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Understanding Uninsured Motorist Coverage vs. Underinsured Motorist Coverage in North Carolina

By: Douglas A. Petho

Uninsured motorist coverage or “UM” is coverage which protects you in the event you are struck by a motorist does not have liability insurance. In determining whether or not the “at fault” vehicle is covered by liability insurance, it is first necessary to look for insurance coverage on the vehicle itself. If there is no insurance on the vehicle and the at fault vehicle and the vehicle is owned by the at fault driver, then UM coverage would apply. If however, the at fault driver is not the owner of the at fault vehicle, then he or she may still be covered by the liability policy of any vehicle they own or any vehicles which they are an “insured” under the policy, such as vehicles owned by other family members in the household.

An insured seeking benefits under UM coverage has a duty to cooperate with their insurance carrier. This means that if requested, the insured must provide a recorded statement, submit, if requested, to an independent medical examination if personal injuries are alleged, as well as provide assistance in the investigation of the accident. It is generally understood that a claimant has no such obligations in dealing with a liability insurance carrier as it is an adversarial relationship. Even though the uninsured motorist carrier is” stepping into the shoes” of the nonexistent liability carrier, it receives these benefits.

What is covered under UM coverage?

Personal injuries: UM provides the same compensation that liability insurance would provide for personal injuries up to policy limits. Medical expenses, lost wages and pain and suffering are essentially the same.
Property damage: Property damages are also compensable subject to a $100 UM deductible.

Punitive damages: UM does not cover punitive damages.

Hit-and-run accidents: What compensation is available under UM coverage varies. In a hit-and-run accident were the at fault vehicle cannot be identified, UM coverage will provide compensation for personal injuries only. UM does not provide coverage for property damages in hit-and-run accidents were the at fault vehicle cannot be identified. In addition, UM coverage is subject to the” no contact rule”. Simply stated, if there is no contact between the hit-and-run driver and a claimant’s vehicle and the hit-and-run vehicle cannot be identified, then neither personal injury or property damage will be covered.

Underinsured motorist coverage” UIM” is coverage that applies when the underlying liability coverage available to an at fault motorist is insufficient to cover the damages caused by an accident. UIM coverage is optional and is usually purchased in coverage amounts equal to the liability insurance limits. Like UM coverage, UIM coverage is a first party claim.

What is covered under UIM coverage?

Personal Injuries: UIM provides compensation for personal injuries to the extent the damages exceed the available liability coverage. Damages include compensation for medical expenses, lost wages and pain and suffering.

Punitive damages: may not be recovered if excluded by the policy.

Property damages: UIM provides compensation property damages to the extent not covered by the available liability coverage.