UM/UIM Demand Letter - Hawaii

UM/UIM (UNINSURED/UNDERINSURED MOTORIST) DEMAND LETTER

State of Hawaii

[LAW FIRM LETTERHEAD]

PRIVILEGED AND CONFIDENTIAL
SETTLEMENT COMMUNICATION — FOR RESOLUTION PURPOSES ONLY
PROTECTED UNDER HAWAII RULES OF EVIDENCE RULE 408 AND F.R.E. 408

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

Date: [__/__/____]

To:
[________________________________]
[________________________________] (Insurance Company Name)
Attn: UM/UIM Claims Department
[________________________________]
[________________________________], HI [____]

Attention: [________________________________], [________________________________] (Adjuster Name and Title)

Re: FORMAL UM/UIM POLICY LIMITS DEMAND — HAWAII LAW

Dear [________________________________]:

I. INTRODUCTION AND NATURE OF DEMAND

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

Hawaii is a no-fault (personal injury protection) state. Under Haw. Rev. Stat. § 431:10C-304, our client has already exhausted or will exhaust the applicable $10,000 PIP limit under Haw. Rev. Stat. § 431:10C-103.5(a). Because our client's injuries satisfy the tort threshold of Haw. Rev. Stat. § 431:10C-306(b) — specifically, [☐ PIP benefits equal or exceed $5,000 / ☐ significant permanent loss of use of a body part or function / ☐ permanent and serious disfigurement causing mental or emotional suffering / ☐ death] — our client is entitled to pursue full tort damages, including all general damages not covered by PIP.

Our client's total damages far exceed the tortfeasor's available coverage, making this a clear UM/UIM claim under Haw. Rev. Stat. § 431:10C-301(b)(3) and (b)(4).

II. HAWAII UM/UIM LAW AND COVERAGE FRAMEWORK

A. Statutory Basis for UM/UIM Coverage

Haw. Rev. Stat. § 431:10C-301(b)(3) requires every Hawaii motor vehicle insurance policy to include uninsured motorist coverage at no less than the bodily injury liability minimums of $20,000 per person / $40,000 per accident, unless the named insured rejects coverage in writing.

Haw. Rev. Stat. § 431:10C-301(b)(4) separately requires an offer of underinsured motorist coverage. A tortfeasor is "underinsured" when the liability for damages exceeds the total applicable bodily injury liability limits. See Haw. Rev. Stat. § 431:10C-103 (definition of "underinsured motor vehicle").

Key Hawaii UIM Rule — No Exhaustion Requirement: Under Hawaii law, exhaustion clauses in UIM policies requiring the insured to exhaust the tortfeasor's policy before applying for UIM benefits are void as against public policy. See 90 Haw. 302, 978 P.2d 740 (1999). An insurer may not condition its consent to settle on the insured's failure to achieve full exhaustion.

B. Stacking of UM/UIM Coverage

Stacking is neither automatic nor prohibited under Haw. Rev. Stat. § 431:10C-301(c)–(d). Under the statute:

• Stacking is prohibited by default unless the insured affirmatively purchases the stacking option.
• Haw. Rev. Stat. § 431:10C-301(d) requires the insurer to offer the insured the option to (1) stack UM/UIM coverage across multiple vehicles, and (2) select UM/UIM limits up to the bodily injury liability limits.
• These offers must be made at policy inception. An insurer that fails to clearly offer and obtain a written rejection of the stacking option may be required to provide stacked coverage. See 87 Haw. 307, 955 P.2d 100 (1998) (written rejection required; failure to clearly offer stacking may invalidate rejection).

Stacking Status for This Claim:
☐ Stacked coverage was purchased — total stacked limits: $[________________________________]
☐ Non-stacked policy — single vehicle limits apply: $[________________________________]
☐ Insurer failed to make required stacking offer — stacked coverage is owed as a matter of law

C. Hawaii No-Fault (PIP) Interaction

Hawaii's no-fault system under Haw. Rev. Stat. Chapter 431, Article 10C, requires PIP benefits of $10,000 per person to be paid without regard to fault. PIP is primary over health insurance. Payment must be made within 30 calendar days after the insurer receives reasonable proof of the fact and amount of benefits. Haw. Rev. Stat. § 431:10C-304(3)(A).

