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Uninsured Motorist Coverage

UNINSURED MOTORIST COVERAGE UNDER
STATUTE N.C. GEN. STAT. §20-279.21(b) (3)
By
Jennifer H. Seate

I. PURPOSE

When I start to review a statute I always find it useful to look at what the purpose and intent may be behind the enactment of the legislation.  My understanding of the purpose of the uninsured motorist (UM) statute is to protect innocent persons who suffer property damage or bodily injury as a result of the wrongful conduct of an uninsured motorist who has been financially irresponsible and thus are,   S.E.2d ( unable to pay for the wrong committed.  Moore v. Harford Fire Ins., 270 N.C. 532, 155 S.E.2d 128 (1967); Wright v. Fidelity & Cas. Co., 270 N.C. 577, 155 S.E.2d 100 (1967).

Because the nature of this statute is remedial and was enacted to protect the innocent people, the statute should be construed liberally to accomplish the purpose intended by the legislature. Williams v. Holsclaw 128 N.C. App. 205, 495 S.E.2d 166, aff’d 349 N.C. 225, 504 S.E.2d 784 (1998); Hoffman v. Great Am. Alliance Ins. Co., 166  N.C. App. 422, 601 S.E.2d 908 (2004).

Every provision of N.C. Gen. Stat. §20-279.21 is written into every policy as a matter of law  See Lictenberger v. American Motorists Ins. Co., 7 N.C. App.269, 172 S.E.2d 284 (1970)  If  the insurance contract language is in conflict with the statute the statute controls.  See Baxley v. Nationwide Mut. Ins. Co., 115 N.C.App.718, 446 S.E.2d 597 (1994).

In order for an innocent party to recover under the uninsured motorist coverage, one must prove he/she is:

  1. legally entitled to recover damages;
  2. from the owner or operator of an uninsured automobile;
  3. because of bodily injury;
  4. caused by accident; and
  5. arising out of the ownership, maintenance or use of the uninsured auto.

See Williams v. Nationwide Mut. Ins. Co., 269 N.C. 235 152 S.E.2d 102 (1967).

What this means is the plaintiff has to prove the uninsured driver is legally responsible for the accident.  If the plaintiff contributed to the accident, he/she will be barred from recovery under the UM coverage of the policy.

For the accident to arise out of the ownership, maintenance or use of the
uninsured auto is defined by the courts in the same manner as the language is defined under the liability portion of the statute and policies. Id.

See the following cases:

Nationwide Mut. Ins. Co. v Webb, 132 N.C. App. 524. 512 S.E.2d 764 (1999) (an intentionally thrown soda bottle from an insured vehicle causing injuries to bicyclist did not arise out of the use of the vehicle).

Williams v. Nationwide Mut. Ins. Co., 269 N.C. 235, 152 D.E.2d 102 (1967) (making repairs underneath the uninsured vehicle while on blocks making repairs, when car fell injuring plaintiff was part maintaining the vehicle and was covered under the UM coverage).

State Capitol Ins. Co. v. Nationwide Mut. Ins. Co., 318 N.C. 534, 350 S.E.2d 66 (1986) (where rifle accidentally discharged as it was being removed from the vehicle was found arising out of the maintenance ownership or use of the motor vehicle).

Integon Specialty Ins. Co. v. Austin, 151 N.C. App. 593, 565 S.E.2d 736 (2002), cert. denied, 356 N.C. 302, 570 S.E.2d 509 (2002) (where victim sustained injury from a gunshot wound which was fired from moving motor vehicle did not arise out of the use, maintenance or ownership of the vehicle).

II. WHO IS COVERED UNDER UNINSURED MOTORIST COVERAGE?

First, uninsured motorist coverage is different from liability coverage as the UM coverage follows the person and not the automobile. See Nationwide Mut. Ins. Co. v. Mabe, 342 N.C. 482, 467 S.E.2d 34 (1996). So there is the potential of having more policies under which an individual could be covered for purposes of UM coverage than you could under liability policies.

