In order to collect uninsured or underinsured motorist coverage in North Carolina, the injured party must exhaust all other limits of liability.
Car accident attorneys in Asheville recognize this means the injured person seeking to tap into their own UIM coverage need to first fully pursue all potential claims against third parties and their insurers.
So for example, let’s say you are injured in crash caused by a drunk driver who carried a $25,000 liability limit. Your medical bills and other losses relating to the crash exceed that amount, and you carry an underinsured motorist coverage policy. In order to collect on your UIM policy, you must first secure a judgment for the $25,000 from the at-fault driver’s insurer. Then, whatever the difference between that $25,000 and the amount of your expenses should be paid by your own insurer per the terms of the policy.
An experienced personal injury attorney can help you determine the best course of action in how to pursue all relevant claims, and at what point you should file a claim for compensation through UIM coverage.
In the recent case of Carter v. Progressive Mountain Ins., the Georgia Supreme Court was tasked with weighing whether the allocation of punitive damages should be considered an exhaustion of all remedies. The court concluded that it did.
According to court records, the plaintiff was injured in a crash in February 2011 after being struck by a drunk driver. The drunk driver’s insurance policy indicated a per person liability limit of $30,000. The plaintiff held an uninsured/underinsured motorist coverage policy allowing for up to $25,000 of coverage per person.
The plaintiff sued the drunk driver and his insurer, providing notice to her own insurer of the litigation. Before the case went to trial, the at-fault driver’s insurer entered into a settlement agreement that would allow the plaintiff to receive the full liability limit of $30,000. That agreement indicated that $1,000 was to be paid in compensatory damages, while the other $29,000 was for punitive damages.
The UIM carrier filed an answer to the lawsuit. The carrier sought judgment on the insured’s claim to find that a $29,000 award of punitive damages with only a $1,000 award of compensatory damages meant the insured failed to exhaust all liability limits, and therefore was precluded from collecting UIM benefits.
The trial court granted a judgment in favor of the insurer, and the appellate court affirmed. However, that ruling was reversed by the state supreme court.
The court noted that punitive damages (intended to punish the defendant) aren’t recoverable under UIM benefit policies – only compensatory damages (or actual economic losses) are recoverable. However, the court found there was no statutory prohibition on damages being allocated for punitive rather than compensatory purposes in order to meet the prerequisite exhaustion of remedies.
The court indicated that the allocation of damages was not important as much as the total amount paid. Here, the insured did collect the full liability amount, even though only a fraction of it was for compensatory damages.
Contact the North Carolina injury lawyers at the Lee Law Offices by calling 800-887-1965.
Carter v. Progressive Mountain Ins., July 11, 2014, Georgia Supreme Court
More Blog Entries:
What to Do When an Insurance Company Calls You after a North Carolina Car Accident, July 16, 2014, Asheville Car Accident Lawyer Blog