UM/UIM Demand Letter - Michigan

UM/UIM (UNINSURED/UNDERINSURED MOTORIST) DEMAND LETTER

State of Michigan

[LAW FIRM LETTERHEAD]

PRIVILEGED AND CONFIDENTIAL
SETTLEMENT COMMUNICATION — FOR RESOLUTION PURPOSES ONLY
PROTECTED UNDER MRE 408 AND FRE 408

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

Date: [__/__/____]

[INSURANCE_COMPANY_NAME]
[UM_UIM_CLAIMS_DEPARTMENT_ADDRESS]
[CITY], [STATE] [ZIP]

Attention: [ADJUSTER_NAME], [ADJUSTER_TITLE]

Re: UM/UIM POLICY LIMITS DEMAND — MICHIGAN LAW
Insured/Claimant: [________________________________]
Policy Number: [________________________________]
Claim Number: [________________________________]
Date of Loss: [__/__/____]
UM/UIM Policy Limits: $[________________________________]
Tortfeasor: [________________________________]
Tortfeasor's Carrier: [________________________________]
Tortfeasor's Liability 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 a policy issued by [INSURANCE_COMPANY_NAME] ("[CARRIER_SHORT_NAME]") arising from a motor vehicle collision that occurred on [__/__/____] in [________________________________], Michigan. This letter constitutes a formal demand for payment of the full UM/UIM policy limits of $[________________________________].

Michigan is a no-fault state governed by the Michigan No-Fault Automobile Insurance Act, MCL 500.3101 et seq., as substantially amended by 2019 PA 21 and 2019 PA 22 (effective July 1, 2020). Because UM/UIM coverage in Michigan is optional contractual coverage (not mandated by MCL 500.3009), the rights, duties, and obligations under the UM/UIM endorsement are determined primarily by the policy language, interpreted under Michigan contract law. Our client purchased this protection precisely for a situation like this — where the at-fault driver lacks sufficient coverage to compensate the insured for injuries meeting Michigan's tort threshold under MCL 500.3135.

Our client has sustained injuries that constitute a "serious impairment of body function" under MCL 500.3135(5), as interpreted by McCormick v. Carrier, 487 Mich. 180 (2010), and now codified in the statute. These injuries give rise to tort liability for noneconomic loss against the tortfeasor (and, derivatively, against [CARRIER_SHORT_NAME] as UM/UIM insurer). Our client's damages far exceed the tortfeasor's liability limits and the available UM/UIM limits.

II. MICHIGAN UM/UIM AND NO-FAULT FRAMEWORK

A. UM/UIM Is Contractual, Not Statutory, in Michigan

Unlike many states, Michigan does not mandate UM or UIM coverage. MCL 500.3009 requires only residual liability limits ($250,000/$500,000/$10,000 effective July 2, 2020, unless a lower limit is chosen in accordance with statute). UM/UIM coverage is purely optional and governed by the policy's insuring agreement, exclusions, and conditions. Accordingly, this demand is based on the contractual obligations [CARRIER_SHORT_NAME] assumed when it sold our client a UM/UIM endorsement and collected premium for it.

B. Tort Threshold — MCL 500.3135 and McCormick v. Carrier

Under Michigan's verbal tort threshold, noneconomic damages (pain and suffering, loss of enjoyment of life, etc.) are recoverable only upon a showing of death, permanent serious disfigurement, or serious impairment of body function. MCL 500.3135(1). MCL 500.3135(5) (as amended by 2019 PA 21) codifies the McCormick three-part test:

1. An objectively manifested impairment — observable or perceivable from actual symptoms or conditions by someone other than the injured person;
2. Of an important body function — a body function of great value, significance, or consequence to the injured person; and
3. That affects the person's general ability to lead his or her normal life — influencing some or all aspects of the person's ability to live a normal life, as compared to the person's life before the incident.

As set forth below, our client's injuries satisfy each prong of the McCormick test.

C. Interaction with PIP Benefits (MCL 500.3107 / 500.3107c)

Our client has separately pursued Personal Injury Protection ("PIP") benefits under MCL 500.3107 for allowable expenses, work loss, and replacement services. Our client selected the [$50,000 Medicaid / $250,000 / $500,000 / Unlimited] PIP coverage tier under MCL 500.3107c. To the extent PIP benefits have paid medical expenses and wage loss, those amounts are excluded from the noneconomic tort recovery pursuant to MCL 500.3135(3)(c), but economic damages in excess of PIP coverage — including excess medical expenses above the selected tier cap, excess wage loss above the three-year statutory limit, and unreimbursed out-of-pocket expenses — are recoverable through tort and, correspondingly, through UM/UIM coverage.