In order to be able to recover under the uninsured motorist portion of the policy, you must be an insured as defined by the statute.  The statute defines persons insured as:

“the named insured and, while resident of the same household, the spouse of the named insured and any 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 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 the vehicle.” N.C. Gen. Stat. §20-279.21(b)(3).

The statute sets out two classes of insureds.  Persons typically defined as a Class 1 insured are those persons listed under the uninsured motorist coverage as the named insured, the named insured’s spouse if a resident of the household and resident relatives of either.  The Class 2 insureds are anyone using the covered automobile with express or implied consent of the named insured or a guest passenger in the automobile.  Members of Class 2 are “persons insured” when the insured’s vehicle is involved in the accident.  Members of Class 1 are persons insured even when the insured vehicle is not involved in the insured’s injuries.  Crowder v. N.C. Farm Bureau Mut. Ins. Co., 79 N.C. App. 551, 340 S.E.2d 127, (1986);  See also Smith v. Nationwide Mut. Ins. Co., 328 N.C. 139, 400 .E.2d 44 (1991), rehearing denied, 328 N.C. 577, 403 S.E.2d. 514 (1991). See also Brown v. Truck Ins. Exch., 103 N.C. App. 59, 404 S.E.2d 172, cert. denied, 329 N.C. 786, 408 S.E.2d 514 (1991).

In Bray v. North Carolina Farm Bureau Ins. Co., 115 N.C. App. 438, 445 S.E.2d 79 (1994), aff’d in part and rev’d in apart on other grounds, 341 N.C. 678, 462 S.E.2d 650 (1995), the plaintiff was injured in an accident caused by an uninsured motorist.  Her personal auto policy covered her UM claim but then she sought coverage under her husband’s business auto policy and garage policy.  The business policy is the only policy the court looked at in this case.  The exclusion in the policy read “this coverage (UM) does not apply to “bodily injury” sustained by you or any “family member” while “occupying” or struck by any vehicle owned by you or any “family member” that is not a covered “auto.” Clearly the car the plaintiff was in was not a covered auto under the business policy as it was covered under another insurance policy.  In addition, the auto was owned by the same named insured, her husband. The court upheld the Court of Appeals decision finding that the family member/household owner exclusion was repugnant to the purpose of UM and UIM coverage and the exclusion in the policy was thus invalid.

The class of insured a plaintiff is classified as will affect which insurance policies will apply.  Other cases that help classify whether the plaintiff is a class 1 or class 2 insured are:

Isenhour v. Universal Underwriters Ins. Co., 341 N.C. 597, 461 S.E. 2d 317, reh’g denied, 342 N.C. 237 (1995).

Bailey v. Nationwide Mut. Ins. Co. , 333 N.C. 458, 426, S.E.2d 684 (1993) (where person living in household with insured was not married to the named insured, nor related to the insured or insured’s spouse and was only a listed drive on the policy, the person was only a class II insured).

Bass v. N.C. Farm Bureau Mut. Ins. Co. , 332 N.C. 109, 418 S.E.2d 221 (1992) (driver of motorcycle was a class I insured under a separate policy not covering the motorcycle).

Sproles v. Green, 329 N.C. 603, 407 S.E.2d 497 (1991) (where party was not an insured under the corporate employer’s business auto policy because the corporation was the only named insured and the party was not riding in an auto covered under the provisions of the policies, the parties were only class II insureds). In contrast see Erwin v. Tweed, 142  N.C. App. 643, 544 S.E.2d 803, disc rev. denied, 353 N.C. 724, 551 S.E.2d 437 (2001) were a farm trust is treated differently from a corporation and is considered owned individually for the purposes of providing insurance for all family members in the same resident.  See also Stockton v. North Carolina Farm Bureau Mut. Ins. Co., 139 N.C. App. 196, 532 S.E.2d 566, disc. rev. denied, 352 N.C. 683, 545 S.E.2d 727 (2000) (where son was entitled to UIM coverage under his parent’s Oak Farm policy because the farm was not considered the legal entity).

