How Liability Insurance, Uninsured/Underinsured Motorist Insurance and MedPay Interact
Being in an accident can be inconvenient on many different levels. You may suffer injuries, lose your vehicle for a significant amount of time, miss time from work and more. Whatever the reason may be, we can all agree that in some way or another, being involved in an accident will likely cause some sort of disruption to your life.
At least you can rest assured knowing that when you are not at fault for the accident, someone else’s insurance company will be covering your damages…right? Usually, the answer is yes; however, this may not always be the case. For instance, an at-fault driver may not actually carry auto insurance, or your damages may be greater than the at-fault driver’s insurance policy limits.
When one of these situations occurs, all may not be lost. This article will provide you with information on what you can do when:
- You are in an accident in which the at-fault driver does not have car insurance; OR
- You are in an accident in which the at-fault driver does have insurance but your damages exceed their liability policy limit
Liability Insurance and Uninsured Motorist (UM) Coverage
Uninsured motorist coverage applies when an at-fault driver in an accident does not have car insurance. This type of coverage is required in North Carolina; therefore, all car insurance plans will include this type of coverage. Uninsured motorist coverage will typically match your liability insurance policy limits. For more information, please read Uninsured Motorist Coverage.
Uninsured motorist coverage is typically triggered when you are in an accident with an at-fault driver who does not have insurance. If you are the at-fault driver, your uninsured insurance coverage will not be available. Your uninsured motorist coverage will generally cover up to your personal liability limits. In other words, if you have the minimum required policy limit in North Carolina of $50,000 per individual (for policies issued or renewed on or after July 1, 2025; it was $30,000 before) (for more information about liability limits, please read Liability Coverage), then your uninsured motorist coverage will cover up to that amount.
For example, let’s assume that you are in an accident with an at-fault driver who does not have car insurance. Your medical bills are $65,000. You have the minimum required personal liability limit of $50,000, which your uninsured motorist coverage matches. Here, because you were not at-fault, you should be able to open a claim under your uninsured motorist coverage. Unfortunately, your entire medical expenses of $65,000 will not be covered because your policy limits are limited to only $50,000.
With this being said, all may not be lost, as “stacking” of uninsured policies may be an available option. The following section will examine a situation in which more than one uninsured motorist policy may be at your disposal for coverage.
Stacking of Uninsured Motorist (UM) Coverage
When injured by an at-fault driver who does not have insurance coverage, you may be able to combine several uninsured motorist policies to cover your damages. Combining two or more coverages is known as “stacking.” Generally, a person may have multiple coverages in one of two ways: intra-policy or inter-policy.
Intra-policy coverage occurs when you have more than one vehicle covered under the same policy. When this occurs, you cannot “stack” the policies in order to get more coverage. For example, let’s assume that you were in an accident with an uninsured at-fault driver. You open a claim with your own insurance company’s uninsured motorist coverage. You have two vehicles under that same policy. In this instance, you would only be able to open a claim under one of the vehicles, as it is considered intra-policy (two or more vehicles under the same policy).
You may be able to stack uninsured motorist claims, however, if it is considered inter-policy “stacking.” Coverage is considered inter-policy when you fit into the definition of an “insured” on multiple policies. This generally occurs when you are a passenger in another person’s vehicle. For instance, let’s assume that you are riding in a friend’s vehicle and are involved in an accident. The other driver is determined to be at-fault, but does not have car insurance. Your friend’s vehicle has $50,000 of uninsured motorist coverage and your own personal vehicle has $50,000 of uninsured motorist coverage. Due to the policies being separate (inter-policy), you will have $100,000 of total coverage by “stacking” the available uninsured policy coverage.
Important Note: When stacking inter-policy uninsured motorist coverage, the coverage for vehicle that was involved in the accident must typically be exhausted before any other uninsured motorist coverage will be liable to pay. This is assuming, of course, that the vehicle that was in the accident has insurance coverage. To clarify, referring back to our example, your friend’s uninsured motorist insurance coverage of $50,000 would likely need to be exhausted before you could use your own uninsured motorist coverage.