Tort Threshold — Haw. Rev. Stat. § 431:10C-306(b): Tort liability is not abolished where:

1. ☐ Death occurs;
2. ☐ Injury results in a significant permanent loss of use of a part or function of the body;
3. ☐ Injury results in a permanent and serious disfigurement causing mental or emotional suffering; or
4. ☐ PIP benefits incurred equal or exceed $5,000.

Once the threshold is met, the injured party may recover all damages including general damages (pain and suffering, emotional distress, loss of enjoyment of life) not payable under PIP.

D. Policy Coverage Summary

III. COVERAGE TRIGGER

A. For Uninsured Motorist (UM) Claims

The tortfeasor qualifies as an "uninsured motor vehicle" under Hawaii law because:

☐ The tortfeasor had no liability insurance at the time of the collision
☐ The tortfeasor's insurer has denied coverage
☐ The tortfeasor's insurer is insolvent
☐ The tortfeasor was a hit-and-run driver who cannot be identified (physical contact required under policy terms — see policy provisions)
☐ The tortfeasor's insurance limits are below Hawaii's statutory minimum of $20,000/$40,000

B. For Underinsured Motorist (UIM) Claims

The tortfeasor qualifies as an "underinsured motor vehicle" under Haw. Rev. Stat. § 431:10C-103 because:

• The tortfeasor's liability limits of $[________________________________] are insufficient to compensate our client for total damages of $[________________________________]
• The damages imposed by law against the tortfeasor exceed the cumulative bodily injury liability limits applicable at the time of loss
• Our client's UIM benefits are calculated as the difference between our client's total damages and the tortfeasor's limits actually available (not offset by other payments or settlements)

UIM Benefit Calculation:

IV. THE COLLISION — FACTS AND LIABILITY

A. Facts of the Collision

On [__/__/____], at approximately [____]:00 [☐ a.m. ☐ p.m.] Hawaii Standard Time, our client was [________________________________] at or near [________________________________], [________________________________], Hawaii.

[________________________________]
(Provide a detailed narrative of how the collision occurred, road and weather conditions, direction of travel, traffic controls, and any Hawaii-specific factors such as volcanic haze ["vog"], highway conditions on specific islands, or tourist/rental vehicle involvement.)

Location Details:

• Island: ☐ Oahu ☐ Maui ☐ Hawaii (Big Island) ☐ Kauai ☐ Molokai ☐ Lanai
• Road/Intersection: [________________________________]
• County: ☐ City & County of Honolulu ☐ Maui County ☐ Hawaii County ☐ Kauai County
• Traffic control: [________________________________]
• Road conditions: [________________________________]

B. Tortfeasor's Negligence

The tortfeasor, [________________________________], was negligent under Haw. Rev. Stat. § 663-31 (pure comparative negligence) in the following respects:

☐ Failure to maintain proper lookout (Haw. Rev. Stat. § 291C-72)
☐ Failure to yield right-of-way (Haw. Rev. Stat. § 291C-73 et seq.)
☐ Following too closely (Haw. Rev. Stat. § 291C-85)
☐ Excessive speed for conditions (Haw. Rev. Stat. § 291C-101 et seq.)
☐ Distracted driving / use of mobile electronic device (Haw. Rev. Stat. § 291-71)
☐ Running red light or stop sign (Haw. Rev. Stat. § 291C-32 et seq.)
☐ Improper lane change (Haw. Rev. Stat. § 291C-38)
☐ Operating under the influence of intoxicants (Haw. Rev. Stat. § 291E-61)
☐ Operating a U-drive/rental vehicle negligently
☐ [________________________________] (other)

C. Evidence of Liability

1. Police Report
[________________________________] Police Department / Hawaii County Police Department / Honolulu Police Department Traffic Crash Report No. [________________________________], dated [__/__/____].

