UM/UIM Demand Letter - Indiana

UM/UIM (UNINSURED/UNDERINSURED MOTORIST) DEMAND LETTER

State of Indiana

[LAW FIRM LETTERHEAD]

PRIVILEGED AND CONFIDENTIAL
SETTLEMENT COMMUNICATION - FOR RESOLUTION PURPOSES ONLY
PROTECTED UNDER INDIANA RULES OF EVIDENCE 408 AND F.R.E. 408

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

Date: [__/__/____]

[________________________________] (Insurance Company)
UM/UIM Claims Department
[________________________________]
[________________________________], Indiana [____]

Attention: [________________________________], Claims Adjuster
Re: FORMAL POLICY LIMITS DEMAND - UM/UIM BENEFITS UNDER INDIANA LAW
Insured/Claimant: [________________________________]
Policy Number: [________________________________]
Claim Number: [________________________________]
Date of Loss: [__/__/____]
County of Loss: [________________________________] County, Indiana
UM/UIM Policy Limits: $[____]
Tortfeasor: [________________________________]
Tortfeasor's Carrier: [________________________________]
Tortfeasor's Limits: $[____]
Response Deadline: [__/__/____]

Dear [________________________________]:

I. INTRODUCTION AND NATURE OF DEMAND

This firm represents [________________________________] ("our client" or "your insured") in connection with a claim for uninsured/underinsured motorist benefits under the above-referenced Indiana automobile liability policy arising from a motor vehicle collision that occurred on [__/__/____] in [________________________________] County, Indiana. This letter constitutes a formal demand for payment of the full UM/UIM policy limits of $[____] pursuant to Ind. Code § 27-7-5-2 and the common-law duty of good faith recognized in Erie Ins. Co. v. Hickman by Smith, 622 N.E.2d 515 (Ind. 1993).

Our client's damages, which substantially exceed both the tortfeasor's minimum liability coverage and the available UM/UIM limits, make this a clear policy-limits case. Indiana's UM/UIM statutory scheme exists precisely for situations where, as here, a negligent driver lacks the financial resources to fully compensate an innocent victim. As the Indiana Supreme Court recognized in Erie v. Hickman, the insurer-insured relationship involves a "special relationship" creating a quasi-fiduciary duty, and our client is entitled to prompt, fair, and objective evaluation of this first-party claim.

II. GOVERNING INDIANA UM/UIM LAW

A. Statutory Framework - Ind. Code § 27-7-5-2

Indiana requires every automobile liability insurance policy delivered or issued for delivery in Indiana to make available both uninsured and underinsured motorist coverage, unless affirmatively rejected in writing by the named insured. Specifically:

1. Uninsured Motorist (UM) coverage must be offered in limits at least equal to the bodily injury liability limits of the policy (minimum $25,000 per person / $50,000 per accident under Indiana's financial responsibility law).

2. Underinsured Motorist (UIM) coverage must be offered in limits not less than $50,000 per person / $100,000 per accident (Ind. Code § 27-7-5-2(a)(2)).

3. Written Rejection Requirement - Ind. Code § 27-7-5-2(a) and § 27-7-5-4: The named insured must reject UM/UIM coverage in writing. Absent a valid written rejection, coverage is deemed included at the bodily injury liability limits of the policy. Oral rejections or unsigned forms are insufficient.

B. The Hickman Duty of Good Faith

In Erie Ins. Co. v. Hickman by Smith, 622 N.E.2d 515 (Ind. 1993), the Indiana Supreme Court recognized a common-law tort of bad faith based on the "special relationship" between insurer and insured, which imposes a duty of good faith in first-party contexts such as UM/UIM claims. The Court held the duty prohibits:

1. Making an unfounded refusal to pay policy proceeds;
2. Causing an unfounded delay in making payment;
3. Deceiving the insured; and
4. Exercising unfair advantage to pressure the insured into settlement.

C. Indiana Stacking Rules - Beam v. Wausau

Under Beam v. Wausau Ins. Co., 765 N.E.2d 524 (Ind. 2002), and the anti-stacking analysis that has evolved in Indiana case law, the default rule permits an insured to "stack" UM/UIM coverage across separately insured vehicles unless the policy contains clear and unambiguous anti-stacking language that meaningfully notifies the insured. Offset clauses that would reduce coverage below the required statutory minimums are void as against public policy.

