UM/UIM Demand Letter - Delaware

UM/UIM (UNINSURED/UNDERINSURED MOTORIST) DEMAND LETTER

State of Delaware

[LAW FIRM LETTERHEAD]

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

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

Date: [__/__/____]

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

Attention: [________________________________], [________________________________]
Re: UM/UIM POLICY LIMITS DEMAND — DELAWARE 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. Eastern Time

Dear [________________________________]:

I. INTRODUCTION AND NATURE OF DEMAND

This firm represents [________________________________] ("our client") in connection with a claim for [UNINSURED/UNDERINSURED] motorist ("UM/UIM") benefits arising under Delaware law from a motor vehicle collision that occurred on [__/__/____] in [________________________________], Delaware. This letter constitutes a formal demand for payment of the full UM/UIM policy limits of $[________________________________].

Our client has sustained serious injuries that have resulted in damages far exceeding the tortfeasor's available coverage. Under 18 Del. C. § 3902, UM/UIM coverage exists precisely to protect Delaware insureds in this circumstance.

II. DELAWARE UM/UIM LAW — COVERAGE FRAMEWORK

A. Statutory Basis: 18 Del. C. § 3902

Delaware's UM/UIM statute, 18 Del. C. § 3902, governs uninsured and underinsured vehicle coverage in Delaware. Key provisions include:

Mandatory Offer Requirement: Every insurer issuing or delivering a motor vehicle liability policy in Delaware must offer UM/UIM coverage. The insurer must offer the named insured the option to purchase additional coverage up to a limit of $100,000 per person / $300,000 per accident (or $300,000 single limit), not to exceed the bodily injury liability limits in the policy. 18 Del. C. § 3902(b).

Minimum Coverage Floor: UM/UIM coverage shall not be less than the minimum limits for bodily injury and property damage liability insurance required under Delaware's motorist financial responsibility laws. Delaware's minimum bodily injury liability limits are $25,000 per person / $50,000 per accident, establishing the floor for UM/UIM coverage. 21 Del. C. § 2118(a).

Written Rejection Required: UM/UIM coverage is required unless rejected in writing on a form furnished by the insurer describing the coverage being rejected. An oral rejection is ineffective under Delaware law. 18 Del. C. § 3902(a).

Insolvency Coverage: UM benefits extend to losses where the tortfeasor's insurer has become insolvent within eighteen months of the covered accident. 18 Del. C. § 3902(d).

B. Delaware's Anti-Stacking Rule

Under 18 Del. C. § 3902(c), when two or more vehicles owned or leased by persons residing in the same household are insured by the same insurer or affiliated insurers, the limits of liability shall apply separately to each vehicle as stated in the declaration sheet, but shall not exceed the highest limit of liability applicable to any one vehicle. This is Delaware's statutory anti-stacking provision for same-insurer policies.

However, where multiple vehicles are insured by different, unaffiliated insurers, the anti-stacking restriction does not apply and stacking of limits may be permissible. See analysis below.

C. Stacking Analysis for This Claim

Stacking Position: [DESCRIBE STACKING ARGUMENT OR ANTI-STACKING CONCESSION BASED ON FACTS]

D. Coverage Summary

E. Coverage Trigger

For Uninsured Motorist (UM) Claims:

The tortfeasor qualifies as an "uninsured motorist" under 18 Del. C. § 3902 because (check all that apply):

☐ The tortfeasor carried no liability insurance at the time of the collision
☐ The tortfeasor's insurer has denied coverage for this loss
☐ The tortfeasor's insurer is insolvent (within 18 months of the accident per § 3902(d))
☐ The tortfeasor was an unidentified hit-and-run driver; physical contact occurred
☐ The tortfeasor's insurance limits are less than Delaware's minimum financial responsibility requirements

For Underinsured Motorist (UIM) Claims:

The tortfeasor qualifies as an "underinsured motorist" under 18 Del. C. § 3902 because:

☐ The tortfeasor's bodily injury liability limits of $[________________________________] are insufficient to fully compensate our client for damages
☐ Our client has exhausted (or will exhaust upon settlement) the tortfeasor's policy limits of $[________________________________]
☐ Our client's total damages of $[________________________________] exceed all available liability coverage

