Following a bad car accident, which results in serious injuries, eventually someone is going to pose the question regarding who is going to pay for the medical treatment. Initially, money is the furthest thing from peoples’ minds following an accident but sometime after the ambulance, the emergency room and meetings with doctors, reality hits regarding the cost.
The biggest misconception that people have following an accident is that the other person’s automobile insurance will pay for all of the medical expenses (not to mention lost wages). Unfortunately, in practice, many times the other person’s insurance is insufficient to cover all of the costs.
In North Carolina, the minimum required liability limits of insurance are $30,000.00. As anyone who has been to the Emergency Room can tell you, it doesn’t take much to reach $30,000.00 in medical expenses. The question now is, where does this leave the injured party?
Every individual buying a North Carolina insurance policy can purchase under insured insurance coverage, abbreviated “UIM”. This is one of the few items people can buy which protects them when they are involved in an accident. Liability coverage is what is used to cover the injuries to other people, UIM is what is used to cover yourself.
Every time when one of our personal injury lawyers meets with a new client we provide additional information regarding their own insurance policies. We always focus on their underinsured insurance and uninusred insurance (discussed in other articles). Underinsured insurance starts at $50,0000.00 then goes to $100,000.00. We recommend to clients that they have at least $100,000.00 worth of coverage. Further, we suggest that they look into increasing that amount to the highest level they feel comfortable.
Underinsured insurance, UIM for short, works by, in effect, stepping into the shoes of the other driver and becoming their insurance. It covers the injured party by supplementing the other person’s insurance (with important differences). Each state handles the use of UIM differently. In other words, the use and implementation of UIM is North Carolina is different than South Carolina.
In North Carolina, UIM carriers get a credit for payments made by the liability carriers. To highlight this point consider this example. A person in injured in a Charlotte car accident suffers injuries valued at $100,000.00. The at-fault driver is insured by X insurance company for $30,000.00, the minimum required policy in North Carolina. The liability policy agrees to tender their policy of $30,000.00. The insured party has $50,000.00 of UIM coverage. In North Carolina, the most the UIM carrier would pay would be $20,000.00 because they would get a credit of $30,000.00 from the liability carrier. In the same example, if the accident took place in South Carolina, the UIM carrier would have to pay $50,000.00 as they would not get a credit from the liability carrier.
Another large difference between states is call intra-policy stacking. Intra-policy stacking occurs when you have multiple vehicles on your policy. For each vehicle you can stack the UIM amounts on top of each other. For example, if you have a South Carolina insurance policy with two vehicles and UIM coverage of $100,000.00 your total UIM coverage is $200,000.00 because you can stack both vehicles on top of each other. North Carolina does not allow for intra-policy stacking. The exact same scenario in North Carolina only allows for $100,000.00 of UIM coverage.
One of the biggest advantages of using your UIM is the ability to arbitrate. Within a North Carolina insurance policy is language on arbitration. Arbitration, in North Carolina UIM cases is a binding procedure wherein both sides present their case to a panel of one or three arbitrators. The arbitrators are selected by the parties’ lawyers. The arbitrators hear the case than make a decision regarding the value of the case.
Another advantage of arbitration is that the Rules of Evidence do not apply. This results in a more efficient presentation of the case. Arbitration hearings take place in my office and depending on the size of the case can take half a day. Compare this to a jury trial which, even for the smallest of cases, can last for many days. Further, having live testimony is not necessary in arbitration. This is important when looking at the expense of arbitration, specifically, the expenses of having a medical doctor testify. This is highlighted when looking at the typical jury trial wherein the majority of the treatment was performed by an orthopedic surgeon. Many times we do not have the doctor testify live in court. This is usually because the doctors typically don’t want to be out of their office for prolonged periods of time. If the doctors are subpoenaed to be in court they may not make the best witness. As such, we typically scheduled a time to meet with the doctor and depose them regarding the treatment. This deposition is video recorded. When it is time to call the doctor the lawyer will play the video for the jury.
Historically arbitration results are higher than one receives in court. While there are many reasons for this I am of the belief that it is because arbitrators are professionals who understand all of the aspects of the case, including what is really going on behind the scenes. Insurance companies take advantage of the inexperience of the juries. They are not able to do that with arbitrators.
Arbitration does carry some risk. The largest risk is the result is binding. This means that if you do not like the result of the arbitrators you do not have any recourse. Of course, the award is binding to both sides. As such, the insurance company doesn’t have any recourse if they think the award is too high.