UM/UIM Demand Letter - Kentucky

UM/UIM (UNINSURED/UNDERINSURED MOTORIST) DEMAND LETTER

Commonwealth of Kentucky

[LAW FIRM LETTERHEAD]

FOR SETTLEMENT PURPOSES — KRE 408 AND FED. R. EVID. 408 MAY LIMIT SPECIFIED USES OF DISPUTED-CLAIM NEGOTIATIONS

This label does not create a privilege or make every statement inadmissible.

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

Date: [__/__/____]

[INSURANCE_COMPANY_NAME]
[________________________________]
[CITY], [STATE] [ZIP]

Attention: [ADJUSTER_NAME], [ADJUSTER_TITLE]
Re: UM/UIM POLICY LIMITS DEMAND — COMMONWEALTH OF KENTUCKY
Insured/Claimant: [________________________________]
Policy Number: [________________________________]
Claim Number: [________________________________]
Date of Loss: [__/__/____]
UM/UIM Policy Limits: $[________________________________]
Tortfeasor: [________________________________]
Tortfeasor's Carrier: [________________________________]
Tortfeasor's Liability Limits: $[________________________________]
Coots Notice: [INCLUDED HEREWITH / PREVIOUSLY SERVED]
Response Deadline: [__/__/____]

Dear [ADJUSTER_NAME]:

I. INTRODUCTION AND NATURE OF DEMAND

This firm represents [CLIENT_NAME] ("our client" or "your insured") in connection with a claim for [uninsured / underinsured] motorist benefits under Kentucky law arising from a motor vehicle collision that occurred on [__/__/____] in [COUNTY] County, Commonwealth of Kentucky. This letter constitutes a formal, time-limited demand for payment of the full UM/UIM policy limits of $[UM_UIM_LIMITS].

Our client's damages substantially and verifiably exceed both the tortfeasor's available liability coverage and the UM/UIM limits at issue. Under the Kentucky Motor Vehicle Reparations Act (KRS Chapter 304, Subtitle 39) and the Kentucky Insurance Code (KRS Chapter 304, Subtitles 12 and 20), UM/UIM coverage exists precisely for this situation — to protect your own insured when the at-fault driver lacks sufficient coverage to compensate a seriously injured Kentuckian.

This letter also serves as notice of intent to settle pursuant to Coots v. Allstate Ins. Co., 853 S.W.2d 895 (Ky. 1993), where applicable, and as formal notice under the Kentucky Unfair Claims Settlement Practices Act, KRS 304.12-230.

II. KENTUCKY UM/UIM LEGAL FRAMEWORK

A. Statutory Framework

Uninsured Motorist Coverage — KRS 304.20-020. Every motor vehicle liability insurance policy delivered or issued for delivery in Kentucky must provide UM coverage unless the named insured has rejected it in writing. The minimum UM limit is $25,000 per person / $50,000 per accident, matching the Kentucky financial responsibility minimums.

Underinsured Motorist Coverage — KRS 304.39-320. Kentucky's UIM statute is an "available-upon-request" statute: under KRS 304.39-320(2), every insurer must make UIM coverage available upon request, so it need not be included in every policy, but where it is in place it pays the insured's uncompensated damages when the tortfeasor's liability limits are insufficient. On stacking, the Kentucky Supreme Court held in Allstate Ins. Co. v. Dicke, 862 S.W.2d 327 (Ky. 1993), that anti-stacking provisions are void as to UIM coverage where the insured paid separate premiums on separate vehicles (reasonable-expectations doctrine); however, only "insureds of the first class" — the named insured and resident family members — may stack. James v. James, 25 S.W.3d 110 (Ky. 2000). Confirm the declarations page and premium structure to determine whether stacking applies here.

