Understanding Recent Changes to North Carolina’s Uninsured and Underinsured Motorist Insurance Laws

The North Carolina General Assembly (SB 452) recently introduced significant changes to the state’s uninsured (UM) and underinsured (UIM) motorist insurance coverage laws. These updates, which impact the protection available to drivers and automobile occupants in accidents involving uninsured or underinsured at-fault drivers, aim to improve the level of compensation available to injured parties. Here’s a breakdown of what these changes mean for North Carolina motorists.

What Is UM and UIM Coverage?

Uninsured Motorist (UM) coverage and Underinsured Motorist (UIM) coverage are types of auto insurance protection designed to compensate policyholders when an at-fault driver has no insurance or insufficient insurance coverage to cover the damages. UM coverage applies if you are hit by an uninsured driver, while UIM coverage applies if the at-fault driver’s liability coverage is insufficient to fully cover the other party’s damages.

Key Changes in the New Legislation

The recent changes to North Carolina’s UM/UIM laws reflect the state’s efforts to ensure fair compensation and prevent policyholders from facing financial burdens due to underinsured or uninsured drivers. Here are the main aspects of the changes:

1. Increased Minimum Liability Insurance Limits

   Previously, North Carolina required all drivers to carry at least minimum liability limits of $30,000 per person and $60,000 per accident. The new law has increased minimum liability limits to $50,000 per person and $100,000 per accident. Additionally, property damage coverage has also been increased to $50,000 per accident.

2. Elimination of “Liability Setoff” for UIM Coverage

   Previously, North Carolina allowed UIM carriers to receive a “liability setoff” from payments made by the liability carrier. As an example of the prior law, if a motor vehicle accident victim was seriously injured by an at-fault driver and that driver had liability coverage of $30,000, then the victim’s UIM coverage would receive a credit of the $30,000 paid by the liability carrier. So, if the victim had a total of $100,000 in UIM coverage, the UIM carrier would only pay the difference between the liability coverage limit ($30,000) and the UIM coverage ($100,000), or $70,000.

   The new law eliminates the “liability setoff”. Thus, a UIM carrier will not receive a reduction to its UIM limits by the liability payment. Under the above hypothetical, the same motor vehicle accident victim, who would have only collected a total of $100,000 under the prior law, can now collect $130,000 ($30,000 in liability coverage and $100,000 in UIM coverage).

3. Medical Lienholders and Timeline for Production of Medical Records

   Medical providers with liens on a motor vehicle accident victim’s recovery must provide medical records within 60 days of a request for medical records or that provider risks waiving its lien. This update ensures victims and their attorneys will obtain medical information faster so their claims can be presented to insurance carriers in a more timely manner.

4. Revision of the Service of Process Issue for Serving UM Complaints

   The updated legislation clears an old precedent which allows a motor vehicle accident victim to serve a UM carrier as long as the summons and complaint are filed within the statute of limitations and the summons does not expire prior to service. Previously, a UM carrier had to be served with a copy of the summons and complaint within the statute of limitations rather than receiving simple notice of a UM claim.

How These Changes Impact North Carolina Drivers

The recent legislative changes strengthen the safety net for North Carolina drivers and automobile occupants by ensuring fairer compensation in the event of an accident with an uninsured or underinsured driver. Here’s how these changes could impact you:

• Increased Financial Protection: For those who previously had limited UIM coverage or no UIM coverage, the new liability coverage increase means additional financial security, covering medical costs and damages that may have otherwise gone uncompensated.
• Elimination of the “Liability Setoff”: The elimination of the “liability setoff” provided to UIM carriers provides an essential boost to total insurance coverage available in severe accident scenarios.
• Efficiency Changes: The clarification of service on UM carriers as well as the set deadline for receipt of medical records will help in the efficient administration of justice for accident victims.

Next Steps for North Carolina Policyholders

With these changes, which are set to take effect on July 1, 2025, it’s an ideal time for North Carolina residents to review their current automobile insurance policies with their insurance carriers. Make sure your UM/UIM coverage aligns with your needs and provides adequate protection in case of an automobile accident. Consulting with an experienced personal injury attorney can also help you understand how these changes may affect you personally and ensure that you are fully protected.

At DeMent Askew Johnson & Marshall, we stay up-to-date with North Carolina’s insurance laws to protect our clients’ rights and help them secure the compensation they deserve. If you have questions about how these changes impact your UM/UIM coverage, contact our office for a consultation. We’re here to help you navigate the complexities of insurance and ensure your rights are upheld.