UM/UIM Demand Letter - Maryland

UM/UIM (UNINSURED/UNDERINSURED MOTORIST) DEMAND LETTER

State of Maryland

[LAW FIRM LETTERHEAD]

PRIVILEGED AND CONFIDENTIAL
SETTLEMENT COMMUNICATION - FOR RESOLUTION PURPOSES ONLY
PROTECTED UNDER MD. RULE 5-408 AND FED. R. EVID. 408

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

Date: [__/__/____]

[INSURANCE_COMPANY_NAME]
[UM_UIM_CLAIMS_DEPARTMENT_ADDRESS]
[________________________________]

Attention: [ADJUSTER_NAME], [ADJUSTER_TITLE]
Re: UM/UIM POLICY LIMITS DEMAND - MARYLAND LAW
Insured/Claimant: [________________________________]
Policy Number: [________________________________]
Claim Number: [________________________________]
Date of Loss: [__/__/____]
UM/UIM Policy Limits: $[________________________________]
Tortfeasor: [________________________________]
Tortfeasor's Carrier: [________________________________]
Tortfeasor's Limits: $[________________________________]
Response Deadline: [__/__/____]

Dear [ADJUSTER_NAME]:

I. INTRODUCTION AND NATURE OF DEMAND

This firm represents [________________________________] ("our client") in connection with a claim for [UNINSURED/UNDERINSURED] motorist benefits under the above-referenced Maryland automobile insurance policy arising out of a motor vehicle collision that occurred on [__/__/____] in [COUNTY] County, Maryland. This letter constitutes a formal time-limited policy-limits demand for payment of the full UM/UIM (or EUIM) policy limits of $[________________________________] pursuant to Md. Code Ann., Ins. § 19-509 and § 19-509.1.

Our client's documented economic and non-economic damages materially exceed the available tortfeasor liability coverage and the available UM/UIM limits. Under long-standing Maryland law, UM/UIM coverage is mandatory and is intended to place the insured in the same position the insured would have occupied had the tortfeasor carried adequate liability coverage. See Md. Code Ann., Ins. § 19-509; Pa. Nat'l Mut. Cas. Ins. Co. v. Gartelman, 288 Md. 151, 416 A.2d 734 (1980).

II. MARYLAND UM/UIM LAW

A. Statutory Framework — Md. Code Ann., Ins. § 19-509

Maryland imposes one of the strongest mandatory UM/UIM regimes in the country. Under Md. Code Ann., Ins. § 19-509(c), every motor vehicle liability policy issued, sold, or delivered in Maryland must provide uninsured motorist coverage in amounts at least equal to the mandatory minimum liability limits of $30,000 per person / $60,000 per accident for bodily injury, and $15,000 for property damage. Md. Code Ann., Transp. § 17-103.

B. Enhanced Underinsured Motorist Coverage — Md. Code Ann., Ins. § 19-509.1

Effective July 1, 2018, and continuing for policies issued, sold, or delivered in Maryland, every insurer must offer Enhanced Underinsured Motorist Coverage ("EUIM") under § 19-509.1. Unlike standard UIM, EUIM is non-reducing: the EUIM limits are not offset by the tortfeasor's liability limits. The insured must affirmatively opt out of EUIM in a signed waiver; if no waiver was executed, EUIM is the default coverage under § 19-509.1(d).

☐ Policy provides standard UIM (reduced by tortfeasor payment)
☐ Policy provides Enhanced UIM (EUIM) under § 19-509.1 (no offset)
☐ No signed EUIM waiver has been produced — EUIM is presumed to apply

Demand: Please produce any alleged EUIM waiver within ten (10) days. Absent a compliant waiver under § 19-509.1(d), [CARRIER_SHORT_NAME] is required to treat this claim as an EUIM claim.

C. Stacking and Multiple Vehicle Policies

Maryland permits inter-policy stacking where separate policies are issued to separate vehicles, and permits intra-policy stacking of UM/UIM limits across vehicles insured on the same policy only where the policy language does not unambiguously prohibit it. See Md. Code Ann., Ins. § 19-509; Larimore v. Am. Ins. Co., 314 Md. 617, 552 A.2d 889 (1989).

