UM/UIM Demand Letter - Vermont

UM/UIM (UNINSURED/UNDERINSURED MOTORIST) DEMAND LETTER

State of Vermont

[LAW FIRM LETTERHEAD]

SETTLEMENT COMMUNICATION — FOR RESOLUTION PURPOSES ONLY
V.R.E. 408 MAY LIMIT ADMISSIBILITY FOR SPECIFIED PURPOSES

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

Date: [__/__/____]

[INSURANCE COMPANY NAME]
[________________________________]
[________________________________]
[City], [State] [Zip]

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

Dear [________________________________]:

I. INTRODUCTION AND NATURE OF DEMAND

This firm represents [________________________________] ("our client") in connection with a claim for [UNINSURED / UNDERINSURED] motorist benefits under Vermont law arising from a motor vehicle collision on [__/__/____] in [________________________________], Vermont. This letter constitutes a formal demand for payment of the full UM/UIM policy limits of $[________________________________].

Our client's damages substantially exceed the available coverage. Vermont's UM/UIM statute, 23 V.S.A. § 941, protects insureds who are legally entitled to recover damages from owners or operators of uninsured, underinsured, or hit-and-run motor vehicles. [CARRIER NAME] ("the Company") also owes the contractual duty of good faith and fair dealing recognized in Bushey v. Allstate Insurance Co., 164 Vt. 399, 670 A.2d 807 (1995).

II. VERMONT UM/UIM LAW

A. Mandatory UM/UIM Coverage Under 23 V.S.A. § 941

Vermont law mandates UM/UIM coverage in automobile liability policies delivered or issued for delivery in Vermont with respect to vehicles registered or principally garaged in Vermont. 23 V.S.A. § 941 requires:

• Minimum limits: $50,000 per person / $100,000 per accident
• Coverage matching: If the policy's liability limits exceed $50,000/$100,000, UM/UIM limits must equal the liability limits unless the policyholder otherwise directs
• Hit-and-run coverage: Section 941(a) expressly includes hit-and-run motor vehicles; the statute does not impose a physical-contact requirement
• Interpolicy stacking: Policy terms that prevent stacking coverage under multiple applicable policies violate § 941. Policies may establish primary and excess priority without eliminating the insured's stacking rights. Humphrey v. Vermont Mutual Automobile Insurance Co., 2009 VT 53, ¶¶ 9-10.
• Reimbursement: Under § 941(e), and subject to the coverage terms, an insurer that pays UM/UIM benefits is entitled to proceeds recovered from a legally responsible person, less a fair share of reasonable recovery expenses.

B. Coverage Analysis Under Vermont Law

C. Coverage Trigger

For Uninsured Motorist (UM) Claims:

The tortfeasor qualifies as an "uninsured motorist" under 23 V.S.A. § 941 because (check all that apply):

☐ The tortfeasor carried no liability insurance at the time of the collision
☐ The tortfeasor's liability insurer is insolvent
☐ The tortfeasor fled the scene and cannot be identified (hit-and-run)
☐ [OTHER POLICY-BASED OR STATUTORY BASIS: __________________________________]

For Underinsured Motorist (UIM) Claims:

Under 23 V.S.A. § 941(f), the tortfeasor qualifies as underinsured to the extent that:

☐ The liability limits applicable at the time of the crash, $[________________________________], are less than our client's applicable UM/UIM limits of $[________________________________]
☐ Payments to other injured persons reduced the liability insurance available to our client to $[________________________________], an amount below our client's applicable UM/UIM limits of $[________________________________]

Damages exceeding the tortfeasor's liability limits do not, by themselves, satisfy Vermont's statutory limits-to-limits definition. Any exhaustion or settlement requirement must also be evaluated under the applicable policy and current Vermont law.

III. THE COLLISION AND LIABILITY

A. Facts of the Collision

On [__/__/____], at approximately [____]:00 [AM/PM], our client was [________________________________] at or near [________________________________], [________________________________], Vermont.

[DESCRIBE THE COLLISION IN DETAIL — roadway conditions, weather, vehicle positions, point of impact, post-impact movement. Note any Vermont-specific conditions: icy roads, limited visibility due to snowfall, rural road characteristics, wildlife-related evasion, etc.]

