UM/UIM Demand Letter - Vermont

UM/UIM (UNINSURED/UNDERINSURED MOTORIST) DEMAND LETTER

State of Vermont

[LAW FIRM LETTERHEAD]

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

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, exists for precisely this situation — to protect Vermont insureds when the negligent party lacks adequate coverage. [CARRIER NAME] ("the Company") owes our client not merely a contractual duty to pay, but the duty of good faith and fair dealing that Vermont courts have enforced rigorously since 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 that every automobile liability policy issued or delivered in Vermont include UM/UIM coverage. 23 V.S.A. § 941 requires:

• Minimum limits: $50,000 per person / $100,000 per accident — among the highest statutory minimums in the nation
• Coverage matching: If the policy's liability limits exceed $50,000/$100,000, UM/UIM limits must equal the liability limits unless the policyholder affirmatively directs otherwise
• Hit-and-run coverage: "Unknown motorist" coverage is required, with physical contact generally required for hit-and-run claims
• Stacking: Vermont courts have held that policy provisions purporting to prevent inter-policy stacking violate § 941 and are void and unenforceable. See Humphrey v. Vermont Mutual & State Farm, 2009 VT. An insured with coverage on multiple vehicles may stack the UM/UIM limits across policies.
• Subrogation: Under § 941(e), the UM/UIM insurer is entitled to subrogation against the at-fault party. We will cooperate fully with any subrogation effort.

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 insurer has denied coverage
☐ The tortfeasor's liability insurer is insolvent
☐ The tortfeasor fled the scene and cannot be identified (hit-and-run; physical contact occurred)
☐ The tortfeasor's limits are below Vermont's statutory minimum of $25,000/$50,000 (23 V.S.A. § 800)

For Underinsured Motorist (UIM) Claims:

The tortfeasor qualifies as an "underinsured motorist" because:

☐ The tortfeasor's liability limits of $[________________________________] are insufficient to compensate our client for damages of $[________________________________]
☐ Our client has exhausted (or will exhaust) the tortfeasor's policy limits of $[________________________________]
☐ Our client's net damages exceed all available liability coverage

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)
☐ Failure to maintain lane (23 V.S.A. § 1031)
☐ Distracted driving / handheld device use (23 V.S.A. § 1099b)
☐ 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 pure comparative fault under 12 V.S.A. § 1036. Unlike many states, Vermont places no bar on recovery at any percentage of fault — a plaintiff who is 99% at fault may still recover 1% of damages. Our client bears [____]% comparative fault, 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

Vermont does not cap non-economic damages in personal injury cases. Our client is entitled to 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. Prejudgment Interest Under 9 V.S.A. § 41a

Vermont's prejudgment interest statute, 9 V.S.A. § 41a, provides for interest at the rate of 12% per annum on all damages from the date of the loss (or date of breach). Interest on our client's damages accruing from [__/__/____] through [__/__/____] ([____] months) is approximately $[________________________________].

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

Pursuant to Vermont law and the policy terms, we hereby request [CARRIER]'s written consent to settle with the tortfeasor's liability carrier.

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

Per 23 V.S.A. § 941(e), we acknowledge [CARRIER]'s subrogation rights. Our client will cooperate with any subrogation effort against the tortfeasor. We request that consent not be unreasonably withheld, as any unreasonable refusal to consent may itself constitute bad faith under Vermont law.

VII. DEMAND FOR UM/UIM BENEFITS

A. Calculation of UIM Benefits Due

B. Policy Limits Demand

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

Our client's total damages of $[________________________________] exceed the combined coverage available (tortfeasor's limits of $[________________________________] plus UM/UIM limits of $[________________________________]). This is an unmistakable policy limits case.

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.

A claim is not "fairly debatable" simply because [CARRIER] disagrees with the valuation. Vermont courts will scrutinize whether the Company's position is objectively reasonable — not merely internally consistent.

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

Vermont's Insurance Trade Practices Act, 8 V.S.A. § 4724(9), prohibits unfair claims settlement practices, 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
☐ Compelling our client to litigate by offering substantially less than the claim's value
☐ Failing to provide a reasonable explanation for any denial or inadequate offer

Vermont DFR Fair Claims Practices Regulation I-79-2 further requires acknowledgment of claim notice within 10 business days and acceptance or denial within 15 business days of receipt of completed proofs of loss.

C. Available Remedies for Bad Faith

Under Vermont law, a successful bad faith plaintiff may recover:

• Policy benefits wrongfully withheld
• Consequential damages flowing from the bad faith conduct
• Emotional distress damages
• Punitive damages — Vermont imposes no statutory cap. Under 12 V.S.A. § 1026, punitive damages require proof by clear and convincing evidence of conduct motivated by actual malice or such reckless disregard of our client's rights as to be the functional equivalent of malice. Monahan v. GMAC Mortgage Corp., 2005 VT 110, 893 A.2d 298 (Vt. 2005).
• Attorney's fees — available under 8 V.S.A. § 4726 where the insurer's conduct constitutes an unfair trade practice committed with sufficient frequency to constitute a business practice

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 will be commenced immediately in Vermont Superior Court, [________________________________] Unit
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
Phone: (802) 828-3301 | Online complaint portal: dfr.vermont.gov

4. Prejudgment interest under 9 V.S.A. § 41a at 12% per annum will continue to accrue from the date of loss

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.

Our client's damages of $[________________________________] are clear, well-documented, and unambiguously exceed all available coverage. This is a straightforward policy limits case. 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: https://legislature.vermont.gov/statutes/section/23/011/00941
• 8 V.S.A. § 4724: https://legislature.vermont.gov/statutes/section/08/129/04724
• 8 V.S.A. Chapter 129 (Insurance Trade Practices): https://legislature.vermont.gov/statutes/chapter/08/129
• 12 V.S.A. § 1036 (comparative fault): https://legislature.vermont.gov/statutes/section/12/027/01036
• 9 V.S.A. § 41a (prejudgment interest): https://legislature.vermont.gov/statutes/section/09/004/00041a
• 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
• Monahan v. GMAC Mortgage Corp., 2005 VT 110, 893 A.2d 298: https://law.justia.com/cases/vermont/supreme-court/2005/op2003-508.html
• Humphrey v. Vermont Mutual & State Farm, 2009 VT: https://law.justia.com/cases/vermont/supreme-court/2009/eo2008-173.html
• Vermont DFR Fair Claims Practices Regulation I-79-2: https://dfr.vermont.gov/reg-bul-ord/fair-claims-practices
• Vermont DFR Insurance Division: https://dfr.vermont.gov/insurance
• Vermont DFR Insurance Complaints: https://dfr.vermont.gov/consumers/file-complaint/insurance
• Coverage Criteria — Vermont Auto Insurance Requirements: https://coveragecriteria.com/articles/vermont-auto-insurance-requirements