North Carolina Uninsured/Underinsured Motorist Coverage

Do you know what the most overlooked coverage on your North Carolina car insurance policy is today?  It’s your uninsured/underinsured motorist coverage.  It’s an afterthought, it’s rarely discussed, and it’s the coverage that can be the difference between you being made whole and financial ruin.

I’m sure that you are part of the 87% of drivers that have car insurance.  In fact, you probably have great insurance.

You have collision coverage.

You have comprehensive or other than collision coverage.

You have towing & labor coverage.

You have extended transportation expense or rental reimbursement coverage.

You have repair/replace coverage.

You have uninsured/underinsured motorist coverage.

You are the 87% that decided the privilege of having a driver’s license and owning a car means you are responsible enough to purchase car insurance.

(Want to make sure you aren’t overpaying for car insurance? Check out our article about Top 7 Ways to Save Money on Your North Carolina Car Insurance.)

But here’s the reality according to a study by the Insurance Research Council: 13% of drivers don’t have insurance.  They are uninsured motorist drivers.  They are the ones that you need to worry about.  They are the ones that make uninsured/underinsured motorist coverage something that we have to buy.

The study shows that in North Carolina the number of uninsured drivers is between 9-11%, so we’ll call it 10% for simplicity sake.

Think about that for a moment.

Think about the fact that one out of ten cars on the road in North Carolina are driving around without car insurance.

Think about how many cars are on the road when you drive to work, when you drive your kids to school, pick them up from soccer practice, go to dinner on Saturday night.

10% goes from being a relatively small number to a much larger number in the blink of an eye.

What is uninsured/underinsured motorist coverage?

Let’s first take a look at the formal definition of each one and then we’ll look at what it really means to you.

Uninsured motorist coverage

According to IRMI:

Coverage for bodily injury (BI) and, in some states, property damage (PD) incurred by an insured when an accident is caused by a motorist who is not insured. This coverage allows an insured to collect from his or her insurer as if it provided liability coverage for the negligent third party.

Underinsured motorist coverage

According to IRMI:

Coverage for bodily injury (BI) and, in some states, property damage (PD) incurred by an insured when an accident is caused by a motorist who is not sufficiently insured. Depending on the jurisdiction, UIM coverage may be written with a limits trigger or a damages trigger. With a limits trigger, UIM coverage applies when the limits of liability carried by the other motorist are lower than the UIM limits carried by the insured. With a damages trigger, UIM coverage applies when the insured’s damages are more than the at-fault party’s available limits.

What does uninsured motorist coverage really mean?

Uninsured motorist coverage means you are injured in an accident and/or your vehicle is damaged in an accident by another driver who doesn’t have insurance.

The caveat to know here is that you have to prove to the insurance company that the other drive doesn’t have any insurance.  Where this becomes extremely important is in a hit-and-run situation or what I call phantom damage.

Let’s look at two very real life scenarios that have happened to clients of mine.

(Cue Dragnet)

Scenario 1: Anthony Meyers was driving to the grocery store on Saturday morning on Kildaire Farm Road in Cary.  As he was pulling up to a stop light at the intersection of Kildaire Farm Road and Tryon Road a green, Ford F-150 truck was behind him.  Anthony came to a complete stop, but the Ford F-150 did not.  The truck ends up rear ending him, damaging his passenger side taillight, the rear bumper, and the trunk.  He gets out of the car to talk to the other driver and since both of their cars are drivable they decide to pull into the nearest parking lot to call the police and exchange information (I do not recommend doing this instead you should stay at the scene, call the police, and wait for them to arrive).   As he  pulls into the parking lot he notices in his rearview mirror that the truck is not behind him anymore.  He turns around and he sees the truck speeding down Tryon Road.  He doesn’t have enough time to get out of the parking lot and follow the truck (I do not recommend chasing someone who just left the scene of an accident).   He doesn’t know who the other driver is and most importantly he doesn’t know if the other driver has insurance or not.  All we know is that the other driver is a jerk.  In this scenario Anthony cannot file an insured motorist claim.