B. Tortfeasor's Negligence

The tortfeasor, [________________________________], was negligent under Vermont law in the following respects:

☐ Failure to maintain proper lookout
☐ Failure to yield right-of-way
☐ Following too closely (23 V.S.A. § 1039)
☐ Excessive speed for conditions (23 V.S.A. § 1081)
☐ Driving left of the lawful roadway position (23 V.S.A. § 1031)
☐ Distracted driving / handheld portable electronic device use (23 V.S.A. § 1095b)
☐ Running red light or stop sign
☐ Improper passing
☐ Driving under the influence of alcohol or drugs (23 V.S.A. § 1201)
☐ Failure to control speed on wet/icy/snowy Vermont roadway
☐ [________________________________]

C. Evidence of Liability

1. Law Enforcement Report
[________________________________] Police Department / Vermont State Police Crash Report (Report No. [________________________________]), dated [__/__/____]. The investigating officer determined [________________________________].

2. Witness Statements
[____] independent witnesses observed the collision, including: [________________________________].

3. Physical Evidence
Vehicle damage patterns, skid marks, debris field, and point of impact establish [________________________________].

4. Electronic Data
☐ Event data recorder ("black box") download — [DESCRIBE FINDINGS]
☐ Traffic / business surveillance camera footage
☐ Cell phone records confirming distracted driving

5. Expert Analysis
☐ [________________________________], accident reconstruction expert, has concluded: [________________________________].

D. Comparative Fault Under Vermont Law

Vermont follows modified comparative negligence under 12 V.S.A. § 1036. A claimant may recover when the claimant's negligence is not greater than the combined causal negligence of the defendant or defendants, so a claimant at exactly 50% may recover a proportionately reduced award; recovery is barred only above 50%. Our client bears [____]% comparative negligence, if any, for the following reason: [________________________________].

[IF CLIENT BEARS SOME FAULT: Even accepting [CARRIER]'s assertion that our client was [____]% at fault, our client's net recoverable damages remain $[________________________________] — well above the UIM policy limits.]

IV. OUR CLIENT'S INJURIES AND TREATMENT

A. Injury Summary

As a direct and proximate result of this collision, our client sustained the following injuries:

Primary Injuries:

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

Secondary / Consequential Injuries:

• [________________________________]
• [________________________________]

B. Treatment Timeline

C. Current Condition and Prognosis

[DESCRIBE CURRENT CONDITION, ONGOING SYMPTOMS, AND PROGNOSIS AS PROVIDED BY TREATING PHYSICIANS AND/OR EXPERT WITNESSES]

D. Permanent Impairment

V. DAMAGES

A. Medical Expenses

Past Medical Expenses:

Future Medical Expenses (Present Value):

B. Lost Income

Past Lost Income:

Our client was unable to work from [__/__/____] to [__/__/____], a period of [____] weeks, resulting in lost wages/income of $[________________________________].

Employer / Income Documentation: [________________________________]

Future Lost Earning Capacity:

As a result of permanent impairment, our client's future earning capacity has been diminished. Present value of lost earning capacity: $[________________________________].

Basis for calculation: [________________________________]

C. Pain and Suffering / Non-Economic Damages

Subject to proof and applicable law, our client seeks compensation for:

• Physical pain endured from the date of the collision through [__/__/____] and continuing
• Emotional distress and mental anguish
• Loss of enjoyment of life and recreational activities
• Loss of consortium (if applicable): [________________________________]
• Disfigurement: [________________________________]

Estimated non-economic damages: $[________________________________]

D. Potential Prejudgment Interest

If prejudgment interest is legally recoverable, 9 V.S.A. § 41a(a) supplies a 12% annual statutory rate. Interest is awarded as of right when damages are liquidated or reasonably certain; when damages are not readily determinable, an award may be discretionary to avoid injustice. Epsom v. Crandall, 2019 VT 74, ¶ 38. Counsel must determine entitlement, the proper accrual date, and the recoverable amount for this claim. Estimated interest, if recoverable: $[________________________________].

E. Damages Summary

VI. TORTFEASOR'S LIABILITY COVERAGE AND EXHAUSTION

A. Status of Third-Party Claim

☐ We have reached a settlement with tortfeasor [________________________________]'s liability carrier, [________________________________], for the policy limits of $[________________________________]. A copy of the settlement agreement / release is [ENCLOSED / WILL BE PROVIDED UPON REQUEST].

☐ We are in the process of settling with the tortfeasor's carrier and will provide prompt notice before execution of any release.

☐ The tortfeasor had no liability insurance. [CARRIER] has been provided with proof of the tortfeasor's uninsured status.

B. Consent to Settle / Subrogation

To preserve all contractual and statutory rights, we hereby give notice of the proposed settlement and request [CARRIER]'s written consent to settle, to the extent the policy requires consent.

Please respond to this consent request within [____] calendar days.