III. THE COLLISION — LIABILITY AND FACTS

A. Facts of the Collision

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

[DETAILED DESCRIPTION OF COLLISION — include road conditions, weather, traffic controls, positions of vehicles, direction of travel, point of impact]

B. Tortfeasor's Negligence Under Delaware Law

The tortfeasor, [________________________________], was negligent under Delaware law in the following respects (check all that apply):

☐ Failure to maintain proper lookout (11 Del. C. § 4176 — duty of care)
☐ Failure to yield the right-of-way (11 Del. C. § 4132 et seq.)
☐ Following too closely (21 Del. C. § 4123)
☐ Excessive speed for conditions (21 Del. C. § 4168)
☐ Distracted driving / use of handheld device (21 Del. C. § 4176C)
☐ Failure to obey traffic signal / stop sign (21 Del. C. § 4107)
☐ Improper lane change (21 Del. C. § 4155)
☐ Driving under the influence of alcohol or drugs (21 Del. C. § 4177)
☐ [________________________________]

C. Evidence of Liability

1. Delaware State Police / Local Police Report
[________________________________] Traffic Crash Report, Report No. [________________________________], dated [__/__/____], documenting [________________________________].

2. Witness Statements
[____] independent witnesses observed the collision, including:
- [________________________________], who observed [________________________________]
- [________________________________], who observed [________________________________]

3. Physical Evidence
Point of impact, vehicle damage patterns, debris field, and skid mark analysis establish that [________________________________].

4. Citation / Arrest
The tortfeasor was cited for [________________________________] in violation of [________________________________].

5. Expert Analysis
☐ [________________________________], accident reconstructionist, has concluded: [________________________________]

D. Comparative Negligence Analysis Under 10 Del. C. § 8132

Delaware follows modified comparative negligence under 10 Del. C. § 8132. A plaintiff whose fault equals or exceeds 51% is barred from recovery. A plaintiff who is 50% or less at fault may recover, but damages are reduced in proportion to their percentage of fault.

Our client bears zero comparative fault for this collision because [EXPLAIN]. The tortfeasor bears 100% of the fault for the reasons set forth above.

IV. CLIENT'S INJURIES AND MEDICAL TREATMENT

A. Injury Summary

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

Primary Diagnoses:
- [________________________________]
- [________________________________]
- [________________________________]

Secondary / Related Conditions:
- [________________________________]
- [________________________________]

B. Emergency and Initial Treatment

On the date of loss, our client was transported to [________________________________] Hospital/Medical Center in [________________________________], Delaware, where emergency treatment was provided for [________________________________].

C. Treatment Timeline

D. Diagnostic Studies

E. Surgical Procedures

☐ No surgical intervention required
☐ The following surgical procedures were performed:

F. Current Condition, Permanent Impairment, and Prognosis

[DESCRIBE CURRENT CONDITION AND PROGNOSIS IN DETAIL]

Permanent Impairment Ratings:

Future Treatment Required:
[DESCRIBE FUTURE TREATMENT NEEDS, SURGERIES, THERAPIES, MEDICATIONS]

V. DAMAGES

A. Past Medical Expenses

B. Future Medical Expenses (Present Value)

C. Lost Income and Earning Capacity

Employer: [________________________________]
Pre-Accident Wages / Salary: $[________________] per [week/year]
Period of Disability: [__/__/____] through [__/__/____]

Supporting documentation: ☐ W-2s / Tax Returns ☐ Employer Verification Letter ☐ Vocational Expert Report ☐ Economist Report

D. Non-Economic Damages — Pain, Suffering, and Loss of Enjoyment of Life

Delaware does not cap non-economic damages in personal injury cases (except for medical malpractice under 18 Del. C. § 6855). Our client's non-economic damages are substantial:

Pain and Suffering: [DESCRIBE NATURE AND DURATION OF PAIN — acute, chronic, surgical, rehabilitative]