D. Modified Comparative Fault — MCL 500.3135(2) / MCL 600.2959

Michigan applies modified comparative fault: a plaintiff more than 50% at fault is barred from recovering noneconomic damages, and economic damages are reduced proportionally. Our client bears 0% fault (or, at most, [________________________________]%), well below the statutory bar.

III. THE COLLISION AND LIABILITY

A. Facts of the Collision

On [__/__/____], at approximately [___:___] [AM/PM], our client was [DESCRIBE_CLIENT_ACTIVITY — e.g., traveling southbound on I-94 near the Telegraph Road interchange in Wayne County, Michigan] when [TORTFEASOR_NAME] [DESCRIBE_NEGLIGENT_CONDUCT].

[DETAILED_NARRATIVE_OF_COLLISION]

The collision was investigated by the [________________________________] Police Department under UD-10 Traffic Crash Report No. [________________________________]. The investigating officer concluded that [TORTFEASOR_NAME] was at fault for [________________________________] and issued citation(s) for violation of [MCL / local ordinance section].

B. Tortfeasor's Negligence

[TORTFEASOR_NAME] breached the standard of care under Michigan law in the following particulars:

☐ Failure to maintain proper lookout (MCL 257.626b — careless driving)
☐ Failure to yield right-of-way (MCL 257.649 or 257.650)
☐ Following too closely (MCL 257.643)
☐ Excessive speed / speed not reasonable and prudent (MCL 257.627)
☐ Running a red light or stop sign (MCL 257.612 / 257.649)
☐ Improper lane change / failure to signal (MCL 257.642 / 257.648)
☐ Operating while intoxicated (MCL 257.625)
☐ Distracted driving / texting (MCL 257.602b)
☐ Reckless driving (MCL 257.626)
☐ Other: [________________________________]

C. Liability Is Clear

Liability is established by:

• The UD-10 Traffic Crash Report (Report No. [________________________________])
• Independent witness statements from [NUMBER] witnesses
• Physical evidence including point of impact, debris field, and vehicle damage patterns
• [If applicable] Dashcam/surveillance video from [________________________________]
• [If applicable] Accident reconstruction report by [________________________________]
• [If applicable] Traffic citation(s) issued to [TORTFEASOR_NAME]

D. Our Client's Freedom from Fault

Our client exercised reasonable care at all times and bears no comparative fault under MCL 500.3135(2) and MCL 600.2959. The collision was caused solely by [TORTFEASOR_NAME]'s negligent conduct.

IV. OUR CLIENT'S INJURIES — SATISFACTION OF MCCORMICK THRESHOLD

A. Injuries Sustained

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

Primary Injuries:

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

Secondary/Associated Injuries:

• [________________________________]
• [________________________________]

B. Objectively Manifested Impairment (Prong 1 of McCormick)

Our client's injuries are objectively manifested through:

• Diagnostic imaging: [MRI/CT/X-ray findings dated [__/__/____]] showing [________________________________]
• Positive clinical findings on physical examination by [PROVIDER_NAME]
• EMG/NCV studies dated [__/__/____] demonstrating [________________________________]
• [Surgical findings / intraoperative observations]
• Functional capacity evaluation by [________________________________]

These are not subjective complaints; they are observable and perceivable conditions within the meaning of MCL 500.3135(5)(a) and McCormick, 487 Mich. at 196.

C. Important Body Function (Prong 2)

The injured body functions — [e.g., the ability to walk without assistance, the ability to use the dominant upper extremity, cognitive function, the ability to sleep without pain] — are of great value, significance, and consequence to our client. These are core functions central to daily living, employment, and independent existence.

D. Effect on General Ability to Lead Normal Life (Prong 3)

Prior to the collision, our client [DESCRIBE_PRIOR_LIFESTYLE — employment, family responsibilities, recreational activities]. Since the collision, our client [DESCRIBE_CURRENT_LIMITATIONS — inability to return to work, loss of household services, inability to engage in previously enjoyed activities, etc.]. This represents a profound and ongoing influence on our client's general ability to lead a normal life, satisfying the third McCormick prong.

E. Treatment Timeline

F. Permanency and Future Treatment

Our client has reached maximum medical improvement [or will reach MMI on approximately [__/__/____]] with the following permanent impairments: [________________________________]. Future care needs include: [________________________________].

V. DAMAGES

A. Economic Damages in Excess of PIP

Because our client elected the [$50,000 / $250,000 / $500,000 / Unlimited] PIP allowable expense tier under MCL 500.3107c, medical expenses in excess of that cap are recoverable against the tortfeasor (and UM/UIM insurer) as excess economic damages under MCL 500.3135(3)(c).