Per 23 V.S.A. § 941(e), we acknowledge [CARRIER]'s reimbursement rights, subject to the coverage terms and the statutory deduction for a fair share of reasonable recovery expenses. Our client will cooperate in preserving those rights.

VII. DEMAND FOR UM/UIM BENEFITS

A. Calculation of UIM Benefits Due

The benefits demanded should not exceed the lesser of uncompensated damages and net available UIM coverage. Under Humphrey, the liability payment offsets total stacked UM/UIM coverage; policy language may allocate that offset between primary and excess insurers. 2009 VT 53, ¶¶ 15, 21.

B. Policy Limits Demand

We hereby demand payment of the full UM/UIM policy limits of $[________________________________].

Our client's uncompensated damages of $[________________________________] exceed the net available UM/UIM coverage of $[________________________________] after the liability offset. Subject to confirmation of all applicable policies, limits, priority provisions, prior payments, and defenses, this is a policy-limits demand.

VIII. VERMONT BAD FAITH WARNING

[CARRIER] owes our client — its own insured — the duties of good faith and fair dealing under Vermont law. These duties are not merely aspirational; they are legally enforceable.

A. Vermont First-Party Bad Faith Standard

The Vermont Supreme Court established the first-party bad faith standard in Bushey v. Allstate Insurance Co., 164 Vt. 399, 670 A.2d 807 (1995). To prevail on a bad faith claim, our client must show:

1. [CARRIER] had no reasonable basis to deny or delay payment of the UM/UIM claim; and
2. [CARRIER] knew or recklessly disregarded the fact that no reasonable basis existed for the denial or delay.

Where a claim is fairly debatable, an insurer is not liable for bad faith merely because its position is later found mistaken. Bad faith requires more than negligence or sloppy claims handling. Murphy v. Patriot Insurance Co., 2014 VT 96, ¶¶ 17, 24.

B. Statutory Violations — 8 V.S.A. § 4724(9)

Vermont's Insurance Trade Practices Act, 8 V.S.A. § 4724(9), identifies conduct that is prohibited when committed with such frequency as to indicate a business practice, including:

☐ Misrepresenting pertinent policy provisions or coverage terms
☐ Failing to acknowledge and act reasonably promptly on communications
☐ Failing to adopt and implement reasonable investigation standards
☐ Refusing to pay without conducting a reasonable investigation
☐ Failing to affirm or deny coverage within a reasonable time
☐ Not attempting in good faith to effectuate prompt, fair, and equitable settlement where liability is reasonably clear
☐ Failing to provide a reasonable explanation for any denial or inadequate offer

Vermont DFR Fair Claims Practices Regulation I-1979-02 (Revised) generally requires acknowledgment of claim notice within 10 business days. For a first-party claim, the insurer must advise the claimant of acceptance or denial within 15 business days after receipt of properly executed proofs of loss. If more time is needed, the insurer must timely state the reasons for delay and provide follow-up explanations while the investigation remains incomplete, subject to the regulation's stated exceptions.

C. Available Remedies for Bad Faith

Available relief depends on the causes of action proved, the policy, and applicable Vermont law. Contract benefits and damages legally recoverable on a proven bad-faith claim may be sought. Punitive damages require a separate common-law showing of outrageously reprehensible conduct and malice; reckless misconduct must reflect conscious and deliberate disregard of a known, substantial, and intolerable risk, with knowledge that harm was substantially certain. Fly Fish Vermont, Inc. v. Chapin Hill Estates, Inc., 2010 VT 33, ¶¶ 18, 25. Attorney's fees should be requested only when authorized by contract, statute, or a recognized exception to Vermont's American Rule.

Any attempt to deny, unreasonably delay, or grossly undervalue this claim will be met with a bad faith action seeking all available remedies.

IX. ARBITRATION

A. Policy Arbitration Clause

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

[IF APPLICABLE: The policy's arbitration clause provides: "[________________________________]." Arbitration shall be conducted in [________________________________], Vermont pursuant to the policy and applicable Vermont law.]

B. Arbitration Demand

If [CARRIER] fails to accept this demand, consider this letter as formal notice of our intent to invoke the arbitration process under the policy. We request that [CARRIER] identify its selected arbitrator within [____] days of any refusal.