The statute indicates a person is insured while in a motor vehicle or otherwise.
Thus if you are outside of a motor vehicle you may be covered as well.  For example if you are a pedestrian hit by an uninsured vehicle, you will be covered under your uninsured motorist coverage. See Bray v. North Carolina Farm Bureau Ins. Co., 115 N.C. App. 438, 445 S.E.2d 79 (1994), aff’d in part and rev’d in apart on other grounds, 341 N.C. 678, 462 S.E.2d 650 (1995).

III. WHEN IS AN AUTO UNINSURED?

The statute defines an uninsured motor vehicle as:

  1. 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
  2. there is that insurance but the insurance company writing the insurance denies coverage there under, or
  3. has become bankrupt, or
  4. 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 bodily injury and property damage liability insurance, or
  5. the owner of the motor vehicle has not qualified as a self-insurer under the provisions of G.S. §20-279.33, or
  6. the vehicle is not subject to the provisions of the motor vehicle safety and financial responsibility act.

N.C. Gen. Stat.§20-279.21(b)

When there is no insurance purchased on the vehicle or the coverage has been terminated by the insurer, or the insurer has decided the coverage is not applicable in the given situation, the vehicle is uninsured as it does not carry any liability limits of coverage to compensate the innocent party. For instance, where the insurance company has denied coverage based on the driver driving without permission or in lawful possession of the vehicle, the courts have held this is a specific incident the statute is meant to cover. See Buck v. United States Fid. & Guar. Co., 265 N.C. 285, 144 S.E.2d 34 (1965).

In addition, if the vehicle’s liability insurance limit is less than what is required by North Carolina, there is uninsured motorist coverage for the difference.  For instance, if an accident happens in North Carolina and the tortfeasor is from South Carolina with SC policy limits of $15,000.00 and the injured person is from North Carolina with UM coverage of $30,000.00 per person, the South Carolina driver is uninsured for the additional $15,000.00 since it is not as much as what is required by the North Carolina General Statutes. See Hamilton v. Travelers Indemnity Co., 77 N.C. App. 318, 335 S.E.2d 228 (1985), disc rev denied, 315 NC 587 341 SE2d 25 (1986).

The statute states “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 vehicle cannot be ascertained, the insured may institute an action directly against the insurer”. N.C. Gen. Stat. §20-279.21(b).  By statute then, an unidentified vehicle is treated as an uninsured motor vehicle See Johnson v. North Carolina Farm Bureau Ins. Co., 112 N.C. App. 623, 436 S.E.2d 265 (1993). However, a collision is required.  A “collision”  requires physical contact between the insured’s vehicle and the unidentified driver’s vehicle. Anderson v. Baccus, 109 N.C. App. 16, 426 S.E.2d 105 (1993), affirmed in part and reversed in part, 335 N.C. 526, 439S.E.2d 136 (1994). The purpose behind requiring contact is to avoid fraudulent claims that were actually caused by the insured’s own negligence. Id.

In Anderson, Baccus swerved to miss a vehicle hitting Anderson but there was no contact with the unidentified vehicle with either Baccus or Anderson. However, in McNeil v Hartford Accident & Indemnity Co., 84 N.C. App. 438, 352 S.E.2d 915 (1987), the plaintiff was in a multi car accident.  The responsible party was unidentified and left the scene.  The “phantom vehicle” did not make direct contact with the plaintiff’s vehicle. The court held that “the physical contact requirement is satisfied where the physical contact arises between the hit-and-run vehicle and plaintiff’s vehicle through intermediate vehicles involved in an unbroken “chain collision” which involves the hit-and-run vehicle… albeit intermediate and indirect”.

