People can insure against almost anything, and our attorneys have handled many different types of insurance cases, either against insurance companies or for them. In the interest of time and sanity, however, this is a very limited discussion about insurance claims for traffic accidents, and how automobile (and motorcycle) insurance works in North Carolina.
Every licensed driver in North Carolina must have insurance, and every car driven on the road must be covered by insurance. North Carolina has an interesting way of treating automobile insurance. All the insurance companies use the same basic policy. The North Carolina Rate Bureau writes the policy language. The state requires that all policies have certain types of coverage; and it also sets the maximum amount an insurance company can charge for that coverage. Differences in the policies offered by insurance companies tend to come from how much less they charge than the maximum allowed, as well as how much coverage (and what kinds of coverage) they are willing to offer beyond what the state requires.
Since every driver must be insured, the investigating officer at the scene of an accident gets insurance information from all drivers involved as part of his or her investigation and report procedure. A driver’s insurance information is kept by the Department of Motor Vehicles along with his driving history, and that information can be accessed by the parties to an accident in addition to whatever the investigating officer listed on the accident report.
North Carolina uses a fault based system of insurance for traffic accidents. The negligent (at fault) driver must have liability coverage on his insurance policy. The company providing the liability coverage (the liability carrier) pays for the damages the negligent driver caused to others. For purposes of this discussion only (to avoid be overly wordy), we will call the negligent driver the insured; and we will call the person who was hurt (and/or whose car was damaged) the claimant. (Please note that any number of people can be considered an insured under a personal auto policy in North Carolina - such as, a driver or an occupant of a car - regardless of whether they paid for the coverage or are declared as a named insured under the policy). A claimant can get the name of the liability carrier and the insured’s policy number from the accident report filed by the investigating officer. The claimant can usually open a claim against the insured’s liability carrier either on line or over the phone, using the policy number to verify the insured’s coverage. Insurance companies publish their contact information on the internet, or you can get that through the North Carolina Department of Insurance.
The liability carrier is supposed to pay the claimant for the damages the law requires the insured to pay, but that amount is limited to how much coverage the insured purchased. This can be woefully inadequate as noted later in this discussion about Underinsured Motorist Coverage.
For more information about injury law, see the Negligence heading on this site.
In general, the liability carrier (insurance company) must either pay to repair a faultless claimant’s car or reimburse the claimant for his car’s Fair Market Value (FMV) if it was a total loss. According to North Carolina’s insurance regulations, a car is a total loss if it would cost 75% or more of the FMV to fix it. The insurer also has to pay for a rental car for a reasonable time to fix or replace the claimant’s car; however, the insurance regulations only require reimbursement for a rental car for three days after an offer is made on a total loss, regardless of whether or not the offer is accepted.
If a claimant does not agree with the amount offered for his car, the insurance company must base its final evaluation on the published regional value of the car and the local market value of the car. The carrier is required to provide a copy of its local market survey to the claimant.
The North Carolina Commissioner of Insurance has published regulations regarding how insurance companies must handle total loss claims:
11 NCAC 04 .0418 - TOTAL LOSSES ON MOTOR VEHICLES
This is a link to those regulations:
Bodily Injury Claims
The Liability carrier must also pay for the bodily injuries of a faultless claimant. There is more information on this site (under the heading Negligence) about the damages due. In general, the insurance company must cover the claimant’s medical bills and for the time missed from work due to injuries suffered in the accident. The insurance company also owes the claimant for pain and suffering associated with the injury. The amount the insurance company must pay is limited to the amount of liability coverage purchased by the insured. This is discussed in a little more detail under the heading of Underinsured Motorist Claims below.
An insurance adjuster reviews the claimant’s medical records and bills to determine if the health care treatment he got was reasonable and necessary. Not surprisingly, insurance companies commonly argue that they do not owe a claimant’s medical bills. They also tend to find reasons to minimize the value of a claimant’s pain and suffering. An adjuster will generally make the claimant one, lump-sum settlement offer for the whole bodily injury claim (medical bills, lost wages and pain). If a claimant insists that the offer is not enough, the claimant can either take what is offered or file suit (meaning litigation in the court system).
Uninsured Motorist Claims
Although it is illegal to drive without liability insurance in North Carolina, lots of people do. A driver without liability insurance who causes an accident is referred to as an uninsured motorist. In such cases, a claimant’s own automobile insurance may provide Uninsured Motorist (UM) coverage, which could offer compensation for property damage and/or bodily injuries when there is no available liability coverage.
