GENERAL ASSEMBLY OF NORTH CAROLINA
1991 SESSION
CHAPTER 646
AN ACT TO PROHIBIT THE STACKING OF UNINSURED AND UNDERINSURED MOTORIST COVERAGE.
The General Assembly of North Carolina enacts:
Section 1. G.S. 20-279.21(b)(3) reads as rewritten:
"(3) No policy of bodily
injury liability insurance, covering liability arising out of the ownership,
maintenance, or use of any motor vehicle, shall be delivered or issued for
delivery in this State with respect to any motor vehicle registered or
principally garaged in this State unless coverage is provided therein or
supplemental thereto, in limits for bodily injury or death set forth in
subsection (c) of G.S. 20-279.5, under provisions filed with and approved
by the Commissioner of Insurance, for the protection of persons insured
thereunder who are legally entitled to recover damages from owners or operators
of uninsured motor vehicles and hit-and-run motor vehicles because of bodily
injury, sickness or disease, including death, resulting therefrom; provided,
an insured is entitled to secure additional coverage up to the limits of bodily
injury liability in the owner's policy of liability insurance that he carries
for the protection of third persons. therefrom, in an amount not to be
less than the financial responsibility amounts for bodily injury liability as
set forth in G.S. 20-279.5 nor greater than one million dollars ($1,000,000),
as selected by the policy owner. Such The provisions
shall include coverage for the protection of persons insured thereunder who are
legally entitled to recover damages from owners or operators of uninsured motor
vehicles because of injury to or destruction of the property of such insured,
with a limit in the aggregate for all insureds in any one accident of up to the
limits of property damage liability in the owner's policy of liability
insurance, and subject, for each insured, to an exclusion of the first one
hundred dollars ($100.00) of such damages. Such The provision
shall further provide that a written statement by the liability insurer, whose
name appears on the certification of financial responsibility made by the owner
of any vehicle involved in an accident with the insured, that such the
other motor vehicle was not covered by insurance at the time of the
accident with the insured shall operate as a prima facie
presumption that the operator of such the other motor vehicle was
uninsured at the time of the accident with the insured for the purposes of
recovery under this provision of the insured's liability insurance policy. The
coverage required under this subdivision shall is not be applicable
where any insured named in the policy shall reject rejects the
coverage. An insured named in the policy may select different coverage
limits as provided in this subdivision. Once the named insured exercises
this option, the insurer is not required to offer the option in any renewal,
reinstatement, substitute, amended, altered, modified, transfer, or replacement
policy unless the named insured makes a written request to exercise a different
option. The selection or rejection of uninsured motorist coverage by a
named insured is valid and binding on all insureds and vehicles under the
policy. If the named insured rejects the coverage required under this
subdivision, the insurer shall is not be required to offer
the coverage in any renewal, reinstatement, substitute, amended, altered,
modified, transfer or replacement policy unless the named insured makes a
written request for the coverage. Rejection of this coverage for policies
issued after October 1, 1986, shall be made in writing by the named insured on
a form promulgated by the North Carolina Rate Bureau and approved by the
Commissioner of Insurance.
Where coverage is provided on more than one vehicle insured on the same policy or where the owner or the named insured has more than one policy with coverage under this subdivision, there shall not be permitted any combination of coverage within a policy or where more than one policy may apply to determine the total amount of coverage available.
In addition to the above requirements relating to uninsured motorist insurance, every policy of bodily injury liability insurance covering liability arising out of the ownership, maintenance or use of any motor vehicle, which policy is delivered or issued for delivery in this State, shall be subject to the following provisions which need not be contained therein.
a. A provision
that the insurer shall be bound by a final judgment taken by the insured
against an uninsured motorist if the insurer has been served with copy of
summons, complaint or other process in the action against the uninsured
motorist by registered or certified mail, return receipt requested, or in any
manner provided by law; provided however, that the determination of whether a
motorist is uninsured may be decided only by an action against the insurer
alone. The insurer, upon being served as herein provided, shall be a party to
the action between the insured and the uninsured motorist though not named in
the caption of the pleadings and may defend the suit in the name of the
uninsured motorist or in its own name. The insurer, upon being served with copy
of summons, complaint or other pleading, shall have the time allowed by statute
in which to answer, demur or otherwise plead (whether such the pleading
is verified or not) to the summons, complaint or other process served upon it.