No-Fault / Basic Reparation Benefits — KRS 304.39-030. Kentucky is a "choice no-fault" jurisdiction. Unless the individual has rejected tort limitations in writing and filed the rejection form with the Kentucky Department of Insurance, the operator is entitled to Basic Reparation Benefits ("BRB") of up to $10,000 per person per accident (aggregate cap set by KRS 304.39-020(2)) for medical expenses, lost wages, replacement services, and survivor's benefits. Note (HB 627, 2026 Acts ch. 149, effective July 15, 2026, applied by policy issue/renewal date): the $10,000 aggregate BRB cap is unchanged, but PIP medical payments are now capped at the KRS 342.035 workers'-compensation fee schedule (except hospital/hospital-owned outpatient care), the weekly work-loss and replacement-services limits rise to $500, and the funeral/burial sub-limit rises to $5,000. Confirm which rule set governs based on the policy's issue/renewal date.

Tort Threshold — KRS 304.39-060(2)(b). An injured person subject to Kentucky's no-fault limitations may maintain a tort claim for pain and suffering only if (i) medical expenses exceed $1,000, (ii) there is permanent disfigurement, (iii) there is a fracture of a weight-bearing bone, a compound, comminuted, displaced, or compressed fracture, (iv) loss of a body member, (v) permanent injury, (vi) permanent loss of a bodily function, or (vii) death. Our client meets the tort threshold because: [DESCRIBE_HOW_THRESHOLD_IS_MET].

B. Coverage Summary

C. Coverage Trigger Under Kentucky Law

☐ Uninsured Motorist Trigger (KRS 304.20-020):

• Tortfeasor carried no motor vehicle liability insurance at the time of collision
• Tortfeasor's carrier has denied coverage or is insolvent
• Hit-and-run collision with an unidentified driver (physical contact requirement under Kentucky law satisfied)
• Tortfeasor's limits are below the Kentucky statutory minimum of $25,000/$50,000

☐ Underinsured Motorist Trigger (KRS 304.39-320):

• Tortfeasor's liability limits of $[TORTFEASOR_LIMITS] are insufficient to fully compensate our client's damages
• Our client has exhausted (or will exhaust) those limits via the Coots procedure
• Total damages materially exceed the available underlying coverage

III. THE COLLISION AND LIABILITY UNDER KENTUCKY LAW

A. Facts of the Collision

On [__/__/____], at approximately [____] [AM/PM], our client was [DESCRIBE_CLIENT_ACTIVITY] at or near [LOCATION], [CITY], [COUNTY] County, Kentucky.

[DETAILED_NARRATIVE_OF_COLLISION]

B. The Tortfeasor's Negligence

The tortfeasor, [TORTFEASOR_NAME], breached his/her duty of ordinary care under Kentucky common law by:

☐ Failure to maintain a proper lookout
☐ Failure to yield right-of-way (KRS 189.330)
☐ Following too closely (KRS 189.340)
☐ Operating at a speed greater than reasonable and prudent (KRS 189.390)
☐ Reckless driving (KRS 189.290)
☐ Operating under the influence (KRS 189A.010)
☐ Distracted driving / texting while driving (KRS 189.292)
☐ Failure to obey traffic control device (KRS 189.231)
☐ Improper lane change / failure to signal (KRS 189.380)
☐ [OTHER: ________________________________]

C. Comparative Fault Analysis — KRS 411.182

Kentucky follows pure comparative fault under KRS 411.182 and Hilen v. Hays, 673 S.W.2d 713 (Ky. 1984). Even were any minor comparative fault to be attributed to our client (which is denied), pure comparative fault would not bar recovery — it would merely reduce the award proportionally. Under the facts, the tortfeasor bears 100% of the causal fault for the following reasons: [EXPLAIN_LIABILITY_BASIS].

D. Evidence of Liability

1. Kentucky Uniform Police Traffic Collision Report — [AGENCY], Report No. [________________________________]
2. Independent Witnesses — [NUMBER] witnesses whose statements corroborate our client's account
3. Physical Evidence — Point of impact, crush damage, debris field, and skid analysis
4. Expert Analysis (if applicable) — [ACCIDENT_RECONSTRUCTIONIST] has opined: [SUMMARY]
5. Electronic Data — EDR / telematics / dashcam footage: [DESCRIBE]

IV. INJURIES AND MEDICAL TREATMENT

A. Injuries Sustained

As a direct and proximate result of this collision, our client sustained the following injuries, all of which are causally related and satisfy KRS 304.39-060(2)(b):

Primary Injuries:

• [PRIMARY_INJURY_1]
• [PRIMARY_INJURY_2]
• [PRIMARY_INJURY_3]

B. Treatment Providers and Chronology

C. Permanent Impairment / Prognosis

[DESCRIBE_PROGNOSIS_AND_PERMANENCY_IF_ANY], including any AMA Guides impairment rating of [____]% whole person impairment. Kentucky juries routinely consider permanent impairment in awarding non-economic damages under the standards set forth in Sand Hill Energy, Inc. v. Ford Motor Co., 83 S.W.3d 483 (Ky. 2002).