B. Noneconomic Damages (MCL 500.3135)

Noneconomic damages recoverable under Michigan law include past and future pain and suffering, mental anguish, fright and shock, denial of social pleasures and enjoyments, embarrassment, humiliation, mortification, and loss of consortium.

[DESCRIBE_SPECIFIC_NONECONOMIC_IMPACT — chronic pain, sleep disruption, emotional distress, inability to parent actively, loss of recreational activities, etc.]

Noneconomic damages: $[________________]

C. Damages Summary

VI. RESOLUTION OF TORTFEASOR'S LIABILITY CLAIM AND CONSENT TO SETTLE

A. Status of Tortfeasor Claim

We [HAVE REACHED / ARE NEGOTIATING] a settlement with [TORTFEASOR_NAME]'s liability carrier, [TORTFEASOR_CARRIER], for the tortfeasor's available policy limits of $[________________].

B. Request for Consent to Settle / Subrogation Waiver

Consistent with standard Michigan UM/UIM policy language preserving the UIM carrier's subrogation rights against the tortfeasor, we hereby request written consent to settle with [TORTFEASOR_CARRIER] for the liability limits, with subrogation rights preserved (or, alternatively, that [CARRIER_SHORT_NAME] substitute the tortfeasor's limits within [30] days and thereby preserve its own subrogation rights against the tortfeasor).

Please provide written consent (or election to substitute) within [30] days of receipt of this letter. Failure to respond within that period will be construed as consent and/or waiver of subrogation rights to the extent permitted by Michigan law and the policy.

VII. CALCULATION OF UM/UIM BENEFITS DEMANDED

We hereby demand tender of the full UM/UIM policy limits of $[________________].

Our client's uncompensated damages vastly exceed the available UM/UIM coverage. Under any reasonable evaluation by any reasonable Michigan adjuster, this is a clear policy-limits case.

VIII. MICHIGAN LAW ON FIRST-PARTY INSURER DUTIES

A. No Common Law Bad Faith Tort

Unlike many jurisdictions, Michigan does not recognize a common law tort of first-party insurance bad faith. Kewin v. Massachusetts Mutual Life Insurance Co., 409 Mich. 401, 295 N.W.2d 50 (1980), holds that a first-party insured's remedy for an insurer's wrongful refusal to pay policy benefits sounds in contract — not tort — and that mental distress damages are not recoverable absent the rare case of a policy predominantly intended to secure tranquility. Nor does Michigan recognize bad-faith punitive damages. Kewin, 409 Mich. at 419-420.

This does not mean [CARRIER_SHORT_NAME] faces no consequences for improper claim handling. Michigan provides robust statutory remedies for unreasonable delay and wrongful denial, including:

B. MCL 500.2006 — Penalty Interest (12% Per Annum)

Under MCL 500.2006(4), an insurer that fails to pay benefits on a timely basis to its insured (or a person directly entitled to benefits under the policy) owes simple interest at 12% per annum from a date 60 days after satisfactory proof of loss was received. Failure to pay interest is itself an unfair trade practice unless the claim is reasonably in dispute. The Michigan Supreme Court has held that 12% penalty interest under MCL 500.2006 is owed on untimely UIM payments even when the claim was reasonably in dispute, so long as the insured is directly entitled to benefits under the contract. Griswold Properties, LLC v. Lexington Ins. Co.; see also Dickinson Wright commentary on penalty-interest awards on first-party UM/UIM claims.

C. MCL 500.2026 — Michigan Unfair Trade Practices Act

MCL 500.2026(1) enumerates prohibited claim-handling practices when committed "in conscious disregard" of the Act or "with such frequency as to indicate a general business practice." Prohibited practices include:

• (a) Misrepresenting pertinent facts or insurance policy provisions;
• (b) Failing to acknowledge promptly or act reasonably promptly on communications;
• (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;
• (f) Not attempting in good faith to effectuate prompt, fair, and equitable settlement of claims in which liability has become reasonably clear;
• (g) Compelling insureds to institute litigation to recover amounts due by offering substantially less than recovered;
• (h) Attempting to settle for less than a reasonable person would believe was owed;
• (i) Making claim payments not accompanied by a statement of coverage under which payment is made; and
• (m) Failing to provide promptly a reasonable explanation for denial or compromise.

D. MCL 500.3148 Does Not Directly Apply to UM/UIM, But…

We acknowledge that MCL 500.3148 (attorney fees for unreasonable refusal or delay of PIP benefits) applies to first-party no-fault PIP claims, not contractual UM/UIM claims. However, to the extent our client has parallel PIP claims pending, any unreasonable refusal or delay on those will be pursued under MCL 500.3148, and attorney fees will be sought and proven at trial.