Scenario 2: Emily Robinson is walking to her car in the parking garage in downtown Raleigh near Moore Square.  As she gets into the parking garage and walks to her car she notices something that doesn’t seem right about the rear end of her BMW 535i.  As she gets closer she realizes that someone has backed into her car and put a large dent in the rear bumper.  She hopes that the other driver left a note under the windshield wiper and when she checks there’s no note.  She doesn’t know who caused the damaged, when it was caused, and most importantly she doesn’t know if the other driver has insurance.  Just like what happened to Anthony, in this scenario Emily can not file an insured motorist claim.

If you ever encounter one of the above scenarios, you’ll have to file a claim under your collision coverage in order to have your vehicle repaired.  This means you’ll pay your collision deductible and it will be considered a not-at fault accident.

What does underinsured motorist coverage really mean?

Underinsured motorist coverage means you are injured in an accident and/or your vehicle is damaged in an accident by another driver who doesn’t have enough insurance.

FYI, in the state of North Carolina our minimum limits of liability are bodily injury $30,000 per person & $60,000 per accident and property damage $25,000. 

With this coverage we don’t have the caveat of proving that the other driver does have insurance because we know that they do.  What we know is that they had low limits of insurance and it’s not enough to cover your medical bills and repair your vehicle.

Let’s take a look at the most recent claim involving an underinsured motorist driver for one of my clients. Tom and Sarah Adams were on their way to visit Sarah’s parents on the Outer Banks of North Carolina.  Tom came to a 4 way stop in their Lexus SUV on one of the many back country roads that make North Carolina so beautiful.  He looked all around to make sure that no one was coming and pulled out into the intersection to go straight.  All of a sudden out of the corner of his right eye he sees a white, Chevrolet Silverado truck barreling towards them (later it was discovered the driver was going 55 mph) and hit the passenger side of their SUV.  Sarah was sitting in the passenger seat and took the brunt of the impact.  Their SUV rolled several times and the jaws of life was used to get her out of the vehicle.  She was immediately life-flighted to Duke Hospital and spent almost a week there before being released.  It was later discovered that the driver of the other vehicle did have insurance, but did not have enough insurance to cover all of Sarah’s medical bills.  Because Sarah has underinsured motorist coverage she is able to file a claim under her policy to have her medical bills covered.

Without this coverage Tom and Sarah would have endured a lengthy lawsuit against the other driver and having to pay out of pocket for her medical bills until the lawsuit was settled.  This is something that I never want my client, or anyone, to have the experience and having underinsured motorist coverage as part of your North Carolina auto insurance will help protect you and your family.

What are the parts of uninsured/underinsured motorist coverage?

There are two parts to uninsured underinsured motorist coverage.  The first is bodily injury coverage and the second is property damage coverage.

Uninsured/underinsured bodily injury

This coverage is protect you when you sustain injuries from an accident by either a driver without any insurance or enough insurance to cover your medical bills.

Uninsured/underinsured property damage

This coverage pays to repair your car when it’s damaged by either a driver without any insurance or enough insurance.  Typically this coverage includes a $100 deductible.

How much uninsured/underinsured motorist coverage do you need?

This is a great question and is a conversation that you really need to have with your independent insurance agent.  What I would recommend is the following amount of coverage:

• UM/UIM bodily injury: $250,000 per person & $500,000 per accident
• UM/UIM property damage: $100,000

Many insurance companies are beginning to offer this coverage as an add-on to your umbrella policy.  The most I’ve seen available is $1,000,000 and if you are able to add it to your umbrella policy I would highly recommend it.

How much does uninsured/underinsured motorist coverage cost?

The cost will depend upon how many vehicles are on the policy and how high of coverage that you have on the policy.  Here’s the cost of recent auto policies I’ve written for clients:

• 1 car, $250/500/100 limits: $81 annual premium
• 2 cars, $250/500/100 limits: $189 annual premium
• 1 car, $100/300/50 limits: $49 annual premium
• 3 cars, $250/500/100 limits: $199 annual premium

The cost is extremely reasonable when you consider the amount of coverage that you not only need to have, but that is required by law in North Carolina.

What’s next to do about uninsured/underinsured motorist coverage?

The next step is to talk to your independent insurance agent about your coverage.  You’ll want to review the current limits on your policy, determine if they are adequate or if they need to be increased.

I’d love to be the trusted insurance advisor that reviews the coverage with you, so click the button below to schedule a call with me to see what you may be covered for and where there may be gaps in your coverage if something like this were to ever happen to you.