co. v. Thomas, 2011 Ark. 490 — insurer could not compel insured to arbitrate
14. Aetna Casualty & Surety Co. v. Broadway Arms Corp., 281 Ark. 128, 664 S.W.2d 463 (1984) — bad-faith tort
15. Bayer CropScience LP v. Schafer, 2011 Ark. 518, 385 S.W.3d 822 — § 16-55-208 cap unconstitutional
16. Arkansas Insurance Department Consumer Services: file a complaint

Current official agency materials were used where extractable. Arkansas's consolidated code and several opinions were cross-checked through current Justia/FindLaw and CourtListener mirrors because the official consolidated-code and opinion interfaces were not reliably extractable in this session.

This template was verified against Arkansas law and official agency materials available on July 13, 2026. Arkansas UM/UIM coverage depends on the policy type, rejection history, endorsement language, settlement notice, and proof of the tortfeasor's status; licensed Arkansas counsel must review the completed demand before use.