D. Coverage Analysis Under Maryland Law

E. Coverage Trigger

Uninsured Motorist Trigger (§ 19-509(e))

☐ Tortfeasor had no liability insurance at the time of loss
☐ Tortfeasor's carrier has denied coverage
☐ Tortfeasor's carrier is insolvent (pre- or post-judgment)
☐ Unidentified "phantom" hit-and-run vehicle (physical contact required under § 19-509(f))
☐ Tortfeasor's BI limits are below Maryland's $30,000/$60,000 mandatory minimums

Underinsured Motorist Trigger

☐ Tortfeasor's BI limits of $[________] are less than our client's damages
☐ Written notice of tentative settlement sent to [CARRIER_SHORT_NAME] pursuant to § 19-511

III. MANDATORY CONSENT TO SETTLE — Md. Code Ann., Ins. § 19-511

Maryland's consent-to-settle / subrogation preservation statute, Md. Code Ann., Ins. § 19-511, governs this claim. Our client's tortfeasor liability settlement of $[________________________________] with [TORTFEASOR_CARRIER] cannot be finalized until [CARRIER_SHORT_NAME] either:

1. Consents in writing to the proposed settlement within sixty (60) days of receiving written notice under § 19-511(c); OR
2. Advances the full tentative settlement amount to our client and thereby preserves its subrogation rights against the tortfeasor under § 19-511(d).

This letter, together with the enclosed tentative settlement notice, constitutes formal § 19-511 notice. The sixty (60) day clock began running on [__/__/____]. Failure to respond within sixty (60) days operates as a waiver of subrogation under § 19-511(d) and does not defeat our client's UIM claim.

IV. THE COLLISION AND LIABILITY

A. Facts of the Collision

On [__/__/____] at approximately [__:__] [AM/PM], our client was [DESCRIBE_CLIENT_ACTIVITY] at or near [LOCATION_OF_COLLISION] in [CITY], [COUNTY] County, Maryland.

[DETAILED_DESCRIPTION_OF_COLLISION]

B. Tortfeasor's Negligence

The tortfeasor, [TORTFEASOR_NAME], was negligent in violation of the Maryland Vehicle Law and common law in the following respects:

☐ Failure to control vehicle (Md. Code Ann., Transp. § 21-801)
☐ Failure to yield right-of-way (Md. Code Ann., Transp. §§ 21-401 et seq.)
☐ Following too closely (Md. Code Ann., Transp. § 21-310)
☐ Exceeding posted speed limit (Md. Code Ann., Transp. § 21-801.1)
☐ Negligent lane change (Md. Code Ann., Transp. § 21-309)
☐ Failure to stop at traffic control device (Md. Code Ann., Transp. § 21-202)
☐ Driving while impaired (Md. Code Ann., Transp. § 21-902)
☐ Texting/handheld device use (Md. Code Ann., Transp. § 21-1124.2)
☐ [OTHER_NEGLIGENCE]

C. Maryland's Pure Contributory Negligence Rule — Addressed

Maryland is one of only four jurisdictions (with Alabama, North Carolina, Virginia, and the District of Columbia) that continues to apply the pure contributory negligence doctrine. Coleman v. Soccer Ass'n of Columbia, 432 Md. 679, 69 A.3d 1149 (2013). Under this rule, a plaintiff who is found to be even 1% negligent is completely barred from recovery.

We anticipate [CARRIER_SHORT_NAME] may attempt to manufacture contributory negligence arguments. We preemptively address and reject any such arguments:

1. Our client bore no fault whatsoever. The undisputed evidence shows the tortfeasor had the last clear chance to avoid the collision.
2. No assumption of risk applies. See ADM P'ship v. Martin, 348 Md. 84, 702 A.2d 730 (1997).
3. The Boulevard Rule (Md. Code Ann., Transp. § 21-403) [DOES/DOES NOT] apply and [SUPPORTS OUR CLIENT'S / DOES NOT UNDERMINE] position.
4. Last Clear Chance Doctrine — to the extent any contributory negligence is argued, the tortfeasor had the last clear chance to avoid the collision.

D. Evidence of Liability

1. Maryland State Police / Local Crash Report
Report Number [________________________________], prepared by Officer [________] of the [AGENCY].

2. Witness Statements
[NUMBER] independent witnesses whose statements corroborate our client's version of events.

3. Physical Evidence
Point of impact, debris field, gouge marks, and vehicle damage patterns.

4. Expert Analysis (if applicable)
[RECONSTRUCTIONIST_NAME], who has been qualified as an expert in Maryland courts, has concluded [SUMMARY_OF_OPINION].

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 documented by Maryland-licensed medical providers:

Primary Injuries:

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

B. Treatment Timeline

C. Current Condition and Prognosis

[DESCRIBE_CURRENT_CONDITION_AND_PROGNOSIS]

D. Permanent Impairment Rating

VI. DAMAGES

A. Past Medical Expenses (Boarded at Full Amount — Collateral Source)

Maryland's collateral source rule remains intact for personal injury cases. Haischer v. CSX Transp., Inc., 381 Md. 119, 848 A.2d 620 (2004). Our client is entitled to board the full billed amount, not the written-down, adjusted, or insurance-negotiated amount.

