UM/UIM Demand Letter - Washington

UM/UIM (UNINSURED/UNDERINSURED MOTORIST) DEMAND LETTER

State of Washington

[LAW FIRM LETTERHEAD]

PRIVILEGED AND CONFIDENTIAL
SETTLEMENT COMMUNICATION - FOR RESOLUTION PURPOSES ONLY
PROTECTED UNDER ER 408 AND FED. R. EVID. 408

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

Date: [__/__/____]

[________________________________] (Insurer)
[________________________________]
[________________________________], WA [____]

Attention: [________________________________], UM/UIM Claims Adjuster
Re: UM/UIM POLICY LIMITS DEMAND - WASHINGTON LAW
Insured/Claimant: [________________________________]
Policy Number: [________________________________]
Claim Number: [________________________________]
Date of Loss: [__/__/____]
County of Loss: [________________________________], Washington
UM/UIM Per-Person Limit: $[____]
UM/UIM Per-Accident Limit: $[____]
Tortfeasor: [________________________________]
Tortfeasor's Liability Carrier: [________________________________]
Tortfeasor's Liability Limits: $[____] / $[____]
Response Deadline: [__/__/____] at 5:00 p.m. Pacific Time

Dear [________________________________]:

I. INTRODUCTION AND NATURE OF DEMAND

This firm represents [________________________________] ("our client" or "your insured") in connection with a first-party claim for underinsured motorist ("UIM") benefits (and/or uninsured motorist ("UM") benefits) under a policy of automobile insurance issued by [________________________________] ("the Company"). This claim arises from a motor vehicle collision occurring on [__/__/____] in [________________________________] County, Washington.

This letter constitutes a formal demand for payment of the full UM/UIM per-person policy limits of $[____]. Our client's lawful damages substantially exceed both the tortfeasor's liability limits and your UM/UIM limits. This is the quintessential "policy limits" UIM case that the Washington Legislature had in mind when it enacted RCW 48.22.030 and its mandatory UIM requirement.

Washington courts have repeatedly emphasized that the "purpose of the underinsured motorist statute is to allow an injured party to recover those damages which the injured party would have received had the responsible party been insured with liability limits as broad as the injured party's UIM coverage." Blackburn v. Safeco Ins. Co., 115 Wn.2d 82, 87, 794 P.2d 1259 (1990). That purpose is directly at stake here.

II. GOVERNING WASHINGTON LAW

A. Statutory Framework — RCW 48.22.030

RCW 48.22.030(2) mandates that every automobile liability policy issued or renewed in Washington include coverage for bodily injury and property damage caused by the owners or operators of underinsured motor vehicles, hit-and-run vehicles, and phantom vehicles, unless the named insured rejects the coverage in writing. RCW 48.22.030(1) defines an "underinsured motor vehicle" as one in which:

"the sum of the limits of liability under all bodily injury or property damage liability bonds and insurance policies applicable to a covered person after an accident is less than the applicable damages which the covered person is legally entitled to recover."

Washington's minimum liability limits are $25,000 per person / $50,000 per accident / $10,000 property damage (RCW 46.29.090). The tortfeasor's available limits of $[____] are plainly insufficient to make our client whole, triggering UIM coverage as a matter of law.

B. "Floating Layer" of Coverage

Unlike some states, Washington follows the "floating layer" approach to UIM coverage. Per-accident UIM limits are not reduced dollar-for-dollar by the tortfeasor's liability payment. Rather, UIM coverage operates as excess coverage that "floats" above the tortfeasor's limits, up to the insured's total UIM limit. Elovich v. Nationwide Ins. Co., 104 Wn.2d 543, 553, 707 P.2d 1319 (1985). Accordingly, our client is entitled to recover the full amount of damages in excess of the tortfeasor's liability recovery, up to the UIM per-person limit.

C. UIM Stacking

Washington permits stacking of UIM coverage across multiple vehicles and multiple policies. Anti-stacking clauses are generally invalid where they conflict with the mandate of RCW 48.22.030. Federated Am. Ins. Co. v. Raynes, 88 Wn.2d 439, 563 P.2d 815 (1977). Our analysis reflects [____] vehicles on the named insured's policy/policies, with stacked available limits of $[____].

D. Pure Comparative Fault — RCW 4.22.005

Washington applies pure comparative fault. Under RCW 4.22.005, any contributory fault attributable to the claimant reduces recovery proportionally but does not bar it, regardless of percentage. As set forth below, our client bears zero comparative fault for this collision.

