UM/UIM Demand Letter - Tennessee

UM/UIM (UNINSURED/UNDERINSURED MOTORIST) DEMAND LETTER

State of Tennessee

[LAW FIRM LETTERHEAD]

PRIVILEGED AND CONFIDENTIAL
SETTLEMENT COMMUNICATION — FOR COMPROMISE PURPOSES ONLY
PROTECTED UNDER TENN. R. EVID. 408 AND FED. R. EVID. 408
FORMAL DEMAND UNDER TENN. CODE ANN. § 56-7-105

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

Date: [__/__/____]

[INSURANCE_COMPANY_NAME]
[UM_UIM_CLAIMS_DEPARTMENT_ADDRESS]
[CITY], [STATE] [ZIP]

Attention: [ADJUSTER_NAME], [ADJUSTER_TITLE]

Re: UM/UIM POLICY LIMITS DEMAND — TENNESSEE LAW
Insured/Claimant: [________________________________]
Policy Number: [________________________________]
Claim Number: [________________________________]
Date of Loss: [__/__/____]
County of Loss: [________________________________], Tennessee
UM/UIM Policy Limits: $[________________________________]
Tortfeasor: [________________________________]
Tortfeasor's Carrier: [________________________________]
Tortfeasor's Liability Limits: $[________________________________]
Response Deadline: [__/__/____] (60 days from receipt pursuant to Tenn. Code Ann. § 56-7-105)

Dear [ADJUSTER_NAME]:

I. INTRODUCTION AND FORMAL DEMAND

This firm represents [CLIENT_NAME] ("our client") — who is your own insured — in connection with a claim for [uninsured/underinsured] motorist benefits under a policy of insurance issued in Tennessee and governed by Tennessee law. This letter constitutes the formal demand for payment required by Tenn. Code Ann. § 56-7-105 and triggers the 60-day statutory period during which the Company must pay the loss or face a statutory bad-faith penalty of up to 25% of the liability, plus attorney's fees.

We hereby demand payment of the full UM/UIM policy limits of $[UM_UIM_LIMITS] within sixty (60) days of your receipt of this letter.

Under Tennessee's financial responsibility law, Tenn. Code Ann. § 55-12-102, the minimum liability limits in Tennessee are $25,000 per person / $50,000 per accident for bodily injury and $15,000 for property damage. The tortfeasor in this case carried policy limits of $[TORTFEASOR_LIMITS], which are wholly inadequate to compensate our client's damages of $[TOTAL_DAMAGES]. UM/UIM coverage exists under Tennessee law precisely to fill this gap and to protect our client — the Company's own insured — from negligent, uninsured, and underinsured motorists.

II. GOVERNING TENNESSEE UM/UIM LAW

A. Mandatory UM Coverage — Tenn. Code Ann. § 56-7-1201

Tennessee requires that every automobile liability policy delivered, issued for delivery, or renewed in Tennessee include uninsured motorist coverage, unless the named insured has rejected such coverage in writing. Tenn. Code Ann. § 56-7-1201(a)(1). UM coverage protects "persons insured under the policy who are legally entitled to recover compensatory damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death."

Pursuant to Tenn. Code Ann. § 56-7-1201(a)(2), the UM/UIM limits must equal the policy's bodily injury liability limits unless the insured affirmatively selects lower limits (but not below the statutory minimum of $25,000/$50,000 in § 55-12-102).

B. UIM Coverage — "Underinsured" Defined

Under Tennessee law, a tortfeasor is "underinsured" when the tortfeasor's available liability limits are less than the total damages sustained by the UM/UIM insured. Tenn. Code Ann. § 56-7-1201(b)(3). Tennessee is a "difference" or "gap" jurisdiction — meaning UIM coverage pays the difference between the tortfeasor's available limits and the insured's damages, up to the UIM policy limits.

C. Stacking — Tenn. Code Ann. § 56-7-1201(b)(4)

Tennessee permits intra-policy stacking of UM/UIM coverage across multiple vehicles on the same policy, subject to the policy's anti-stacking provisions. Inter-policy stacking is generally allowed unless clearly prohibited by policy language. See Tenn. Code Ann. § 56-7-1201(b)(4).