D. Coverage Trigger Under Indiana Law

For Uninsured Motorist (UM) Claims (Ind. Code § 27-7-5-4):

The tortfeasor qualifies as an "uninsured motorist" because:

☐ The tortfeasor had no liability insurance in effect at the time of the collision
☐ The tortfeasor's liability insurer has denied coverage in writing
☐ The tortfeasor's liability insurer became insolvent within the meaning of Ind. Code § 27-7-5-4
☐ The collision was a hit-and-run and the tortfeasor cannot be identified (corroborated by physical evidence as required)
☐ The tortfeasor's liability limits are less than Indiana's statutory minimum ($25,000/$50,000)

For Underinsured Motorist (UIM) Claims:

The tortfeasor qualifies as "underinsured" because:

☐ The tortfeasor's bodily injury liability limits of $[____] are insufficient to compensate our client's damages
☐ Our client has exhausted or will exhaust the tortfeasor's liability limits by settlement or judgment
☐ Our client's damages exceed the tortfeasor's available liability coverage
☐ Your insured's UIM limits of $[____] exceed the tortfeasor's paid liability limits, triggering UIM coverage under the Indiana difference-in-limits analysis

III. COVERAGE ANALYSIS

A. Policy Details

B. Demand for Production of Rejection Documentation

Pursuant to Ind. Code § 27-7-5-2 and § 27-7-5-4, please produce within ten (10) days any written rejection of UM/UIM coverage signed by the named insured. Absent a valid, signed, clear rejection, UM/UIM coverage is deemed to exist at bodily injury liability limits.

IV. THE COLLISION AND LIABILITY

A. Facts of the Collision

On [__/__/____], at approximately [____] [AM/PM], our client was [________________________________] at or near [________________________________] in [________________________________] County, Indiana.

[________________________________]

B. The Tortfeasor's Negligence

The tortfeasor, [________________________________], was negligent per se and/or negligent at common law by virtue of the following conduct:

☐ Failure to maintain a proper lookout
☐ Failure to yield right-of-way (Ind. Code § 9-21-8-et seq.)
☐ Following too closely (Ind. Code § 9-21-8-14)
☐ Excessive speed for conditions (Ind. Code § 9-21-5-1)
☐ Disregarding a traffic control device (Ind. Code § 9-21-8-32)
☐ Operating while intoxicated (Ind. Code § 9-30-5-1 et seq.)
☐ Distracted driving / handheld device use (Ind. Code § 9-21-8-59)
☐ Improper lane change (Ind. Code § 9-21-8-24)
☐ Reckless driving (Ind. Code § 9-21-8-52)
☐ Other: [________________________________]

C. Evidence of Liability

1. Indiana Officer's Standard Crash Report from [________________________________] Police Department (Report No. [________________________________]), which identifies [________________________________] as the at-fault driver.
2. Independent witness statements from [____] witnesses observing the collision.
3. Physical evidence including point-of-impact, debris-field analysis, and vehicle damage patterns.
4. Criminal citation / charges issued to the tortfeasor: [________________________________]
5. Accident reconstruction report by [________________________________] (enclosed).

D. Comparative Fault Analysis - Ind. Code § 34-51-2

Indiana follows modified comparative fault with a 51% bar under Ind. Code § 34-51-2-6. A claimant whose contributory fault is more than 50% is barred from any recovery. Below the 51% threshold, recovery is reduced proportionally.

Our client bears zero percent (0%) comparative fault in this collision. All evidence establishes that the tortfeasor's negligence was the sole proximate cause of the collision and our client's injuries.

V. OUR CLIENT'S INJURIES AND TREATMENT

A. Injury Summary

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

Primary Injuries:

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

Diagnostic Findings:

• MRI/CT/X-Ray findings: [________________________________]
• EMG/NCS findings: [________________________________]

B. Treatment Timeline

C. Current Condition and Prognosis

[________________________________]

D. Permanent Impairment Rating

VI. DAMAGES

A. Past Medical Expenses

Note on Collateral Source Rule: Indiana Code § 34-44-1-2 limits evidence of collateral source payments at trial. The full billed amount remains recoverable subject to Indiana's modified collateral source rule.

