What Is a Policy-Limits Demand in Utah, and When Does It Make Sense?
Short answer: A policy-limits demand is a written offer to settle an injury claim for the full amount of the at-fault driver's liability coverage. It makes sense when fault is reasonably clear and the injuries plainly exceed the policy. It carries weight because a liability insurer owes its own policyholder a duty to act in good faith on settlement offers within the limits, and since May 6, 2026, Utah law spells out what the demand must contain and gives the insurer at least 30 days to answer.
Why the at-fault driver's insurer cares about its limits
When someone injures you in a crash, their liability insurer controls the defense of the claim against them and decides whether to settle it. The driver has handed that decision to the insurance company. If the company turns down a reasonable chance to settle within the policy limits, and a jury later returns a verdict above those limits, the driver can be personally exposed to the difference.
The Utah Supreme Court addressed that conflict in Ammerman v. Farmers Insurance Exchange, 19 Utah 2d 261, 430 P.2d 576 (1967). The court said the insurer's obligation to defend "imposes upon it a fiduciary responsibility," and that when an offer below the limits would relieve the insured of liability, "a conflict of interests may exist." The standard it adopted: the insurer "must act in good faith and be as zealous in protecting the interests of its insured as it would in looking after its own."
Later, in Beck v. Farmers Insurance Exchange, 701 P.2d 795 (Utah 1985), the court described the same third-party situation: the insurer "controls the disposition of claims against its insured," and its failure to act in good faith "exposes its insured to a judgment and personal liability in excess of the policy limits."
What the duty does not require
Ammerman is also clear about the limits of that duty. The court said it is not reasonable to require an insurer to accept "any offer below the policy limits; regardless of circumstances, and however questionable the issues of liability and damage may be." The company has "a reasonable latitude of discretion" to decide whether to accept a settlement, and whether it met its duty "may depend upon various considerations including the certainty or uncertainty as to the issues of liability, injuries, and damages." The court specifically cautioned against equating bad faith with a mere failure to accept an offer below the limits.
In practice, that means a limits demand only has force when the file shows why a reasonable insurer, looking out for its own driver, should pay. A demand sent on disputed fault or unfinished treatment is easy to decline.
Who holds the rights if the insurer gets it wrong
The duty runs to the insurer's own policyholder, not to you. In Ammerman, the injured person had won a judgment larger than the policy and then sued the insurer himself. The court held he could not take the insured's bad-faith claim for himself merely because he was the insured's judgment creditor, and it described the bad-faith claim as "a separate cause of action for a wrong done to the insured." How a claim beyond the limits is ultimately pursued depends on the facts and is something to discuss with a lawyer, not assume.
What Utah's 2026 statute requires
S.B. 74 (2026 General Session), effective May 6, 2026, enacted Utah Code 31A-22-323 for third-party motor vehicle liability claims. Its key parts:
| Subsection | What it says |
|---|---|
| (1)(a)(i) | A limits demand must include reasonably sufficient information for a reasonable carrier to evaluate the claim: a description of the incident, injuries, liability basis and damages, copies of the medical records and bills supporting the medical damages, and information supporting other economic damages. |
| (1)(a)(ii) | The carrier must be given no less than 30 days to accept or reject. |
| (1)(b) | Expert reports and attorney work product are not required. |
| (2) | If the carrier declines and the claimant or the claimant's lawyer chooses to write directly to an unrepresented insured before suing, the letter has required contents, a copy goes to the carrier, and unless necessary to preserve the claimant's rights, suit waits 45 days after the insured receives it. |
| (3) | Within 30 days of getting that copy, the carrier must tell its insured in writing whether it will defend and whether it will indemnify beyond the policy limits. |
| (4)(b), (5) | Following the procedure does not shield a carrier whose substantive settlement decisions were unreasonable, and the statute does not alter the insurer's duty of good faith to its insured or the insured's remedies for failure to accept a reasonable settlement within limits. |
| (6)(a) | A claimant who does not follow subsections (1) or (2) can still sue, but a court may consider the failure in deciding whether the demand was reasonable. |
That last point is why the contents of the demand matter. A limits demand that leaves out records, or gives the carrier less than 30 days, can be used later to argue that the demand itself was not reasonable.
When a limits demand makes sense
- The losses clearly exceed the coverage. Utah's minimum bodily injury limit for policies issued or renewed on or after January 1, 2025 is $30,000 per person and $65,000 per accident (Utah Code 31A-22-304). Some drivers carry only the minimum, and a hospital stay, surgery or months of lost work can pass $30,000 quickly.
- Fault is reasonably clear. A rear-end collision or a documented red-light violation supports a limits demand far better than a disputed lane change.
- The medical picture is settled enough to document. The carrier must be able to evaluate the claim from what you send.
- The limits are known. A demand for "your limits" without knowing the figure is harder to evaluate for both sides.
When it usually does not
If the policy is large compared to the injuries, a limits demand is simply an overreach, and a carrier can decline it without much risk. The same is true when liability is genuinely disputed or treatment is ongoing. In those cases a regular demand, built around the actual damages, is the better tool. Our page on how adjusters value claims explains how the carrier will look at it.
Find every policy before you demand one
If accepted, a limits demand closes out the at-fault driver's liability coverage. Before sending one, identify what else is there. Your own underinsured motorist coverage is added to, "combined with, or stacked upon" the at-fault driver's liability coverage rather than offset by it (Utah Code 31A-22-305.3(3)(k)(ii)). Other drivers, vehicle owners, employers and umbrella policies may also be involved. See stacking insurance coverage in Utah and underinsured motorist claims.
How we handle limits demands
At West Injury Law, an attorney reviews every case at intake and approves every demand, including any limits demand, before it goes out. Once you sign, the firm handles all communication with the insurers. A tender of the full limits is one of the few situations in which the firm generally recommends settling early; the other is a case whose value could never come close to the limits. Either way, the decision is yours, and if you want to settle, the firm settles. See how we negotiate with insurance companies.
Common questions
How long does the insurer have to answer a policy-limits demand in Utah?
For a third-party motor vehicle liability claim, the demand must give the carrier no less than 30 days (31A-22-323(1)(a)(ii)).
If the insurer refuses a limits demand, is that automatically bad faith?
No. Ammerman rejected that idea. Under the 2026 statute, the question is still whether the carrier's substantive settlement decisions were unreasonable under the circumstances (31A-22-323(4)(b)(i)). For bad faith by your own insurer, see insurance bad faith in Utah.
Can I collect more than the policy from the driver personally?
A judgment can exceed the policy, but whether it can be collected from the driver depends on the driver's assets and circumstances. That is part of why other coverage matters.
Should I send a limits demand myself?
The statute applies to a demand sent by "a claimant or claimant's legal counsel," so you can. Because a defective demand can be held against its reasonableness later, it is worth having it reviewed first.
Talk to our legal team
If your injuries look larger than the other driver's policy, call (801) 921-5134 or send us your case. You pay nothing up front, and no attorney fees unless we win.
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