D. Consent-to-Settle Procedure — Tenn. Code Ann. § 56-7-1206(d)

Tennessee has a unique statutory procedure governing settlements with a tortfeasor's liability carrier when UM/UIM coverage is in play. Under Tenn. Code Ann. § 56-7-1206(d), the liability carrier must provide written notice of any settlement offer to the UM/UIM carrier, and the UM/UIM carrier has thirty (30) days to either (1) consent to the settlement and waive subrogation, or (2) pay the settling insured the amount of the tortfeasor's tender and preserve its subrogation rights against the tortfeasor.

[If applicable:] We hereby formally notify [CARRIER_SHORT_NAME] under Tenn. Code Ann. § 56-7-1206(d) of the pending settlement with [TORTFEASOR_CARRIER] in the amount of $[TORTFEASOR_LIMITS]. The Company has thirty (30) days to either consent or advance the settlement amount and preserve subrogation.

E. Statute of Limitations — Six Years for Contract Claim

Unlike the one-year personal-injury statute of limitations applicable to the tortfeasor, a UM/UIM claim against one's own insurer is a contract action governed by the six-year statute of limitations under Tenn. Code Ann. § 28-3-109. The Tennessee Supreme Court has consistently held that UM claims sound in contract, not tort.

III. POLICY AND COVERAGE ANALYSIS

A. Policy Details

B. Trigger of UM/UIM Coverage

☐ Uninsured Motorist — Tortfeasor had no liability insurance at the time of the collision
☐ Uninsured Motorist — Tortfeasor's carrier has denied coverage (copy of denial letter attached)
☐ Uninsured Motorist — Tortfeasor's carrier is insolvent or in rehabilitation/liquidation
☐ Uninsured Motorist — Hit-and-run driver; identity unknown (see § 56-7-1201(e) for physical-contact requirement)
☐ Underinsured Motorist — Tortfeasor's liability limits of $[TORTFEASOR_LIMITS] are less than our client's total damages of $[TOTAL_DAMAGES]

C. Our Client Is a Covered Person

Our client qualifies as an "insured" under the policy because:

☐ Named insured on the declarations page
☐ Resident relative of the named insured (Tennessee law recognizes household residency)
☐ Permissive user of a covered vehicle
☐ Occupant of a covered vehicle at time of loss
☐ Pedestrian struck by a covered/uninsured vehicle

IV. THE COLLISION AND LIABILITY

A. Facts of the Collision

On [__/__/____] at approximately [TIME], our client was [DESCRIBE_CLIENT_ACTIVITY] at or near [LOCATION_OF_COLLISION] in [COUNTY] County, Tennessee.

[DETAILED_DESCRIPTION_OF_COLLISION]

B. Tortfeasor's Negligence Under Tennessee Law

The tortfeasor violated the following provisions of Tennessee's Rules of the Road (Tenn. Code Ann. Title 55, Chapter 8):

☐ Tenn. Code Ann. § 55-8-103 — Required obedience to traffic laws
☐ Tenn. Code Ann. § 55-8-124 — Following too closely
☐ Tenn. Code Ann. § 55-8-136 — Duty to maintain proper lookout
☐ Tenn. Code Ann. § 55-8-152 — Speeding / unreasonable speed for conditions
☐ Tenn. Code Ann. § 55-10-205 — Reckless driving
☐ Tenn. Code Ann. § 55-10-401 — DUI (driving under the influence)
☐ Tenn. Code Ann. § 55-8-199 — Texting while driving / handheld device
☐ Tenn. Code Ann. § 55-8-109 — Traffic control devices (ran red light / stop sign)
☐ Tenn. Code Ann. § 55-8-123 — Improper lane change

C. Modified Comparative Fault — McIntyre v. Balentine

Under Tennessee's modified comparative fault rule, adopted in McIntyre v. Balentine, 833 S.W.2d 52 (Tenn. 1992), a plaintiff may recover so long as his or her fault is less than 50% (the "49% bar"). Our client bears [no/minimal] comparative fault in this collision. Specifically:

[DESCRIBE_WHY_NO_FAULT_OR_MINIMAL_FAULT]

Even assuming arguendo a minor apportionment of fault to our client, recovery is not barred under Tennessee law, and damages would be reduced proportionally.

