New North Carolina law seeks to tackle underinsured motorists

Private passenger automobile insurance policies sold in North Carolina must now include underinsured motorist (UIM) bodily injury coverage, a shift from the previous requirement that mandated UIM coverage only if the policy exceeded state-mandated limits. This change is outlined in the recently enacted Senate Bill 319.

According to a report by AM Best, the bill stipulates that the limits of the underinsured motorist coverage must match the highest limits of the bodily injury liability coverage for any vehicle covered by the policy. However, these limits cannot exceed $1 million per person or accident.

The new law, signed by Gov. Roy Cooper on July 3, applies only to nonfleet private passenger vehicles, according to a summary from the University of North Carolina School of Government.

The law states that if a claimant has underinsured motorist coverage on multiple policies, the total amount of applicable coverage is the sum of the limits of the claimant’s underinsured motorist coverages, combining the highest limit available under each policy.

This total should also not be reduced due to other coverages, including liability insurance, except for workers’ compensation.

Additionally, the North Carolina Motor Vehicle Reinsurance Facility must reinsure underinsured motorist bodily injury coverage at $50,000 per person and $100,000 per accident, according to the university’s summary.

The reinsurance facility is a nonprofit, unincorporated entity comprising every carrier authorized to sell auto insurance in the state. It was established to create a market for drivers who couldn’t find coverage through the voluntary market.

Last year, the North Carolina Department of Insurance and the state’s rate bureau agreed to a 4.5% private auto insurance rate increase for this year. This rate increase was significantly lower than the 28.4% increase requested by the North Carolina Rate Bureau.

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