The consent of the insurer shall not be required for the initiation of suit by
the insured against the uninsured motorist: Provided, however, no action shall
be initiated by the insured until 60 days following the posting of notice to
the insurer at the address shown on the policy or after personal delivery of such
the notice to the insurer or its agent setting forth the belief of
the insured that the prospective defendant or defendants are uninsured
motorists. No default judgment shall be entered when the insurer has timely
filed an answer or other pleading as required by law. The failure to post
notice to the insurer 60 days in advance of the initiation of suit shall not be
grounds for dismissal of the action, but shall automatically extend the time
for the filing of an answer or other pleadings to 60 days after the time of
service of the summons, complaint, or other process on the insurer.
b. Where the
insured, under the uninsured motorist coverage, claims that he has sustained
bodily injury as the result of collision between motor vehicles and asserts
that the identity of the operator or owner of a vehicle (other than a vehicle
in which the insured is a passenger) cannot be ascertained, the insured may
institute an action directly against the insurer: Provided, in such that
event, the insured, or someone in his behalf, shall report the accident
within 24 hours or as soon thereafter as may be practicable, to a police
officer, peace officer, other judicial officer, or to the Commissioner of Motor
Vehicles. The insured shall also within a reasonable time give notice to the
insurer of his injury, the extent thereof, and shall set forth in such the
notice the time, date and place of such the injury.
Thereafter, on forms to be mailed by the insurer within 15 days following
receipt of the notice of the accident to the insurer, the insured shall furnish
to insurer such any further reasonable information concerning the
accident and the injury as that the insurer shall request. requests.
If such the forms are not so furnished within 15 days,
the insured shall be is deemed to have complied with the
requirements for furnishing information to the insurer. Suit may not be
instituted against the insurer in less than 60 days from the posting of the
first notice of such the injury or accident to the insurer at the
address shown on the policy or after personal delivery of such the notice
to the insurer or its agent. The failure to post notice to the insurer 60 days in
advance of before the initiation of the suit shall not be grounds
for dismissal of the action, but shall automatically extend the time for filing
of an answer or other pleadings to 60 days after the time of service of the
summons, complaint, or other process on the insurer.
Provided under this section the term 'uninsured motor vehicle' shall include, but not be limited to, an insured motor vehicle where the liability insurer thereof is unable to make payment with respect to the legal liability within the limits specified therein because of insolvency.
An insurer's insolvency protection shall be applicable only to accidents occurring during a policy period in which its insured's uninsured motorist coverage is in effect where the liability insurer of the tort-feasor becomes insolvent within three years after such an accident. Nothing herein shall be construed to prevent any insurer from affording insolvency protection under terms and conditions more favorable to the insured than is provided herein.
In the
event of payment to any person under the coverage required by this section and
subject to the terms and conditions of such coverage, the insurer making
such payment shall, to the extent thereof, be entitled to the proceeds
of any settlement for judgment resulting from the exercise of any limits of
recovery of such that person against any person or organization
legally responsible for the bodily injury for which such the payment
is made, including the proceeds recoverable from the assets of the insolvent
insurer.
For the
purpose of this section, an 'uninsured motor vehicle' shall be a motor vehicle
as to which there is no bodily injury liability insurance and property damage
liability insurance in at least the amounts specified in subsection (c) of G.S.
20-279.5, or there is such that insurance but the insurance
company writing the same insurance denies coverage thereunder, or
has become bankrupt, or there is no bond or deposit of money or securities as
provided in G.S. 20-279.24 or 20-279.25 in lieu of such the bodily
injury and property damage liability insurance, or the owner of such the
motor vehicle has not qualified as a self-insurer under the provisions of
G.S. 20-279.33, or a vehicle that is not subject to the provisions of the Motor
Vehicle Safety and Financial Responsibility Act; but the term 'uninsured motor
vehicle' shall not include:
a. A motor vehicle owned by the named insured;
b. A motor
vehicle which that is owned or operated by a self-insurer within
the meaning of any motor vehicle financial responsibility law, motor carrier
law or any similar law;
c. A motor
vehicle which that is owned by the United States of America,
Canada, a state, or any agency of any of the foregoing (excluding, however,
political subdivisions thereof);
d. A land motor vehicle or trailer, if operated on rails or crawler-treads or while located for use as a residence or premises and not as a vehicle; or
e. A farm-type tractor or equipment designed for use principally off public roads, except while actually upon public roads.
