UM/UIM Demand Letter - Pennsylvania

UM/UIM (UNINSURED/UNDERINSURED MOTORIST) DEMAND LETTER

Commonwealth of Pennsylvania — Motor Vehicle Financial Responsibility Law

[LAW FIRM LETTERHEAD]

PRIVILEGED AND CONFIDENTIAL
SETTLEMENT COMMUNICATION — FOR RESOLUTION PURPOSES ONLY
PROTECTED UNDER Pa.R.E. 408 AND F.R.E. 408

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

Date: [__/__/____]

[INSURANCE COMPANY NAME]
[________________________________]
[________________________________]
[________________________________], PA [________]

Attention: [________________________________], [________________________________]
Re: FORMAL UM/UIM POLICY LIMITS DEMAND — PENNSYLVANIA MVFRL
Insured/Claimant: [________________________________]
Policy Number: [________________________________]
Claim Number: [________________________________]
Date of Loss: [__/__/____]
UM/UIM Policy Limits: $[________________________________]
Stacking Status: ☐ Stacked ☐ Non-Stacked ☐ Disputed (waiver invalid)
Tortfeasor: [________________________________]
Tortfeasor's Carrier: [________________________________]
Tortfeasor's Limits: $[________________________________]
Response Deadline: [__/__/____] at 5:00 p.m. Eastern Time

Dear [________________________________]:

I. INTRODUCTION AND NATURE OF DEMAND

This firm represents [________________________________] ("our client") in connection with a claim for [☐ uninsured / ☐ underinsured] motorist benefits under the Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL), arising from a motor vehicle collision on [__/__/____]. This letter constitutes a formal demand for payment of the full UM/UIM policy limits of $[________________________________].

Pennsylvania's MVFRL requires insurers to offer UM/UIM coverage coextensive with liability limits unless the named insured affirmatively rejects such coverage in writing on the prescribed statutory form mandated by 75 Pa.C.S. § 1731(c). The purpose of UM/UIM coverage is to protect your insured when the negligent party lacks adequate insurance. That is precisely the situation here.

II. PENNSYLVANIA MVFRL — GOVERNING LAW

A. UM/UIM Coverage Requirements — 75 Pa.C.S. § 1731

Under 75 Pa.C.S. § 1731, every private passenger motor vehicle liability insurance policy issued or delivered in Pennsylvania must include UM and UIM coverage equal to the bodily injury liability limits, unless the named insured rejects such coverage by signing the verbatim prescribed rejection form required by § 1731(c)(1) (UM) and § 1731(c)(2) (UIM).

Critical: Pennsylvania law provides that any rejection form that does not specifically comply with § 1731(c) is void. 75 Pa.C.S. § 1731(c.1). If [________________________________] cannot produce a facially valid, statutorily compliant rejection form signed by the first named insured, the UM/UIM coverage defaults to the bodily injury liability limits of the policy.

Minimum UM/UIM Limits: $15,000 per person / $30,000 per accident (matching Pennsylvania's minimum liability limits under 75 Pa.C.S. § 1702).

B. Stacking of UM/UIM Benefits — 75 Pa.C.S. §§ 1733 and 1738

Pennsylvania law permits stacking of UM/UIM benefits across multiple vehicles and multiple policies unless the named insured executed a valid anti-stacking waiver pursuant to 75 Pa.C.S. § 1738(d).

Stacking analysis for this claim:

Note on Stacking Waivers: The Pennsylvania Supreme Court has held that anti-stacking waivers must strictly comply with § 1738(d). A waiver pertaining to a multi-vehicle policy waives only intra-policy stacking, not inter-policy stacking, unless the waiver explicitly addresses inter-policy stacking. Demand is hereby made for production of all stacking waiver forms within [____] days.