Liability Insurance and Underinsured Motorist (UIM) Coverage
For policies issued or renewed on or after July 1, 2025, every North Carolina auto policy includes underinsured motorist coverage, generally at the same limits as its bodily injury liability coverage (N.C. Gen. Stat. § 20-279.21(b)(4)). The at-fault driver is “underinsured” when their liability insurance adds up to less than your damages, whether or not your own limits are higher than theirs. The following example provides some guidance as to how underinsured motorist coverage works. For a general overview on this type of coverage, please read Underinsured Motorist Coverage.
Let’s assume that you are in an accident with an at-fault driver who has the minimum liability limit amount ($50,000/$100,000). You have an underinsured policy amount of $100,000/$300,000. Your personal injury damages are $90,000. You settle with the at-fault insurance company for the policy limit amount: $50,000. Under these facts, you will likely be able to open a claim with your underinsured motorist coverage for the remaining $40,000, as the policy limits of the at-fault driver have been exhausted.
Important Note: Remember, you must reach a settlement or judgment before your underinsured insurance provider is obligated to pay out on the policy. There are certain rules and obligations imposed on you and your claim when seeking underinsured insurance coverage. This can be an extremely complicated process.
Stacking of Underinsured Motorist Coverage
When applicable, underinsured motorist coverage may also be “stacked.” Similar to that of uninsured motorist coverage, underinsured coverage only permits “stacking” inter-policy. In other words, you cannot stack intra-policy (i.e., when two or more vehicles are covered under the same policy). Therefore, so long as you are considered an “insured” under separate policies, then you may be able to stack different underinsured motorist policy coverages.
For example, let’s assume that you are a passenger in a vehicle and are injured. The other vehicle was deemed at-fault. You settle your claim with the at-fault insurance company for $50,000, as they have the minimum required policy limit. The vehicle you were riding in has $50,000 of underinsured motorist coverage, and the vehicle you own and are insured under also has $50,000 of underinsured motorist coverage. These two underinsured policies can be “stacked” because they are available to you under separate policies (inter-policy). Thus, you would have $100,000 of underinsured motorist coverage available to you, in addition to the $50,000 paid by the at-fault driver’s insurance.
No Credit for the At-Fault Driver’s Insurance (Policies from July 1, 2025)
Under policies issued or renewed on or after July 1, 2025, underinsured motorist coverage applies to the first dollar of your damages beyond what the at-fault driver’s insurance paid, and it may not be reduced by a setoff or credit against any other coverage, including the at-fault driver’s liability insurance. The only exception is workers’ compensation. In other words, if you have $50,000 of underinsured motorist coverage and the at-fault driver’s $50,000 policy has been exhausted, your underinsured coverage can pay up to its full $50,000 toward your remaining damages.
How Credits Worked Under Older Policies
Under policies issued or renewed before July 1, 2025, underinsured motorist coverage generally paid only the excess over the at-fault driver’s liability coverage. For example, with $50,000 of underinsured motorist coverage and an at-fault driver who carried the old minimum of $30,000, your insurer was entitled to a credit for the $30,000, so it only had to pay up to an additional $20,000. When several underinsured policies were stacked, the policy covering the vehicle involved in the wreck was usually “primary” and took the full credit, and any other policies paid their pro-rated share of the rest. Under those older policies, an underinsured insurer could also take a credit for MedPay (Medical Payments coverage) paid on your behalf if the policy included “set-off” language; North Carolina case law holds that a policy without set-off language cannot take that credit. For more information on MedPay, please read MedPay Coverage. Uninsured motorist policies may still include MedPay set-off language, so it is important to review your policy when opening a claim.
Due to the complexity surrounding this area of law, I would recommend speaking with a personal injury attorney in your jurisdiction if you have been injured in an accident. Please feel free to use our lawyer locator service.