Loss of Enjoyment of Life: [DESCRIBE ACTIVITIES, HOBBIES, RELATIONSHIPS AFFECTED]

Emotional Distress: [DESCRIBE PSYCHOLOGICAL IMPACT — note: in Delaware, emotional distress damages in contract-based claims require accompanying physical injury; here the personal injury context supports full non-economic recovery]

Non-Economic Damages Claimed: $[________________]

E. Damages Summary

VI. TORTFEASOR'S LIABILITY COVERAGE AND SETTLEMENT STATUS

A. Tortfeasor's Coverage

B. Status of Third-Party Claim

☐ Settlement Reached: We have reached an agreement with [________________________________] to settle for the tortfeasor's policy limits of $[________________________________], subject to your consent as UIM carrier.

☐ Settlement Pending: We are in active settlement discussions with the tortfeasor's carrier.

☐ Litigation Filed: A lawsuit has been filed against the tortfeasor in [________________________________] Court, Case No. [________________________________].

C. Consent to Settle — Required Under Delaware Law

IMPORTANT — CONSENT TO SETTLE REQUIRED:

Pursuant to Delaware law and the terms of our client's policy, we hereby formally request your written consent to settle with the tortfeasor's liability carrier for the limits described above. Your consent must be provided within [____] days of this letter.

Under Delaware UM/UIM law and the policy's terms, your failure to consent within a reasonable time may operate as a waiver of your subrogation rights against the tortfeasor, or may be deemed a consent to the settlement. See 18 Del. C. § 3902.

☐ We will provide a copy of the proposed Release for your review prior to execution.

VII. UIM BENEFIT CALCULATION AND DEMAND

A. Calculation of UIM Benefits Due

B. Policy Limits Demand

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

Our client's total damages of $[________________________________] vastly exceed the combined coverage available. The tortfeasor's limits of $[________________________________] are wholly inadequate to compensate our client. This is a clear policy limits case.

VIII. BAD FAITH WARNING AND DELAWARE LEGAL STANDARD

A. Delaware Bad Faith Law

[________________________________] ("the Carrier") owes our client — its own insured — the duties of good faith and fair dealing implied in all Delaware insurance contracts. Delaware recognizes first-party bad faith sounding in contract through the implied covenant of good faith and fair dealing. Casson v. Nationwide Ins. Co., 455 A.2d 361 (Del. Super. 1982); Tackett v. State Farm Fire & Cas. Ins. Co., 653 A.2d 254 (Del. 1995); Dunlap v. State Farm Fire & Cas. Co., 878 A.2d 434 (Del. 2005).

The standard: Bad faith is actionable where the insurer's denial or delay is "clearly without any reasonable justification." Tackett, 653 A.2d at 265. The insurer need not act with ill will — unreasonable conduct is sufficient.

B. Delaware Unfair Claims Practices — 18 Del. C. § 2304

While 18 Del. C. § 2304 (Unfair Practices in the Insurance Business) is enforced regulatorily by the Delaware Insurance Commissioner — not through a private right of action — the Carrier's obligations under § 2304(16) inform the standard of care. The regulations promulgated under 18 Del. C. § 2312 require, among other things:

• Acknowledging written communications within 15 working days of receipt
• Commencing investigation within 10 working days of notice of loss
• Affirming or denying coverage within 30 days of receiving proof of loss
• Settling promptly once liability becomes reasonably clear (within 30 days of settlement agreement execution)

Failure to meet these regulatory benchmarks constitutes evidence of bad faith in any subsequent contract action.

C. Available Remedies if Bad Faith Is Found

Under Delaware law, the following damages are available in a successful bad faith action:

D. Bad Faith Warning

Any attempt by the Carrier to deny, delay, or substantially undervalue this clear policy limits claim will be treated as a breach of the implied covenant of good faith and fair dealing and will result in immediate litigation. Given our client's damages of $[________________________________] and the unambiguous coverage under this policy, there is no reasonable justification for denying or substantially discounting this claim.

IX. ARBITRATION CONSIDERATIONS

A. Policy Arbitration Clause

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

[IF APPLICABLE:] The policy's arbitration provision at Section [____] states: "[________________________________]."

