UM/UIM Demand Letter - South Carolina

UM/UIM (UNINSURED/UNDERINSURED MOTORIST) DEMAND LETTER

State of South Carolina

[LAW FIRM LETTERHEAD]

SETTLEMENT COMMUNICATION — FOR RESOLUTION PURPOSES ONLY
EVIDENTIARY USE SUBJECT TO S.C. R. EVID. 408 AND, WHERE APPLICABLE, 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 [________________________________]:

If and to the extent this demand constitutes compromise negotiations concerning a claim disputed as to validity or amount, Rule 408, SCRE limits specified uses to prove liability, invalidity, or the claim's amount. The rule preserves other-purpose use and otherwise discoverable evidence. Where federal evidence law applies, Federal Rule of Evidence 408 may impose additional specified-use limits. Neither rule itself makes this ordinary demand confidential or privileged.

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, but only for a "Class I" insured and only up to the coverage on the involved vehicle. Under State Farm Mut. Auto. Ins. Co. v. Gunning, 340 S.C. 526, 532 S.E.2d 16 (Ct. App. 2000); Ohio Cas. Ins. Co. v. Hill, 323 S.C. 208, 473 S.E.2d 843 (Ct. App. 1996); and Continental Ins. Co. v. Shives, 328 S.C. 470, 492 S.E.2d 808 (Ct. App. 1997), the right to stack turns on whether the insured's own vehicle was involved in the accident: a Class I insured is an insured or named insured who has a vehicle involved in the accident, while a Class II insured is one none of whose vehicles is involved. Only a Class I insured may stack, and a Class I insured may stack UM/UIM coverage from policies on non-involved vehicles only up to the amount of UM/UIM coverage carried on the vehicle involved in the accident (so where the involved vehicle carries no or lower UM/UIM coverage, stacking is limited or unavailable — Gunning; Hill). A Class II insured may not stack and recovers only the coverage available under § 38-77-160 on a non-involved vehicle.

D. "John Doe" / Hit-and-Run — S.C. Code Ann. §§ 38-77-170, -180

If the owner or operator is unknown, a UM claim may proceed against the insurer with the unknown driver named as "John Doe," and service may be made on the clerk of the court in which the action is brought (§ 38-77-180). Section 38-77-170 was rewritten by 2024 Act No. 180 (H.4869), effective May 20, 2024, and now conditions recovery on all of the following: (1) the insured or someone on her behalf reported the accident to an appropriate police authority within a reasonable time; (2) one of — (a) the injury or damage was caused by physical contact with the unknown vehicle; (b) the accident was witnessed by someone other than the owner or operator of the insured vehicle, who signs an affidavit attesting to the facts (or, failing an affidavit, the insured obtains a presuit deposition of the witness under Rule 27, SCRCP); or (c) the insured provides a recording (electronic or otherwise) showing the unknown vehicle caused the damage or injury; and (3) the insured was not negligent in failing to determine the identity of the other vehicle and driver at the time of the accident. Any § 38-77-170(2)(b) witness affidavit must prominently display the statutory false-statement warning. See historically Wynn v. Doe, 255 S.C. 509, 180 S.E.2d 95 (1971) (pre-amendment John Doe standard).

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; the § 38-77-170 conditions (as rewritten by 2024 Act No. 180, eff. May 20, 2024) are satisfied — timely police report; physical contact, a non-occupant eyewitness affidavit, or a recording of the collision; and no negligence in failing to identify the driver.

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 LIABILITY SETTLEMENT

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

No carrier consent is required for our client to accept those limits and preserve the full UIM claim. Under S.C. Code Ann. § 38-77-160, a South Carolina UIM policy may not contain a clause requiring the insurer's consent to settlement with the at-fault party, and UIM benefits paid are not subject to subrogation or assignment. This letter serves as notice of the intended or completed liability settlement. The Company's only statutory option is that, if the tortfeasor's liability carrier settles by paying its applicable limits, the Company "may assume control of the defense of [the] action for its own benefit" under § 38-77-160; it may not condition or reduce UIM benefits on withheld consent or assert a subrogation-based defense.

Please confirm receipt and state, within thirty (30) days, whether the Company intends to assume the defense under § 38-77-160.

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

Section 38-59-20 classifies the listed conduct as an improper claim practice only when committed without just cause and with enough frequency to indicate a general business practice. The list includes:

• 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 through suit or qualifying counseled settlement;
• offering less because of the possibility or probability that the claimant would incur attorney's fees to recover the amount reasonably due;
• invoking policy defenses or rescission without good faith and a reasonable expectation of prevailing, primarily to discourage or reduce a claim; and
• other unreasonable delay or unreasonable failure to pay or settle in full a claim arising under policy coverage.

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 the annually CPI-adjusted dollar amount (statutory base: $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: notice of liability settlement, § 38-77-160)

Sources and References

• S.C. Code Ann. § 38-77-150 (Uninsured motorist provision)
• S.C. Code Ann. § 38-77-160 (UIM; stacking; no consent-to-settle clause; benefits not subrogable)
• S.C. Code Ann. §§ 38-77-170, -180 (unknown-driver "John Doe" recovery; § 38-77-170 rewritten by 2024 Act No. 180 (H.4869), eff. May 20, 2024)
• 2024 Act No. 180 (H.4869) — amendment rewriting § 38-77-170
• 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