The Healthcare Executive's Simple Guide to FMV by the ABA
In 2015, there were over 250,000 reported car accidents in North Carolina. And, unfortunately, statistics suggest that nearly every driver will be involved in at least one car accident in their lifetime. Given these numbers, you should be aware of the types of car insurance coverage in North Carolina that might be available should you or a family member find yourself in this unfortunate situation.
North Carolina law requires that the owner of a registered motor vehicle maintain basic levels of liability insurance coverage. The purpose of liability coverage is to pay for claims when the owner or driver of that vehicle is “liable” for an accident—i.e., when an accident is that owner’s or driver’s fault. The minimum requirements for coverage in North Carolina are $30,000 for bodily injury to one person, $60,000 for bodily injury to two or more people, and $25,000 for property damage.
Many individuals carry additional coverage beyond these limits. And, doing so often is a good idea. If you cause a car wreck and someone is injured, the cost of even one trip to the emergency room or a few days in the hospital can easily exceed $30,000. If you caused the wreck, you can potentially be personally liable for any additional damages, and these bodily injury damages are not limited to medical bills. Such damages may include any future medical costs associated with ongoing care, lost wages, diminished future earning, pain and suffering, scarring or disfigurement, loss of use of part of your body, or the permanency associated with any continuing injuries.
In addition to bodily injury liability coverage, North Carolina requires car owners to have at least $25,000 in property damage liability coverage. Amounts under this type of coverage are available to repair or replace a vehicle damaged by the at-fault driver (i.e., to fix or replace the “innocent” driver’s vehicle). What about the at-fault driver’s vehicle? In order for the at-fault driver to receive any insurance funds to repair or replace his car, the at-fault driver will have to collect under the collision (property damage) coverage of his own policy. This same result applies if both drivers in an accident were at-fault—each proceeds through his own policy.
Underinsured Motorist (UIM) Coverage and Uninsured Motorist (UM) Coverage
Your liability insurance coverage protects your assets and also protects any driver you might injure by supplying funds to be paid toward their bodily injury or property damage. In some cases, however, another driver’s insurance could be absent or insufficient, so other import coverages you shouldn’t overlook are Underinsured Motorist Coverage (“UIM”) or Uninsured Motorist Coverage (“UM”).
UIM coverage applies when the insured owner or driver is injured by the driver of another motor vehicle without insurance coverage sufficient to fully compensate for all resulting injuries. UM coverage applies if the insured owner or driver is injured by a driver who was driving (illegally) without any insurance coverage at all. Thus, in these situations, as the injured party, you are compensated under your own personal insurance policy in addition to, or in lieu of, the at-fault driver’s insufficient or the nonexistent policy.
For example, suppose you have UIM coverage of $250,000 per person and you are injured due to someone else’s negligence. The at-fault driver has $30,000 in liability insurance coverage. If you have significant medical bills or other personal injury damages, the at-fault driver’s insurance would tender the full $30,000. Then, because your injuries exceed the $30,000 limits of the at-fault driver’s insurance, your own insurance company would pay up to an additional $220,000 (to get to $250,000 total) as part of your UIM coverage. The same general approach applies with UM coverage.
Medical Payments Coverage
Medical payments coverage (“med pay”) may be available under your insurance policy to help pay medical expenses for you, anyone else in your vehicle, or any other covered person who needs medical care because of an accident. The amounts are usually relatively small ($1,000 to $5,000). But, this money will be paid regardless of who is at fault and is generally paid soon after the accident. This can be very helpful early on after a car accident, before the covering insurance carrier determines the total amount to be paid, especially if there are medical expenses that require early payment or pre-payment.
Other types of insurance coverage may provide funds if you are injured in a car accident. It is not uncommon, however, for injured individuals to “miss” the other potential sources of recovery. And, anyone who signs a broad settlement agreement or release in accepting one set of insurance proceeds may never be able to recover under other insurance policies. Thus, one of the most helpful benefits lawyers can provide after a car accident is exploring all possible sources of insurance coverage before settlement.
An important concept in automobile insurance coverage is that insurance policies do not just cover the actual driver. In fact, insurance policies “follow the car” in North Carolina. So, if a driver who borrowed a friend’s car causes an accident and hurts you, you would first pursue the liability policy of the car’s owner. However, if that policy does not provide sufficient coverage, you also could then proceed against the actual driver’s insurance policy. Also, most insurance policies apply to anyone living in the same household as the insured who is related to the insured by blood or marriage. So, if there is insufficient coverage under one policy, it is important to look for coverage of anyone else who lives in the same household and is related to the insured.
A party may also have additional types of insurance coverage. This can include an “umbrella” insurance policy that provides, in the event of significant damages, coverage beyond the automobile insurance limits.
Also, if the at-fault driver was traveling in the course and scope of his employment, then the driver’s employer’s liability policy may apply for additional coverage.
This list is not exhaustive, and there are numerous other insurance coverage issues that may arise. But, the variety of possible coverage underscores the necessity of performing a full investigation of potential insurance recovery sources if you are injured in a car accident (in addition to the potential personal liability of the at-fault driver if there is insufficient insurance coverage).
How Do You Determine Coverage if You Are in a Car Accident?
If you are in a car accident, review your insurance policy to see what types and amounts of coverage may be available to you. Then, consider the insurance of the other party or parties involved in the accident. Part of this analysis will depend on who was “at-fault” for the accident—you, the other driver, or both? Depending on who is liable, and how much coverage is available, you will need to fully examine the possibility of other insurance coverage.