UM/UIM Demand Letter - South Dakota

UM/UIM (UNINSURED/UNDERINSURED MOTORIST) DEMAND LETTER

State of South Dakota

[LAW FIRM LETTERHEAD]

SETTLEMENT COMMUNICATION — FOR RESOLUTION PURPOSES ONLY
EVIDENTIARY USE MAY BE LIMITED BY SDCL § 19-19-408 AND FED. R. EVID. 408, WHERE APPLICABLE

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

Date: [__/__/____]

[INSURANCE COMPANY NAME]
[________________________________]
[________________________________]
[________________________________]

Attention: [________________________________], [________________________________]
Re: FORMAL UM/UIM POLICY LIMITS DEMAND — SOUTH DAKOTA LAW
Insured/Claimant: [________________________________]
Policy Number: [________________________________]
Claim Number: [________________________________]
Date of Loss: [__/__/____]
UM/UIM Policy Limits: $[________________________________]
Tortfeasor: [________________________________]
Tortfeasor's Carrier: [________________________________]
Tortfeasor's Liability Limits: $[________________________________]
Response Deadline: [__/__/____] at 5:00 p.m. Central Time

Dear [________________________________]:

I. INTRODUCTION AND NATURE OF DEMAND

This firm represents [________________________________] ("our client") in connection with a claim for [uninsured/underinsured] motorist benefits under South Dakota law and the above-referenced policy arising from a motor vehicle collision on [__/__/____]. This letter demands $[________________________________] in UM or UIM benefits, as applicable. For UIM, the amount demanded is subject to the offset and coverage cap in S.D.C.L. § 58-11-9.5, calculated in Section VIII.

Our client's total damages substantially exceed all available coverage. Under S.D. Codified Laws §§ 58-11-9 and 58-11-9.4, qualifying South Dakota motor vehicle liability policies must include uninsured and underinsured motorist coverage tied to their bodily injury liability limits, subject to the statutes' limits and exceptions. Your policy provides applicable [UM/UIM] limits of $[________________________________].

You are hereby on notice that a denial or delay without a reasonable basis, made with knowledge or reckless disregard of that lack of basis, may constitute bad faith under South Dakota law. Bertelsen v. Allstate Ins. Co., 2013 SD 44, ¶ 17. If that standard is proven, [________________________________] ("the Company") may face compensatory or consequential damages; punitive damages require the separate showing and court finding under S.D. Codified Laws §§ 21-3-2 and 21-1-4.1.

II. SOUTH DAKOTA UM/UIM LEGAL FRAMEWORK

A. Mandatory UM and UIM Coverage — S.D.C.L. §§ 58-11-9 and 58-11-9.4

For qualifying policies, § 58-11-9 requires uninsured and hit-and-run motorist bodily injury coverage, and § 58-11-9.4 separately requires underinsured motorist bodily injury coverage. Each ties the required coverage to the policy's bodily injury liability limits, but does not require limits above $100,000 per person and $300,000 per accident unless the insured requests additional coverage. Check the actual policy and the statutory snowmobile and government-vehicle exceptions. Neither section mandates vehicle-damage coverage.

B. UIM Offset Calculation — S.D.C.L. § 58-11-9.5

South Dakota's UIM statute employs a limits-to-limits offset approach: the available UIM benefit is calculated as the difference between the UIM policy limit and the amount actually recovered from the tortfeasor's liability carrier. The offset is applied per person, not in the aggregate. Pursuant to Gloe v. Union Insurance Co., 2005 SD 37, the carrier may not aggregate payments made to multiple claimants to reduce the per-person UIM payment owed to our client.

C. UIM Limit Aggregation — S.D.C.L. § 58-11-9.9

Section 58-11-9.9 bars adding UIM liability limits for two or more of the insured's motor vehicles to determine coverage for one injured person in one accident, regardless of the number of policies, vehicles, covered persons, claims, or premiums. Identify the applicable single-vehicle limit and review the actual policy terms before calculating this demand.

D. Comparative Fault — S.D.C.L. § 20-9-2

South Dakota applies a distinctive "slight/gross" comparative negligence rule. Under S.D.C.L. § 20-9-2, a plaintiff's contributory negligence does not bar recovery only when that negligence "was slight in comparison with the negligence of the defendant," in which case "the damages shall be reduced in proportion to the amount of plaintiff's contributory negligence." There is no fixed 50% bar; under the 1998 amendment, the slight-in-comparison determination is made without disclosing any percentage of plaintiff fault by special interrogatory. Our client bears no comparative fault for this collision, as the evidence demonstrates.