B. Future Medical Expenses (Present Value)

C. Lost Earnings and Earning Capacity

• Past lost wages: $[________]
• Future lost earning capacity (present value): $[________]

D. Non-Economic Damages — Maryland Statutory Cap

Maryland imposes a statutory cap on non-economic damages in personal injury actions arising on or after October 1, 2026, at $[CURRENT_CAP_AMOUNT] (cap increases by $15,000 annually each October 1). See Md. Code Ann., Cts. & Jud. Proc. § 11-108. For wrongful death cases with two or more beneficiaries, the cap is increased by 150%. Our client's non-economic damages fully exhaust the applicable cap.

E. Damages Summary

VII. CALCULATION OF UM/UIM BENEFITS DUE

A. Standard UIM (Reducing) Calculation

B. Enhanced UIM (Non-Reducing) Calculation — If EUIM Applies

If, as we believe, EUIM coverage applies under § 19-509.1, the tortfeasor's liability payment does not offset our client's EUIM benefits:

C. Policy Limits Demand

We hereby demand tender of the full UM/UIM (or EUIM) policy limits of $[________________________________]. Our client's damages of $[________] vastly exceed the combined coverage available. This is a clear policy-limits case.

VIII. BAD FAITH WARNING — Md. Code Ann., Cts. & Jud. Proc. § 3-1701

A. Maryland's First-Party Bad Faith Framework

In 2007, the Maryland General Assembly enacted a comprehensive statutory bad faith regime for first-party claims codified at Md. Code Ann., Cts. & Jud. Proc. § 3-1701 and Md. Code Ann., Ins. §§ 27-1001 through 27-1005. The statute applies to UM/UIM claims because UM/UIM is a first-party contractual claim by the insured against its own insurer. See Allstate Ins. Co. v. Rochkind, 381 Md. 157, 848 A.2d 643 (2004) (pre-statute common law); Cecilia Schwaber Trust Two v. Hartford Accident & Indem. Co., 437 F. Supp. 2d 485 (D. Md. 2006).

B. "Good Faith" Defined

Under § 3-1701(a)(4), "good faith" means "an informed judgment based on honesty and diligence supported by evidence the insurer knew or should have known at the time the insurer made a decision on a claim." Mere subjective belief is insufficient; the insurer must actually investigate.

C. Mandatory MIA Pre-Suit Process

Under Md. Code Ann., Ins. § 27-1001(d), before filing suit for first-party bad faith, an insured must first file a written complaint with the Maryland Insurance Administration ("MIA") accompanied by all proof-of-loss documents. This mandatory administrative step is a jurisdictional prerequisite unless one of the statutory exceptions applies (claim does not exceed $5,000; commercial policy exceeding $1 million; or insurer consent).

The MIA process under § 27-1001:

1. Insurer has thirty (30) days to file written response;
2. MIA must render a decision within ninety (90) days of complaint;
3. MIA determines coverage, amount owed, whether insurer breached, whether breach was in bad faith, and damages.

Either party may appeal the MIA decision to the Circuit Court for judicial review.

D. Available Damages Under § 3-1701(e)

If our client prevails under § 3-1701, recoverable damages include:

1. Actual damages — not to exceed applicable policy limits;
2. Expenses and litigation costs, including reasonable attorney's fees capped at one-third (1/3) of the actual damages recovered; and
3. Pre- and post-judgment interest at the legal rate under § 11-107 of the Courts Article.

E. Common-Law Bad Faith Tort (Mesmer) — Still Available in Third-Party Context

In addition to § 3-1701, Maryland recognizes a common-law bad-faith failure-to-settle tort when the liability insurer has undertaken a defense and then refuses a reasonable settlement within policy limits. Mesmer v. Md. Auto. Ins. Fund, 353 Md. 241, 725 A.2d 1053 (1999). While Mesmer is a third-party case, it reinforces that Maryland law imposes real consequences for carriers who act in bad faith.

F. Punitive Damages — Owens-Illinois v. Zenobia

Punitive damages require "actual malice" proven by clear and convincing evidence. Owens-Illinois, Inc. v. Zenobia, 325 Md. 420, 601 A.2d 633 (1992). Actual malice means "conduct characterized by evil motive, intent to injure, ill will, or fraud." There is no statutory cap on punitive damages in Maryland. Gross, reckless, or willful handling of this UM/UIM claim could expose [CARRIER_SHORT_NAME] to uncapped punitive liability.

We hereby provide notice that any denial, delay, or lowball response will trigger a formal MIA complaint under § 27-1001 followed by a § 3-1701 civil action and, where appropriate, common-law and punitive claims.

