What Are the New Policy Limits in North Carolina for 2025 and How Does Uninsured Motorist (UM) Coverage Help?
Here at Triangle Legal, we frequently assist clients in navigating the complex world of automobile accidents and insurance claims. One of the most common sources of confusion for accident victims is understanding policy limits and how Uninsured Motorist (UM) or Underinsured Motorist (UIM) coverage can provide protection when you're hurt in an accident caused by an uninsured or underinsured driver. In this article, we will explain what these terms mean and how they can affect your case, as well as how UIM coverage can be a critical safeguard for your financial well-being.
Starting this past new year, North Carolina increased the minimum liability insurance coverage required for drivers. Under the new law, the required bodily injury liability limits has increased from $30,000 per person and $60,000 per accident to $50,000 per person and $100,000 per accident. Additionally, the minimum property damage liability coverage has increased from $25,000 to $50,000. These changes reflect the rising costs of medical treatment, vehicle repairs, and the overall expenses that result from car accidents.
What Are Policy Limits?
Policy limits refer to the maximum amount an insurance policy will pay out for a covered claim. This limit is set by the terms of the insurance policy and applies to both liability insurance (the coverage the at-fault driver carries) and your own coverage if you're injured in an accident. In North Carolina, all drivers are required to carry a minimum level of liability insurance, but these minimums may not always be enough to cover the full extent of injuries or damages resulting from a car accident.
For example:
Bodily Injury Liability Limits: If you're in an accident caused by another driver, their liability insurance will cover your medical expenses and other damages, but only up to their policy limit. In North Carolina, the minimum liability coverage is $30,000 per person and $60,000 per accident. If your medical expenses exceed that amount, you may be left with out-of-pocket costs.
Property Damage Liability Limits: The at-fault driver’s insurance will also cover damage to your vehicle up to the policy’s property damage limit. If the at-fault driver has the minimum coverage ($50,000), but your vehicle is worth $70,000, you will only receive $50,000 from their insurer, leaving a significant gap.
Unfortunately, it’s not uncommon for drivers to have inadequate insurance, and this can leave accident victims struggling to recover their full financial losses. This is where Uninsured Motorist (UM) and Underinsured Motorist (UIM) coverage can be a lifesaver.
What Is Uninsured Motorist (UM) Coverage?
Uninsured Motorist (UM) coverage is a type of insurance that protects you if you're involved in an accident with a driver who has no insurance.
There is also Underinsured Motorist (UIM) coverage, which steps in when the at-fault driver has some insurance, but their coverage is insufficient to fully compensate you for your injuries or losses. For example, if the at-fault driver only carries $50,000 in bodily injury liability coverage but your injuries result in $100,000 in medical bills and lost wages, your own UIM coverage can help cover the remaining $50,000. In North Carolina, while UIM coverage is not mandatory, it is strongly recommended. Without UIM coverage, you could find yourself facing significant medical bills, lost wages, and other expenses with little recourse if the at-fault driver doesn’t have enough insurance to cover your damages.
UM vs. UIM: What’s the Difference?
While Uninsured Motorist (UM) and Underinsured Motorist (UIM) coverage both serve similar purposes, they apply in different circumstances. Here's how the two types of coverage differ:
1. Uninsured Motorist (UM) Coverage
When it applies: UM coverage is activated when the at-fault driver has no insurance at all.
Example: You’re hit by another driver who doesn’t have car insurance. Because the driver is uninsured, your own UM coverage kicks in to cover your medical expenses, lost wages, pain and suffering, and other body injury related damages.
2. Underinsured Motorist (UIM) Coverage
When it applies: UIM coverage applies when the at-fault driver has insurance, but their policy limits are not enough to fully compensate you for your injuries or damages.
Example: You’re in an accident with a driver who has liability insurance, but their policy only covers $50,000 for bodily injury, and your medical bills and lost wages total $100,000. Because the at-fault driver’s insurance is insufficient to cover your damages, your own UIM coverage will make up the difference.
How Does UM/UIM Coverage Help After an Accident?
UM and UIM coverage act as a safety net in situations where the at-fault driver either has no insurance or doesn’t have enough coverage. Here are some of the ways UM/UIM coverage can help:
1. Medical Expenses
If you're injured in an accident with an uninsured or underinsured driver, your UM/UIM coverage can help pay for medical bills. This includes everything from emergency room visits and surgeries to physical therapy and long-term care. Without UM coverage, you may be forced to cover these costs on your own.
2. Lost Wages
If your injuries prevent you from working, UM/UIM insurance can help reimburse you for lost wages. With UM/UIM coverage, you don’t have to worry about your financial situation spiraling due to an accident caused by someone else’s negligence when they don’t have adequate insurance.
3. Pain and Suffering
In addition to medical bills and lost wages, UM/UIM coverage can compensate you for pain and suffering—the physical pain, emotional distress, and diminished quality of life resulting from your injuries. This type of compensation can be difficult to quantify but is an important part of ensuring you’re made whole after an accident.
4. Protecting Your Family
In North Carolina, UM coverage often extends to your family members as well. This means that if a member of your household is injured in an accident with an uninsured or underinsured driver, their medical expenses and other damages could be covered under your policy.
Why Should You Have UIM Coverage?
In North Carolina, the percentage of uninsured drivers is estimated to be around 10.3%, meaning that about 1 in 10 drivers you encounter on the road do not have any insurance to cover the costs of an accident. However, while most drivers carry the state’s minimum required liability coverage, these minimums may not be enough to fully compensate you for significant injuries or property damage.
Without UIM coverage, you could find yourself with no way to recover damages if you're involved in an accident with someone who has insufficient insurance. UIM coverage ensures that you have a financial safety net if the at-fault driver doesn’t have enough insurance or any insurance at all.
How Much Coverage Should You Have?
The amount of coverage you need depends on your personal circumstances, including the amount of liability insurance you carry. We recommend reviewing your policy limits with an insurance professional to ensure that your coverage is sufficient to cover potential damages, particularly given the rising costs of healthcare and vehicle repairs.
Conclusion
Understanding policy limits and the role of Uninsured Motorist (UM) and Underinsured Motorist (UIM) coverage is essential for any driver in North Carolina. While liability insurance covers damages when someone else is at fault, it’s often not enough to fully compensate you for your losses.
If you’ve been injured in a car accident and are dealing with the complexities of insurance claims, don’t hesitate to contact us. Give us a call or text at (919) 590-3647, our experienced attorneys at Triangle Legal are here to guide you through the process and fight for the compensation you deserve!
This article was prepared by Triangle Legal for educational purposes only and is not intended to be a comprehensive statement of the law or legal advice. North Carolina laws change frequently and could affect the information in this article. For legal advice, you may contact an attorney at our law firm via phone/text at (919) 590-3647 or online (https://www.triangle.legal).