E. Statute of Limitations

The applicable statute of limitations for this UM/UIM contract claim is six (6) years under S.D. Codified Laws § 15-2-13. The date of loss was [__/__/____], making the deadline for filing suit approximately [__/__/____]. This demand does not toll the statutory period.

III. COVERAGE ANALYSIS

A. Policy Information

B. Coverage Trigger

Uninsured Motorist Claim (if applicable):

The tortfeasor qualifies as an "uninsured motorist" under S.D.C.L. § 58-11-9 because:

☐ The tortfeasor carried no liability insurance at the time of the collision
☐ The tortfeasor's liability insurer has denied coverage for this collision
☐ The tortfeasor's liability insurer is insolvent
☐ The tortfeasor fled the scene and cannot be identified (hit-and-run)

Supporting documentation attached: ☐ Police report confirming no insurance ☐ Denial letter from tortfeasor's carrier ☐ NAIC insolvency notice ☐ Hit-and-run report

Underinsured Motorist Claim (if applicable):

A UIM payment is potentially available under S.D.C.L. § 58-11-9.5 only to the extent uncompensated damages remain and the applicable UIM limit exceeds the amount paid by the tortfeasor's liability insurer:

☐ The tortfeasor's liability limits of $[________________________________] are insufficient to fully compensate our client's damages of $[________________________________]
☐ Our client has exhausted (or will exhaust upon settlement) the tortfeasor's policy limits
☐ Our client's damages exceed all available liability coverage by $[________________________________]
☐ Applicable UIM limit of $[________________________________] minus liability-insurer payment of $[________________________________] leaves a positive UIM limit of $[________________________________]

IV. THE COLLISION AND LIABILITY

A. Facts of the Collision

On [__/__/____], at approximately [____] a.m./p.m. Central Time, our client was [________________________________] at or near [________________________________], [________________________________] County, South Dakota.

[________________________________]
[________________________________]
[________________________________]

B. The Tortfeasor's Negligence

[________________________________] ("Tortfeasor") was negligent under South Dakota law in the following respects:

☐ Failed to maintain a proper lookout [DESCRIBE FACTS AND GOVERNING DUTY]
☐ Failed to yield right-of-way
☐ Following too closely (S.D.C.L. § 32-26-40)
☐ Excessive speed for road and weather conditions
☐ Distracted driving (cell phone use, inattention)
☐ Failure to obey traffic control device
☐ Improper lane change
☐ Driving under the influence of alcohol or drugs (S.D.C.L. § 32-23-1)
☐ [________________________________]

C. Evidence of Liability

Police Report: [________________________________] Traffic Crash Report No. [________________________________], dated [__/__/____], prepared by Officer [________________________________] of [________________________________] law enforcement. ☐ Tortfeasor cited ☐ Tortfeasor at fault per narrative

Witness Statements: [____] independent witnesses confirmed the Tortfeasor's negligence. Names and contact information available upon request.

Physical Evidence: ☐ Skid marks ☐ Vehicle damage consistent with described impact ☐ Debris field ☐ Traffic camera footage ☐ Dashcam video

Expert Analysis: [________________________________] (accident reconstruction specialist) has concluded: [________________________________]

D. Our Client's Comparative Fault

Under S.D.C.L. § 20-9-2, our client's fault is zero percent (0%). The physical evidence, eyewitness accounts, and police report support our position that the Tortfeasor was solely responsible for this collision. We ask the Company to identify any evidence on which it relies to assign comparative fault to our client.

V. OUR CLIENT'S INJURIES AND MEDICAL TREATMENT

A. Emergency and Initial Treatment

Our client was transported from the scene by [________________________________] to [________________________________] in [________________________________], South Dakota, where emergency evaluation revealed:

[________________________________]
[________________________________]

B. Treatment Timeline

C. Diagnosis and Permanent Impairment

Our client has been diagnosed with:

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

Pursuant to a permanent impairment evaluation conducted by [________________________________], M.D., on [__/__/____], our client has sustained a permanent impairment rating of:

D. Current Condition and Prognosis

[________________________________]
[________________________________]

Our client will require the following future medical care: [________________________________]

VI. DAMAGES

A. Past Medical Expenses

B. Future Medical Expenses

Based on the life care plan prepared by [________________________________] on [__/__/____]:

C. Lost Income

Past Lost Wages/Income: Our client was employed as [________________________________] earning $[________________________________] per [week/month/year] and was unable to work from [__/__/____] through [__/__/____], resulting in lost wages of $[________________________________].