C. Tort Election — 75 Pa.C.S. § 1705 (Critical Pennsylvania Issue)

Pennsylvania is unique among states in requiring insureds to elect between full tort and limited tort coverage at the time of policy issuance. This election directly affects our client's right to recover noneconomic damages (pain and suffering) in the underlying tort claim and therefore the value of the UM/UIM claim.

Our client's tort election: ☐ Full Tort ☐ Limited Tort ☐ Disputed/Unknown

If Limited Tort: Our client ☐ does / ☐ does not qualify for an exception permitting recovery of noneconomic damages despite the limited tort election, because:

☐ The tortfeasor was operating a vehicle registered in another state (75 Pa.C.S. § 1705(d)(1))
☐ The tortfeasor was convicted of, or pled guilty to, DUI under 75 Pa.C.S. § 3802 (75 Pa.C.S. § 1705(d)(4))
☐ The tortfeasor had no insurance (75 Pa.C.S. § 1705(d)(3))
☐ Our client suffered a "serious injury" — death, serious impairment of body function, or permanent serious disfigurement (75 Pa.C.S. §§ 1705(d)(1)(B), 1702)
☐ Our client was a pedestrian or bicyclist
☐ Other: [________________________________]

Serious Injury Finding: As detailed in Section IV below, our client's injuries constitute a "serious injury" as defined by 75 Pa.C.S. § 1702 because [________________________________], which eliminates any limitation on noneconomic damages regardless of the limited tort election.

III. COVERAGE ANALYSIS

A. Policy Information

B. Coverage Trigger

☐ Uninsured Motorist (UM) Claim — 75 Pa.C.S. § 1731(b):

The tortfeasor qualifies as an "uninsured motor vehicle" under Pennsylvania law because:

☐ The tortfeasor had no liability insurance at the time of the collision
☐ The tortfeasor's insurer has denied coverage
☐ The tortfeasor's insurer is insolvent and the claim has been submitted to the Pennsylvania Property and Casualty Insurance Guaranty Association
☐ The tortfeasor was a hit-and-run driver who cannot be identified (physical contact requirement noted)
☐ The tortfeasor's liability limits are below Pennsylvania's minimum requirements

☐ Underinsured Motorist (UIM) Claim — 75 Pa.C.S. § 1731(c):

The tortfeasor qualifies as an "underinsured motor vehicle" because:

☐ The tortfeasor's liability limits of $[________________________________] are insufficient to fully compensate our client
☐ Our client has exhausted or will exhaust the tortfeasor's policy limits of $[________________________________]
☐ Our client's total damages of $[________________________________] exceed all available liability coverage
☐ Written consent to settle with the tortfeasor's carrier ☐ has been obtained / ☐ is hereby requested (see Section VI)

C. Validity of Rejection / Waiver Forms

Pursuant to 75 Pa.C.S. §§ 1731 and 1738, demand is hereby made for production of the following within [____] days:

1. The original UM rejection form, if any, signed by the named insured
2. The original UIM rejection form, if any, signed by the named insured
3. The original anti-stacking waiver form, if any, signed by the named insured
4. Proof of the date each form was signed relative to the policy inception date

Failure to produce valid, compliant rejection and/or waiver forms will be treated as an admission that UM/UIM coverage applies at the liability limits and that stacking applies.

IV. THE COLLISION AND LIABILITY

A. Facts of the Collision

On [__/__/____], at approximately [________] [☐ a.m. / ☐ p.m.], our client, [________________________________], was operating/occupying a [____] [________________________________] at or near [________________________________], [________________________________] County, Pennsylvania.

