Underinsured Motorist Coverage and Insurance Company’s Subrogation Rights | Wood v. Nunnery
Standard North Carolina automobile insurance policies contain a number of different types of coverage. One of the more important is underinsured motorist coverage (UIM). The North Carolina Court of Appeals recently decided an important case regarding this type of coverage and decided that a defendant is not entitled to a credit against a judgment for amounts paid by the UIM insurer to the victim.
Underinsured motorist coverage acts as a protection to an insured that has been severely injured by a driver that has a low amount of liability insurance. In North Carolina, the minimum limit of liability insurance that every driver must own is only $30,000.00 for a single victim ($60,000.00 if there are multiple). Consequently, if someone sustains $100,000.00 of personal injury damages in an automobile accident caused by a driver with minimum limits, he or she would be left attempting to collect the additional $70,000.00 of damages from the at-fault driver personally. In most scenarios, this would be impossible. Most folks just don’t have that kind of money in a bank account, and North Carolina’s judgment collection statutes strongly protect debtors. Fortunately, this is where underinsured motorist coverage steps in. If you owned an automobile policy with $100,000.00 of UIM coverage, the other $70,000.00 of damages would be paid by your insurer directly. It is a contractual right that you are entitled to because you likely pay a few extra dollars a month. The coverage is well worth the price.
The case involving UIM coverage recently decided by the Court of Appeals is Wood v. Nunnery. In Nunnery, the plaintiff won a trial verdict of $300,000.00 for bodily injuries. Unfortunately, the defendant’s State Farm policy only provided $30,000.00 of liability coverage. Due to certain workers’ compensation issues (plaintiff was driving a company vehicle), plaintiff was able to recover $202,627.58 from a UIM policy on the vehicle he was driving.
The issue before the Court of Appeals was whether the Defendant was entitled to a credit against the $300,000.00 judgment in the amount of the UIM coverage paid. The Court decided he was not. What this meant was that the plaintiff could theoretically then pursue the defendant individually for the remaining $270,000.00 on the judgment. Unfortunately, it’s not quite that simple. In most situations, the UIM insurer is contractually entitled to subrogate against the Plaintiff’s claim.
As an example of how subrogation works, imagine that you go to trial and win a judgment against a negligent driver for $400,000.00. His insurance company pays their liability limits of $100,000.00. You recover $200,000.00 of UIM money from your insurer. The defendant would still owe $300,000.00. The UIM insurer is, however, subrogated to the first $200,000.00 recovered from the defendant. This means that if $230,000.00 is ultimately recovered from the defendant, the UIM insurer gets $200,000.00 and you recover $30,000.00. You would have ultimately received $330,000.00 on a $400,000.00 judgment.
As should be clear, the world of underinsured motorist coverage can be quite complex. The Raleigh automobile accident attorneys of Maginnis Law are available to assist you and walk you through the process. We offer free consultations and handle all personal injury matters on a contingency basis. This means you do not pay any attorneys’ fees unless and until we make a recovery on your behalf.
To speak with a Raleigh automobile accident lawyer, call Maginnis Law at 919.480.8526 or send a confidential email inquiry via our contact page. Our firm regularly represents residents of the Wake-Durham County area, including: Raleigh, Durham, Chapel Hill, Apex, Cary, Garner, and Wake Forest.