Future Lost Earning Capacity: As a result of permanent impairment and work restrictions, our client has suffered a reduction in earning capacity with a present value of $[________________________________], per the vocational rehabilitation assessment of [________________________________].

D. Pain and Suffering / Non-Economic Damages

The $500,000 general-damages cap in S.D.C.L. § 21-3-11 applies to medical-malpractice actions; this demand concerns an auto-injury claim. Our client has endured [________________________________] months of documented pain, [________________________________], loss of enjoyment of life, and [________________________________]. These non-economic damages are conservatively valued at $[________________________________].

E. Total Damages Summary

VII. SETTLEMENT WITH TORTFEASOR'S CARRIER

A. Settlement Status

☐ We have reached a settlement with [________________________________] (Tortfeasor's carrier) for the Tortfeasor's policy limits of $[________________________________], pending your consent.

☐ We are actively pursuing settlement with [________________________________] (Tortfeasor's carrier) for the Tortfeasor's policy limits of $[________________________________].

☐ The Tortfeasor's carrier has confirmed its insured has no liability coverage (uninsured motorist scenario).

B. Request for Consent to Settle

Pursuant to South Dakota law and the policy's subrogation and consent provisions, we hereby formally request your written consent to settle with the Tortfeasor's liability carrier for the policy limits of $[________________________________].

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

Failure to respond to this consent request within a reasonable time may constitute waiver of any subrogation interest. If you deny consent, please state the specific basis for denial and identify any additional investigation you intend to conduct, consistent with your obligations under S.D.C.L. § 58-33-67.

VIII. UIM BENEFITS CALCULATION AND DEMAND

A. UIM Benefits Due Under S.D.C.L. § 58-11-9.5

Our client's remaining uncompensated damages are $[________________________________]. The net UIM coverage cap after the statutory offset is $[________________________________]. The requested UIM payment is the lesser amount, subject to the policy terms.

B. Formal Demand

We hereby demand payment of $[________________________________] in [UM/UIM] benefits within [____] calendar days of the date of this letter. For UIM, this is the Section VIII amount after the § 58-11-9.5 offset.

IX. SOUTH DAKOTA BAD FAITH WARNING

The Company owes our client — its own insured — the duty of good faith and fair dealing. Under South Dakota law, bad faith is an intentional tort requiring proof that: (1) there was no reasonable basis to deny, delay, or underpay the claim; and (2) the insurer knew of, or recklessly disregarded, the lack of a reasonable basis for its conduct. Isaac v. State Farm Mut. Auto. Ins. Co., 522 N.W.2d 752, 759 (S.D. 1994). A fairly debatable claim may be challenged; delay may support bad faith when this same lack-of-basis and knowledge standard is met. Bertelsen v. Allstate Ins. Co., 2013 SD 44, ¶ 17.

A. Prohibited Conduct Under S.D.C.L. § 58-33-67

The Company must comply with the applicable unfair-claims standards in § 58-33-67. Identify the facts supporting each alleged violation; evaluate any separate civil claim under its own governing authority:

☐ Failing to acknowledge and act within 30 days upon claim communications, or failing to follow reasonable standards for prompt claim investigation
☐ Making a claim payment without stating the coverage under which it is made
☐ Failing to promptly explain the policy, facts, or law supporting a denial or compromise offer
☐ Failing to promptly settle a reasonably clear claim under one coverage part to influence settlement under another
☐ Failing to make a good faith contributory-negligence assignment when assessing liability

B. Attorney's Fees Under S.D.C.L. § 58-12-3

If the Company refuses to pay UM/UIM benefits actually owed, the refusal is vexatious or without reasonable cause, and our client obtains a qualifying judgment or award, S.D.C.L. § 58-12-3 permits a reasonable attorney's fee as part of costs, subject to its pre-suit tender exception. Whether a refusal meets that standard depends on the coverage and claim record; a disagreement over policy limits alone does not establish it.

C. Punitive Damages Under S.D.C.L. § 21-3-2

Punitive damages require a case-specific showing and the hearing and clear-and-convincing-evidence gate in SDCL § 21-1-4.1 before related discovery or submission to the finder of fact. In Isaac, 522 N.W.2d at 761–62, the court found sufficient evidence to submit the punitive claim to the jury; it reversed other parts of the judgment. Counsel must establish the statutory basis and procedure before seeking punitive relief here.

X. ARBITRATION

A. Policy Arbitration Clause

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

[If applicable: The policy provides for arbitration of UM/UIM disputes at: [________________________________]. Applicable arbitration rules: [________________________________].]