V. DAMAGES UNDER KENTUCKY LAW

A. Past Medical Expenses

Note: Kentucky's treatment of medical-expense proof, collateral benefits, subrogation, and recoverable amounts is claim-specific. KRS 411.188 is not operative authority because O'Bryan v. Hedgespeth, 892 S.W.2d 571, 578 (Ky. 1995), held it unconstitutional. Confirm the current rule for the coverage and damages asserted.

B. BRB (PIP) Offset Analysis — KRS 304.39-060(2)

C. Future Medical Expenses (Present Value)

D. Lost Income and Impairment of Earning Power

• Past Lost Wages: $[____]
• Future Lost Earning Capacity (present value): $[____]

E. Pain, Suffering, Mental Anguish, and Loss of Enjoyment of Life

Kentucky permits recovery for physical pain and suffering, mental anguish, and impairment of the capacity to enjoy life. [DESCRIBE_IMPACT_ON_CLIENT].

F. Loss of Consortium — KRS 411.145

[IF APPLICABLE: Spouse of our client asserts a claim for loss of consortium under KRS 411.145, valued at $[____].]

G. Damages Summary

VI. TORTFEASOR SETTLEMENT AND THE COOTS PROCEDURE

A. Settlement Status With Underlying Carrier

We [have reached / are finalizing] a settlement with [TORTFEASOR_CARRIER] for the tortfeasor's liability policy limits of $[TORTFEASOR_LIMITS].

B. Coots Notice and 30-Day Substitution Period

Pursuant to Coots v. Allstate Ins. Co., 853 S.W.2d 895 (Ky. 1993), and its progeny, this letter constitutes formal written notice of our client's intention to settle with the tortfeasor's liability carrier. [CARRIER_SHORT_NAME] has thirty (30) days from receipt of this notice to either:

1. Consent to the proposed settlement and waive subrogation against the tortfeasor; OR
2. Substitute its payment for the amount of the tendered liability limits, preserving its subrogation rights against the tortfeasor (Coots substitution).

Failure to exercise either option within 30 days constitutes a waiver of any subrogation rights against the tortfeasor, and our client will proceed with the settlement while preserving all rights against [CARRIER_SHORT_NAME] for UIM benefits.

VII. DEMAND FOR UM/UIM POLICY LIMITS

A. Calculation of UIM Benefits Due

B. Policy Limits Demand

We hereby formally demand tender of the full UM/UIM policy limits of $[UM_UIM_LIMITS]. Our client's provable damages of $[TOTAL_DAMAGES] substantially exceed the available coverage. This is a textbook policy-limits case under Kentucky law. Any failure to tender the full limits in response to this demand will be documented and introduced in any subsequent bad-faith action under Wittmer v. Jones and Federal Kemper Ins. Co. v. Hornback.

VIII. BAD FAITH NOTICE AND WARNING

A. The Kentucky Bad Faith Standard — Wittmer v. Jones

Kentucky recognizes both first-party and third-party bad faith causes of action arising from violations of the Kentucky Unfair Claims Settlement Practices Act ("KUCSPA"), KRS 304.12-230. To prevail in a bad-faith action, an insured must establish the three-element test adopted by the Kentucky Supreme Court in Wittmer v. Jones, 864 S.W.2d 885 (Ky. 1993) (synthesizing Federal Kemper Ins. Co. v. Hornback, 711 S.W.2d 844 (Ky. 1986) and Curry v. Fireman's Fund Ins. Co., 784 S.W.2d 176 (Ky. 1989)):

1. The insurer must be obligated to pay the claim under the terms of the policy;
2. The insurer must lack a reasonable basis in law or fact for denying the claim; and
3. The insurer must know there is no reasonable basis for denying the claim, or act with reckless disregard for whether such a basis exists.

