UM/UIM Demand Letter - New Jersey

UM/UIM (UNINSURED/UNDERINSURED MOTORIST) DEMAND LETTER

State of New Jersey

[LAW FIRM LETTERHEAD]

SETTLEMENT COMMUNICATION - FOR RESOLUTION PURPOSES ONLY
EVIDENTIARY USE MAY BE LIMITED BY N.J.R.E. 408 AND FED. R. EVID. 408, WHERE APPLICABLE

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]

Dear [ADJUSTER_NAME]:

I. INTRODUCTION AND NATURE OF DEMAND

This firm represents [CLIENT_NAME] ("our client"), the named insured/resident relative under the above-captioned policy, in connection with a claim for [uninsured / underinsured] motorist benefits under New Jersey law arising from a motor vehicle collision that occurred on [__/__/____] in [________________________________], New Jersey.

This letter constitutes (1) a formal demand for payment of the full UM/UIM policy limits of $[________________________________]; (2) formal written notice under the New Jersey Insurance Fair Conduct Act ("IFCA"), N.J.S.A. 17:29BB-1 et seq., effective January 18, 2022, that [CARRIER_SHORT_NAME] has unreasonably delayed and/or unreasonably denied the payment of UM/UIM benefits owed under this policy; and (3) a demand that [CARRIER_SHORT_NAME] consent to settlement with the tortfeasor's liability carrier pursuant to Longworth/Rutgers Casualty consent-to-settle procedure to preserve our client's UIM rights.

Our client's damages far exceed the combined available coverage from all sources. New Jersey created UM/UIM coverage precisely for this situation — to protect insureds when the negligent party is uninsured or carries limits insufficient to compensate the injured party.

II. NEW JERSEY UM/UIM LEGAL FRAMEWORK

A. Mandatory UM Coverage — N.J.S.A. 17:28-1.1

Every automobile liability policy issued or renewed in New Jersey must include uninsured motorist coverage in amounts not less than $35,000 per person / $70,000 per accident for bodily injury (for policies issued or renewed on or after January 1, 2026, per P.L. 2022, c.87; the minimum was $25,000/$50,000 for policies issued or renewed January 1, 2023 through December 31, 2025), and $25,000 for property damage. UM coverage is mandatory and cannot be rejected.

B. UIM Coverage — Mandatory Offering with Written Rejection

Under N.J.S.A. 17:28-1.1(a)(2) and (b), insurers must offer UIM coverage up to the insured's liability limits (up to $250,000 per person / $500,000 per accident for bodily injury, or $500,000 single-limit). UIM coverage applies whenever the tortfeasor's liability limits are less than the UIM limits selected by the insured. Any rejection of higher UIM limits must be in writing, signed by the named insured.

C. Anti-Stacking — N.J.S.A. 17:28-1.1(c)

New Jersey prohibits stacking of UM/UIM coverage for policies issued or renewed on or after January 1, 1991. Only the highest limit available on any single policy applies, regardless of the number of insured vehicles. Our client's recovery is therefore limited to the UM/UIM limit on the policy covering the vehicle with the highest applicable limits.

D. "Gap" Coverage Requirement

Under established New Jersey UIM law (French v. New Jersey School Bd. Ass'n, 149 N.J. 478 (1997)), UIM benefits are owed only to the extent the UIM limit exceeds the tortfeasor's liability limit. The "gap" is the difference between the UIM policy limits and the tortfeasor's available liability limits.

E. Coverage Summary

F. Coverage Trigger

For UM Claims: The tortfeasor qualifies as an "uninsured motorist" under N.J.S.A. 17:28-1.1(e) because:

☐ The tortfeasor had no liability insurance at the time of the collision
☐ The tortfeasor's insurer has denied coverage or disclaimed
☐ The tortfeasor's insurer is insolvent
☐ The tortfeasor is a hit-and-run driver who cannot be identified (physical contact required)
☐ The tortfeasor's coverage falls below the NJ minimum of $35,000/$70,000 BI (for policies issued or renewed on or after January 1, 2026; $25,000/$50,000 for 2023–2025 policies)

For UIM Claims: The tortfeasor qualifies as an "underinsured motorist" under N.J.S.A. 17:28-1.1(e) because:

☐ The tortfeasor's liability limits of $[________] are less than our client's UIM limits of $[________]
☐ Our client's damages exceed the tortfeasor's policy limits
☐ The tortfeasor's limits will be/have been tendered in full

III. 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/TOWNSHIP], [COUNTY] County, New Jersey.

[DETAILED_DESCRIPTION_OF_COLLISION]

B. Tortfeasor's Negligence

The tortfeasor, [________________________________], was negligent under New Jersey law in one or more of the following respects:

