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NC Supreme Court Weighs in on Uninsured Motorist Coverage

Dan Brian   |  January 13, 2015   |  

When a serious car accident involves only two vehicles, pursuing a settlement is often relatively straightforward. Usually, the injured person makes a claim against the at-fault driver’s car insurance, and the insurance company will either settle the claim according to the terms of the at-fault driver’s policy, or the insurance company will fight the claim in court.

When the accident involves more than one person, however, things can get complicated—especially if one party is uninsured or underinsured. If you have underinsured or uninsured motorist (UIM) coverage, a new change in North Carolina’s law will help you use this coverage more quickly after a complicated auto accident.

Changes Affect Underinsured Motorist Insurance Policies

Many North Carolina drivers carry their own insurance policies just in case they are in an accident with a driver who is uninsured or doesn’t have enough insurance to pay all of the medical bills after an accident. These policies are known as Uninsured or Underinsured Motorist (UIM) policies. UIM policies make up the difference between the at-fault driver’s coverage, and the injured person’s medical bills. If a driver who is injured in an accident has a UIM policy, then he or she can make a claim for against their own UIM policy after the at-fault driver’s insurance policy has been exhausted.

As an example, suppose that you were injured by a negligent driver, and you have $100,000 worth of medical bills. The negligent driver has an insurance policy which is only worth $25,000. If you have UIM coverage, you can make a claim for the difference with your own UIM insurance after the other driver’s policy has paid out. However, you have to collect the $25,000 from the other driver before you can collect the $75,000 from your UIM policy.

However, problems were occurring in North Carolina when people were involved in accidents with more than one person. When multiple people are responsible for an accident, whose insurance coverage must be exhausted before your UIM insurance can be used to pay any remaining bills? Do you have to reach settlements with the insurance company of every responsible person before you can use your UIM insurance? The North Carolina Supreme Court decided this issue once and for all last month.

North Carolina Supreme Court Case

In 2009, a semi-truck driver took a curve too fast and flipped his truck. A volunteer firefighter came upon the scene, and was helping the injured truck driver out of his rig when another vehicle came around the curve, struck the firefighter, and dragged the firefighter under his vehicle, seriously injuring him.

The firefighter sued everyone involved—the truck driver, the owner of the truck, and the second driver who hit him. The truck driver and the truck’s owner had insurance policies providing coverage up to $1 million. The second driver had coverage up to $50,000, and the firefighter had both personal UIM coverage and a work-based UIM policy which totaled  $400,000.

The second driver agreed to settle for the full $50,000. After the second driver settled, the firefighter made a claim against his UIM policy for the remainder of his coverage–$350,000. Soon after, the truck driver and the truck’s owner settled for $850,000.

The firefighter’s UIM company refused to pay out the $350,000, because it argued that the firefighter had already received $900,000 through the other two parties, which was more than the $400,000 policy limit of his UIM coverage.  In addition, the UIM company argued that it was not responsible to pay for underinsured motorist coverage unless all of the defendants’ insurance policies has been exhausted. The UIM company appealed the judge’s order to pay the $350,000 all the way to the North Carolina Supreme Court.

The Supreme Court disagreed, and held that the UIM company was responsible for paying out under the policy once a single defendant’s insurance company had exhausted its policy. The Court reasoned that holding otherwise would require injured people to file against any person who could possibly be related to the accident, no matter how removed they were, before they could receive their UIM payments. This would lead to substantial delay and excessive litigation expenses, which would be devastating to patients who need serious medical treatment.

UIM coverage is triggered upon the exhaustion of the policy limits of a single at-fault motorist.

In rejecting the UIM company’s arguments, the North Carolina Supreme Court said, “…UIM coverage is triggered upon the exhaustion of the policy limits of a single at-fault motorist.” Therefore, when the second driver’s insurance company paid out the full policy amount of $50,000, the UIM company was required to give the firefighter the remaining $350,000.

Ruling Helps North Carolina Drivers

The Supreme Court’s ruling helps drivers injured in multi-vehicle accidents. Now, drivers who have paid for uninsured or underinsured motorist coverage don’t have to track down every party to their accident, and can rest assured that the coverage they paid for will be available to compensate them after an accident.

At Riddle & Brantley, our experienced personal injury attorneys understand complicated auto accidents, and can help you recover the maximum compensation possible regardless of how many parties were involved in your accident.