In Petteway v South Carolina Ins. Co., 93 N.C. App. 776,  379 S.E.2d 80, disc review denied, 325 N.C. 273, 384 S.E.2d 518 (1989) the plaintiff ran off the road and hit a ditch because a phantom vehicle forced his vehicle off the road.  A witness saw the accident and verified this information to the police. Since the purpose of the physical contact requirement is to protect against fraud, one would think an independent witness would be sufficient to verify the incident and fraud was not taking place.  The courts still held that a vehicle collision of some sort is essential for the uninsured motorist coverage to apply when the wrongdoer is unidentified.  Keep in mind in this situation, if the car had stopped and had been identifiable, then UM coverage would apply because the vehicle is identifiable.

The liability policy can deny coverage for a host of reasons by the statute and by the policy.  In Fortune Ins. Co. v. Owens, 351 N.C. 424, 526 S.E.2d 463 (2000) the defendant had a Florida insurance policy.  The Florida insurance company denied coverage pursuant to its policy language.  The court held the Financial Responsibility Act only applies to motor vehicle liability policies issued in this state and the denial of liability coverage was appropriate.  In this case, the plaintiff can make a claim under the uninsured motorist coverage of his/her applicable policy

Typically if I have a liability carrier denying liability coverage, I precede with UM coverage.  There are more protections to an insured under his own policy and you can have more leverage with them to obtain a better settlement.  However, if you have a larger case and you have minimal UM Limits, then you may have to pursue the denial of liability coverage if it is wrongful.  Once the liability insurance company denies coverage on a policy, whether correctly or incorrectly, the vehicle automatically becomes uninsured and the uninsured carrier’s duties are activated.

When an insurance company is bankrupt and is thus unable to pay under its insured’s liability policy, the vehicle then becomes uninsured.  The statute states: “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 accident.  Nothing herein shall be construed to prevent any insurer from affording insolvency protection under the terms and conditions more favorable to the insured than is provided here in.” N.C. Gen. Stat. §20-279.21(b).  See North Carolina Ins. Guar. Ass’n v. State Farm Mut. Auto Ins. Co., 115 N.C. App, 666, 446 S.E.2d 364 (1994) and Jones v. N.C. Ins. Guaranty Ass’n, 163 N.C. App. 105, 592 S.E.2d 600 (2004).

In Rice v. Aetna Casualty & Surety Co., 267 N.C. 421, 148 S.E.2d 223 (1966), the plaintiff was injured by a South Carolina resident who’s insurance company was placed in a receivership due to insolvency was insufficient to render the vehicle as an uninsured vehicle when a claim was filed with the receivership.

N.C. Gen. Stat. §20-279.33 defines what is considered a self insured.  If any person who owns more than 25 vehicles, he/she may qualify as a self- insurer.  The Insurance Commissioner issues a certificate of self- insurance when he is satisfied that the person is possessed and will continue to be possessed of the ability to pay judgments against the said person.   If the self-insured fails to pay a final judgment within 30 days, this shall be reasonable grounds to cancel the certificate of insurance.  The commissioner can also hold a hearing upon reasonable grounds to terminate the self-insurance. The statute clearly indicates that for purposes of this article the State of North Carolina shall be considered a self-insurer

IV. WHAT IS NOT CONSIDERED AN UNINSURED VEHICLE

The Statute once again sets out what is not included in the term uninsured motor vehicle:

  1. motor vehicle owned by the named insured;
  2. a motor vehicle owner or operated by a self-insurer within the meaning of the motor vehicle financial responsibility law, motor carrier law or any similar law;
  3. a motor vehicle that is owned by the US of America, Canada, a state or any agency of any of the foregoing (excluding, however, political subdivisions thereof);
  4. 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
  5. a farm-type tractor or equipment designed for use principally off public roads, except while actually upon public roads.

N.C. Gen. Stat. §20-279.21(b)

The statute clearly indicates that a named insured cannot claim that one of his/her own vehicles caused the accident and was also uninsured.  This makes sense, as you can not be liable to yourself, as well as the insured could have added it to his other uninsured motorist policy.  The courts typically do not let you buy one policy and hope to insure all vehicles for only one premium.