☐ Failure to maintain proper lookout
☐ Failure to yield right-of-way (N.J.S.A. 39:4-90, 39:4-144)
☐ Following too closely (N.J.S.A. 39:4-89)
☐ Careless driving (N.J.S.A. 39:4-97)
☐ Reckless driving (N.J.S.A. 39:4-96)
☐ Excessive speed / speed not reasonable (N.J.S.A. 39:4-98)
☐ Distracted driving / use of handheld device (N.J.S.A. 39:4-97.3)
☐ Running red light or stop sign (N.J.S.A. 39:4-81, 39:4-144)
☐ Improper lane change (N.J.S.A. 39:4-88)
☐ Driving while intoxicated (N.J.S.A. 39:4-50)
☐ Leaving scene of accident (N.J.S.A. 39:4-129)
☐ [OTHER_NEGLIGENCE]

C. Evidence of Liability

1. Police Report
[POLICE_DEPARTMENT] Crash Investigation Report (NJTR-1), Case No. [________________________________]

2. Witness Statements
[________] independent witnesses observed the collision. Witness names and statements attached as Exhibit [___].

3. Physical Evidence
Point of impact, vehicle damage patterns, debris field analysis, skid marks, and EDR/CDR download (if applicable).

4. Expert Analysis (if applicable)
[ACCIDENT_RECONSTRUCTIONIST_NAME] has concluded [SUMMARY_OF_OPINION].

D. Comparative Fault — N.J.S.A. 2A:15-5.1

New Jersey is a modified comparative negligence jurisdiction with a 50% bar. Under N.J.S.A. 2A:15-5.1, a plaintiff may recover only if his or her percentage of fault is 50% or less. Our client bears no comparative fault for this collision. The tortfeasor's negligence was the sole proximate cause of the collision and our client's injuries.

IV. AICRA TORT THRESHOLD AND OUR CLIENT'S INJURIES

A. Tort Threshold Election — N.J.S.A. 39:6A-8

Our client elected the [verbal threshold (limitation on lawsuit) / zero threshold (no limitation on lawsuit)] option under N.J.S.A. 39:6A-8 at the time of policy issuance.

[IF VERBAL THRESHOLD APPLIES]: Our client's injuries satisfy the AICRA verbal threshold because they fall within one or more of the six statutory categories:

☐ Death
☐ Dismemberment
☐ Significant disfigurement or significant scarring
☐ Displaced fractures
☐ Loss of a fetus
☐ Permanent injury within a reasonable degree of medical probability, other than scarring or disfigurement (body part/organ has not healed to function normally and will not heal to function normally with further medical treatment)

A Physician Certification of Permanency under N.J.S.A. 39:6A-8(a), executed by [PHYSICIAN_NAME], [SPECIALTY], is attached as Exhibit [___]. The certification meets the 60-day post-Answer requirement applicable to any ensuing litigation.

[IF ZERO THRESHOLD]: Our client elected the no-limitation / zero threshold option and is not required to satisfy the verbal threshold to recover non-economic damages.

B. Primary Injuries

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

• [PRIMARY_INJURY_1]
• [PRIMARY_INJURY_2]
• [PRIMARY_INJURY_3]
• [PRIMARY_INJURY_4]

C. Treatment Timeline

D. Current Condition and Prognosis

[DESCRIBE_CURRENT_CONDITION_AND_PROGNOSIS]

E. Permanent Impairment

V. DAMAGES

A. Medical Expenses

PIP Coordination Note: Under N.J.S.A. 39:6A-4 and N.J.S.A. 39:6A-12, New Jersey's mandatory $250,000 PIP medical expense benefit has been/will be exhausted as follows:

Medical expenses paid by PIP are generally inadmissible at trial per N.J.S.A. 39:6A-12 and cannot be recovered from the tortfeasor or UM/UIM carrier. Medical expenses in excess of the PIP limit, non-PIP medical expenses, and charges excluded from PIP (including medical expenses subject to PIP co-payment/deductible) are set forth below.

Past Medical Expenses (Non-PIP / Excess of PIP):

Future Medical Expenses (Present Value):

B. Lost Income

Past Lost Income: $[________]
Future Lost Earning Capacity (Present Value): $[________]

Note: Under N.J.S.A. 39:6A-4 and 39:6A-10, PIP provides up to $100/week in income continuation benefits, up to $5,200 aggregate. Lost income in excess of PIP income-continuation benefits is recoverable.