B. Private Right of Action

Kentucky is one of the few states that permits private civil actions — by both first-party and third-party claimants — for violations of KUCSPA. See State Farm Mut. Auto. Ins. Co. v. Reeder, 763 S.W.2d 116 (Ky. 1988) (the third-party private right of action arises from KRS 446.070 coupled with KRS 304.12-230). This means our client may sue [CARRIER_SHORT_NAME] directly for bad-faith conduct.

C. Recoverable Damages in a Kentucky Bad Faith Action

• Contract damages — all policy benefits wrongfully withheld
• Consequential damages — including economic loss, emotional distress, and damage to credit/reputation
• Punitive damages under KRS 411.184 upon clear and convincing evidence of oppression, fraud, or malice. Note: the statute's narrow definition of "malice" in KRS 411.184(1)(c) (requiring "subjective awareness that such conduct will result in human death or bodily harm") was held unconstitutional in Williams v. Wilson, 972 S.W.2d 260 (Ky. 1998); the common-law standard — punitive damages for conduct showing gross negligence or wanton/reckless disregard for the rights or safety of others (Horton v. Union Light, Heat & Power Co., 690 S.W.2d 382 (Ky. 1985)) — governs that prong
• Attorney's fees only when independently authorized, including KRS 304.12-235(3) if the named-insured and delay-without-reasonable-foundation predicates are met
• Interest under KRS 304.12-235(2) if its statutory predicates are met, or under another claim-specific prejudgment-interest basis identified by counsel

Any failure to fairly evaluate and timely pay this claim will be documented and introduced as evidence of bad faith under Wittmer and its progeny, including the more recent guidance in Mosley v. Arch Specialty Ins. Co., 626 S.W.3d 579 (Ky. 2021).

IX. KUCSPA STATUTORY VIOLATIONS

[CARRIER_SHORT_NAME]'s handling of this UM/UIM claim violates one or more of the following provisions of KRS 304.12-230:

• (1) Misrepresenting pertinent facts or insurance policy provisions
• (2) Failing to acknowledge and act reasonably promptly upon communications regarding claims
• (3) Failing to adopt and implement reasonable standards for the prompt investigation of claims
• (4) Refusing to pay claims without conducting a reasonable investigation
• (6) Not attempting in good faith to effectuate prompt, fair, and equitable settlements when liability has become reasonably clear
• (7) Compelling insureds to institute litigation by offering substantially less than the amounts ultimately recovered
• (13) Failing to promptly settle where liability has become reasonably clear under one portion of the policy to influence settlement under another portion
• (14) Failing to promptly provide a reasonable explanation of the policy, facts, or applicable-law basis for denial or compromise of a claim

These obligations are reinforced by 806 KAR 12:095, Kentucky's administrative regulation governing unfair claims settlement practices, which incorporates the 15-day acknowledgment requirement and mandates good-faith claim handling by all Kentucky-licensed insurers.

X. ARBITRATION / LITIGATION CONSIDERATIONS

A. Policy Arbitration Clause

The policy [CONTAINS / DOES NOT CONTAIN] a binding arbitration clause for UM/UIM disputes. Kentucky courts generally enforce such clauses so long as they comply with the Kentucky Uniform Arbitration Act, KRS 417.045 et seq. If litigation is pursued, venue will be proper in [COUNTY] Circuit Court under KRS 452.480.

B. Statute of Limitations

Under KRS 304.39-230, the statute of limitations for actions based on UIM coverage commences when the insured reasonably should know that the tortfeasor is underinsured. For the underlying tort, the limitations period is two (2) years from the last BRB payment or two (2) years from the date of injury, whichever is later, under KRS 304.39-230(6).

XI. RESPONSE DEADLINE

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

If [CARRIER_SHORT_NAME] fails to tender the policy limits by that date:

1. We will file a civil action in [COUNTY] Circuit Court, Commonwealth of Kentucky, seeking all policy benefits, bad-faith damages, punitive damages, and attorney's fees.
2. We will file a formal complaint with the Kentucky Department of Insurance, 500 Mero Street, Frankfort, KY 40601, and request an investigation under 806 KAR 12:095.
3. All prior settlement offers will be deemed withdrawn, and the claim value will reset based on continuing medical treatment and litigation costs.
4. This demand letter, and the Company's response or non-response, will be Exhibit A in any subsequent bad-faith action under Wittmer v. Jones.