E. The UIM Carrier Stands in the Shoes of the Tortfeasor

In a UIM claim, the UIM insurer is placed in an unusual and quasi-adversarial posture: it "stands in the shoes" of the tortfeasor for purposes of contesting liability and damages, while simultaneously owing its insured the enhanced fiduciary-like duty of good faith recognized in Washington. Ellwein v. Hartford Accident & Indem. Co., 142 Wn.2d 766, 780, 15 P.3d 640 (2001) (overruled on other grounds by Smith v. Safeco Ins. Co., 150 Wn.2d 478, 78 P.3d 1274 (2003)); Tank v. State Farm Fire & Cas. Co., 105 Wn.2d 381, 715 P.2d 1133 (1986). The Company must conduct a full, fair, equitable, and objective investigation and give equal consideration to its insured's interests.

III. COVERAGE VERIFICATION

Coverage Trigger

☐ The tortfeasor was uninsured at time of loss (RCW 48.22.030(1)(a))
☐ The tortfeasor's insurer is insolvent (RCW 48.22.040)
☐ The tortfeasor was a hit-and-run driver (RCW 48.22.030(1)(b))
☐ The tortfeasor operated a "phantom vehicle" (RCW 48.22.030(1)(c))
☐ The tortfeasor's liability limits are less than our client's damages (RCW 48.22.030(1)(d)) — THIS CASE

IV. THE COLLISION AND LIABILITY

A. Facts of the Collision

On [__/__/____] at approximately [__:__] [AM/PM], our client was [________________________________] at or near [________________________________] in [________________________________] County, Washington.

[________________________________ DETAILED NARRATIVE OF COLLISION ________________________________]

B. Tortfeasor's Negligence

The tortfeasor, [________________________________], breached the standard of care owed to other motorists under Washington law in one or more of the following respects:

☐ Failure to yield the right-of-way (RCW 46.61.180 et seq.)
☐ Following too closely (RCW 46.61.145)
☐ Speeding / excessive speed for conditions (RCW 46.61.400)
☐ Failure to obey a traffic control device (RCW 46.61.050)
☐ Improper lane change (RCW 46.61.140)
☐ Inattention / failure to maintain lookout
☐ Distracted driving / use of personal electronic device while driving (RCW 46.61.672)
☐ Driving under the influence (RCW 46.61.502)
☐ Negligent driving, first or second degree (RCW 46.61.5249 / 46.61.525)
☐ Other: [________________________________]

C. Evidence of Liability

1. Washington State Patrol / Local Agency Collision Report
Reporting Agency: [________________________________]
Report Number: [________________________________]
Investigating Officer: [________________________________]
Fault Assignment: [________________________________]

2. Witness Statements
[____] independent witness(es) whose statements are attached and corroborate our client's account.

3. Physical Evidence
Point-of-impact analysis, debris field, skid marks, and vehicle damage patterns all support our liability theory. Photographs are enclosed.

4. Expert Accident Reconstruction (if applicable)
[________________________________] (qualified expert) has concluded: [________________________________].

D. Our Client's Freedom from Comparative Fault

Under RCW 4.22.005, Washington applies pure comparative fault. Our client bears zero percent (0%) fault. Our client was [________________________________] at the time of impact and had no opportunity to avoid the collision caused exclusively by the tortfeasor.

V. OUR CLIENT'S INJURIES AND TREATMENT

A. Injury Summary

As a direct and proximate result of the tortfeasor's negligence, our client sustained:

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

B. Treatment Timeline

C. Current Condition and Prognosis

[________________________________]

D. Permanent Impairment

VI. DAMAGES UNDER WASHINGTON LAW

A. Past Medical Expenses

Note: Washington follows the collateral source rule. Amounts paid by PIP, health insurance, or other collateral sources do not reduce the tortfeasor's (or UIM carrier's) liability. Mazon v. Krafchick, 158 Wn.2d 440 (2006); Cox v. Spangler, 141 Wn.2d 431 (2000). The Company's offset rights are limited to the statutory UIM offset for the tortfeasor's actual liability recovery and to any PIP subrogation properly preserved.

B. Future Medical Expenses (Present Value)

C. Past Lost Earnings

Our client was unable to work from [__/__/____] to [__/__/____], a period of [____] weeks.

Pre-loss earnings: $[____] / [week/month/year]
Total past lost earnings: $[____]

D. Future Lost Earning Capacity (Present Value)

$[____] — supported by [vocational expert / economist] report of [________________________________].

E. Non-Economic Damages (Pain, Suffering, Loss of Enjoyment of Life, Disability)

Washington has no cap on non-economic damages in personal injury cases. Sofie v. Fibreboard Corp., 112 Wn.2d 636, 771 P.2d 711 (1989) (invalidating RCW 4.56.250 on constitutional grounds). Our client's non-economic damages are therefore properly assessed on the evidence, without artificial limit.

[________________________________ DESCRIBE IMPACT ON LIFE, RELATIONSHIPS, ACTIVITIES ________________________________]

F. Loss of Consortium (if applicable)

[________________________________]

G. Damages Summary

VII. SETTLEMENT WITH TORTFEASOR'S LIABILITY CARRIER

A. Settlement Status

Our client ☐ has reached / ☐ is pursuing settlement with [________________________________] (tortfeasor's liability carrier) for the full liability policy limits of $[____].