B. Future Medical Expenses (Present Value)

C. Lost Wages and Lost Earning Capacity

• Past Lost Wages (gross): $[____]
• Future Lost Earning Capacity (present value): $[____]
• Employer: [________________________________]
• Position: [________________________________]
• Hourly/Annual Rate: $[____]
• Time Missed: [____] days/weeks/months

D. Pain, Suffering, and Non-Economic Damages

Unlike medical malpractice cases, Indiana law imposes no statutory cap on non-economic damages in ordinary personal injury claims. Our client has endured, and will continue to endure, significant physical pain, mental anguish, loss of enjoyment of life, permanent disfigurement/scarring, and emotional distress. [________________________________]

E. Damages Summary

VII. SETTLEMENT WITH TORTFEASOR'S LIABILITY CARRIER

A. Status of Liability Settlement

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

B. Consent to Settle / Preservation of Subrogation Rights

Pursuant to the policy's consent-to-settle and subrogation provisions, we hereby request written consent from [________________________________] to accept the tortfeasor's policy limits and execute a limited release. In Indiana, the UIM carrier's subrogation rights against the tortfeasor must be preserved by either:

1. Providing written consent to settle within [____] days; or
2. Tendering the equivalent of the tortfeasor's liability limits to our client and preserving subrogation against the tortfeasor directly.

Please respond with written consent or a substitution tender within ten (10) days. Silence will be deemed consent and a waiver of subrogation.

VIII. CALCULATION OF UIM BENEFITS DEMANDED

Our client's documented damages of $[____] vastly exceed the combined coverage available. This is a clear policy-limits case under Indiana law and should be paid without further delay.

IX. BAD FAITH WARNING AND EXPOSURE UNDER INDIANA LAW

A. The Hickman Duty

[________________________________] (the Carrier) owes our client, its own insured, the duties of good faith and fair dealing recognized in Erie Ins. Co. v. Hickman, 622 N.E.2d 515 (Ind. 1993). The Indiana Supreme Court has reaffirmed that insurers occupy a quasi-fiduciary position with respect to first-party claimants.

B. Freidline Standard

Under Freidline v. Shelby Ins. Co., 774 N.E.2d 37 (Ind. 2002), bad faith requires clear and convincing evidence that the insurer had knowledge there was no legitimate basis to deny, delay, or underpay the claim. Bad faith may be shown by:

1. Unfounded refusal to pay proceeds;
2. Unfounded delay in payment;
3. Deception of the insured; or
4. Exercising unfair advantage to pressure settlement.

C. Magwerks - Bad Faith Even With Coverage Dispute

Significantly, under Monroe Guar. Ins. Co. v. Magwerks Corp., 829 N.E.2d 968 (Ind. 2005), a good-faith coverage dispute does not automatically preclude a bad faith claim. Indiana courts will examine the Carrier's "conduct leading up to and including the issuance of the denial letter," and bad faith handling during a coverage investigation is independently actionable.

D. Available Remedies If Bad Faith Is Established

• Full policy benefits plus pre-judgment interest;
• Consequential damages including emotional distress caused by the wrongful denial;
• Punitive damages under Ind. Code § 34-51-3-4, capped at the greater of three times compensatory damages or $50,000 (with 75% paid to the Indiana Violent Crime Victims Compensation Fund per Ind. Code § 34-51-3-6);
• Attorney's fees under Ind. Code § 34-52-1-1 if the Carrier's defense is frivolous, unreasonable, or groundless.

E. Ind. Code § 27-4-1-4.5 Violations

Although Indiana's Unfair Claim Settlement Practices Act does not create a private right of action, violations are admissible and persuasive evidence of bad faith. Violations at issue here may include:

• Misrepresenting pertinent facts or policy provisions;
• Failing to acknowledge and act reasonably promptly upon communications;
• Failing to adopt reasonable standards for prompt investigation;
• Not attempting in good faith to effectuate prompt, fair, and equitable settlement where liability is reasonably clear;
• Compelling the insured to institute litigation to recover amounts due by offering substantially less than will ultimately be recovered.

X. POLICY ARBITRATION CLAUSE

A. Indiana UM/UIM Arbitration

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

[If applicable, quote arbitration provision and confirm demand process below.]

