North Carolina Court of Appeals revisits uninsured and underinsured motorist coverage

The North Carolina Court of Appeals recently issued an unpublished opinion on UIM and UM automobile insurance coverage. Unpublished opinions, under North Carolina Rule of Appellate Procedure 30(e)(3), do "not constitute controlling legal authority" and citation to such opinions "is disfavored."

In Bacon v. Universal Insurance Co., authored by Judge Mark Davis, the Court of Appeals held that even though the plaintiff had a commercial auto insurance policy with $1,000,000 in coverage limits, he was not entitled to $1 million (much less the treble damages for unfair claims handling practices) of uninsured or underinsured motorist coverage following an accident for the following reasons.

First, the record on appeal revealed that the Plaintiff had been informed by his insurer that UM and UIM coverage was available to him and the limits would be set equal to the highest limits for bodily injury liability coverage under the policy unless he elected different limits. The Plaintiff chose to purchase UM coverage of $50,000 per person and $100,000 per accident, as revealed on various insurance documents which he signed.

Second, the UM endorsement at issue in this case defined "uninsured motor vehicle" to include underinsured, as well as completely uninsured, vehicles.

Third, the driver which hit the Plaintiff had insurance coverage, which tendered $50,000 to the Plaintiff for his injuries. Pursuant to the terms of the UM endorsement and N.C.G.S. 20-279.21(Financial Responsibility Act), that driver who hit the Plaintiff was not underinsured, and thus the Plaintiff was not entitled to UIM benefits from his own insurer.

After finding that Universal's denial of coverage was proper and supported by North Carolina insurance law, the Court then deemed arguments regarding unfair trade practices or bad faith to be abandoned on appeal, as such arguments wholly related to the assertions that Universal failed to honor its obligations under the insurance policy.

The Court opinion is a mix of a review of the factual record, and the application of the canons of statutory construction to North Carolina's Financial Responsibility Act. Importantly, the case demonstrates the importance of record keeping and documenting the policyholder's election of UM/UIM limits which were above the statutory minimum but significantly lower than the maximum allowable.

Further, as a matter of insurance law, the Court notes that it had to look beyond the declarations page of the policy:

While the declarations page is silent as to the amount of UIM coverage available to Plaintiff under the Policy, the Act, which is “written into every automobile liability policy as a matter of law,” Hendrickson, 119 N.C. App. at 449, 459 S.E.2d at 278 (citation, quotation marks, and brackets omitted), mandates that Plaintiff be entitled to receive UIM coverage limits “equal to the limits of uninsured motorist bodily injury coverage purchased pursuant to subdivision (3) of this subsection,” N.C. Gen. Stat. § 20-279.21(b)(4). We therefore conclude that the Policy provides Plaintiff with $50,000 — rather than $1,000,000 — in UIM coverage.