D. Evidence of Liability

1. Tennessee Traffic Crash Report
[POLICE_DEPARTMENT] / Tennessee Highway Patrol Traffic Crash Report No. [REPORT_NUMBER]
Reporting Officer: [OFFICER_NAME], Badge [BADGE_NUMBER]
Citations issued to tortfeasor: [CITATIONS]

2. Witness Statements
[NUMBER] independent witnesses observed the collision. Their statements unanimously corroborate our client's account. Witness list attached.

3. Physical Evidence
Point of impact, skid mark analysis, debris field, vehicle damage profile

4. Expert Analysis (if applicable)
Accident reconstructionist [EXPERT_NAME] has concluded: [SUMMARY_OF_OPINION]

V. OUR CLIENT'S INJURIES AND TREATMENT

A. Injury Summary

As a direct and proximate result of this collision, our client sustained the following injuries, supported by imaging and treating-physician diagnoses:

Primary Injuries:

• [PRIMARY_INJURY_1]
• [PRIMARY_INJURY_2]
• [PRIMARY_INJURY_3]

B. Treatment Timeline

C. Current Condition and Prognosis

[DESCRIBE_CURRENT_CONDITION_AND_PROGNOSIS_SIGNED_BY_TREATING_PHYSICIAN]

D. Permanent Impairment Rating

Pursuant to the AMA Guides to the Evaluation of Permanent Impairment (6th Edition), our client's permanent impairment ratings are:

VI. DAMAGES UNDER TENNESSEE LAW

A. Past Medical Expenses

Note: Tennessee follows the collateral source rule for personal-injury recovery, but allows admissibility of reasonable-and-necessary expenses. Billed charges are presented below with the understanding that they are subject to Tennessee's medical expense reduction statutes and case law.

B. Future Medical Expenses (Present Value)

Based on the life care plan prepared by [LIFE_CARE_PLANNER]:

C. Lost Wages and Loss of Earning Capacity

Our client's vocational expert, [VOCATIONAL_EXPERT], has opined that the injuries will [describe impact on earning capacity].

D. Pain, Suffering, and Non-Economic Damages

Tennessee permits recovery for physical pain and suffering, mental anguish, loss of enjoyment of life, and disfigurement. Note that Tennessee's noneconomic damages cap under Tenn. Code Ann. § 29-39-102 ($750,000; $1,000,000 for catastrophic injuries) was held unconstitutional in part by the Tennessee Supreme Court in McClay v. Airport Management Services, LLC, 596 S.W.3d 686 (Tenn. 2020) as applied to certain claims. This issue should be evaluated in light of current case law at the time of suit.

[DESCRIBE_PAIN_AND_SUFFERING_DETAILED]

E. Loss of Consortium (if applicable)

Tennessee recognizes a spouse's claim for loss of consortium as a separate cause of action. See Jackson v. Miller, 776 S.W.2d 115 (Tenn. Ct. App. 1989).

F. Total Damages Summary

VII. UIM GAP CALCULATION

Tennessee is a "difference" state for UIM benefits, meaning the UIM carrier pays the difference between the tortfeasor's available limits and the insured's total damages, up to the UIM limits.

Our client's damages of $[TOTAL_DAMAGES] vastly exceed the combined available coverage (tortfeasor's $[TORTFEASOR_LIMITS] + UIM of $[UIM_LIMITS] = $[TOTAL_COVERAGE]). This is a clear policy limits case.

VIII. BAD FAITH WARNING — TENN. CODE ANN. § 56-7-105

A. The Statutory Framework

Tennessee's bad faith statute, Tenn. Code Ann. § 56-7-105, provides that an insurer that refuses to pay a loss within sixty (60) days after formal demand, where such refusal is not in good faith, is liable for a statutory penalty "not exceeding twenty-five percent (25%) on the liability for the loss," plus consequential losses and attorney's fees.

Four elements are required to recover the statutory penalty:

1. The policy must have become due and payable;
2. A formal demand for payment must have been made (this letter satisfies that requirement);
3. The insured must have waited sixty (60) days after the demand before filing suit (unless refusal occurred before the 60 days expired); and
4. The refusal to pay must not have been in good faith.