X. RESPONSE DEADLINE AND CONSEQUENCES

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

Consequences of Non-Response or Inadequate Response

If [CARRIER] fails to accept this demand in full by the deadline:

1. Arbitration or litigation may be commenced in the forum authorized by the policy and applicable Vermont law
2. Bad faith action will be filed under Vermont law seeking all remedies described in Section VIII above
3. Regulatory complaint will be filed with:

Vermont Department of Financial Regulation — Insurance Division
89 Main Street, Montpelier, VT 05620-3101
Insurance Consumer Inquiries: (802) 828-3302 or (800) 964-1784
Email: [email protected] | Online complaint portal: dfr.vermont.gov

4. Prejudgment interest, if awarded, will be calculated at the statutory rate under 9 V.S.A. § 41a(a) from the legally applicable accrual date

XI. DOCUMENT PRESERVATION NOTICE

This letter serves as formal notice to preserve all documents and electronically stored information (ESI) relating to this claim, including but not limited to: the complete claim file and all internal correspondence; adjuster notes and activity logs; all reserve history and reserve change documentation; claim handling guidelines and training materials; any communications regarding coverage or valuation; and all expert reports, IME reports, and surveillance materials.

XII. CONCLUSION

Vermont's UM/UIM statute, 23 V.S.A. § 941, was enacted specifically to protect Vermont insureds like our client from the consequences of collisions with uninsured and underinsured drivers. [CARRIER] collected premiums for this protection. The time to honor that promise is now.

Based on the enclosed evidence and calculations, our client's uncompensated damages of $[________________________________] exceed net available UM/UIM coverage of $[________________________________]. We strongly urge [CARRIER] to resolve this matter within the demand period.

Respectfully submitted,

[________________________________]

By: ___________________________________
[________________________________], Esq.
Vermont Bar No. [________________]
[________________________________]
[________________________________], VT [________________]
Tel: [________________________________]
Email: [________________________________]

Counsel for [________________________________]

ENCLOSURES:

• Policy declarations page and UM/UIM endorsement
• Evidence of tortfeasor's insurance status / policy limits
• Vermont State Police / local police crash report
• Medical records and itemized billing (all providers)
• Wage loss documentation
• Photographs of scene, vehicles, and injuries
• Expert reports (attached / to follow)
• Proof of stacking eligibility (if applicable)

CC:

• [CLIENT NAME]
• [TORTFEASOR'S CARRIER] (re: consent to settle and subrogation)

VERMONT UM/UIM LAW — QUICK REFERENCE

SOURCES AND REFERENCES

• 23 V.S.A. § 941 (2025 consolidated text): https://law.justia.com/codes/vermont/title-23/chapter-11/section-941/
• 8 V.S.A. § 4724 (2025 consolidated text): https://law.justia.com/codes/vermont/title-8/chapter-129/section-4724/
• 8 V.S.A. § 4726 (2025 consolidated text; Commissioner enforcement): https://law.justia.com/codes/vermont/title-8/chapter-129/section-4726/
• 12 V.S.A. § 1036 (2025 consolidated text): https://law.justia.com/codes/vermont/title-12/chapter-27/section-1036/
• 9 V.S.A. § 41a (2025 consolidated text): https://law.justia.com/codes/vermont/title-9/chapter-4/section-41a/
• Humphrey v. Vermont Mutual Automobile Insurance Co., 2009 VT 53: https://www.vermontjudiciary.org/sites/default/files/documents/eo2008-173.pdf
• Town of Ira v. Vermont League of Cities and Towns, 2014 VT 115: https://www.vermontjudiciary.org/media/4302
• Murphy v. Patriot Insurance Co., 2014 VT 96: https://www.vermontjudiciary.org/media/4321
• Fly Fish Vermont, Inc. v. Chapin Hill Estates, Inc., 2010 VT 33: https://www.vermontjudiciary.org/sites/default/files/documents/2007-476.pdf
• Epsom v. Crandall, 2019 VT 74: https://www.vermontjudiciary.org/media/11506
• Smith v. Clark's Truck Center, 2009 VT 80 (V.R.E. 408): https://www.vermontjudiciary.org/sites/default/files/documents/2008-381.pdf
• Bushey v. Allstate Insurance Co., 164 Vt. 399, 670 A.2d 807 (1995): https://law.justia.com/cases/vermont/supreme-court/1995/op95-069.html
• Depot Square Pizzeria, LLC v. Department of Taxes, 2017 VT 29 (American Rule): https://www.vermontjudiciary.org/sites/default/files/documents/op15-472.pdf
• Vermont DFR Fair Claims Practices Regulation I-1979-02 (Revised): https://dfr.vermont.gov/reg-bul-ord/fair-claims-practices
• Vermont DFR contact information: https://dfr.vermont.gov/contact-us
• Vermont DFR Insurance Complaints: https://dfr.vermont.gov/consumers/file-complaint/insurance