For property damage claims, Uninsured Motorist (UM) coverage pays everything liability coverage would pay, minus a $100.00 deductible. UM coverage for property damage is not mandatory in North Carolina, however, and many insurance companies will not sell it unless there is also collision coverage on the policy. Collision coverage pays to fix a claimant’s vehicle when he caused the accident (or negligently contributed to causing the accident, which is discussed further under the heading for Negligence).
UM coverage pays bodily injury claims as well. In fact, it covers everything liability coverage would pay, except for punitive damages, which are paid in accidents caused by a driver’s willful and wanton conduct, such as driving while impaired (DWI). As with liability coverage, the amount the insurance company must pay in an uninsured motorist claim is limited to how much coverage the insured purchased for his or her policy. North Carolina requires each personal automobile insurance policy to have uninsured motorist coverage for bodily injuries in an amount equal to the policy’s liability coverage, unless the insured rejects that coverage in a very specific way. The rejection has to be in writing on a selection/rejection form created by the North Carolina Rate Bureau or on a form so like it you can hardly tell the difference.
Underinsured Motorist Claims
The amount of liability coverage each policy must have is so limited that most are woefully inadequate to cover a severe injury. Each policy is only required to provide $30,000.00 in liability coverage per person injured in an accident. Even that per person requirement is capped at a maximum of $60,000.00 to be distributed between every faultless person injured in the accident.
For example, suppose there is a high speed accident caused by one driver on and three passengers are severely injured. If the driver only has the minimum liability coverage required (minimum limits), the most the liability carrier would have to pay the injured passengers collectively would be $60,000.00. So, if each passenger has $50,000.00 in medical bills (which is fairly common these days), the most they could get from the liability carrier would be $20,000.00 apiece. That would true even if they died or had hundreds of thousands of dollars in medical bills. The liability carrier would pay $20,000.00 on each claim and close its file, leaving the passengers to figure out how to pay the rest of their medical bills.
Drivers can purchase Underinsured Motorist (UIM) coverage to pay for damages that exceed the minimum liability coverage required. In fact, North Carolina requires insurance companies to offer more than minimum coverage. Each personal automobile insurance policy must have UIM bodily injury coverage that is at least equal to the policy’s liability coverage unless UIM coverage is specifically rejected in the same way UM coverage is rejected as noted above. Every insurance company in this state must also offer $1,000,000.00 in combined Uninsured/Underinsured Motorist (UM/UIM) coverage to those who wish to purchase it. Surprisingly, it is quite cost effective in comparison to the cost of minimum liability coverage, but most people do not know to ask for it.
Medical Payments Coverage
Most personal automobile insurance policies in North Carolina have Medical Payments (Med Pay) coverage, which reimburses for medical bills incurred due to traffic accidents, regardless of fault. Policies for motorcycles tend not to offer Med Pay coverage. This coverage is not required by the state, and most Med Pay coverage limits how much will be reimbursed from $1,000.00 to $5,000.00 for each person injured in a car involved in an accident.
Although Med Pay covers medical bills regardless of fault, using it will cause the policy holder’s insurance premium to increase if the driver was at fault. But if a driver was not at fault, both the driver and everyone in the car he was driving can access Med Pay to cover their medical bills without causing the policy holder’s premium to increase. In fact, Med Pay covers medical bills that are also reimbursed by liability coverage, often resulting in a double recovery.
We find that people who are entitled to Med Pay very often do not know about it. In fact, some insurance agents discourage using it even if that would not make the premium increase.
Finding Insurance Coverage
The sad truth is that most people in North Carolina who suffer catastrophic injuries in traffic accidents end up discovering that there is not enough automobile insurance available to cover their medical bills alone. Among a myriad of other things, attorneys who handle serious injury cases must be skilled in finding ways to link or stack insurance coverage together to find every bit of coverage available. Our attorneys have done this their entire careers, and they are very skilled at it.
If you have suffered from a serious injury in a traffic accident that was not your fault, talk to one of our attorneys about it before you talk to an insurance adjuster. Unless you do this kind of thing all the time, you do not really know why an adjuster is asking a question. Unfortunately, just telling an adjuster everything you know may not be the smartest thing to do. When you call Draper & Wagner, PC about your claim, you will talk to either Mr. Draper or Mr. Wagner about your claim, not just a paralegal. The call is free.