[DETAILED DESCRIPTION OF COLLISION — include direction of travel, weather, road conditions, traffic control devices, sequence of events]

[________________________________]
[________________________________]
[________________________________]

B. Tortfeasor's Negligence

The tortfeasor, [________________________________], was negligent under Pennsylvania law in the following respects:

☐ Failure to maintain proper lookout
☐ Failure to yield right-of-way — violation of [________________________________] Pa. Vehicle Code § [________]
☐ Following too closely — 75 Pa.C.S. § 3310
☐ Exceeding the posted speed limit of [____] mph — 75 Pa.C.S. § 3361/3362
☐ Distracted driving — 75 Pa.C.S. § 3316 (handheld mobile device)
☐ Failure to obey traffic control device — 75 Pa.C.S. § 3112
☐ Improper lane change — 75 Pa.C.S. § 3309
☐ Driving under the influence — 75 Pa.C.S. § 3802
☐ [________________________________]

C. Evidence of Liability

Police Report: [________________________________] Police/PSP Report No. [________________________________] dated [__/__/____], [☐ citing / ☐ not citing] the tortfeasor for [________________________________]

Witnesses: [________________________________] independent witnesses: [________________________________]

Physical Evidence: [DESCRIBE — skid marks, point of impact, vehicle damage, debris]

Expert Analysis: [________________________________], [________________________________], has concluded: [________________________________]

Dashcam/Surveillance: ☐ Yes — [DESCRIBE] ☐ No

D. Comparative Fault

Under Pennsylvania's modified comparative fault system (42 Pa.C.S. § 7102), our client bears no comparative fault — or, alternatively, comparative fault of not more than [____]%, which does not bar recovery. The tortfeasor bears [____]% of the responsibility for this collision.

V. FIRST-PARTY BENEFITS AND COORDINATION

A. First-Party Benefits (FPB) Received

Pennsylvania's MVFRL requires all policies to include first-party medical benefits of at least $5,000 under 75 Pa.C.S. § 1712. Our client has received the following first-party benefits:

B. Coordination/Subrogation of FPB

☐ The first-party benefits carrier has asserted a subrogation/reimbursement claim of $[________________________________]
☐ No subrogation claim has been asserted
☐ The FPB carrier has been notified of this demand

VI. OUR CLIENT'S INJURIES AND TREATMENT

A. Injury Summary

As a direct and proximate result of this collision, our client sustained the following injuries (verified by medical records):

Primary Diagnoses:

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

Serious Injury Finding under 75 Pa.C.S. § 1702:
☐ Serious impairment of body function: [DESCRIBE — specific body functions seriously impaired]
☐ Permanent serious disfigurement: [DESCRIBE]
☐ Death

B. Treatment Timeline

C. Permanent Impairment

D. Current Condition and Prognosis

[DESCRIBE CURRENT CONDITION, FUNCTIONAL LIMITATIONS, AND LONG-TERM PROGNOSIS]

[________________________________]
[________________________________]

VII. DAMAGES

A. Economic Damages

Past Medical Expenses (net of FPB payments already received):

Future Medical Expenses (Present Value):

Lost Wages/Earning Capacity:

B. Noneconomic Damages — Pain, Suffering, and Loss of Enjoyment of Life

[DESCRIBE IN DETAIL — daily impact on activities, relationships, hobbies, sleep, mental health]

Note: Our client elected [☐ full tort / ☐ limited tort] coverage. [If limited tort:] As established in Section II.C above, the limited tort restriction does not apply because [________________________________], permitting full recovery of noneconomic damages.

Noneconomic Damages Claimed: $[________________________________]

C. Total Damages Summary

VIII. DEMAND CALCULATION — UIM BENEFITS

A. UIM Benefits Calculation

B. Policy Limits Demand

We hereby demand payment of the full UM/UIM policy limits of $[________________________________].

Our client's total damages of $[________________________________] vastly exceed all available coverage. This is a clear policy limits case. Payment of the full UM/UIM limits now is [________________________________]'s only opportunity to fulfill its contractual and good-faith obligations to its own insured.

IX. CONSENT TO SETTLE / PRESERVATION OF SUBROGATION

A. Request for Consent to Settle with Tortfeasor's Carrier

IMPORTANT — PENNSYLVANIA CONSENT TO SETTLE REQUIREMENT:

We hereby formally request [________________________________]'s written consent to settle with the tortfeasor's liability carrier, [________________________________], for the tortfeasor's policy limits of $[________________________________].

