UM/UIM Demand Letter - South Carolina

UM/UIM (UNINSURED/UNDERINSURED MOTORIST) DEMAND LETTER

State of South Carolina

[LAW FIRM LETTERHEAD]

PRIVILEGED AND CONFIDENTIAL
SETTLEMENT COMMUNICATION — FOR RESOLUTION PURPOSES ONLY
PROTECTED UNDER S.C. R. EVID. 408 AND FED. R. EVID. 408

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

Date: [__/__/____]

[________________________________] (Insurance Company)
UM/UIM Claims Department
[________________________________]
[________________________________], [____] [__________]

Attention: [________________________________], Claims Adjuster

Re: POLICY LIMITS DEMAND — SOUTH CAROLINA UM/UIM COVERAGE
Insured/Claimant: [________________________________]
Policy Number: [________________________________]
Claim Number: [________________________________]
Date of Loss: [__/__/____]
Location of Collision: [________________________________] County, South Carolina
Tortfeasor: [________________________________]
Tortfeasor's Carrier / Limits: [________________________________] / $[____________]
Response Deadline: [__/__/____] at 5:00 p.m. Eastern Time

Dear [________________________________]:

This firm represents [________________________________] ("our client") in connection with a claim for [☐ uninsured motorist / ☐ underinsured motorist] benefits arising out of the motor vehicle collision described below. This letter constitutes a formal time-limited demand for payment of all available UM/UIM benefits, including all stackable coverage to which our client is entitled under S.C. Code Ann. § 38-77-160.

Our client's damages substantially exceed the available coverage. South Carolina law, and the reserved premium for which our client contracted, requires good-faith, prompt payment. Failure to tender the full available UM/UIM benefits by the deadline below will result in the immediate filing of a breach of contract and first-party bad faith action under Nichols v. State Farm Mut. Auto. Ins. Co., 279 S.C. 336, 306 S.E.2d 616 (1983), together with a complaint to the South Carolina Department of Insurance.

I. GOVERNING SOUTH CAROLINA AUTHORITY

A. Mandatory UM Coverage — S.C. Code Ann. § 38-77-150

Every South Carolina automobile policy must contain uninsured motorist coverage "undertaking to pay the insured all sums which he is legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle." The statutory minimum limits track § 38-77-140: $25,000 per person / $50,000 per accident / $25,000 property damage (the "25/50/25" minimums). UM coverage cannot be waived by a South Carolina insured.

B. Optional UIM Coverage — S.C. Code Ann. § 38-77-160

Under § 38-77-160, insurers must offer UIM coverage up to the liability limits carried. UIM coverage pays the insured the difference between the tortfeasor's available liability limits and the insured's damages, subject to the UIM policy limit. UIM is "excess" over the tortfeasor's coverage — it does not reduce dollar-for-dollar unless the policy so provides consistent with statute.

C. Stacking Under § 38-77-160 — Gunning/Hill/Shives

South Carolina permits stacking of UM/UIM coverage. Under State Farm Mut. Auto. Ins. Co. v. Gunning, 343 S.C. 526, 540 S.E.2d 873 (Ct. App. 2000); Ohio Cas. Ins. Co. v. Hill, 375 S.C. 166, 650 S.E.2d 841 (2007); and Continental Ins. Co. v. Shives, 328 S.C. 470, 492 S.E.2d 808 (Ct. App. 1997), an insured may stack UM/UIM coverage from policies covering non-involved vehicles, but the stackable amount on any non-involved vehicle is capped at the UM/UIM limit applicable to the involved vehicle. A "Class I" insured (named insured, resident spouse, or resident relative) is entitled to stack; a "Class II" insured (occupant of the insured vehicle) generally is not.

D. "John Doe" / Hit-and-Run — S.C. Code Ann. § 38-77-170

If the tortfeasor is unknown, a UM claim against the insurer may proceed as a "John Doe" action provided: (1) the insured or someone on her behalf reported the accident to some proper party within a reasonable time; and (2) the injury arose out of physical contact with the unknown vehicle or there is independent corroborating testimony (other than the insured's) that the unknown vehicle caused the collision. Wynn v. Doe, 255 S.C. 509, 180 S.E.2d 95 (1971).

E. Comparative Negligence — Nelson v. Concrete Supply

South Carolina follows modified comparative negligence with a 51% bar: a plaintiff whose negligence is 50% or less may recover, reduced by her proportion of fault; a plaintiff 51% or more at fault is barred. Nelson v. Concrete Supply Co., 303 S.C. 243, 399 S.E.2d 783 (1991).

F. Statute of Limitations — S.C. Code Ann. § 15-3-530

Actions on UM/UIM contracts and first-party bad faith claims are subject to a three-year limitations period.