IX. ARBITRATION / LITIGATION

A. Policy Arbitration Clause

The UM/UIM endorsement [CONTAINS / DOES NOT CONTAIN] an arbitration clause. [If applicable: "We reserve the right to invoke arbitration under the policy's [SECTION] provision and hereby appoint [________________________________] as our client's arbitrator. Please designate [CARRIER_SHORT_NAME]'s arbitrator within [30] days."]

B. Statute of Limitations

The contractual limitations period on this UM/UIM claim is [________________________________] from [date of accident / date of denial], whichever the policy provides. We have noted the limitations period and reserve all rights; however, this demand is not intended to toll any applicable limitations period unless [CARRIER_SHORT_NAME] expressly agrees in writing.

C. Venue

If litigation is required, suit will be filed in the [Wayne County / Oakland County / Macomb County / Kent County / Washtenaw County / other] Circuit Court or the United States District Court for the [Eastern/Western] District of Michigan, consistent with MCR 2.221 and 28 U.S.C. § 1332.

X. RESPONSE DEADLINE

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

Consequences of Non-Response or Rejection

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

1. Invoke arbitration (if required by the policy) or file suit in Michigan state or federal court;
2. Seek 12% penalty interest under MCL 500.2006 from 60 days after proof of loss;
3. Pursue all available remedies under MCL 500.2026 and related provisions;
4. Seek consequential damages for breach of contract to the full extent permitted under Kewin and its progeny;
5. File a complaint with the Michigan Department of Insurance and Financial Services (DIFS) at P.O. Box 30220, Lansing, MI 48909-7720, or online at www.michigan.gov/difs; and
6. Preserve all rights to seek attorney fees and costs to the extent recoverable under Michigan law, court rule, or contract.

XI. DOCUMENT PRESERVATION NOTICE

This letter constitutes formal notice to preserve all claim-related documents and electronically stored information, including but not limited to: the complete claim file; adjuster diary notes, activity logs, and reserve history; all internal communications; policy underwriting file; training and claim-handling manuals; UM/UIM investigation materials; SIU referrals; and any AI/automated claim-evaluation tool outputs. Spoliation will be addressed under MCR 2.313 and Michigan case law.

XII. CONCLUSION

This claim presents clear liability, injuries that unquestionably satisfy the McCormick threshold, and damages far exceeding the UM/UIM limits. [CARRIER_SHORT_NAME] now has the opportunity to honor the contract it sold to our client, avoid unnecessary litigation, and avoid exposure under MCL 500.2006 and MCL 500.2026. We urge [CARRIER_SHORT_NAME] to do so.

Respectfully submitted,

[LAW_FIRM_NAME]

By: _______________________________
[ATTORNEY_NAME], Esq.
State Bar of Michigan No. P[________]
[ADDRESS]
[CITY], MI [ZIP]
Phone: [(___) ___-____]
Email: [________________________________]

Counsel for [CLIENT_NAME]

ENCLOSURES:

• Declarations page and UM/UIM endorsement
• UD-10 Traffic Crash Report
• Medical records and itemized bills
• Imaging reports (MRI/CT/X-ray)
• Wage loss documentation (pay stubs, W-2s, employer verification)
• Photographs of vehicles and injuries
• [If applicable] Accident reconstruction report
• Ledger of PIP payments received and selected PIP tier documentation

CC:

• [CLIENT_NAME]
• [TORTFEASOR_CARRIER] (re: consent to settle / subrogation)

MICHIGAN UM/UIM AND NO-FAULT QUICK REFERENCE

SOURCES AND REFERENCES

• Michigan No-Fault Automobile Insurance Act, MCL 500.3101 et seq. — https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-500-3101
• MCL 500.3009 (minimum liability / UM/UIM optional) — https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-500-3009
• MCL 500.3135 (tort threshold) — https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-500-3135
• MCL 500.3107 / 500.3107c (PIP allowable expenses; tier options) — https://www.legislature.mi.gov/Laws/MCL?objectName=MCL-500-3107C
• MCL 500.3148 (PIP attorney fees) — https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-500-3148
• MCL 500.2006 (12% penalty interest) — https://www.legislature.mi.gov/Laws/MCL?objectName=MCL-500-2006
• MCL 500.2026 (Michigan UTPA) — https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-500-2026
• 2019 PA 21 — https://www.legislature.mi.gov/documents/2019-2020/publicact/pdf/2019-PA-0021.pdf
• McCormick v. Carrier, 487 Mich. 180 (2010) — Michigan Supreme Court
• Kewin v. Massachusetts Mutual Life Ins. Co., 409 Mich. 401, 295 N.W.2d 50 (1980)
• Michigan Department of Insurance and Financial Services — https://www.michigan.gov/difs
• Michigan Catastrophic Claims Association (MCCA) — https://www.michigancatastrophic.com