B. Formal Demand Is Hereby Made

This letter constitutes the formal written demand for payment required under Tenn. Code Ann. § 56-7-105. The 60-day clock begins upon receipt. Failure to tender the policy limits within 60 days, where such refusal is not in good faith, will expose [CARRIER_SHORT_NAME] to:

• The 25% statutory penalty on the total liability
• Consequential losses caused by the delay
• Attorney's fees incurred to enforce the contract
• Common-law punitive damages under Hodges v. S.C. Toof & Co., 833 S.W.2d 896 (Tenn. 1992) for intentional, fraudulent, malicious, or reckless conduct, proven by clear and convincing evidence

C. Common-Law Bad Faith for Excess Judgment

Independent of the statutory penalty, Tennessee recognizes a common-law bad faith cause of action against an insurer that refuses to settle a claim within policy limits when liability and damages exceed those limits, exposing the insured to an excess judgment. See Johnson v. Tenn. Farmers Mut. Ins. Co., 205 S.W.3d 365 (Tenn. 2006). In Johnson, the Tennessee Supreme Court reinstated a jury verdict of $279,430.92 against Tennessee Farmers for bad-faith failure to settle.

D. Punitive Damages Under Tenn. Code Ann. § 29-39-104

Tennessee's punitive damages cap under Tenn. Code Ann. § 29-39-104 limits punitive awards to the greater of two (2) times compensatory damages or $500,000. Punitive damages require clear and convincing evidence of intentional, fraudulent, malicious, or reckless conduct. The cap does not apply where the defendant intentionally falsified, destroyed, or concealed records to evade liability, or had specific intent to inflict serious physical injury. Note that in Lindenberg v. Jackson National Life Insurance Co., 912 F.3d 348 (6th Cir. 2018), the Sixth Circuit held Tennessee's punitive damages cap unconstitutional under the Tennessee Constitution — this issue remains in flux.

E. TCPA Does Not Apply to Insurance

We acknowledge that the Tennessee Consumer Protection Act (Tenn. Code Ann. § 47-18-101, et seq.) does not apply to insurance claims following the 2011 legislative amendments codified at Tenn. Code Ann. § 56-8-113, which made Title 56 the sole and exclusive statutory remedy for alleged unfair or deceptive acts in connection with a contract of insurance. See also Myint v. Allstate Ins. Co., 970 S.W.2d 920 (Tenn. 1998) (addressing earlier scope of TCPA). Accordingly, we will pursue remedies exclusively under Tenn. Code Ann. §§ 56-7-105 and Tennessee common law, together with regulatory complaint to the Department of Commerce and Insurance.

IX. ARBITRATION CONSIDERATIONS

A. Policy Arbitration Provision

The policy [contains / does not contain] an arbitration clause governing UM/UIM disputes. Tennessee courts generally enforce such clauses under the Tennessee Uniform Arbitration Act, Tenn. Code Ann. § 29-5-301 et seq.

☐ If the policy contains a binding arbitration clause: This letter serves as notice of intent to invoke the arbitration procedure.
☐ If no binding arbitration: We will proceed by filing suit in [COUNTY] County Circuit Court upon expiration of the 60-day demand period.

B. Demand for Arbitration (if applicable)

Pursuant to [Policy Provision], our client hereby demands arbitration of the UM/UIM claim. Our client appoints [ARBITRATOR_NAME] as arbitrator. Please appoint your arbitrator within [NUMBER] days.

X. RESPONSE DEADLINE AND CONSEQUENCES

This formal demand expires at 5:00 p.m. Central Time on [__/__/____] — sixty (60) days from receipt.

Consequences of Non-Payment

If [CARRIER_SHORT_NAME] fails to tender the policy limits within the 60-day period:

1. Suit will be filed in the Circuit Court for [COUNTY] County, Tennessee, seeking:
   - All policy benefits
   - Statutory 25% bad-faith penalty under Tenn. Code Ann. § 56-7-105
   - Consequential damages
   - Attorney's fees
   - Common-law punitive damages under Hodges standard
   - Prejudgment interest at the rate set by Tenn. Code Ann. § 47-14-123

2. Regulatory complaint filed with:
   - Tennessee Department of Commerce and Insurance
   Consumer Insurance Services
   500 James Robertson Parkway, Nashville, TN 37243
   Phone: (615) 741-2218 or (800) 342-4029
   [email protected]
   Insurance Commissioner: [Current Commissioner]

3. Arbitration demand invoked (if applicable under the policy)

4. The Company's refusal will be cited as evidence of bad faith at trial and will be submitted to the jury on the § 56-7-105 penalty.