B. Consent to Settle / Preservation of Subrogation Rights

Pursuant to the policy and Washington law, we hereby provide formal notice of the proposed settlement with the tortfeasor's liability carrier and request written consent within 30 days so the Company may preserve any subrogation rights against the tortfeasor. If the Company wishes to preserve subrogation, it must substitute its own payment for the tortfeasor's settlement in accordance with Hamilton v. Farmers Ins. Co. of Wash., 107 Wn.2d 721, 733 P.2d 213 (1987), and Elovich v. Nationwide, 104 Wn.2d 543 (1985).

A failure to respond timely or to substitute payment will constitute a waiver of subrogation rights under Washington law.

VIII. UIM DEMAND CALCULATION

Because our client's uncompensated damages exceed the available UIM per-person limit, this is a clear policy-limits case. We hereby demand tender of the full UIM per-person limit of $[____].

IX. BAD FAITH WARNING AND IFCA NOTICE TRIGGER

A. Washington Common Law Bad Faith

The duty of good faith in Washington is grounded in statute (RCW 48.01.030) and common law. An insurer's breach of its duty of good faith is a tort that may be committed by unreasonable, frivolous, or unfounded handling of a first-party claim. Anderson v. State Farm Mut. Ins. Co., 101 Wn. App. 323, 329–30 (2000); Smith v. Safeco Ins. Co., 150 Wn.2d 478 (2003). The standard for bad faith is "whether the insurer's breach of the insurance contract was unreasonable, frivolous, or unfounded." Smith, 150 Wn.2d at 484.

Presumed Harm. If bad faith is shown, harm is presumed under Safeco Ins. Co. of Am. v. Butler, 118 Wn.2d 383, 823 P.2d 499 (1992). The Company bears the burden of rebutting the presumption.

Coverage by Estoppel. Where bad faith is established, the Company may be estopped from denying coverage. Butler, 118 Wn.2d at 394.

B. First-Party Bad Faith Applies Even Where Coverage Is Contested

Even if the Company ultimately disputes some portion of damages, Washington law recognizes an independent first-party bad faith cause of action for bad-faith investigation or evaluation, measured by the harm caused by the bad-faith conduct itself. Coventry Associates v. American States Ins. Co., 136 Wn.2d 269, 961 P.2d 933 (1998). Bad faith is actionable regardless of the ultimate coverage determination.

C. IFCA — RCW 48.30.015

The Insurance Fair Conduct Act, RCW 48.30.015, permits any first-party claimant "unreasonably denied a claim for coverage or payment of benefits" to recover:

1. Actual damages sustained;
2. Treble damages — up to three times the actual damages — in the court's discretion;
3. Reasonable attorneys' fees and litigation costs, including expert fees.

A violation of any rule listed in RCW 48.30.015(5) — including WAC 284-30-330, -350, -360, -370, and -380 — independently supports IFCA treble damages and mandatory attorneys' fees.

20-DAY PRE-SUIT NOTICE. Please take notice that if this claim is not resolved, our client intends to serve a 20-day written notice under RCW 48.30.015(8) on the Company and simultaneously on the Washington Office of the Insurance Commissioner, P.O. Box 40256, Olympia, WA 98504-0256, triggering IFCA's treble-damages and fee-shifting remedies.

D. Consumer Protection Act — RCW 19.86

Violations of the WAC claims-handling regulations also give rise to a per se Consumer Protection Act claim. Stevens v. Brink's Home Sec., Inc., 162 Wn.2d 42 (2007); Indus. Indem. Co. of the Nw. v. Kallevig, 114 Wn.2d 907, 923, 792 P.2d 520 (1990). CPA remedies include actual damages, treble damages (capped at $25,000 under RCW 19.86.090), attorneys' fees, and injunctive relief.

E. Cedell — Presumption of No Attorney-Client Privilege

Please be advised that in any first-party bad-faith action arising from this claim, Washington law creates a presumption of no attorney-client privilege over the claim file, including counsel's communications with the adjuster. Cedell v. Farmers Ins. Co. of Wash., 176 Wn.2d 686, 295 P.3d 239 (2013). The Company has an affirmative duty now to preserve all such materials; failure to do so will result in spoliation sanctions.

X. ARBITRATION / LITIGATION

A. Policy Arbitration Clause

The policy ☐ contains ☐ does not contain a UIM arbitration clause. [If applicable: quote clause].

Under RCW 48.18.200 and Condon v. Allstate, 65 Wn. App. 682 (1992), mandatory binding arbitration clauses are enforceable in UIM disputes so long as they do not impinge on IFCA/CPA rights.

