On October 3, 2023, Senate Bill 452 passed and became law. It changed many things in various kinds of insurance, but the most important to our clients who have been seriously injured in car accidents are the changes regarding the minimum auto insurance liability limits. These changes go into effect January 1, 2025.
Since 1999 the lowest limits for auto liability insurance for bodily injury you could buy to legally drive in North Carolina was $30,000 per person and $60,000 for all persons injured in the same accident, no matter how many people were injured or how badly injured they were. That amount is all that would be available from the at-fault driver’s liability insurance to pay the victim’s medical bills, lost wages, and pain and suffering. If more than two people are injured, the entire group of victims must divide and share the total per-occurrence limit of $60,000. It is heartbreaking to inform a seriously injured person that the most money they could get from the negligent driver’s insurance company was $30,000. The large majority of people driving with those minimum insurance limits were “judgment proof”, meaning that no matter how large the judgment from a jury verdict, you couldn’t get more than $30,000 from them.
During that period of time, the minimum property damage auto insurance limit was $25,000, no matter how expensive the victim’s car was.
Senate Bill 452 raised the minimum liability insurance limits to $50,000/person, 100,000/accident for bodily injury, and $50,000 per accident for property damage. While these increased mandatory minimum limits have not kept up with inflation, they are still higher than most other states. Those same minimum limits apply to uninsured motorist coverage. While most of Senate Bill 452 took effect on October 3, 2023, the changes to the minimum limits on auto insurance will not take effect until January 1, 2025. After that date, all new policies written or renewed in North Carolina must reflect those amounts. That doesn’t mean that all existing policies will suddenly have $50,000/100,000 limits. It only means that all policies written after January 1, 2025, will have to provide at least that much coverage.
Another very important change in auto insurance affects underinsured motorist coverage (UIM). First, let us explain what UIM is. UIM coverage is optional in North Carolina. To understand how UIM works, consider a hypothetical: a victim is very seriously injured in an accident caused by the at-fault driver and incurs medical bills of $100,000. Let’s further assume that the at-fault driver carries $50,000 per person bodily injury liability coverage. $50,000 isn’t enough to compensate the victim, whose medical bills are $100,000, so the at-fault driver is “underinsured”. If the victim carries a UIM policy with bodily injury coverage of $100,000 per person, the UIM insurance pays only the difference between the liability coverage limit ($50,000) and the UIM coverage limit ($100,000). So the at-fault driver’s policy would pay $50,000, and the UIM policy would pay an additional $50,000, bringing the total available auto insurance benefits to $100,000.
UIM can be bought in various amounts, for example, $100,000/person and$300,000/accident, $250,000/person and$500,000/accident, or even $1 million.
Senate Bill 452 eliminates the “liability setoff”, which is a hidden reduction in available coverage. Those who buy $100,000 in UIM coverage might expect to be able to collect the entire $100,000 if their injuries are that significant. However, under present law, the UIM limits are reduced, or set off, by the amount of the at-fault driver’s liability coverage. Senate Bill 452 changes that so those who carry UIM coverage can now collect the full face value of their policy. Using the hypothetical above, even though the at-fault driver’s policy pays $50,000 under the bodily injury liability policy, the UIM carrier will no longer be able to reduce the UIM limits by the liability payment. Thus, the victim who could previously only collect a total of $100,000 in benefits can now collect $150,000. This is a huge benefit for North Carolina crash victims who suffer serious injuries.
While Senate Bill 452 made many other changes, these are the most important to our clients. As always, we advise all of our clients to buy as much underinsured motorist coverage as they can afford.
About the Author
Robert C. Younce, JR
Robert C. Younce is an attorney at Younce, Vtipil, Baznik & Banks, P.A. and concentrates his law practice on personal injury and workers’ compensation law. He has tried over 100 workers’ comp cases to Opinion and Award and about a dozen personal injury jury trials to verdict. He has been board-certified by the North Carolina State Bar as a specialist in workers’ compensation law since 2001.