Under Pennsylvania law, settlement with the tortfeasor's carrier without the UIM carrier's consent may waive or prejudice the UIM claim. Your timely written response is required.

Please provide written consent or denial within [____] days of this letter.

B. Waiver of Subrogation Against Tortfeasor

☐ We hereby request that [________________________________] waive its subrogation rights against the tortfeasor in connection with the proposed liability settlement, in accordance with the policy provisions and Pennsylvania law.

X. ARBITRATION

A. Policy Arbitration Provision

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

[If arbitration clause applies — quote verbatim: "[________________________________]"]

B. Arbitration Notice

If [________________________________] declines this demand, consider this letter as notice of our intent to invoke the arbitration process under the policy and Pennsylvania law. Any arbitration shall be governed by Pennsylvania arbitration statutes and conducted in [________________________________] County, Pennsylvania.

Our designated arbitrator: [________________________________]

Please identify [________________________________]'s designated arbitrator within [____] days.

XI. BAD FAITH WARNING — 42 Pa.C.S. § 8371

[________________________________] owes our client — its own insured — the duties of good faith and fair dealing under Pennsylvania law.

A. Pennsylvania Bad Faith Standard

Under 42 Pa.C.S. § 8371 and the two-part test established in Terletsky v. Prudential Property & Casualty Insurance Co., 649 A.2d 680 (Pa. Super. 1994), as affirmed and clarified by the Pennsylvania Supreme Court in Rancosky v. Washington National Insurance Co., 170 A.3d 364 (Pa. 2017), bad faith requires proof by clear and convincing evidence that:

1. The insurer did not have a reasonable basis for denying or delaying benefits under the policy; AND
2. The insurer knew of, or recklessly disregarded, its lack of a reasonable basis.

Rancosky clarified that proof of the insurer's subjective motive of self-interest or ill will is NOT required — reckless disregard of the lack of a reasonable basis is sufficient for the second prong.

B. Remedies Available Under § 8371

If bad faith is proven, the court shall award:

• Interest on the claim from the date of the claim at the prime rate of interest plus 3% (currently prime rate of [____]% + 3% = [____]%)
• Punitive damages against the insurer (no statutory cap in Pennsylvania)
• Court costs against the insurer
• Attorney fees against the insurer

C. Bad Faith Conduct to Date (if applicable)

[________________________________] has engaged in the following conduct that may constitute bad faith under Pennsylvania law:

☐ Unreasonable delay in investigating the claim — claim reported [__/__/____]; investigation status: [________________________________]
☐ Failure to acknowledge a valid stacking right under §§ 1733/1738
☐ Refusal to produce or verify the UM/UIM rejection/waiver forms despite demand
☐ Failure to respond to communications within the 10-working-day standard under 31 Pa. Code § 146.7
☐ Making a grossly inadequate settlement offer of $[________________________________] on damages of $[________________________________]
☐ Misrepresenting policy provisions to defeat coverage
☐ [________________________________]

Any attempt to deny, delay, or undervalue this claim without a reasonable basis will be met with a bad faith action under 42 Pa.C.S. § 8371.

XII. REGULATORY COMPLAINT NOTICE

Failure to respond appropriately to this demand may result in a complaint with the Pennsylvania Insurance Department pursuant to 40 P.S. § 1171.5 (Unfair Insurance Practices Act) and 31 Pa. Code § 146.7 (Standards for Prompt, Fair, and Equitable Settlements).

Pennsylvania Insurance Department
Bureau of Consumer Services
1326 Strawberry Square
Harrisburg, PA 17120
Phone: 1-877-881-6388
www.insurance.pa.gov

XIII. RESPONSE DEADLINE AND CONSEQUENCES

THIS DEMAND EXPIRES AT 5:00 P.M. EASTERN TIME ON [__/__/____].