B. Demand for Arbitration (Conditional)

If the Company fails to tender policy limits by the deadline below, consider this letter formal notice of our client's intent to invoke arbitration of all issues of liability and damages, and to reserve all statutory and common-law bad-faith claims for judicial action.

XI. DOCUMENT PRESERVATION NOTICE

This letter constitutes formal notice to preserve all documents and electronically stored information related to this claim, including:

• Complete claim file (all versions, drafts, deleted entries)
• Adjuster activity logs, diaries, and notes
• Internal communications (email, Teams, Slack, instant messenger)
• Reserve history and reserve change documentation
• Supervisor approvals and round tables
• All communications with defense counsel, SIU, and any outside vendors
• Claims-handling manuals, guidelines, and training materials
• Telephone recordings and transcripts
• Medical bill reviews, IME reports, and peer reviews
• Underwriting file and policy forms

Per Cedell, the attorney-client privilege is presumptively waived in first-party bad-faith litigation regarding this claim.

XII. RESPONSE DEADLINE

This demand expires at 5:00 p.m. Pacific Time on [__/__/____].

If the Company fails to tender the full UIM per-person limit of $[____] by the deadline, our client will:

1. Serve the formal 20-day IFCA pre-suit notice under RCW 48.30.015(8);
2. Invoke UIM arbitration (if applicable) and/or file suit in the Superior Court of [________________________________] County, Washington;
3. File a formal complaint with the Washington Office of the Insurance Commissioner, P.O. Box 40256, Olympia, WA 98504-0256, 1-800-562-6900, https://www.insurance.wa.gov;
4. Pursue all common-law and statutory bad-faith remedies, including IFCA treble damages, CPA damages, actual damages, attorneys' fees, and coverage by estoppel.

XIII. CONCLUSION

This is a clear policy-limits UIM claim under Washington law. Liability is established. Damages far exceed the available limits. Under Butler, Coventry, and IFCA, the Company is legally and ethically obligated to tender the per-person UIM limit promptly and without squeezing its own insured.

Respectfully submitted,

[LAW FIRM NAME]

By: _______________________________
[ATTORNEY NAME], WSBA No. [____]
[________________________________]
[________________________________], WA [____]
Tel: [____]
Email: [________________________________]

Counsel for [________________________________]

ENCLOSURES:

• Policy declarations page and UM/UIM endorsements
• Washington State Patrol / local collision report
• Photographs of vehicles and scene
• Medical records and itemized billing
• Wage-loss documentation (pay stubs, W-2s, employer verification)
• Expert reports (medical, vocational, economic, reconstruction)
• Witness statements
• Client impact statement

CC:

• [Client]
• [Tortfeasor's liability carrier — re: consent to settle]

Sources and References

• RCW 48.22.030 — UM/UIM coverage statute: https://app.leg.wa.gov/rcw/default.aspx?cite=48.22.030
• RCW 48.22.040 — UIM where liability insurer insolvent: https://app.leg.wa.gov/rcw/default.aspx?cite=48.22.040
• RCW 48.30.015 — Insurance Fair Conduct Act: https://app.leg.wa.gov/rcw/default.aspx?cite=48.30.015
• RCW 48.30.010 — Unfair practices: https://app.leg.wa.gov/rcw/default.aspx?cite=48.30.010
• RCW 4.22.005 — Pure comparative fault: https://app.leg.wa.gov/rcw/default.aspx?cite=4.22.005
• RCW 19.86.090 — Consumer Protection Act remedies: https://app.leg.wa.gov/rcw/default.aspx?cite=19.86.090
• WAC 284-30-330 — Specific unfair claims practices: https://app.leg.wa.gov/wac/default.aspx?cite=284-30-330
• WAC 284-30-370 — Prompt investigation: https://app.leg.wa.gov/wac/default.aspx?cite=284-30-370
• Safeco Ins. Co. v. Butler, 118 Wn.2d 383, 823 P.2d 499 (1992)
• Ellwein v. Hartford Accident & Indem. Co., 142 Wn.2d 766 (2001)
• Smith v. Safeco Ins. Co., 150 Wn.2d 478 (2003)
• Cedell v. Farmers Ins. Co. of Wash., 176 Wn.2d 686 (2013)
• Tank v. State Farm Fire & Cas. Co., 105 Wn.2d 381 (1986)
• Coventry Associates v. American States Ins. Co., 136 Wn.2d 269 (1998)
• Blackburn v. Safeco Ins. Co., 115 Wn.2d 82 (1990)
• Elovich v. Nationwide Ins. Co., 104 Wn.2d 543 (1985)
• Washington Office of the Insurance Commissioner: https://www.insurance.wa.gov
• Washington OIC Consumer Line: 1-800-562-6900
• IFCA Notice Filing Portal: https://www.insurance.wa.gov/laws-rules/insurance-fair-conduct-act-ifca