Underinsured Motorist Coverage in a North Carolina Motorcycle Accident

motorcycleHow an underinsured motorist policy provision is interpreted can make a big difference to how much compensation is recovered in an accident in which a North Carolina driver’s insurance doesn’t cover all of an accident victim’s damages. In the unpublished opinion of Integon National Insurance Company v. King, a North Carolina Court of Appeals considered underinsured insurance coverage for a motorcycle accident case. The insurance company asked the court to declare it had no duty or obligation to two deceased people’s estates beyond its underinsured motorist limits of $100,000, minus what these claimants received from the at-fault driver and her insurer.

The accident arose when an insured motorcyclist (King) drove his Harley-Davidson motorcycle with a passenger (Turner). A driver (Skipper) with three passengers lost control of her car and hit the motorcycle, killing the motorcyclist and passenger. When the accident happened, the insurance company insured the car through an automobile liability insurance policy with limits of $30,000 per person and $60,000 per accident. The insurer distributed the $60,000 among the three passengers in the car as well as the estates of the decedents, King and Turner. This exhausted coverage.

The insurance company also insured King through a motorcycle insurance policy that included underinsured motorist coverage with maximum limits for bodily injury of $100,000 per person and $300,000 per accident. Under the policy, the insurer paid the King and Turner estates $82,072 in underinsured motorist benefits. Each estate got $100,000 for the Skipper and King policies, based on the per person limit.

At a summary judgment hearing on the insurer’s lawsuit to get a declaration about coverage, the insurer admitted that King and Turner died because of the crash. It argued that the maximum liability limit should be capped at $100,000, the per person limit. Meanwhile, the estates of the decedents argued that the $300,000 per accident limit should apply. The trial court denied the insurance company’s motion for summary judgment, and the insurer appealed.

The insurer argued that the language of the motorcycle insurance policy limited the estates to a recovery of $100,000 per person. The appellate court disagreed. It explained that under the Motor Vehicle Safety and Financial Responsibility Act of 1953 (N.C. Gen. Stat. § 20-279.21(b)(4)), the limit of underinsured motorist coverage is the difference between what is paid based on the exhausted liability policy and the limit of underinsured motorist coverage applicable.

When a liability policy is exhausted on a per-accident basis in connection with a particular accident, the per-accident underinsured motorist limit applies. The applicable limit depends on the number of claimants asking for coverage under the underinsured motorist policy and whether the negligent driver’s policy was exhausted based on a per-accident or per-person cap. If there is only one underinsured motorist claimant, the per-person limit applies. When there is more than one claimant asking for underinsured motorist coverage, the way the negligent driver’s liability policy was exhausted sets the applicable underinsured motorist limit.

The claimants argued that since the insurance company paid $60,000 under the negligent automobile driver’s policy, $240,000 was still available to be distributed. The insurance company argued that to apply the per-accident limit was to provide a windfall for the estates.

The appellate court explained that distributing the per-accident limit of $240,000 between the estates would not result in their getting an amount beyond what was bargained for in the policy. The final amount paid would still not be more than $300,000. Since the insurer had already paid $164,144 to the estates, it was only liable for a remaining $75,856 under the per-accident limit. The appellate court affirmed the lower court’s ruling.

If you were injured or a loved one was killed by an underinsured driver, the experienced motorcycle accident attorneys at Maurer Law may be able to help you recover compensation. Our principal, an AV-rated trial attorney, is a former insurance insurance claims adjustor and now puts his insights about the insurance industry to work for accident victims. Contact us at 919-229-8359 or via our online form.

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