XII. DOCUMENT PRESERVATION NOTICE

This letter serves as a formal litigation hold. [CARRIER_SHORT_NAME] must preserve all documents and ESI relating to this claim, including but not limited to: the complete claim file; adjuster notes and activity logs; internal e-mails and communications; reserve history; reserve change documentation; supervisor approvals; claim handling manuals and training materials; all recorded statements; all estimates, appraisals, and expert reports; and all documents transmitted to or from the insured. Destruction or alteration of these materials may result in spoliation sanctions and adverse-inference instructions under Kentucky law.

XIII. CONCLUSION

This claim presents clear liability, severe injuries that indisputably meet the Kentucky tort threshold, and damages that substantially exceed the available UM/UIM coverage. [CARRIER_SHORT_NAME] has an opportunity — and a legal duty — to resolve this matter by tendering the full policy limits to its own insured. Kentucky law rewards good-faith claim handling. It also provides meaningful remedies against insurers who ignore their obligations.

We look forward to [CARRIER_SHORT_NAME]'s prompt and reasonable response.

Respectfully submitted,

[LAW_FIRM_NAME]

By: _______________________________
[ATTORNEY_NAME]
KBA Bar Number: [____]
[ADDRESS]
[CITY], KY [ZIP]
Tel: [____]
Email: [____]

Counsel for [CLIENT_NAME]

ENCLOSURES:

• Policy declarations page and UM/UIM endorsement
• Kentucky Uniform Police Traffic Collision Report
• Certified medical records and itemized bills
• BRB/PIP payment ledger
• Wage loss documentation
• Photographs of scene, vehicles, and injuries
• Expert reports (if applicable)
• Coots notice letter

CC:

• [CLIENT_NAME]
• [TORTFEASOR_CARRIER] (re: Coots substitution)

KENTUCKY UM/UIM LAW QUICK REFERENCE

SOURCES AND REFERENCES

• KRS 304.20-020 — Uninsured Vehicle Coverage: https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=45815
• KRS 304.39-320 — Underinsured Motorist Coverage (available through KRS Chapter 304, Subtitle 39)
• KRS 304.39-060 — Tort Threshold: https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=30030
• KRS 304.39-030 — Basic Reparation Benefits
• KRS 304.12-230 — Unfair Claims Settlement Practices: https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=17037
• KRS 304.12-235 — Time of Payment of Claims: https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=17038
• KRS 411.182 — Allocation of Fault: https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=17782
• KRS 411.184 — Punitive Damages: https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=17783
• 806 KAR 12:095 — Unfair Claims Settlement Practices Regulation: https://apps.legislature.ky.gov/law/kar/titles/806/012/095/
• Wittmer v. Jones, 864 S.W.2d 885 (Ky. 1993)
• Federal Kemper Ins. Co. v. Hornback, 711 S.W.2d 844 (Ky. 1986)
• State Farm Mut. Auto. Ins. Co. v. Reeder, 763 S.W.2d 116 (Ky. 1988)
• Coots v. Allstate Ins. Co., 853 S.W.2d 895 (Ky. 1993)
• Mosley v. Arch Specialty Ins. Co., 626 S.W.3d 579 (Ky. 2021)
• Ohio Cas. Ins. Co. v. Ruschell, 834 S.W.2d 166 (Ky. 1992)
• Allstate Ins. Co. v. Dicke, 862 S.W.2d 327 (Ky. 1993) (anti-stacking void for UIM)
• James v. James, 25 S.W.3d 110 (Ky. 2000) (stacking limited to first-class insureds)
• Williams v. Wilson, 972 S.W.2d 260 (Ky. 1998) (KRS 411.184(1)(c) malice definition unconstitutional)
• KRS 304.39-320 — Underinsured Motorist Coverage: https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=54466
• Kentucky Department of Insurance: https://insurance.ky.gov