Failure to accept this demand by the deadline will result in:

1. Invocation of arbitration under the policy (if applicable) or filing of suit in the Court of Common Pleas of [________________________________] County, Pennsylvania
2. Pursuit of bad faith damages under 42 Pa.C.S. § 8371, including punitive damages, interest at prime + 3%, attorney fees, and court costs
3. Filing of a formal complaint with the Pennsylvania Insurance Department
4. Withdrawal of this demand — the policy limits offer will be withdrawn and our client will seek all damages available under Pennsylvania law without limitation

XIV. CONCLUSION

Our client sustained serious injuries through no fault of their own. The tortfeasor carried inadequate insurance. [________________________________] sold our client a policy promising protection for exactly this scenario. Pennsylvania law demands that [________________________________] treat its own insured fairly and in good faith.

This demand presents [________________________________] with a clear opportunity to resolve a meritorious claim for policy limits. We urge [________________________________] to respond promptly and favorably.

All further communications should be directed to the undersigned.

Respectfully submitted,

[________________________________]

By: ___________________________________
[________________________________]
Pennsylvania Bar No. [________]
[________________________________]
[________________________________], PA [________]
Phone: [________________________________]
Fax: [________________________________]
Email: [________________________________]

Counsel for [________________________________]

ENCLOSURES:

☐ Policy declarations page (all policy years at issue)
☐ UM/UIM coverage endorsements
☐ Stacking waiver form (if produced)
☐ Pennsylvania No-Fault/FPB payment records
☐ Police/Pennsylvania State Police crash report
☐ Medical records and itemized bills (all providers)
☐ Expert reports — liability and/or medical
☐ Photographs of vehicle damage and scene
☐ Wage and income documentation
☐ Life care plan (if applicable)
☐ Tortfeasor's policy limits documentation

CC:

• [________________________________] (Client)
• [________________________________] (Tortfeasor's carrier — re: consent to settle)
• File

PENNSYLVANIA UM/UIM LAW — QUICK REFERENCE

SOURCES AND REFERENCES

• 75 Pa.C.S. § 1705 — Election of tort options: https://law.justia.com/codes/pennsylvania/title-75/chapter-17/section-1705/
• 75 Pa.C.S. § 1731 — UM/UIM availability, scope and amount of coverage: https://codes.findlaw.com/pa/title-75-pacsa-vehicles/pa-csa-sect-75-1731.html
• 75 Pa.C.S. § 1738 — Stacking of UM/UIM benefits: https://hh-law.com/blogs/insurance-coverage-and-bad-faith/pennsylvania-superior-court-um-uim-stacking-waivers-only-need-to-be-executed-by-the-first-named-insured/
• 42 Pa.C.S. § 8371 — Bad faith statute: https://codes.findlaw.com/pa/title-42-pacsa-judiciary-and-judicial-procedure/pa-csa-sect-42-8371/
• Terletsky v. Prudential Property & Cas. Ins. Co., 649 A.2d 680 (Pa. Super. 1994)
• Rancosky v. Washington National Ins. Co., 170 A.3d 364 (Pa. 2017): https://law.justia.com/cases/pennsylvania/supreme-court/2017/28-wap-2016.html
• 40 P.S. § 1171.5 — Pennsylvania Unfair Insurance Practices Act: https://codes.findlaw.com/pa/title-40-ps-insurance/pa-st-sect-40-1171-5/
• 31 Pa. Code § 146.7 — Standards for prompt, fair and equitable settlements: https://www.law.cornell.edu/regulations/pennsylvania/31-Pa-Code-SS-146-7
• Pennsylvania Insurance Department: https://www.insurance.pa.gov
• MVFRL Overview (Margolis Edelstein): https://www.margolisedelstein.com/wp-content/uploads/2019/10/2019-MVFRL-Book-for-Website-1.pdf