2. Witness Statements
[____] independent witness(es) corroborate our client's account. Statements attached.

3. Physical Evidence
Point of impact analysis, vehicle damage patterns, debris field, and tire marks establish liability. [________________________________]

4. Hawaii-Specific Evidence
☐ Traffic camera footage from [________________________________]
☐ U-drive/rental vehicle records showing lack of adequate vehicle instruction to operator
☐ Tourist/unfamiliar driver evidence
☐ Expert analysis by [________________________________], who has concluded: [________________________________]

D. Comparative Fault Analysis

Under Hawaii's pure comparative negligence statute, Haw. Rev. Stat. § 663-31, our client's recovery is reduced only by the percentage of fault attributable to our client. Our client bears no (or minimal) comparative fault for this collision because [________________________________].

Any allocation of fault to our client does not bar recovery; it merely reduces the total recovery proportionally.

V. OUR CLIENT'S INJURIES AND MEDICAL TREATMENT

A. No-Fault PIP Benefits Status

B. Injury Summary

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

Primary Injuries:

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

Secondary / Consequential Injuries:

• [________________________________]

C. Treatment Timeline

Note: Hawaii medical providers operating under the Motor Vehicle Insurance Law are governed by the Workers' Compensation Supplemental Medical Fee Schedule (Medicare RBRVS). See Haw. Rev. Stat. § 431:10C-103 ("Medical fee schedule").

D. Current Condition and Prognosis

[________________________________]
(Describe current symptoms, functional limitations, treating physician's prognosis, and any Hawaii-based specialist referrals.)

E. Permanent Impairment

VI. DAMAGES

A. Medical Expenses

Past Medical Expenses (Amounts in Excess of PIP):

Future Medical Expenses (Present Value):

B. Lost Income / Earning Capacity

Note: Under Hawaii's no-fault system, basic PIP does NOT include wage loss benefits. Optional wage loss coverage (Haw. Rev. Stat. § 431:10C-302(a)(2)) must be separately purchased. Wage loss claims in excess of any PIP wage coverage are recoverable once the tort threshold is met.

C. General Damages — Pain and Suffering / Non-Economic Damages

Under Hawaii law, once the tort threshold of Haw. Rev. Stat. § 431:10C-306(b) is met, the injured party is entitled to recover general damages not covered by PIP, including:

• Physical pain and suffering: [________________________________]
• Emotional distress and mental anguish: [________________________________]
• Loss of enjoyment of life and activities: [________________________________] (including Hawaii-specific activities: [________________________________])
• Loss of consortium (if applicable): [________________________________]

Estimated General Damages: $[________________________________]

D. Total Damages Summary

VII. CONSENT TO SETTLE WITH TORTFEASOR'S INSURER

A. Settlement Status

We [☐ have reached / ☐ are pursuing] a settlement with the tortfeasor's liability carrier, [________________________________], for the tortfeasor's policy limits of $[________________________________].

B. Request for Consent to Settle

NOTICE: Pursuant to Haw. Rev. Stat. § 431:10C-301(b)(4) and this policy's terms, we hereby formally request [________________________________]'s written consent to settle with the tortfeasor's carrier for $[________________________________].

Hawaii Law on Consent: An underinsured motorist carrier's grounds for denying UIM benefits under a consent-to-settle provision must be reasonable, in good faith, and within the bounds of the intent underlying Haw. Rev. Stat. § 431:10C-301(b)(4). See 90 Haw. 302, 978 P.2d 740 (1999). It is unreasonable for a UIM carrier to withhold consent in order to protect subrogation rights without tendering the amount of the proposed settlement to substitute itself as subrogee. If you withhold consent, you must place yourself in the position of the insured's subrogee by paying the settlement amount.

Please provide written consent or refusal, with written reasons, within [____] days of this letter.

VIII. DEMAND FOR PAYMENT OF UM/UIM BENEFITS

A. Formal Policy Limits Demand

We hereby demand payment of the full UM/UIM policy limits of $[________________________________] within [____] days of this letter.

Our client's total damages of $[________________________________] vastly exceed the combined available coverage. This is a clear policy limits case. The only question is whether [________________________________] will honor its contractual obligations to its own insured under Hawaii law.

B. UM/UIM Arbitration Notice

The policy [☐ contains / ☐ does not contain] an arbitration clause for UM/UIM disputes pursuant to Haw. Rev. Stat. §§ 431:10C-213 and 431:10C-213.5.