B. Notice of Intent to Arbitrate

If the Company declines this demand, consider this letter formal notice of our client's intent to invoke arbitration (if applicable under the policy) or to file suit in [________________________________] County, South Dakota.

XI. RESPONSE DEADLINE AND CONSEQUENCES

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

If the Company fails to tender the supported UM or UIM amount demanded above by the deadline:

1. We will file suit in South Dakota [Circuit/Federal District] Court seeking all available damages, including bad faith tort damages, punitive damages under S.D.C.L. § 21-3-2, and attorney's fees under S.D.C.L. § 58-12-3.

2. We will file a formal complaint with the South Dakota Division of Insurance, 124 S. Euclid Avenue, 2nd Floor, Pierre, SD 57501 | Phone: (605) 773-3563 | dlr.sd.gov/insurance, documenting the Company's violations of S.D.C.L. § 58-33-67.

3. We will invoke the policy arbitration process (if applicable).

4. This demand will be withdrawn as a settlement offer, and no further settlement offer will be made at or near policy limits.

XII. DOCUMENT PRESERVATION NOTICE

This letter constitutes formal notice that the Company must immediately preserve and not destroy, overwrite, or otherwise alter any documents, electronically stored information, or tangible materials related to this claim, including:

• Complete claim file in all versions and drafts
• All adjuster notes, activity logs, and reserve documentation
• All internal communications and emails regarding this claim
• Claim handling guidelines and training materials
• All photographs, inspection reports, and expert evaluations
• Reserve and reserve-change records with approvals
• Quality assurance and supervisory review records

XIII. CONCLUSION

This claim presents clear UM/UIM coverage, unambiguous liability, documented severe injuries, and total damages far exceeding policy limits. The Company has a straightforward opportunity to fulfill its contractual and legal obligations to its own insured by paying the policy limits now. We strongly urge you to do so.

Please direct all responses to the undersigned.

Respectfully submitted,

[________________________________]

By: _______________________________________________
[________________________________]
SD Bar No. [________________________________]
[________________________________]
[________________________________], SD [________________________________]
Tel: [________________________________]
Fax: [________________________________]
Email: [________________________________]

Counsel for [________________________________]

ENCLOSURES:

• Policy declarations page and UM/UIM endorsement
• Police/crash report (Report No. [________________________________])
• Photographs of scene and vehicles
• Medical records and bills (itemized)
• Permanent impairment evaluation
• Life care plan (if applicable)
• Vocational rehabilitation report (if applicable)
• Tortfeasor's carrier policy limits confirmation
• Proof of tortfeasor's uninsured/underinsured status

CC:

• [________________________________] (Client)
• [________________________________] (Tortfeasor's Carrier — consent to settle request)

SOUTH DAKOTA UM/UIM LAW — QUICK REFERENCE

SOURCES AND REFERENCES

• S.D. Codified Laws § 58-11-9: https://sdlegislature.gov/Statutes/58-11-9
• S.D. Codified Laws § 58-11-9.5: https://sdlegislature.gov/Statutes/58-11-9.5
• S.D. Codified Laws § 58-11-9.9: https://sdlegislature.gov/Statutes/58-11
• S.D. Codified Laws § 58-33-67: https://sdlegislature.gov/Statutes/58-33-67
• S.D. Codified Laws § 58-12-3: https://sdlegislature.gov/Statutes/58-12-3
• S.D. Codified Laws § 21-3-2: https://law.justia.com/codes/south-dakota/title-21/chapter-03/section-21-3-2/
• S.D. Codified Laws § 20-9-2: https://sdlegislature.gov/Statutes/20-9-2
• Isaac v. State Farm Mut. Auto. Ins. Co., 522 N.W.2d 752 (S.D. 1994): https://law.justia.com/cases/south-dakota/supreme-court/1994/18389-1.html
• Champion v. United States Fidelity & Guaranty Co., 399 N.W.2d 320 (S.D. 1987)
• Gloe v. Union Insurance Co., 2005 SD 37: https://law.justia.com/cases/south-dakota/supreme-court/2005/1395.html
• Brooks v. Milbank Ins. Co., 2000 SD 16: https://law.justia.com/cases/south-dakota/supreme-court/2000/224.html
• South Dakota Division of Insurance (SDDOI): https://dlr.sd.gov/insurance/
• SDDOI Auto Insurance Consumer Information: https://dlr.sd.gov/insurance/general_guidance/auto.aspx