XI. DOCUMENT PRESERVATION NOTICE

This letter serves as formal notice to preserve all documents and electronically stored information (ESI) related to this claim, including but not limited to:

• The complete claim file, including all versions, drafts, and revisions
• All internal communications (emails, instant messages, voicemails) regarding this claim
• All reserves information and reserve change history
• Adjuster activity logs, diaries, and notes
• Claim handling manuals, training materials, and guidelines applicable in Tennessee
• Underwriting file and any recorded statements
• All medical record reviews, IME reports, and peer reviews
• All communications with defense counsel, SIU, or outside consultants
• Metadata for all electronic documents

Spoliation of any of the foregoing will be vigorously pursued as an independent basis for sanctions and adverse inference under Tennessee law.

XII. CONCLUSION

This claim presents clear liability under Tennessee's modified comparative fault regime, severe and permanent injuries, and damages far exceeding all available coverage. The Company has 60 days under Tenn. Code Ann. § 56-7-105 to pay the policy limits of $[UM_UIM_LIMITS] to its own insured. Anything less will be met with immediate suit, pursuit of the 25% statutory penalty, common-law bad faith under Johnson, and regulatory action before the Tennessee Department of Commerce and Insurance.

Respectfully submitted,

[LAW_FIRM_NAME]

By: _______________________________
[ATTORNEY_NAME], BPR No. [BAR_NUMBER]
[ADDRESS]
[CITY], TN [ZIP]
[PHONE]
[EMAIL]

Counsel for [CLIENT_NAME]

ENCLOSURES:

• Policy declarations page
• UM/UIM coverage form and endorsements
• Tennessee Traffic Crash Report
• Medical records and itemized bills
• Photographs of vehicles and scene
• Lost wage documentation
• Expert reports (liability and life care plan)
• Tortfeasor's policy declarations (or denial letter)
• HIPAA authorization

CC:

• [CLIENT_NAME]
• [TORTFEASOR_CARRIER] (re: consent to settle under Tenn. Code Ann. § 56-7-1206)
• [MORTGAGEE / LIENHOLDER, if applicable]

TENNESSEE UM/UIM LAW QUICK REFERENCE

SOURCES AND REFERENCES

• Tenn. Code Ann. § 56-7-105 — Additional liability upon insurers for bad-faith failure to pay promptly
• Tenn. Code Ann. § 56-7-1201 — UM/UIM coverage requirements
• Tenn. Code Ann. § 56-7-1206 — UM/UIM arbitration and consent-to-settle procedure
• Tenn. Code Ann. § 55-12-102 — Financial Responsibility Law definitions and minimum limits
• Tenn. Code Ann. § 55-12-107 — Minimum insurance policy requirements
• Tenn. Code Ann. § 56-8-104 — Unfair trade practices in insurance
• Tenn. Code Ann. § 56-8-113 — Title 56 as sole remedy; TCPA inapplicable
• Tenn. Code Ann. § 29-39-104 — Punitive damages cap
• Tenn. Code Ann. § 28-3-109 — Six-year statute of limitations for contract actions
• McIntyre v. Balentine, 833 S.W.2d 52 (Tenn. 1992) — Modified comparative fault
• Hodges v. S.C. Toof & Co., 833 S.W.2d 896 (Tenn. 1992) — Punitive damages standard
• Johnson v. Tenn. Farmers Mut. Ins. Co., 205 S.W.3d 365 (Tenn. 2006) — Common-law bad faith
• Myint v. Allstate Ins. Co., 970 S.W.2d 920 (Tenn. 1998) — TCPA/insurance scope (superseded by statute in 2011)
• Lindenberg v. Jackson National Life Ins. Co., 912 F.3d 348 (6th Cir. 2018) — Constitutionality of TN punitive damages cap
• McClay v. Airport Management Services, LLC, 596 S.W.3d 686 (Tenn. 2020) — Noneconomic damages cap
• Tennessee Department of Commerce and Insurance: https://www.tn.gov/commerce/insurance.html