C. Pain and Suffering / Non-Economic Damages

[DESCRIBE_PAIN_AND_SUFFERING, INCLUDING IMPACT ON ACTIVITIES OF DAILY LIVING, RELATIONSHIPS, AND QUALITY OF LIFE]

D. Damages Summary

VI. LONGWORTH / RUTGERS CASUALTY CONSENT-TO-SETTLE PROCEDURE

A. Statutory and Case Law Framework

Under Longworth v. Van Houten, 223 N.J. Super. 174 (App. Div. 1988) and Rutgers Casualty Ins. Co. v. Vassas, 139 N.J. 163 (1995), an insured pursuing UIM benefits must provide the UIM carrier with written notice of a proposed settlement with the tortfeasor's liability carrier. The UIM carrier then has 30 days to either:

1. Consent to the settlement (preserving UIM rights); or
2. Advance the tortfeasor's settlement amount to the insured and preserve its subrogation rights against the tortfeasor.

Failure to respond within 30 days constitutes consent to settle and bars any subrogation defense.

B. Formal Longworth Notice

NOTICE IS HEREBY GIVEN that our client intends to settle with [TORTFEASOR_CARRIER] for the tortfeasor's policy limits of $[TORTFEASOR_LIMITS] unless, within 30 days of receipt of this letter, [CARRIER_SHORT_NAME] either:

• Provides written consent to the settlement and waives any subrogation rights against the tortfeasor; or
• Advances $[TORTFEASOR_LIMITS] to our client in substitution of the tortfeasor's settlement payment.

Silence or non-response within 30 days shall constitute consent and waiver of subrogation defenses.

VII. DEMAND FOR UM/UIM BENEFITS

A. Calculation of UIM Gap Benefits

B. Policy Limits Demand

Our client hereby demands payment of the full UM/UIM policy limits of $[________________________________].

Our client's documented damages of $[________] vastly exceed the combined coverage available from all sources. This is a clear policy-limits case under New Jersey law. Any refusal to tender limits will be treated as an unreasonable denial under the IFCA.

VIII. IFCA AND BAD FAITH NOTICE

A. New Jersey Insurance Fair Conduct Act — N.J.S.A. 17:29BB-1 et seq.

Effective January 18, 2022, New Jersey's Insurance Fair Conduct Act creates a private statutory cause of action for qualifying UM/UIM claimants against their automobile insurers. Apply the Act's claimant definition, statutory predicates, causation, and remedies; do not describe the statute as automatic trebling.

Under N.J.S.A. 17:29BB-3, a UM/UIM claimant may file suit against the insurer for:

1. Unreasonable delay in paying UM/UIM benefits;
2. Unreasonable denial of UM/UIM benefits; or
3. Violation of the Unfair Claims Settlement Practices Act (N.J.S.A. 17:29B-4) in handling the UM/UIM claim.

B. IFCA Remedies

Upon proof of violation, the claimant is entitled to recover:

1. Actual damages caused by the violation, including trial verdicts subject to a ceiling of three times the applicable coverage amount;
2. Pre-judgment interest;
3. Post-judgment interest;
4. Reasonable attorney's fees; and
5. All reasonable litigation expenses.

This letter gives notice of the alleged IFCA predicates identified above. If [CARRIER_SHORT_NAME] fails to timely and reasonably respond, our client may seek the statutory remedies supported by the facts and law, subject to the Act's coverage-based ceiling.

C. Pickett v. Lloyd's Common Law Bad Faith

In addition to IFCA remedies, our client preserves all common-law bad faith claims under Pickett v. Lloyd's, 131 N.J. 457 (1993), which permits first-party bad-faith claims where the insurer's denial or delay was not "fairly debatable." Under Pickett:

• Denial of benefits: Bad faith is established by showing that no debatable reason existed for the denial.
• Processing delay: Bad faith is established by showing no valid reason existed to delay processing and the insurer knew or recklessly disregarded that fact.

The NJ Supreme Court reaffirmed the "fairly debatable" standard in Wood v. New Jersey Manufacturers Ins. Co., 213 N.J. 195 (2013) and Badiali v. NJM Ins. Grp., 220 N.J. 544 (2015), and recognized that consequential economic losses (including attorney fees and emotional distress damages) are recoverable for bad faith.

D. Punitive Damages — N.J.S.A. 2A:15-5.12

Under N.J.S.A. 2A:15-5.12, punitive damages are available upon proof by clear and convincing evidence that the harm resulted from acts of actual malice or wanton and willful disregard. Per N.J.S.A. 2A:15-5.14, punitive damages are capped at the greater of:

• Five times compensatory damages, or
• $350,000.

IX. ARBITRATION CONSIDERATIONS

A. Policy Arbitration Clause

The policy [contains / does not contain] a UM/UIM arbitration clause. Under New Jersey law, UM/UIM arbitration is typically conducted under the New Jersey Automobile Arbitration Program or a three-arbitrator panel (one appointed by each party, with the two party-arbitrators selecting a neutral).

