North Carolina Appellate Court Issues Opinion Stating that Underinsured Motorist Coverage Payments are Deemed Collateral and Cannot be Credited Against Civil Judgments

Car accidents often involve multiple auto insurance policies, which can lead to confusion and headaches for injury victims. It’s also important to remember that insurance companies are for-profit entities who don’t always have the best interests of injured persons in mind. At Maurer Law, our dedicated team of North Carolina personal injury lawyers has aided numerous residents in interpreting insurance policies and ensuring that they receive the full amount of compensation that they are owed.

Recently, the North Carolina appellate court considered whether a trial court committed a reversible error by crediting payments made to the plaintiff under his own insurer’s underinsured motorist coverage against the judgment that the plaintiff obtained from the other driver in a civil suit. At the time of the accident, the plaintiff had an insurance policy that provided an underinsured motor vehicle coverage up to $250,000 per person. The defendant had an insurance policy that provided a personal liability limit of $100,000 per person.

The case proceeded to trial and the jury returned a verdict in favor of the plaintiff finding the defendant negligent and awarding the plaintiff $263,000 in compensation. A few months later, the plaintiff’s insurance company sent him a check for $145,000 which it claimed represented the amount of underinsured motorist coverage that the plaintiff was owed under the policy. The defendant filed a motion asking the court to determine the amount of set-off that should be credited against the jury award based on the payment as well as other payments that the plaintiff received, including $3,000 from the defendant’s insurer as well as $30,000 from the settlement of a medical negligence claim the plaintiff asserted against the medical professionals who treated him following the accident.

The court later entered an order stating that all parties agreed to a set off of $33,000 and later concluded that the defendant was entitled to a set off of $145,000. The plaintiff appealed, claiming that the set off violated the collateral source rule which prohibits a plaintiff’s recovery from being reduced based on some other source of compensation that is collateral to the defendants such as insurance payments. The defendant counter-argued that North Carolina policy and public law prevented outcomes where plaintiffs were allowed to receive a double recovery for a single injury.

On review, the appellate court reversed the lower court’s decision allowing the offset, stating that payments from an underinsured motorist policy are deemed collateral sources for the purpose of the collateral source rule. The court also noted that insurers have statutory subrogation rights to recoup some or all of the monies that are paid to an insured under a policy when the insured also obtains a judgment. In this case, however, the plaintiff’s insurer had waived its subrogation rights.

If you were injured in a car accident, our compassionate and responsive team of personal injury lawyers are ready to assist you in determining whether you are owed compensation. We have assisted injured parties throughout North Carolina with a broad range of motor vehicle accidents, including truck accidents and motorcycle accidents. To schedule your free consultation call us at 1-844-817-8058 or contact us online to get started.

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