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Case Summary: Multiple Claimants Affects UM Coverage


How Multiple Claimants Affects Underinsured Motorist Coverage

Ray v. Atlantic Casualty Insurance Co.
112 N.C. App. 259 (1993)
Court of Appeals of North Carolina


This case arose out of injuries sustained by Shanta’ L Ray (Ray), George Royal, Jr. (Royal), and Saundra Barbour (Barbour) as a result of an accident allegedly caused by Ronnie Rufus Pollard (Pollard). There was also a passenger in Pollard’s vehicle, Randy Hall (Hall), who was injured in the collision.

Procedural History

Ray and Royal filed a complaint against Atlantic Casualty Insurance Company (Atlantic), seeking a declaratory judgment that Atlantic’s liability policy provide underinsured coverage for their injuries as a result of the accident. Atlantic moved for summary judgment on the pleadings, and the motion was granted by the Johnston County Superior Court. It is from that order granting summary judgment in favor of Atlantic that Ray appealed.


The facts stipulated by the parties were that Pollard’s vehicle crossed the center line and struck Ray’s vehicle. Ray was driving the vehicle while Royal and Barbour were passengers. Hall was a passenger in Pollard’s vehicle.

At the time of the collision, Pollard had an insurance policy through Aetna Insurance Company (Aetna) which provided liability limits of $100,000.00 per person for bodily injury, $300,000.00 per accident, and $50,000.00 for property damage. Aetna paid $98,000.00 to Hall to settle his claim for injury, thereby leaving $202,000.00 available for Ray and Royal.

Ray and Royal sought to recover the $98,000.00 which had been disbursed to Hall, from their own underinsured policy with Atlantic. The issue that the court faced was whether an underinsured vehicle includes a tortfeasor’s vehicle whose available liability insurance is less than the UIM coverage that the injured party has in their policy.

Governing Law

The relevant North Carolina statute provides that UIM coverage is triggered when “all liability bonds or insurance policies providing coverage for bodily injury caused by . . . the underinsured highway vehicle have been exhausted.” N. C. Gen. Stat. § 20-279.1(b)(4). The statute further defines an underinsured highway vehicle as “a highway vehicle with respect to the ownership, maintenance, or use of which, the sum of the limits of liability under all bodily injury liability bonds and insurance policies applicable at the time of the accident is less than the applicable limits of liability under the owner’s policy.” Id.

What this essentially means is that if the tortfeasor’s liability coverage is less than the UIM coverage of the injured party, the vehicle will be considered underinsured. This comparison between coverage amounts, under the plain meaning of the language of N.C. Gen. Stat. § 20-279.21 (b)(4), is to be made based on the coverage available at the time of the accident.


The plaintiffs argued that because only $202,000.00 was available to them from Pollard’s liability insurance coverage, this amount must be measured against their own $300,000.00 liability coverage.

However, the North Carolina Court of Appeals did not agree with the plaintiffs’ argument. Instead, the Court ruled that, at the time of accident, Pollard’s coverage was the same as Ray’s, and as a matter of law, Pollard’s vehicle was not underinsured under the language of N.C. Gen. Stat. § 20-279.21.

Developments in the Law Since this Case

The 2004 amendment to the Financial Responsibility Act changed the rule the Court of Appeals applied to reach its result. The amendment provided an additional definition of “underinsured highway vehicle” for situations where multiple claimants are seeking liability funds. Under the multiple claimant exception, when more than one person is injured, a highway vehicle will also be considered an “underinsured highway vehicle” if the total amount actually paid to that person under all bodily injury liability bonds and insurance policies applicable at the time of the accident is less than the applicable limits of underinsured motorist coverage for the vehicle involved in the accident and insured under the owner’s policy. N.C. Gen. Stat. § 20-279.21(b)(4) (emphasis added).

This multiple claimant exception, means that in North Carolina, when there are multiple persons injured, the recovery by one person will not reduce the liability coverage available for other injured parties’ claims, and will apply only when the amount paid to a claimant is less than the claimants limits of UIM coverage, after liability payments to multiple claimants.

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