[IF APPLICABLE: Quote arbitration clause and state procedural requirements]

B. Arbitration Demand (If Applicable)

If [CARRIER_SHORT_NAME] fails to accept this demand, consider this letter a formal demand to invoke UM/UIM arbitration. Our client appoints [ARBITRATOR_NAME] as its party-arbitrator and demands that [CARRIER_SHORT_NAME] designate its own arbitrator within 30 days.

X. RESPONSE DEADLINE

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

Consequences of Non-Response

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

1. Arbitration or suit will be filed in the Superior Court of New Jersey, Law Division, [COUNTY] County.
2. IFCA claims may be asserted under N.J.S.A. 17:29BB-1 et seq., seeking the actual damages, interest, reasonable attorney's fees, and reasonable litigation expenses authorized after a violation is established.
3. Common-law bad faith claims will be asserted under Pickett v. Lloyd's seeking consequential damages, emotional distress damages, and punitive damages.
4. Administrative complaints will be filed with the New Jersey Department of Banking and Insurance, Consumer Inquiry and Response Center, P.O. Box 471, Trenton, NJ 08625-0471.

XI. DOCUMENT PRESERVATION NOTICE

This letter serves as formal notice to preserve all documents and electronically stored information relating to this claim, including but not limited to the complete claim file, reserve information, adjuster notes, internal communications, supervisor approvals, training materials, and claims handling guidelines. Spoliation will be met with an adverse-inference instruction and/or sanctions.

XII. CONCLUSION

This claim presents clear liability, severe injuries satisfying the AICRA threshold (or zero-threshold election), and documented damages far exceeding all available coverage. [CARRIER_SHORT_NAME] has a clear opportunity to resolve this matter by tendering the UM/UIM policy limits to its own insured. Any other response exposes the Company to IFCA treble damages, common-law bad faith damages, and punitive exposure.

Respectfully submitted,

[LAW_FIRM_NAME]

By: _______________________________
[ATTORNEY_NAME], Esq.
NJ Bar No. [________________________________]
[ADDRESS]
[CITY], NJ [ZIP]
[PHONE]
[EMAIL]

Counsel for [CLIENT_NAME]

ENCLOSURES:

☐ Policy declarations page
☐ UM/UIM coverage endorsement and selection form
☐ NJTR-1 police crash report
☐ Medical records and bills
☐ Physician Certification of Permanency (N.J.S.A. 39:6A-8)
☐ PIP payment log and exhaustion letter
☐ Photographs of vehicles and scene
☐ Expert reports (if applicable)
☐ Wage loss documentation
☐ Tortfeasor's declarations page (if available)

CC:

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

NEW JERSEY UM/UIM LAW QUICK REFERENCE

SOURCES AND REFERENCES

• N.J.S.A. 17:28-1.1 — Uninsured and Underinsured Motorist Coverage Requirements: https://law.justia.com/codes/new-jersey/title-17/section-17-28-1-1/
• N.J.S.A. 17:29BB-1 et seq. — New Jersey Insurance Fair Conduct Act (2022)
• N.J.S.A. 17:29B-4 — Unfair Claim Settlement Practices Act
• N.J.A.C. 11:2-17 — Unfair Claims Settlement Practices Regulations: https://www.law.cornell.edu/regulations/new-jersey/N-J-A-C-11-2-17-7
• N.J.S.A. 39:6A-1 et seq. — Automobile Insurance Cost Reduction Act (AICRA)
• N.J.S.A. 39:6A-4 — PIP Medical Expense Benefits ($250,000 default): https://law.justia.com/codes/new-jersey/title-39/section-39-6a-4/
• N.J.S.A. 39:6A-8 — Tort Option / Verbal Threshold
• N.J.S.A. 2A:15-5.1 — Modified Comparative Negligence (50% bar)
• N.J.S.A. 2A:15-5.12, 5.14 — Punitive Damages Standard and Cap
• Pickett v. Lloyd's, 131 N.J. 457 (1993): https://law.justia.com/cases/new-jersey/supreme-court/1993/131-n-j-457.html
• Badiali v. NJM Ins. Grp., 220 N.J. 544 (2015): https://law.justia.com/cases/new-jersey/supreme-court/2015/a-48-12.html
• Wood v. NJM Ins. Co., 213 N.J. 195 (2013)
• French v. New Jersey School Bd. Ass'n, 149 N.J. 478 (1997)
• Longworth v. Van Houten, 223 N.J. Super. 174 (App. Div. 1988)
• Rutgers Casualty Ins. Co. v. Vassas, 139 N.J. 163 (1995)
• New Jersey Department of Banking and Insurance: https://www.nj.gov/dobi/