☐ If the policy contains a mandatory arbitration clause: We hereby also provide notice of our intent to invoke arbitration if this demand is not accepted. Please confirm the applicable arbitration procedure and deadlines under the policy.

☐ If no arbitration clause: In the event this demand is rejected, we will file suit in the Circuit Court of the [________________________________] Circuit, State of Hawaii.

IX. BAD FAITH WARNING

[________________________________] ("the Carrier") owes our client, its own insured, the duties of good faith and fair dealing as a matter of Hawaii common law and statute.

A. Hawaii Bad Faith Standard

In Best Place, Inc. v. Penn Am. Ins. Co., 82 Haw. 120, 920 P.2d 334 (1996), the Hawaii Supreme Court held that there is a legal duty, implied in a first-party insurance contract, that the insurer must act in good faith. Breach of that duty gives rise to an independent tort cause of action. The implied covenant is breached — whether the Carrier pays the claim or not — when its conduct damages the very protection or security which the insured sought to gain by buying insurance.

The Hawaii Supreme Court extended these principles to the UM/UIM context in Guajardo v. AIG Haw. Ins. Co., 118 Haw. 196, 187 P.3d 580 (2008), recognizing bad faith liability where a UM/UIM carrier unreasonably denies or delays payment to its own insured.

The applicable standard does not require proof of a conscious awareness of wrongdoing. An unreasonable delay in payment or an unreasonable denial of a meritorious claim is sufficient to support a bad faith cause of action. Best Place, 920 P.2d at 347–348.

B. Statutory Unfair Claims Practices

Haw. Rev. Stat. § 431:13-103(a)(11) defines the following as unfair claims settlement practices when committed with such frequency as to indicate a general business practice:

• (B) Failing to respond with reasonable promptness — in no case more than 15 working days — to communications from the insured
• (C) Failing to adopt and implement reasonable standards for prompt investigation of claims
• (D) Refusing to pay claims without conducting a reasonable investigation
• (E) Failing to affirm or deny coverage within a reasonable time after proof of loss is submitted
• (F) Failing to offer payment within 30 calendar days of affirmation of liability where the amount is determined and not in dispute
• (G) Failing to provide a written explanation for any delay on claims unresolved for 30 calendar days from the date reported
• (H) Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear
• (I) Compelling insureds to institute litigation by offering substantially less than amounts ultimately recovered
• (P) Failing to promptly provide a reasonable explanation of the basis in the policy for denial of a claim or compromise settlement offer

Note: Three or more written complaints received by the Insurance Commissioner within any 12-month period charging separate violations constitute a rebuttable presumption of a general business practice. Haw. Rev. Stat. § 431:13-103(c).

C. UDAP — Haw. Rev. Stat. §§ 480-2 and 480-13

Unfair or deceptive acts or practices in the conduct of any trade or commerce are unlawful under Haw. Rev. Stat. § 480-2. A consumer who suffers loss due to a violation may recover three times actual damages (treble damages), plus attorney's fees and costs, under Haw. Rev. Stat. § 480-13. To the extent the Carrier's conduct in handling this UM/UIM claim constitutes an unfair or deceptive act or practice in the insurance trade, our client expressly reserves UDAP claims.

D. Available Damages for Bad Faith

Under Hawaii law, a policyholder who prevails on a bad faith claim may recover:

• All compensatory damages flowing from the breach
• Consequential damages (financial losses caused by the insurer's failure to pay)
• Emotional distress damages
• Punitive damages, upon proof by clear and convincing evidence that the Carrier "acted wantonly or oppressively or with such malice as implies a spirit of mischief or criminal indifference to civil obligations, or where there has been some wilful misconduct or that entire want of care which would raise the presumption of a conscious indifference to consequences." Best Place, 920 P.2d at 348.
• Attorney's fees as an element of consequential damages in bad faith cases

X. RESPONSE DEADLINE

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

Failure to respond constitutes a waiver of the Carrier's right to negotiate further and will be submitted as evidence of bad faith in any subsequent litigation.

