Underinsured Motorist Coverage
Underinsured motorists (UIM) coverage is very similar to uninsured motorist coverage. The only difference is it applies in cases where the at-fault vehicle does have liability insurance. UIM coverage is extra insurance available to pay your claims if the at-fault driver’s liability insurance limits are lower than the UIM limits available under all policies. To determine if you can use the UIM coverage, you must look at all available liability policies and all available UIM policies. After adding together all per-person coverages for each type of policy, you compare the aggregate liability coverage limit to the aggregate UIM coverage limit. If the UIM limit is higher, you can collect additional benefits through the UIM policies. To determine the amount of UIM available, simply subtract the total available liability coverage from the total available UIM; the difference is the amount that the UIM coverage would pay above the liability policies.
Example: Calculating Available UIM Coverage
John enters an intersection under a red light and strikes Alice. John has liability coverage of $30,000.00 per person for bodily injury. Alice has a personal auto policy with UIM coverage limits of $100,000.00 per victim. Because John’s coverage limits are lower than Alice’s UIM limits, her UIM coverage is triggered. If her claims are worth $100,000.00, she collects the first $30,000.00 from John’s liability policy and the remaining $70,000.00 from her policy.
Stacking UIM Policies
UIM coverage is stackable in North Carolina, and the coverage sources are identical to the coverage sources for UM shown above. If multiple policies are available for stacking, the liability limit is subtracted only once! To properly determine the amount of available coverage, you first identify all UIM policies available. After stacking all coverage and determining the total available UIM coverage amount, you then subtract the liability coverage amount from the total available limits.
Example: Using and Stacking UIM
John borrows Andy’s car and causes an accident that injures Alice. Andy has a liability insurance policy with bodily injury coverage limits of $30,000.00 per person. John has his own car insurance with liability limits of $50,000.00 per person. Alice is driving her own car, and she has a UIM policy with a $50,000.00 per person limit. Alice’s husband has a separate car insurance policy that also has UIM limits of $50,000.00 per person for bodily injury. Alice’s daughter also resides with her, and she has another separate car insurance policy with UIM limits of $100,000.00 per person. Adding all liability limits together, we see there is a total of $80,000.00 in liability coverage to fund Alice’s injury claims. The total of all available UIM policies that cover Alice would be $200,000.00. Therefore, Alice can collect up to $200,000.00 for all injury claims, with the first $80,000.00 paid through John’s and Andy’s liability coverage and the remaining $120,000.00 being paid through stackable UIM coverage.
If another driver causes your accident, it is best to collect for car damage and personal property loss through their liability insurance policy. However, if you have collision coverage on your policy, you retain the option to have your vehicle repair or replacement cost paid through your own policy. While your payments would be reduced by the amount of your deductible, your insurance carrier will pursue reimbursement of their payout and your deductible once the collision claim is paid and closed. If the collision was partially your fault, collision coverage will be the only avenue of payment for vehicle damage.
Comprehensive coverage pays for vehicle damage caused by non-collision-based causes, such as storm damage, vandalism, and theft. In North Carolina, collision and comprehensive coverages are paired under the policy and carry the same deductible.