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One Poignant Example

Taking Matters into Your Own Hands: Underinsured Motorist Coverage in North Carolina

Your son is a new driver. He goes for a ride with his six friends (6 passengers and one driver) in a friend’s vehicle, which teenagers often do. This new driver overcorrects and every passenger and the driver are seriously injured. If none of the teenagers, nor their parents have underinsured motorist coverage, each passenger will only receive $10,000.00. If one of the teens or their parents were to have underinsured motorist coverage in the 50/100 amount, that teen would receive an additional $40,000.00 pay out. (If the underinsured motorist coverage were in the 300/300 amount, that teen would receive an additional $290,000 pay out).

If the vehicle in which they were riding was covered by underinsured motorist coverage in the 50/100 amount, each of the six teens would receive an additional $16,667.00 ($100,000 per accident limit divided by six).

One final point: underinsured motorist coverage “STACKS” or adds up. This means that if one of the teens was covered with underinsured motorist coverage on a personal policy in the amount of 50/100, AND the vehicle was covered with underinsured motorist coverage in the amount of 50/100, the total available coverage would be $50,000 per person plus $50,000 per person, or $100,000 total. That particular teen would receive $10,000 from the at-fault driver, an additional $16,667.00 from the underinsured policy covering the vehicle AND another $50,000.00 from their personal underinsured policy. Thus, bringing the total pay out to $76,667.00. (The reason the total pay out is not $100,000 in this example, is that the per accident limit on the vehicle’s underinsured policy was shared amongst the six severely injured teens whose claims exceeded $100,000: pay out of $16,667 or 100/6).

This example is quite complex and quite confusing because the per accident limit came into play on the vehicle’s policy and the per person limit came into play on the personal policy. Remember the two ways insurance companies limit pay outs? The per person limits came into play for the personal policy because only the one person was claiming under their personal policy. Nonetheless, you can hopefully still see how grateful a family would be when they realize how much more of their medical bills are paid and their pain and suffering compensated when they have underinsured motorist coverage.

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