B. Arbitration Demand (If Required by Policy)

If the Carrier fails to pay policy limits by the response deadline, this letter shall serve as a formal demand for arbitration of the amount owed. Please designate your arbitrator within [____] days of receipt, or confirm willingness to resolve through litigation in the [________________________________] County Circuit/Superior Court.

XI. STATUTE OF LIMITATIONS

Indiana's two-year statute of limitations for personal injury claims applies to the underlying tort claim (Ind. Code § 34-11-2-4). Contract claims for UM/UIM benefits are subject to a ten-year statute under Ind. Code § 34-11-2-11 for written contracts, though policy language may shorten these periods. Nothing in this letter tolls or waives any applicable limitations period.

XII. RESPONSE DEADLINE

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

Consequences of Non-Response

If the Carrier fails to tender the full UM/UIM policy limits by the deadline, we are prepared to:

1. Invoke arbitration (if required by policy) or file suit in [________________________________] County Circuit/Superior Court seeking:
   - Full UM/UIM policy benefits;
   - Contractual and statutory pre-judgment interest (Ind. Code § 24-4.6-1-102);
   - Bad faith damages under Hickman and Magwerks;
   - Punitive damages under Ind. Code § 34-51-3-4;
   - Attorney's fees under Ind. Code § 34-52-1-1;

2. File a formal complaint with the Indiana Department of Insurance, Consumer Services Division, 311 W. Washington Street, Suite 300, Indianapolis, IN 46204-2787, (317) 232-2395 or toll-free (800) 622-4461;

3. Preserve all evidence and seek spoliation sanctions where appropriate.

XIII. DOCUMENT PRESERVATION NOTICE

This letter constitutes formal notice to preserve the entire claim file, including adjuster notes, diary entries, reserve information, internal communications, supervisor reviews, ESI, claim-handling guidelines, and training materials relating to this claim. Failure to preserve may result in spoliation sanctions under Indiana Trial Rule 37.

XIV. CONCLUSION

This claim presents clear liability, catastrophic injuries, a sympathetic and blameless insured, and damages far exceeding all available coverage. The Carrier has an opportunity to fulfill its statutory and common-law obligations under Indiana law by paying the full UM/UIM policy limits to its own insured, thereby avoiding the substantial exposure that attaches under Hickman, Magwerks, and Freidline.

We expect a good-faith response consistent with the quasi-fiduciary duty Indiana law imposes. We look forward to hearing from you by the response deadline.

Respectfully submitted,

[________________________________] (Law Firm Name)

By: _______________________________
[________________________________], Attorney at Law
Indiana Bar No.: [________________________________]
[________________________________]
[________________________________], Indiana [____]
Tel: [________________________________]
Email: [________________________________]

Counsel for [________________________________]

ENCLOSURES:

• Policy declarations page
• UM/UIM coverage provisions (if in our possession)
• Indiana Officer's Standard Crash Report
• Medical records and itemized bills
• Wage loss documentation (W-2s, tax returns, employer verification)
• Photographs of vehicles, scene, and injuries
• Expert reports (if applicable)
• Impairment rating report

CC:

• [________________________________] (client)
• [________________________________] (tortfeasor's liability carrier - re: consent to settle)

INDIANA UM/UIM LAW QUICK REFERENCE

SOURCES AND REFERENCES

• Ind. Code § 27-7-5-2 (UM/UIM Required Coverage)
• Ind. Code § 27-4-1-4.5 (Unfair Claim Settlement Practices)
• Ind. Code § 34-51-2 (Comparative Fault)
• Ind. Code § 34-51-3-4 (Punitive Damages Cap)
• Erie Ins. Co. v. Hickman by Smith, 622 N.E.2d 515 (Ind. 1993)
• Monroe Guar. Ins. Co. v. Magwerks Corp., 829 N.E.2d 968 (Ind. 2005)
• Freidline v. Shelby Ins. Co., 774 N.E.2d 37 (Ind. 2002)
• Beam v. Wausau Ins. Co., 765 N.E.2d 524 (Ind. 2002)
• Indiana Department of Insurance
• Indiana General Assembly - Title 27 Article 7 Chapter 5