Uninsured (UM) and Underinsured Motorist (UIM) Car Accidents

North Carolina law requires drivers to carry automobile insurance; unfortunately, there are many drivers out there who do not comply. Furthermore, there are many drivers who buy the minimum limits of liability allowed by the law which are rarely enough in the event of a serious injury. The safeguards against such drivers is your insurance policy’s Uninsured and Underinsured motorist insurance. These types of insurance allow a responsible driver to self-insure themselves in the event of an accident involving a driver with inadequate liability insurance. However, insurance agents often do not adequately explain to their clients how these coverages work and after a car accident it may be necessary to have an experienced attorney navigate the injured party through the ordeal of making an uninsured or underinsured motorist claim.

Uninsured Motorist Coverage (UM)

Uninsured motorist coverage, also known simply as UM, works exactly how it sounds, if the insured driver is in an accident with another driver who is at fault but does not carry insurance, the insured drivers uninsured motorist coverage kicks in to cover injuries and damages to the insured and the insured’s property up to the policy’s limit. Automobile insurance policies in North Carolina are required to include uninsured motorist insurance. This coverage usually matches the limits in an insured’s bodily injury and property damage coverage. For example:

If driver A hits driver B and is completely at fault, but, driver A has no automobile insurance, driver B will file a claim to his own policy for coverage of his injuries. If driver B has substantial Uninsured Motorist coverage he will be able to essentially self-insure against drivers without insurance like driver A. Although this coverage can provide protection against irresponsible, uninsured drivers, it is only as effective as the coverage amount which is why it is very important to carry the highest amount of coverage you can afford.

Underinsured Motorist Coverage (UIM)

Underinsured motorist insurance, also known simply as UIM, is not required to be included in an automobile insurance policy but that should not discount the importance of having this option included in a policy. This is the coverage that helps you self-insure against those drivers with inadequate insurance coverage, meaning when a party’s injuries exceed what is available from the at fault driver’s policy. Additionally, this coverage is usually inexpensive and therefore can potentially provide great value. This coverage is more nuanced than the Uninsured Motorist Coverage discussed above as there are more steps to go through to use this type of insurance.

First and foremost, the at-fault vehicle must be deemed underinsured. For this to be the case, the amount of liability coverage of the at-fault vehicle must be less than the injured party’s available Underinsured Motorist insurance coverage. Once a vehicle has been classified as underinsured, the analysis then turns to how far the injured party’s damages exceed the available liability insurance. So in the simplest of situations Underinsured Motorist insurance would work as follows:

If driver A hits driver B and driver A is completely at fault but carries the state minimum liability insurance, there may not be enough coverage from driver A’s insurer to cover all of the injuries to driver B. Assuming driver B is responsible and carries more than the state minimum insurance driver B’s Underinsured Motorist Coverage should be greater than driver A’s liability insurance, making driver A’s vehicle an Underinsured Vehicle. Thus, driver B’s Underinsured motorist coverage should kick in to help subsidize driver B’s injuries.

It is important to note that what is paid from the at-fault party’s policy will be used as a credit against the amount owed by the Underinsured Motorist carrier, meaning in the above situation, driver B’s Underinsured Motorist carrier would only be exposed to the difference between the liability limits of driver A and the Underinsured Motorist limits of driver B. For example assume the following:

Driver A’s limit of liability is $30,000, the state minimum coverage, driver B’s Underinsured Motorist coverage is $100,000, and driver B’s injuries are $130,000. Although it would seem that there is $130,000 available for driver B’s injuries, this is not the case. After driver A’s insurance policy pays its limit of $30,000, driver B’s Underinsured Motorist policy will receive a credit of the same amount towards the Underinsured Motorist coverage ($100,000-$30,000 = $70,000). Therefore, the Underinsured Motorist carrier will only have to pay out $70,000. This $70,000, combined with the $30,000 dollars from driver A’s policy equals the policy limit of driver B’s Underinsured Motorist coverage ($100,000). Thus, there would be $30,000 of the original $130,000 in injuries for which there may not be insurance for.

As with Uninsured Motorist coverage, Underinsured Motorist Coverage will only be helpful if there is an adequate amount of coverage. It is important to buy the most amount of coverage possible to essentially self-insure against those who are less responsible.

If you, or someone you know has recently been injured in a vehicle accident and is trying to navigate the complicated world of insurance policies and coverage give us a call for a free consultation at 704.370.2828. Our team of attorneys and staff have years of experience and have handled hundreds of cases involving all kinds of accidents and insurance coverage. Put our experience and skills to work on your case to ensure you receive all of the compensation you are entitled to. Contact us now.

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