For purposes of this section 'persons
insured' means the named insured and, while resident of the same household, the
spouse of any such named insured and relatives of either, while in a
motor vehicle or otherwise, and any person who uses with the consent, expressed
or implied, of the named insured, the motor vehicle to which the policy applies
and a guest in such the motor vehicle to which the policy applies
or the personal representative of any of the above or any other person or
persons in lawful possession of such the motor vehicle."
Sec. 2. G.S. 20-279.21(b)(4) reads as rewritten:
"(4) Shall, in addition to
the coverages set forth in subdivisions (2) and (3) of this subsection, provide
underinsured motorist coverage, to be used only with policies a
policy that are is written at limits that exceed those
prescribed by subdivision (2) of this section and that afford uninsured
motorist coverage as provided by subdivision (3) of this subsection, in an
amount equal to the policy limits for not to be less than the
financial responsibility amounts for bodily injury liability as set forth in
G.S. 20-279.5 nor greater than one million dollars ($1,000,000) as selected by
the policy owner. automobile bodily injury liability as specified in the
owner's policy. An 'uninsured motor vehicle,' as described in
subdivision (3) of this subsection, includes an 'underinsured highway vehicle,'
which means 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 underinsured motorist
coverage for the vehicle involved in the accident and insured under the
owner's policy. For the purposes of this subdivision, the term 'highway
vehicle' means a land motor vehicle or trailer other than (i) a farm-type
tractor or other vehicle designed for use principally off public roads and
while not upon public roads, (ii) a vehicle operated on rails or crawler-treads,
or (iii) a vehicle while located for use as a residence or premises. The
provisions of subdivision (3) of this subsection shall apply to the coverage
required by this subdivision. Underinsured motorist coverage shall be is
deemed to apply when, by reason of payment of judgment or settlement, all
liability bonds or insurance policies providing coverage for bodily injury
caused by the ownership, maintenance, or use of the underinsured highway
vehicle have been exhausted. Exhaustion of such that liability
coverage for the purpose of any single liability claim presented for
underinsured motorist coverage shall be is deemed to occur when
either (a) the limits of liability per claim have been paid upon such the
claim, or (b) by reason of multiple claims, the aggregate per occurrence
limit of liability has been paid. Underinsured motorist coverage shall be is
deemed to apply to the first dollar of an underinsured motorist coverage
claim beyond amounts paid to the claimant pursuant to under the
exhausted liability policy.
In any event, the limit of underinsured motorist coverage applicable to any
claim is determined to be the difference between the amount paid to the claimant
pursuant to under the exhausted liability policy or policies and
the total limits of the owner's underinsured motorist coverages provided in
the owner's policies of insurance; it being the intent of this paragraph to
provide to the owner, in limit of underinsured motorist coverage
applicable to the motor vehicle involved in the accident. Furthermore, if
a claimant is an insured under the underinsured motorist coverage on separate
or additional policies, the limit of underinsured motorist coverage applicable
to the claimant is the difference between the amount paid to the claimant under
the exhausted liability policy or policies and the total limits of the
claimant's underinsured motorist coverages as determined by combining the
highest limit available under each policy; Provided provided that
this paragraph sentence shall apply only to insurance on nonfleet
private passenger motor vehicle insurance vehicles as defined described
in G.S. 58-131.36(9) and (10). G.S. 58-40-15(9) and (10).
The underinsured motorist limits applicable to any one motor vehicle under a
policy shall not be combined with or added to the limits applicable to any
other motor vehicle under that policy.