A plaintiff who is not entitled to recover from a police officer’s negligence due to immunity could seek benefits under his UM policy. Williams v. Holsclaw 128 N.C. App. 205, 495 S.E.2d 166 (1998).

In Autry v. Aetna Life & Cas. Ins. Co., 35 N.C. App. 628, 242 S.E.2d 172, cert. denied, 295 N.C. 89, 244 S.E.2d 257 (1978), the plaintiff was injured while riding the defendant’s three-wheeler on private property.   An uninsured motor vehicle is intended to include motor vehicles which should be insured under the Motor Vehicle Safety and Financial Responsibility Act, but are not, and motor vehicles which, though not subject to compulsory insurance under the Act, are at some time operated on the public highways.  In this particular case the three-wheeler was not driven on public highways and was driven only on private property so it was not subject to uninsured motorist coverage. See also Corbett v. Smith, 131 N.C. App. 327; 507 S.E.2d 303 (1998) where the plaintiff was injured by an all-terrain vehicle.  Since it was designed for off-road use it was not covered by the uninsured motorist provision. The uninsured motorist provision did not cover vehicles designed mainly for use off public roads. Given the design of the all-terrain vehicle, it was designed for off-road use. Thus, it was not covered by the uninsured motorist provision.

V. NOTICE REQUIREMENTS

The statute requires an insured who is claiming coverage under uninsured motorist coverage for “bodily injury sustained as a result of a collision between motor vehicles and asserts the identity of the owner or operator cannot be ascertained can institute an action directly against the insurer, if the insured or someone on his behalf reported the accident with 24 hours or as soon thereafter as may be practicable, to a police, officer, peace officer, judicial officer, or to commission of motor vehicles”. N.C. Gen. Stat. §20-279.21(b).

The insured is also required to give notice to the insurer of his injury within a reasonable time.  The insured is to give the extent of his injuries and the time, date and place of injury. Then if the insurer requires a proof of claim form, insured must send out in 15 days of notice of injury. If no other forms are sent then the insured is deemed to have complied with the requirements.  If the forms are provided, the insured is required to furnish any further reasonable information concerning the accident and the injury.  N.C. Gen. Stat. §20-279.21(b)

In Hoffman, a bicyclist was hit by an uninsured motorist.  The plaintiff had knowledge of the driver and failed to report the incident to any law enforcement agency, even after being advised to do by his insurance company. The courts upheld the requirement pursuant to the statute that one must report an accident within 24 hours or soon thereafter as may be practicable to a police officer or be barred from recovering under the UM coverage.  The purpose of this requirement is to protect the innocent victims and prevent fraudulent claims.

It is an issue of fact as to whether the insured provided notice as soon as practicable; and it is based on a sense of good faith.  Hoffman created a two part step to decide whether notice was given as soon as practicable:

  1. whether the insured has shown that he acted in good faith; and
  2. the burden then shifts to the insurer to show that its ability to investigate and defend was materially prejudiced by the delay.

Whether the insured acted in good faith is a subjective test and is based on what the insured actually knew at the time. To determine if the insurer was materially prejudiced by the delay, you would look at such things as has the scene changed, witnesses lost, no available photos, etc.  Hoffman v. Great Am. Alliance Ins. Co., 166 N.C. App. 422, 601 S.E.2d 908 (2004).

VI. COMPLAINT/SERVICE TO UM CARRIER

The statute requires suit not to be instituted against the insurer in less than 60 days from posting first notice of injury or accident to insurer.  However, if the insured does file suit before waiting 60 days after he notices the UM carrier, the action will not be dismissed, but the time for filing an answer or other pleadings will be extended to 60 days after the time of service of the summons/complaint of other process on the insurer.  Consent is not required by the insurer before filing suit as long as the above is done. N.C. Gen. Stat. §20-279.21(b)

The right to recover under uninsured motorist coverages is derivative and conditional so any defense available to the tortfesor is also available to the insurer.  Brace v. Strother 90 N.C. App. 357, 368 S.E.2d 447, disc. review denied, 323 N.C. 171, 373 S.E.2d 104 (1988), overruled on other grounds, Ragan v. Hill, 337 N.C. 667, 447 S.E.2d 371 (1994). Plaintiff still has to show the uninsured motorist carrier that the tortfeasor is still responsible for the accident and injuries.

