UM/UIM Demand Letter - South Dakota

UM/UIM (UNINSURED/UNDERINSURED MOTORIST) DEMAND LETTER

State of South Dakota

[LAW FIRM LETTERHEAD]

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

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 constitutes a formal demand for payment of the full UM/UIM policy limits of $[________________________________].

Our client's total damages substantially exceed all available coverage. Under S.D. Codified Laws § 58-11-9, every motor vehicle policy issued in South Dakota must provide uninsured motorist coverage at minimum limits of $25,000 per person / $50,000 per accident, and your policy provides limits of $[________________________________]. This coverage exists precisely to protect insureds like our client when the negligent party lacks sufficient liability insurance.

You are hereby on notice that failure to timely and fairly evaluate and pay this claim will constitute bad faith under South Dakota common law as established in Isaac v. State Farm Mut. Auto. Ins. Co., 522 N.W.2d 752 (S.D. 1994), exposing [________________________________] ("the Company") to liability for compensatory damages, consequential damages, and punitive damages under S.D. Codified Laws § 21-3-2.

II. SOUTH DAKOTA UM/UIM LEGAL FRAMEWORK

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

South Dakota requires every motor vehicle liability policy issued in this state to include uninsured motorist coverage at not less than $25,000 per person and $50,000 per accident for bodily injury. Coverage applies to the named insured, resident family members, and occupants of the insured vehicle. Hit-and-run vehicles are treated as uninsured motorists under South Dakota law. Note that UM/UIM coverage under § 58-11-9 provides bodily injury protection only — no vehicle damage component is mandated by statute.

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. Anti-Stacking Rule — S.D.C.L. § 58-11-9.9

South Dakota prohibits inter-policy stacking: UIM limits from multiple vehicles on the same policy may not be added together to increase the maximum benefit available for a single accident, regardless of the number of vehicles insured, policies in force, or persons covered. Intra-policy stacking is similarly restricted. Any policy language attempting to permit stacking beyond statutory authorization is superseded by § 58-11-9.9.

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

South Dakota applies a modified comparative fault standard with a 50% bar: a claimant whose fault equals or exceeds 50% of the total fault is barred from recovery. Where a claimant is less than 50% at fault, damages are reduced proportionally. 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)
☐ The tortfeasor's liability limits are below South Dakota's statutory minimum of $25,000/$50,000

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):

The tortfeasor qualifies as an "underinsured motorist" under S.D.C.L. § 58-11-9.5 because:

☐ 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 $[________________________________]

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 proper lookout as required by S.D.C.L. § 32-25-1 et seq.
☐ 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 uniformly establish that the Tortfeasor was solely responsible for this collision. There are no facts supporting a comparative fault argument against our client, and any attempt to assert one would be pretextual and in bad faith.

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

South Dakota does not cap non-economic damages in personal injury cases. 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 uncompensated damages of $[________________________________] vastly exceed the available UIM limits. This is a clear policy limits case under South Dakota law.

B. Formal Demand

We hereby demand payment of the full UIM/UM policy limits of $[________________________________] within [____] calendar days of the date of this letter.

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). An insurer's unreasonable delay in investigating, evaluating, or paying a valid claim independently constitutes bad faith. Champion v. United States Fidelity & Guaranty Co., 399 N.W.2d 320, 322 (S.D. 1987).

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

The Company must not engage in the following unfair claims practices, each of which independently triggers regulatory and civil liability:

☐ Failing to acknowledge and begin investigation within 30 days of receiving notice of this claim
☐ Misrepresenting policy provisions relating to UM/UIM coverage
☐ Refusing to pay a valid claim without conducting a reasonable investigation
☐ Failing to provide a written explanation for any denial or compromise offer
☐ Compelling litigation by offering substantially less than the claim's documented value
☐ Attempting to settle for less than a reasonable person would expect to be entitled to receive

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

If the Company refuses to pay the full UM/UIM benefits owed and that refusal is vexatious or without reasonable cause, South Dakota courts will award our client a reasonable attorney's fee as part of costs. Brooks v. Milbank Ins. Co., 2000 SD 80. Given the clarity of coverage and liability here, any refusal to pay policy limits would be vexatious.

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

South Dakota imposes no statutory cap on punitive damages. Where an insurer acts with malice, oppression, or fraud in denying a legitimate claim, punitive damages may be awarded by the jury in addition to compensatory damages. Isaac, 522 N.W.2d at 761 (affirming $20,000 punitive award against State Farm). The Company's exposure in this regard is significant and uncapped.

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 full UM/UIM policy limits 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 80: 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