An underinsured motorist insurer may at its option, upon a claim pursuant to
underinsured motorist coverage, pay moneys without there having first been an
exhaustion of the liability insurance policy covering the ownership, use, and
maintenance of the underinsured highway vehicle. In the event of such payment,
the underinsured motorist insurer shall be either: (a) entitled to receive by assignment
from the claimant any right or (b) subrogated to the claimant's right regarding
any claim the claimant has or had against the owner, operator, or maintainer of
the underinsured highway vehicle, provided that the amount of the insurer's
right by subrogation or assignment shall not exceed payments made to the
claimant by the insurer. No insurer shall exercise any right of subrogation or
any right to approve settlement with the original owner, operator, or
maintainer of the underinsured highway vehicle under a policy providing
coverage against an underinsured motorist where the insurer has been provided
with written notice in advance of before a settlement between its
insured and the underinsured motorist and the insurer fails to advance a
payment to the insured in an amount equal to the tentative settlement within 30
days following receipt of such that notice. Further, the insurer
shall have the right, at its election, to pursue its claim by assignment or
subrogation in the name of the claimant, and the insurer shall not be
denominated as a party in its own name except upon its own election. Assignment
or subrogation as provided in this subdivision shall not, absent contrary
agreement, operate to defeat the claimant's right to pursue recovery against the
owner, operator, or maintainer of the underinsured highway vehicle for damages
beyond those paid by the underinsured motorist insurer. The claimant and the
underinsured motorist insurer may join their claims in a single suit without
requiring that such the insurer be named as a party. Any claimant
who intends to pursue recovery against the owner, operator, or maintainer of
the underinsured highway vehicle for moneys beyond those paid by the
underinsured motorist insurer shall prior to before doing so give
notice to such the insurer and give such the insurer,
at its expense, the opportunity to participate in the prosecution of such the
claim. Upon the entry of judgment in a suit upon any such claim in which
the underinsured motorist insurer and claimant are joined, payment upon such
the judgment, unless otherwise agreed to, shall be applied pro
rata to the claimant's claim beyond payment by the insurer of the owner,
operator or maintainer of the underinsured highway vehicle and the claim of the
underinsured motorist insurer.
A party injured by the operation of an underinsured highway vehicle who
institutes a suit for the recovery of moneys for such those injuries
and in such an amount that, if recovered, would support a claim under
underinsured motorist coverage shall give notice of the initiation of the suit
to the underinsured motorist insurer as well as to the insurer providing
primary liability coverage upon the underinsured highway vehicle. Upon receipt
of such notice, the underinsured motorist insurer shall have the right
to appear in defense of such the claim without being named as a
party therein, and without being named as a party may participate in such the
suit as fully as if it were a party. The underinsured motorist insurer may
elect, but may not be compelled, to appear in such the action in
its own name and present therein a claim against other parties; provided that
application is made to and approved by a presiding superior court judge, in any
such suit, any insurer providing primary liability insurance on the
underinsured highway vehicle may upon payment of all of its applicable limits
of liability be released from further liability or obligation to participate in
the defense of such proceeding. However, prior to before approving
any such application, the court shall be persuaded that the owner, operator, or
maintainer of the underinsured highway vehicle against whom a claim has been
made has been apprised of the nature of the proceeding and given his right to
select counsel of his own choice to appear in such the action on
his separate behalf. In the event that If an underinsured
motorist insurer, following the approval of such the application,
pays in settlement or partial or total satisfaction of judgment moneys to the
claimant, such the insurer shall be subrogated to or entitled to
an assignment of the claimant's rights against the owner, operator, or
maintainer of the underinsured highway vehicle and, provided that adequate
notice of right of independent representation was given to such the owner,
operator, or maintainer, a finding of liability or the award of damages shall
be res judicata between the underinsured motorist insurer and the
owner, operator, or maintainer of underinsured highway vehicle.
The coverage required under this subdivision shall not be applicable where any insured named in the policy rejects the coverage. An insured named in the policy may select different coverage limits as provided in this subdivision. Once the named insured exercises this option, the insurer is not required to offer the option in any renewal, reinstatement, substitute, amended, altered, modified, transfer, or replacement policy unless the named insured makes a written request to exercise a different option. The selection or rejection of underinsured motorist coverage by a named insured is valid and binding on all insureds and vehicles under the policy.
If the named insured rejects the coverage required under this subdivision, the insurer shall not be required to offer the coverage in any renewal, reinstatement, substitute, amended, altered, modified, transfer or replacement policy unless the named insured makes a written request for the coverage. Rejection of this coverage for policies issued after October 1, 1986, shall be made in writing by the named insured on a form promulgated by the North Carolina Rate Bureau and approved by the Commissioner of Insurance."
Sec. 3. Within 60 days after the ratification of this act the North Carolina Rate Bureau shall make appropriate rate and policy form filings with the Commissioner of Insurance to reflect the provisions of this act.
Sec. 4. Sections 1 and 2 of this act become effective 60 days after approval by the Commissioner of Insurance of all filings made by the Bureau under Section 3 of this act. The remainder of this act is effective upon ratification. This act shall not affect claims arising prior to; nor litigation pending on the effective date of Sections 1 and 2 of this act. This act shall apply only to new and renewal policies written on and after the effective date of Sections 1 and 2 of this act.
In the General Assembly read three times and ratified this the 12th day of July, 1991.
───────────────────
James C. Gardner
President of the Senate
───────────────────
Daniel Blue, Jr.
Speaker of the House of Representatives