II. COVERAGE SUMMARY

III. THE COLLISION

A. Facts

On [__/__/____] at approximately [__:__] [a.m./p.m.], our client was [________________________________] on/at [________________________________] in [________________________________] County, South Carolina.

[________________________________]

B. Tortfeasor Liability

The tortfeasor, [________________________________], is liable to our client for negligent operation of a motor vehicle in violation of, among other provisions, S.C. Code Ann. § 56-5-__________ ([describe: e.g., § 56-5-1520 (speeding), § 56-5-2930 (DUI), § 56-5-2120 (failure to yield)]):

☐ Failure to keep a proper lookout
☐ Failure to yield the right-of-way
☐ Following too closely (S.C. Code Ann. § 56-5-1930)
☐ Excessive speed for conditions (S.C. Code Ann. § 56-5-1520)
☐ Running a red light / stop sign (S.C. Code Ann. § 56-5-970 / § 56-5-2710)
☐ Improper lane change (S.C. Code Ann. § 56-5-1900)
☐ Driving under the influence (S.C. Code Ann. § 56-5-2930)
☐ Texting while driving (S.C. Code Ann. § 56-5-3890)
☐ Leaving the scene / hit-and-run (S.C. Code Ann. § 56-5-1210)
☐ Other: [________________________________]

C. Qualification of the Tortfeasor's Vehicle

☐ Uninsured: The tortfeasor carried no liability insurance / carrier denied coverage / tortfeasor is insolvent, placing the vehicle within § 38-77-30's "uninsured motor vehicle" definition.

☐ Underinsured: The tortfeasor's liability limits of $[____________] are insufficient to compensate our client's damages, triggering UIM under § 38-77-160.

☐ John Doe: The tortfeasor is unknown; physical contact occurred / independent corroborating testimony exists as required by § 38-77-170 and Wynn v. Doe.

D. Evidence

• [________________________________] Police Department / S.C. Highway Patrol FR-10 / TR-310 Crash Report No. [__________]
• Witness statements: [________________________________]
• Photographs, dashcam, and scene video
• Accident reconstruction report (if applicable) by [________________________________]

E. Comparative Fault

Our client bears no comparative fault under Nelson v. Concrete Supply and is well within the 51% bar. All proximate causation is attributable to the tortfeasor.

IV. INJURIES AND TREATMENT

A. Diagnoses and Injuries

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

B. Treatment Chronology

C. Permanent Impairment Rating

Assessed under the AMA Guides, Sixth Edition: [____]% whole-person impairment per [________________________________], M.D.

D. Prognosis

[________________________________]

V. DAMAGES

A. Past Medical Specials

Note: South Carolina follows the collateral source rule — insurance write-offs are not admissible to reduce damages. Covington v. George, 359 S.C. 100, 597 S.E.2d 142 (2004).

B. Future Medical (Reduced to Present Value)

$[____________]

C. Past Lost Wages

$[____________] ([________________________________] weeks at $[____________]/week)

D. Loss of Future Earning Capacity (Present Value)

$[____________]

E. Non-Economic Damages

Pain, suffering, mental anguish, loss of enjoyment of life, disfigurement, and permanent impairment: $[____________]

F. Total Compensatory Damages

VI. STATUS OF TORTFEASOR SETTLEMENT AND CONSENT TO SETTLE

Our client [☐ has tendered / ☐ has accepted / ☐ will shortly accept] the tortfeasor's policy limits of $[____________] from [________________________________] (tortfeasor's liability carrier).

Pursuant to standard UIM policy language and S.C. Code Ann. § 38-77-160, we hereby request the carrier's written consent to settle and preservation/waiver of subrogation against the tortfeasor within thirty (30) days. If the carrier wishes to preserve subrogation, it must tender the tortfeasor's policy limits itself, as required under Elam v. South Carolina Dep't of Transp., 361 S.C. 9, 602 S.E.2d 772 (2004), and customary UIM provisions.

Failure to respond to this consent-to-settle request within 30 days will be treated as consent and a waiver of any subrogation-based defense.

VII. UIM BENEFITS CALCULATION

VIII. DEMAND FOR POLICY LIMITS

We hereby demand tender of the full available UM/UIM policy limits of $[____________], including all stackable limits to which our client is entitled under § 38-77-160.

This is a clear policy-limits case. Compensatory damages materially exceed the combined available coverage, the tortfeasor's negligence is documented, and liability is indisputable.

IX. BAD FAITH WARNING UNDER SOUTH CAROLINA LAW

A. The Nichols Standard

Under Nichols v. State Farm Mut. Auto. Ins. Co., 279 S.C. 336, 306 S.E.2d 616 (1983), an insured may recover in tort (including consequential, emotional-distress, and punitive damages) when the insurer refuses to pay first-party benefits without a reasonable basis. A first-party bad faith claim requires proof of:

1. a mutually binding insurance contract;
2. a refusal to pay benefits due under the contract;
3. resulting from the insurer's bad faith or unreasonable action; and
4. damage to the insured.

