• North State Auto Law

I Was In An Accident With an Underinsured Driver. What Now?




What can you do if you are involved in a car accident with an uninsured or underinsured driver?


If a car wreck is caused by someone else’s negligence, they are responsible for paying for your damages. But what happens if they don’t have insurance or if they don’t have enough insurance coverage?


Below, we will discuss what you can do if you are in a car accident with an uninsured or underinsured driver, including:

  • When uninsured motorist (UM) coverage applies in NC,

  • When underinsured motorist (UIM) coverage applies in NC,

  • The collision requirement for “phantom vehicles,” and

  • When you can stack UM or UIM policies in NC.


Uninsured and Underinsured Motorists in NC


If you are in a car accident in NC and the at-fault driver does not have auto insurance or does not have enough auto insurance to cover your damages, you may be covered by your uninsured (UM) and underinsured (UIM) insurance policies (or someone else’s UM or UIM policies if you are a Class 1 or Class 2 insured under NC law).


What’s the Difference Between Uninsured and Underinsured Coverage?


These two terms can be confusing, but they are very distinctly different. Does the other driver in the accident have insurance at all? If so, is it enough to cover your damages?


If the answer to the first question is no, then you may have an Uninsured Motorist issue. If the other driver does have insurance, but it isn’t enough coverage, then you may have an Underinsured Motorist issue.


When Does Uninsured Motorist (UM) Coverage Apply?


What is uninsured motorist (UM) coverage?


UM coverage is required under NC law (UIM coverage is not mandatory), and it protects you if you are in a car accident with a driver who 1) does not have insurance, 2) does not carry the minimum liability policy limits required by NC law, or 3) leaves the scene of the accident.


NC law says that to recover damages from your uninsured motorist (UM) policy, you must show that:

  1. You are legally entitled to recover damages,

  2. From the owner or operator of an uninsured vehicle,

  3. Because of bodily injury,

  4. Caused by accident, and

  5. Arising out of the ownership, maintenance, or use of the uninsured vehicle.

Phantom Vehicles and the Collision Requirement


When the at-fault driver leaves the scene of the accident or the owner or operator cannot be identified, this is referred to as a “phantom vehicle.” When a phantom vehicle causes you to crash, N.C. Gen. Stat. § 20-279.21(b) requires a collision for you to recover damages under your uninsured motorist (UM) policy – physical contact between the vehicles.


For example, in Petteway v. South Carolina Ins. Co., the Court of Appeals held that there was no UM coverage when the insured’s vehicle was forced off the road by a “phantom vehicle,” because there was no contact between the vehicles – even though a witness confirmed what had happened.


When Does Underinsured Motorist (UIM) Coverage Apply?


Underinsured motorist (UIM) coverage is not mandatory under NC law, but every driver should carry it.


UIM coverage “kicks in” when the at-fault driver’s insurance policy is not enough to cover your damages. Once all available liability policies have been exhausted, your underinsured motorist (UIM) coverage pays the balance up to your policy limits.


This doesn’t mean that you get the underinsured driver’s policy limits + your UIM policy limits, though. You must subtract the total of all available liability policy limits from your UIM policy limits, and that is the additional amount of coverage available to you or your passengers.


For example:

  • If the at-fault driver has policy limits of 30/60, and your UIM policy limits are 100/300, you have additional UIM coverage of 70/240.

  • If there are two at-fault drivers each with policy limits of 30/60 (a total of 60/120), and your UIM policy limits are 100/300, you have additional UIM coverage of 40/180.

  • If the at-fault driver has policy limits of 100/300, and your UIM policy limits are 100/300, there is no UIM coverage available to you under that policy.

Purchase underinsured motorist coverage, purchase multiple policies for separate vehicles, and purchase limits as high as your budget can stand, because, if you are involved in a severe accident with catastrophic injuries, there is a good chance that the other driver’s policy limits will not cover your damages.


Is “Stacking” of Insurance Policies Allowed in NC?


“Stacking” is when you combine the policy limits of multiple insurance policies (or vehicles covered under a single policy) to increase the maximum amount that you can recover from your uninsured motorist (UM) or underinsured motorist (UIM) coverage.


“Intrapolicy” stacking of uninsured or underinsured policies is not permitted in NC, but “interpolicy” stacking is permitted.


What does that mean?


N.C. Gen. Stat. § 20-279.21(b)(3) and (4) prohibit stacking, or combining, the policy limits applicable to one covered vehicle with the policy limits applicable to another vehicle covered under the same policy. That is called “intrapolicy stacking,” and it is not permitted in NC.


“Interpolicy stacking” is where you combine the policy limits for two or more insurance policies (as opposed to two or more vehicles covered by a single policy), and that is permitted under NC law for both uninsured motorist (UM) and underinsured motorist (UIM) policies.


Identify All Available Insurance Policies


To determine how much coverage is available under multiple insurance policies (interpolicy stacking), we must identify all policies where our client/ the injured party is 1) a named insured in the policy or 2) a Class 1 or Class 2 insured under NC law (whether the policy names them or not).


The injured person is covered as a Class 1 insured if they are:

  • The named insured,

  • The spouse of the named insured (living in the same household), or

  • A relative of the named insured or a relative of the spouse of the named insured (living in the same household).

The injured person is covered as a Class 2 insured if they are a person who uses the insured vehicle with the consent (express or implied) of the named insured or if they are a guest in the insured vehicle. Class 2 insureds are only covered by the policy if the insured vehicle was involved in their injuries.


Stacking Uninsured Motorist (UM) Policies in NC


To find the total amount of coverage available under multiple uninsured motorist (UM) policies, you add the policy limits that are available under each separate policy.


Stacking Underinsured Motorist (UIM) Policies in NC


To find the total amount of coverage available under multiple underinsured motorist (UIM) policies, you add the policy limits that are available under each separate policy, and the difference between the total UIM coverage and the total liability coverage is the total UIM coverage available (See, “When Does Underinsured Motorist (UIM) Cover Apply?”, above).


When the combined policy limits of each separate UIM policy are greater than the total amount of liability coverage available, the difference between the two is the total additional UIM coverage that is available to the injured person.


Questions About Uninsured or Underinsured Drivers in NC?


Your NC car accident lawyer will help you to understand the categories of damages that you are entitled to based on the facts of your case, to demand full and fair compensation in your settlement, and to try your case to a jury if the insurance company refuses to pay.


If you have been in a car wreck that was caused by someone else’s negligence, do not lose hope! Call Northstate Auto Law now at 336-990-0572 or send us a message through our website to talk to an attorney who cares.



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