IX. STATUTE OF LIMITATIONS

The statute of limitations for contract-based UM/UIM claims in Maryland is three (3) years from the date of breach (typically the date of denial or last payment). Md. Code Ann., Cts. & Jud. Proc. § 5-101. This claim is fully timely.

X. ARBITRATION CONSIDERATIONS

A. Policy Arbitration Clause

The [POLICY_NAME] policy [CONTAINS / DOES NOT CONTAIN] an arbitration clause for UM/UIM disputes. In Maryland, UM/UIM arbitration clauses are generally enforceable under the Maryland Uniform Arbitration Act, Md. Code Ann., Cts. & Jud. Proc. §§ 3-201 et seq.

B. Arbitration Demand (If Applicable)

If [CARRIER_SHORT_NAME] fails to tender the policy limits by the response deadline below, consider this letter formal notice of our intent to invoke arbitration and to demand appointment of arbitrators under the policy terms.

XI. RESPONSE DEADLINE

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

Consequences of Non-Response

If [CARRIER_SHORT_NAME] fails to tender the full policy limits by the deadline:

1. MIA Complaint — we will file a formal complaint with the Maryland Insurance Administration (200 St. Paul Place, Suite 2700, Baltimore, MD 21202) under Md. Code Ann., Ins. § 27-1001;
2. Arbitration / Litigation — we will invoke arbitration (if required) or file suit in the Circuit Court for [________] County, Maryland;
3. § 3-1701 Bad Faith Action — we will pursue the full panoply of first-party bad faith damages, including statutory attorney's fees and interest;
4. Punitive Damages — where facts warrant, we will pursue uncapped punitive damages under Zenobia;
5. Demand will be withdrawn — any subsequent settlement discussions will begin at damages well in excess of current limits.

XII. DOCUMENT PRESERVATION NOTICE

This letter constitutes formal notice to preserve all documents and electronically stored information related to this claim, including but not limited to the complete claim file, adjuster notes and activity logs, reserve history, internal communications, supervisor approvals, UM/UIM evaluation memoranda, EUIM waiver documentation (if any), and all correspondence with the tortfeasor's carrier.

XIII. CONCLUSION

Maryland's UM/UIM statute exists precisely for cases like this — where a negligent driver lacks adequate insurance and the burden shifts to the insured's own carrier. Our client paid premiums to [CARRIER_SHORT_NAME] in reliance on the promise of § 19-509 protection. That promise must now be honored.

Respectfully submitted,

[LAW_FIRM_NAME]

By: _______________________________
[ATTORNEY_NAME]
Maryland Bar No. [____________]
[ADDRESS]
[CITY], MD [ZIP]
[PHONE]
[EMAIL]

Counsel for [CLIENT_NAME]

ENCLOSURES:
☐ Declarations page
☐ Complete policy including UM/UIM endorsement
☐ EUIM waiver (if produced) or certification of non-existence
☐ § 19-511 tentative settlement notice
☐ Maryland crash report
☐ Medical records and billing
☐ Wage loss documentation
☐ Expert reports
☐ Photographs

CC:

• [CLIENT_NAME]
• [TORTFEASOR_CARRIER] (§ 19-511 notice)

MARYLAND UM/UIM LAW QUICK REFERENCE

SOURCES AND REFERENCES

• Md. Code Ann., Ins. § 19-509 — https://law.justia.com/codes/maryland/insurance/title-19/subtitle-5/section-19-509/
• Md. Code Ann., Ins. § 19-509.1 (EUIM) — https://law.justia.com/codes/maryland/insurance/title-19/subtitle-5/section-19-509-1/
• Md. Code Ann., Ins. § 19-511 (Consent to Settle) — https://mgaleg.maryland.gov/mgawebsite/Laws/StatuteText?article=gin&section=19-511
• Md. Code Ann., Cts. & Jud. Proc. § 3-1701 — https://law.justia.com/codes/maryland/courts-and-judicial-proceedings/title-3/subtitle-17/section-3-1701/
• Md. Code Ann., Ins. § 27-1001 — https://law.justia.com/codes/maryland/insurance/title-27/subtitle-10/section-27-1001/
• Mesmer v. Md. Auto. Ins. Fund, 353 Md. 241, 725 A.2d 1053 (1999)
• Owens-Illinois, Inc. v. Zenobia, 325 Md. 420, 601 A.2d 633 (1992)
• Coleman v. Soccer Ass'n of Columbia, 432 Md. 679, 69 A.3d 1149 (2013)
• Maryland Insurance Administration — https://insurance.maryland.gov/
• MIA EUIM FAQs — https://insurance.maryland.gov/Insurer/Documents/rates-and-forms/EUIM-FAQs-Private-Passenger-Motor-Vehicle-Liability-Insurance-Enhanced-Underinsured-Motorist-Coverage-Opt-Out-Option.pdf