UM/UIM Demand Letter - Arkansas

UM/UIM (UNINSURED/UNDERINSURED MOTORIST) DEMAND LETTER

State of Arkansas

[LAW FIRM LETTERHEAD]

PRIVILEGED AND CONFIDENTIAL
SETTLEMENT COMMUNICATION — FOR RESOLUTION PURPOSES ONLY
PROTECTED UNDER ARK. R. EVID. 408 AND F.R.E. 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

UIM coverage in Arkansas is separately offered and separately rejectable in writing. Where purchased, UIM coverage enables the insured to recover from the insurer amounts not compensated by the at-fault driver's liability policy. Coverage is not offset by the tortfeasor's liability policy except to the extent that the injured party would otherwise receive compensation in excess of actual damages.

C. Offer of Higher 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 is required by Arkansas law to offer UM/UIM limits up to the third-party liability limits. Failure to make this offer may entitle the insured to limits equal to those carried for third-party liability.

D. Stacking

Arkansas permits the stacking of UM/UIM coverage across multiple vehicles or policies absent an express, unambiguous anti-stacking provision. See Ark. Code Ann. §§ 23-89-403, 23-89-209.

E. Coverage Analysis

III. COVERAGE TRIGGER

A. For Uninsured Motorist (UM) Claims

The tortfeasor qualifies as an "uninsured motorist" under Ark. Code Ann. § 23-89-401 because:

☐ The tortfeasor carried no liability insurance at the time of the collision
☐ The tortfeasor's insurer has denied coverage and disclaimed liability
☐ The tortfeasor's insurer is insolvent
☐ The tortfeasor was a hit-and-run driver who cannot be identified
☐ The tortfeasor's limits are below the statutory minimum of $25,000/$50,000

Supporting documentation: [________________________________]

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 $[________________________________]
☐ Our client has exhausted the tortfeasor's policy limits ($[________________________________]) through settlement/judgment
☐ Our client's total damages exceed all available liability coverage by $[________________________________]

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 yield the right of way (Ark. Code Ann. § 27-51-601)
☐ Following too closely (Ark. Code Ann. § 27-51-305)
☐ Failure to obey a traffic control device (Ark. Code Ann. § 27-52-105)
☐ 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 personal injury cases. 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 CONSENT TO SETTLE

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. Consent to Settle / Preservation of Subrogation

Under Arkansas law, we hereby formally request your written consent to settle with the tortfeasor's carrier for policy limits.

Pursuant to the policy terms and Arkansas UM/UIM law, [CARRIER SHORT NAME] retains the right to pursue subrogation against the tortfeasor following payment of UIM benefits. By withholding consent unreasonably, [CARRIER SHORT NAME] waives any right to object to the settlement or assert a subrogation lien against our client's recovery.

Please respond within [____] business days.

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 exposes [CARRIER SHORT NAME] to compensatory damages, consequential damages, and punitive damages.

C. Punitive Damages Exposure — Ark. Code Ann. § 16-55-208

Under Ark. Code Ann. § 16-55-208, punitive damages in Arkansas are capped at the greater of $250,000 or three times compensatory damages, not to exceed $1,000,000 — unless clear and convincing evidence establishes that the insurer intentionally pursued a course of conduct for the purpose of causing injury or damage, in which case the cap does not apply.

D. AID Rule 43 — Mandatory Timelines

Arkansas Insurance Department Rule 43 requires:
- 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
- Mailing of all claims checks within 10 days after close of investigation

Violations of Rule 43 with sufficient frequency to constitute a general business practice constitute an unfair claims settlement practice under Ark. Code Ann. §§ 23-66-201 et seq.

X. ARBITRATION PROVISIONS

The policy ☐ contains / ☐ does not contain an arbitration clause for UM/UIM disputes.

☐ Arbitration Demand: If [CARRIER SHORT NAME] fails to accept this demand by the deadline, this letter shall serve as formal notice of our intent to invoke arbitration under the policy's arbitration clause, subject to Arkansas procedural law.

[Quote arbitration clause verbatim and specify selection process for arbitrators under the policy.]

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. Invoke arbitration (if required under policy terms) or file suit in [________________________________] County Circuit Court, Arkansas
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 16-55-208
5. File a formal complaint with the Arkansas Insurance Department, Consumer Services Division, 1 Commerce Way, Suite 102, Little Rock, AR 72202; Phone: (501) 371-2600

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: consent-to-settle notification)

ARKANSAS UM/UIM LAW QUICK REFERENCE

SOURCES AND REFERENCES

1. Ark. Code Ann. § 23-89-403 — Uninsured motorist coverage required: https://law.justia.com/codes/arkansas/title-23/subtitle-3/chapter-89/subchapter-4/section-23-89-403/
2. Ark. Code Ann. § 23-89-209 — Underinsured motorist coverage (available via Justia Arkansas Code Title 23, Chapter 89)
3. Ark. Code Ann. § 23-79-208 — 12% penalty and attorney fees: https://law.justia.com/codes/arkansas/title-23/subtitle-3/chapter-79/subchapter-2/section-23-79-208/
4. Ark. Code Ann. § 16-64-122 — Comparative fault: https://law.justia.com/codes/arkansas/title-16/subtitle-5/chapter-64/section-16-64-122/
5. Ark. Code Ann. § 16-55-208 — Punitive damages cap: https://law.justia.com/codes/arkansas/title-16/subtitle-5/chapter-55/subchapter-2/section-16-55-208/
6. Aetna Cas. & Sur. Co. v. Broadway Arms Corp., 281 Ark. 128, 664 S.W.2d 463 (1984) — Bad faith tort: https://law.justia.com/cases/arkansas/supreme-court/1984/83-134-0.html
7. AID Rule 43 — Unfair Claims Settlement Practices (eff. Dec. 1, 2015): https://www.law.cornell.edu/regulations/arkansas/054-00-15-Ark-Code-R-SS-008
8. Ark. Code Ann. § 27-19-605 — Minimum insurance amounts (25/50/25)
9. Arkansas Insurance Department Consumer Services — 1 Commerce Way, Suite 102, Little Rock, AR 72202; (501) 371-2600; https://www.insurance.arkansas.gov/