See also Tadlock Painting Co. v. Maryland Cas. Co., 322 S.C. 498, 473 S.E.2d 52 (1996); Cock-N-Bull Steak House, Inc. v. Generali Ins. Co., 321 S.C. 1, 466 S.E.2d 727 (1996).

B. Tyger River Doctrine (Excess Liability Warning)

Tyger River Pine Co. v. Maryland Cas. Co., 170 S.C. 286, 170 S.E. 346 (1933), holds that an insurer which refuses a reasonable settlement within limits, and thereby exposes its insured to an excess judgment, is liable for the full amount of any resulting judgment, including the portion in excess of policy limits, together with interest and costs. The same doctrine applies to an insurer refusing to pay first-party benefits when liability is reasonably clear.

C. Statutory Improper Claims Practices — § 38-59-20

The Company is bound by the prohibitions of S.C. Code Ann. § 38-59-20, which prohibits (among other practices):

• knowingly misrepresenting coverages or policy provisions;
• failing to acknowledge pertinent communications with reasonable promptness;
• failing to adopt reasonable investigation standards;
• not attempting in good faith to effectuate prompt, fair, and equitable settlement where liability is reasonably clear;
• compelling insureds to institute suit by offering substantially less than the amount ultimately recovered;
• invoking policy defenses without a reasonable expectation of prevailing.

D. Punitive Damages and § 15-32-530 Cap

Under S.C. Code Ann. § 15-32-520, punitive damages require proof by clear and convincing evidence that harm resulted from the defendant's willful, wanton, or reckless conduct. Under § 15-32-530, punitive damages are generally capped at the greater of three times compensatory damages or $500,000. Enhanced caps of the greater of four times compensatory or $2,000,000 apply where the wrongful conduct was motivated by unreasonable financial gain known to managing agents or constitutes a felony. No cap applies where the defendant acted with specific intent to harm.

X. RESPONSE DEADLINE

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

If the Company fails to tender the full available UM/UIM benefits by that deadline:

1. Suit will be filed in the Court of Common Pleas for [________________________________] County, South Carolina, asserting breach of contract and first-party bad faith under Nichols;
2. Our client will seek full compensatory damages, consequential damages, emotional distress, punitive damages (subject to § 15-32-530), pre- and post-judgment interest, and costs;
3. A formal complaint will be filed with the South Carolina Department of Insurance, 1201 Main Street, Suite 1000, Columbia, SC 29201 (consumer complaint line (803) 737-6180); and
4. This letter will be used as evidence that the Company had actual notice of its exposure and failed to act in good faith — the exact Tyger River scenario.

XI. DOCUMENT PRESERVATION NOTICE

This letter constitutes formal notice to preserve all claim-related documents and ESI, including the complete claim file, adjuster notes and diary, reserve history, supervisor reviews, all internal and external communications, claim manuals and training materials, and audits or quality-assurance reports. Spoliation of any of these items will be raised at trial under Cole v. Boy Scouts of Am., 397 S.C. 247, 725 S.E.2d 476 (2011).

XII. CONCLUSION

This file presents indisputable liability, severe injuries, and damages well in excess of all available coverage. The Company's opportunity to resolve this case within policy limits is now. We urge it to do so.

Respectfully,

[LAW_FIRM_NAME]

By: _______________________________
[________________________________], Esq.
S.C. Bar No. [__________]
[________________________________]
[________________________________], SC [__________]
Tel: [________________________________]
Email: [________________________________]

Counsel for [________________________________]

ENCLOSURES:

• ☐ Declarations page and policy
• ☐ FR-10 / TR-310 crash report
• ☐ Tortfeasor policy limits disclosure / Dec sheet
• ☐ Medical records, bills, and impairment rating
• ☐ Wage-loss documentation
• ☐ Photographs / video
• ☐ Accident reconstruction report

cc:

• ☐ [________________________________] (client)
• ☐ [________________________________] (tortfeasor's liability carrier — re: consent to settle)

Sources and References

• S.C. Code Ann. § 38-77-150 (Uninsured motorist provision)
• S.C. Code Ann. § 38-77-160 (UIM; stacking)
• S.C. Code Ann. § 38-59-20 (Improper claim practices)
• S.C. Code Ann. § 15-32-520 / 15-32-530 (Punitive damages)
• S.C. Code Ann. § 15-3-530 (Three-year limitations)
• Nichols v. State Farm Mut. Auto. Ins. Co., 279 S.C. 336 (1983)
• Tyger River Pine Co. v. Maryland Cas. Co., 170 S.C. 286 (1933)
• State Farm Mut. Auto. Ins. Co. v. Gunning (S.C. Ct. App. 2000)
• Nelson v. Concrete Supply Co., 303 S.C. 243 (1991)
• S.C. Department of Insurance