Consequences of Non-Response

If [________________________________] fails to accept this demand by the deadline:

1. We will invoke arbitration under Haw. Rev. Stat. §§ 431:10C-213 and 431:10C-213.5 (if applicable) or file suit in the Circuit Court of the [________________________________] Circuit, State of Hawaii.
2. We will pursue bad faith damages under Best Place, Guajardo, and Haw. Rev. Stat. § 431:13-103.
3. We will pursue UDAP treble damages and attorney's fees under Haw. Rev. Stat. §§ 480-2 and 480-13.
4. We will file a formal complaint with the Hawaii Insurance Division (Hawaii DCCA), 335 Merchant Street, Room 213, Honolulu, HI 96813, Tel: (808) 586-2790.
5. We will seek all punitive damages supported by the record.

Statutes of Limitation: Contract claims — 6 years (Haw. Rev. Stat. § 657-1); tort claims (including bad faith) — 2 years (Haw. Rev. Stat. § 657-7); no-fault bad faith — see Haw. Rev. Stat. § 431:10C-315.

XI. DOCUMENT PRESERVATION NOTICE

This letter serves as formal notice to [________________________________] to immediately preserve all documents and electronically stored information (ESI) relating to this claim, including but not limited to: the complete claim file; all adjuster notes and diaries; all internal communications regarding this claim; all reserve information and change documentation; claim handling guidelines, manuals, and procedures; all expert reports, evaluations, and IME records; quality assurance and audit records; and supervisor approvals. Destruction of any such material after receipt of this notice may constitute spoliation of evidence.

XII. CONCLUSION

[________________________________] had an opportunity — indeed, a legal obligation — to protect its own insured. Our client purchased UM/UIM coverage for exactly this situation. Total damages of $[________________________________] dwarf the combined available coverage. This is a clear policy limits case under Hawaii law.

We strongly urge the Carrier to tender the full policy limits and resolve this matter without the necessity of litigation, arbitration, and bad faith proceedings.

Please direct all communications regarding this matter to the undersigned.

Respectfully submitted,

[________________________________] (Law Firm Name)

By: ___________________________________
[________________________________] (Attorney Name)
Hawaii Bar No. [________________________________]
[________________________________]
[________________________________], HI [____]
Tel: [________________________________]
Email: [________________________________]

Counsel for [________________________________]

ENCLOSURES:

• Policy declarations page and UM/UIM coverage provisions (including stacking offer documentation)
• PIP payment records and ledger
• Police/traffic crash report
• Medical records and billing statements
• Wage loss documentation
• Photographs
• Expert or IME reports (if applicable)
• Proposed tortfeasor settlement documentation

CC:

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

HAWAII UM/UIM LAW QUICK REFERENCE

SOURCES AND REFERENCES

• Haw. Rev. Stat. § 431:10C-301 (2025): https://law.justia.com/codes/hawaii/title-24/chapter-431/section-431-10c-301/
• Haw. Rev. Stat. § 431:10C-103 (definitions, UIM): https://law.justia.com/codes/hawaii/title-24/chapter-431/section-431-10c-103/
• Haw. Rev. Stat. § 431:10C-306 (tort threshold): https://law.justia.com/codes/hawaii/title-24/chapter-431/section-431-10c-306/
• Haw. Rev. Stat. § 431:13-103 (unfair claims practices): https://law.justia.com/codes/hawaii/title-24/chapter-431/section-431-13-103/
• Best Place, Inc. v. Penn Am. Ins. Co., 82 Haw. 120, 920 P.2d 334 (1996): https://law.justia.com/cases/hawaii/supreme-court/1996/16065-2.html
• Hawaii DCCA Insurance Division: https://cca.hawaii.gov/ins/consumers/mvi/
• Hawaii DCCA Auto Minimum Limits FAQ (Jan. 2026): https://cca.hawaii.gov/wp-content/uploads/2026/01/Auto-Minimum-Limits-FAQs.pdf
• Nolo, "How Hawaii No-Fault Car Insurance Works" (2025): https://www.nolo.com/legal-encyclopedia/hawaii-no-fault-car-insurance.html
• Island Insurance, "Hawaii PIP Benefits Explained" (2025): https://www.islandinsurance.com/article/hawaiis-personal-injury-protection-pip-benefits-explained