On October 3, 2023, then-Governor Roy Cooper signed into law Senate Bill 452. Passed by the North Carolina General Assembly on September 22, 2023, this legislation changes laws related to claims on uninsured and underinsured motorist coverage.
With these changes comes the potential to enhance prospects for better compensating those injured by careless or reckless drivers.
The move has led to a surge in NC Personal Injury Attorneys looking at new ways to market their firm, including SEO for Personal Injury Law Firms.
The Basics of Uninsured and Underinsured Motorist Coverage:
To understand the impact of these changes, it helps to review the principles behind uninsured and underinsured motorist coverage.
- Uninsured Motorist Coverage: In an automobile insurance policy, uninsured motorist coverage affords benefits to a driver or passenger injured by an at fault motorist who lacks the required insurance to pay or otherwise “financial responsibility” to pay personal injury or property damages caused by that motorist’s negligence. To be considered “uninsured,” the at fault driver must have been driving at the time of the crash without liability insurance or other proof of financial responsibility. According to the Insurance Information Institute, 10.3 percent of North Carolina motorists were uninsured in the year 2022, the latest year for which the Institute studied the number of uninsured motorists.All North Carolina drivers must carry automobile liability insurance with limits specified by the North Carolina General Statutes (more on the limits below). No insurance company may offer an automobile liability policy with limits under these amounts. Those who drive without the required insurance or other proof of financial responsibility in the minimum amounts for personal injuries or property damage face conviction for a Class 1 Misdemeanor.
In a lawsuit involving an uninsured at fault motorist, the uninsured motorist carrier stands as an “unnamed defendant.” This follows the rule that evidence of a party’s ability (or lack thereof) to pay for damages is not admissible to prove liability.
- Underinsured Motorist Coverage: Underinsured motorist coverage (UIM) pays when the tortfeasor has the required automobile liability insurance but lacks enough to pay the damages suffered by the victim. For instance, a personal injury victim suffers lost wages, medical expenses, and other losses of $80,000. A motorist who rear ends the victim by failing to keep a proper lookout has liability insurance in the minimum amounts. Such a driver is not uninsured as the driver does have the minimum required by law. However, the minimum amount on the automobile liability policy falls short of compensating the victim for all of the $80,000 in damages.
- A Claimant for Uninsured and Underinsured Coverage Must Prove Liability of the Tortfeasor. Neither uninsured motorist coverage nor underinsured motorist coverage pay the claimant if the alleged at fault driver lacks liability for injuries. That means a claimant must establish the negligence of the other motorist or motorists and must avoid defenses such as contributory negligence. Generally, North Carolina law bars any and all recovery for a plaintiff found to be negligent and whose negligence is a proximate cause, in any degree, of the injuries. Contributory negligence does not allow an uninsured or underinsured motorist carrier to avoid liability when the tortfeasor had the “last clear chance” to avoid the crash or where the tortfeasor acted with gross negligence, such as in driving while impaired.
- Underinsured and Uninsured Motorist Coverage is Mandatory. North Carolina General Statutes Section 20-279.21 requires motorists to have uninsured motorist coverage for bodily injuries and property damage. Motorists must also purchase underinsured motorist coverage for bodily injuries.
Changing in the Minimum Limits of Uninsured and Underinsured Motorist Coverage:
The minimum limits for uninsured motorist and underinsured motorist coverage equal those for liability coverage. Prior to Senate Bill 452, those limits stood at $30,000 per person and $60,000 per accident for bodily injuries and $30,000 per accident for property damage.
Effective July 1, 2025, those liability limits increase to $50,000, $100,000, and $50,000 respectively. These limits apply to uninsured and underinsured motorist coverage. Thanks to these limits, plaintiffs can make greater demands upon uninsured motorist carriers and especially underinsured motorist carriers.
Eliminating the Credit for Underinsured Motorist Carriers:
Senate Bill 452 increases resources for plaintiffs and their lawyers for higher settlements through more than higher minimum coverage limits.
Under prior North Carolina law, underinsured motorist carriers could offset what they otherwise would owe by payments made by the liability carrier. Consider a wreck in which the at-fault driver crosses the center line and strikes the victim’s car head-on. The victim suffers fractures and undergoes surgery and physical therapy and takes considerable medicine for pain and other injuries. Taking into account pain and suffering along with medical expenses, the victim can present evidence of at least $200,000 in damages.
As in many wrecks where the at fault driver’s liability may be clear, the liability carrier of the at-fault driver tenders (offers) the policy limits ($30,000 under the prior statute). This leaves the tortfeasor “underinsured” by $170,000. Under prior North Carolina General Statute Section 20-279(b)(4), the underinsured carrier could subtract the $30,000 tendered by the liability insurer from the underinsured coverage limits of $30,000. The victim in this example recovers nothing from the underinsured carrier. If the victim purchased underinsured limits of $50,000, then the victim would get up to $20,000 ($50,000-$30,000) from the underinsured carrier.
Notice that this same approach would apply under prior law where multiple tortfeasors each offered the policy limits. Each liability policy involved would count toward the credit allowed to the underinsured carrier. See: https://appellate.nccourts.org/opinions/?c=2&pdf=41069.
Senate Bill 452 eliminates this offset from the underinsured carrier’s policy limits. As a result, such a carrier is responsible for all of the damages up to its policy limits. To illustrate, suppose the victim had purchased underinsured limits of $500,000. The victim suffers serious injuries at the hands of two tortfeasors, and the damages for past and future medical expenses for treatments and therapy, pain and suffering, and lost wages total $750,000. Each at fault driver’s liability carrier tenders the respective policy limits of $50,000. That affords the victim $100,000.
By the new underinsured motorist coverage law, the underinsured carrier for the victim does not get a $100,000 offset. Instead, it stands responsible for the victim’s damages up to $500,000. The victim’s compensation would total $600,000 ($100,000 combined from the liability carriers plus the $500,000 under the underinsured motorist limits).
Changes in Serving the Uninsured Motorist Carrier:
Motor vehicle wreck cases in North Carolina carry a three-year statute of limitations from the date of the wreck. That clock normally stops running as soon as the plaintiff files the lawsuit. Typically, a plaintiff need not serve a defendant before the statute expires, so long as the summons gets renewed within 90 days after the last summons. In such cases, renewed summonses are deemed to have been issued when the initial one was issued. Often, plaintiffs would file the lawsuit on the last day of the limitations period.
Before Senate Bill 452, plaintiffs and their lawyers could not rely on filing suit at the last minute on uninsured motorist carriers. Instead, the plaintiff had to obtain service of the summons and complaint upon the uninsured motorist carrier before the statute expired. This required the filing of lawsuits perhaps months before the three-year statute of limitations expired to allow time to serve the uninsured motorist coverage carrier with the summons and complaint and to account for unsuccessful or defective attempts at service. With less time to actually start the lawsuit came less time to allow conclusion of treatments, evaluation of claims, and negotiation.
The new law relieves plaintiffs of the requirement to obtain good service before the statute of limitations expires. It suffices for the plaintiff to have started the lawsuit no later than three (3) years after the accident.
Notifying the Uninsured Motorist Carrier of the Intent to Sue: North Carolina General Statutes Section 20-279.21 includes a requirement that the claimant notify the uninsured motorist carrier at least 60 days before filing suit of the claimant’s belief that the at fault driver was uninsured. The failure of the claimant to post this notice at least 60 days in advance does not result in dismissal of the lawsuit. However, the uninsured motorist carrier need not answer the lawsuit until 60 days after service of the summons and complaint.