Under the policy's arbitration clause, the parties must select arbitrators as follows: [________________________________]. The arbitration proceeding shall be conducted in [________________________________] County, Delaware.

B. Arbitration Demand (If Applicable)

If the Carrier fails to accept this demand, this letter shall serve as notice of our intent to invoke arbitration under the policy terms and Delaware law for resolution of this UM/UIM dispute.

X. STATUTE OF LIMITATIONS NOTICE

Our client's claims are subject to the following Delaware limitations periods:

The statute of limitations on our client's contract claim expires on approximately [__/__/____]. Time is of the essence.

XI. RESPONSE DEADLINE

This demand expires at 5:00 p.m. Eastern Time on [__/__/____].

This deadline is firm. If the Carrier fails to accept this demand by the deadline:

1. We will invoke arbitration (if required by the policy) or file suit in Delaware Superior Court for [________________________________] County, seeking all available damages under Delaware law.
2. We will pursue breach of the implied covenant of good faith and fair dealing under Tackett and Dunlap and seek punitive damages.
3. We will file a formal complaint with the Delaware Department of Insurance, Consumer Services Division, 1351 West North Street, Suite 101, Dover, Delaware 19904; Tel: (302) 674-7310; www.delawareinsurance.gov.
4. This demand will be withdrawn and we will seek the full measure of our client's damages without limitation.

XII. CONCLUSION

This claim presents unambiguous liability, serious and permanent injuries, and damages that far exceed the available coverage. The Carrier has a clear obligation under 18 Del. C. § 3902 and the implied covenant of good faith and fair dealing to promptly pay the UM/UIM policy limits. We strongly urge the Carrier to resolve this matter fairly and promptly.

Respectfully submitted,

[________________________________]

By: _______________________________________________
[________________________________], Esquire
Delaware Bar No. [________________________________]
[________________________________]
[________________________________], Delaware [________]
Telephone: [________________________________]
Email: [________________________________]

Counsel for [________________________________]

ENCLOSURES:
- Policy declarations page and UM/UIM coverage provisions
- Written rejection form (if applicable — to establish absence of rejection)
- Police / crash report
- Complete medical records and bills
- Lost wage documentation
- Photographs of accident scene and vehicle damage
- Expert reports (accident reconstruction, medical, vocational, economic)
- Proof of tortfeasor's policy limits

CC:
- [________________________________] (Client)
- [________________________________] (Tortfeasor's Carrier — re: consent to settle)

DELAWARE UM/UIM QUICK REFERENCE

SOURCES AND REFERENCES

• 18 Del. C. § 3902 — Uninsured and Underinsured Vehicle Coverage: https://delcode.delaware.gov/title18/c039/index.html
• 21 Del. C. § 2118 — Compulsory Automobile Insurance: https://delcode.delaware.gov/title21/c021/index.html
• 10 Del. C. § 8132 — Comparative Negligence: https://law.justia.com/codes/delaware/title-10/chapter-81/section-8132/
• 18 Del. C. § 2304 — Unfair Practices (regulatory): https://delcode.delaware.gov/title18/c023/
• Tackett v. State Farm Fire & Cas. Ins. Co., 653 A.2d 254 (Del. 1995): https://law.justia.com/cases/delaware/supreme-court/1995/653-a-2d-254-1.html
• Casson v. Nationwide Ins. Co., 455 A.2d 361 (Del. Super. 1982)
• Dunlap v. State Farm Fire & Cas. Co., 878 A.2d 434 (Del. 2005): https://caselaw.findlaw.com/court/de-supreme-court/1481318.html
• Connelly v. State Farm Mut. Auto. Ins. Co., 135 A.3d 1271 (Del. 2016): https://law.justia.com/cases/delaware/supreme-court/2016/426-2015.html
• Delaware Department of Insurance — Consumer Services: https://insurance.delaware.gov/services/filecomplaint/
• Delaware UM/UIM Law Overview: https://knepperstratton.com/delaware-uninsured-underinsured-motorist-coverage/