If you fail to effectively serve the defendant, the insurer may raise ineffective service as a defense to bar the insured’s claim under uninsured motorist coverage.  In Grimsley v. Nelson. 342 N.C. 542, 467 S.E.2d 92, reh’g denied, 343 N.C. 128, 468 S.E.2d774 (1996) the insured failed to serve the uninsured defendant and the court dismissed the action against the defendant for lack of personal jurisdiction.  Since the UM carrier is only obligated to pay on judgments obtained against the defendant, the action against the UM carrier was dismissed as well.

In addition to needing to serve the uninsured motorist in the time allotted by the statute of limitations for the underlying tort, you must also serve the uninsured motorist carrier within the same applicable statute of limitations. In Thomas v. Washington, 136 N.C. App. 750, 525 S.E.2d 839 (2000) the plaintiff kept the alias pluries alive directed to the uninsured motorist and served the uninsured motorist  but failed to serve the uninsured motorist carrier within the three-year tort statute of limitations and the court held the service on the carrier was defective and time barred.

In Sturdivant v. Andrews, 161 N.C. App. 177; 587 S.E.2d 510 (2004), on April 20, 2000 the injured party died as a result of the accident. A wrongful death action was commenced on July 3, 2002.  The court held the insurer needed to be made a party to the suit and to be served with a coy of the summons and complaint within the two year wrongful death statute of limitations.  The statute dictates the carrier becomes a party to the action between the insured and the uninsured motorist and the carrier is permitted to defend the suit in its own name or the name of the uninsured motorist.

If you wish to have the insurer bound by the final judgment, the insurer must be served with a 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 and it needs to be addressed to an officer, director or agent authorized to accept service of process; mailing direct to the claims adjuster does not satisfy serving the UM carrier.  Fulton v. Mickle, 134 N.C. App. 620, 518 S.E.2d 518 (1999). See also Thomas v. Washington, 136 N.C. App. 750, 525 S.E.2d 839 (2000).

If the issue is whether the defendant is an uninsured motorist, the insurer will not be bound except by a direct action against the insurer alone. See Hendricks v. United State Fidelity & Guaranty Co., 5 N.C. App. 181, 167 S.E.2d 879 (1969). In McLauhglin v. Martin, 92 NC app 368 374 SE2d 455 (1988) (where the court held that until a valid judgment was obtained against the defendant to force liability on the uninsured motorist carrier, there was no case in controversy to meet the jurisdictional requirements of a declaratory judgment action.)

N.C. Gen. Stat. §20-279.21(b) also prohibits the entering of a default judgment against the insurer if the carrier has filed responsive pleadings.  See Abrams v. Surrette, 119 N.C. App. 239, 457 S.E.2d 770 (1995).

When filing a lawsuit to recover uninsured motorist benefits, typically the complaint is captioned plaintiff v. defendant and the insurer is not named.  However, the insurer is a party to the action and can defend in the name of the defendant or its own name.   In Daniels v. Hetricks. 164 N.C. App. 197, 595 S.E.2d 700 (2004), an on duty policy officer with governmental immunity was the tort-feasor.  The officer had governmental immunity and was dismissed from the lawsuit.  The action continued against the UM carrier as an unnamed defendant.  The UM carrier presented the defendant as the defendant and defended the action.  The court held that the UM carrier had the option to defend the case in the uninsured motorist name and as such it was not error to present him at trial to the jury as the defendant.

The insurer does not have to be a named party and is typically not a named party to the action.  See Sparks v. Nationwide Mut. Ins. Co., 99 N.C. App. 148, 392 S.E.2d 415 (1990).  If the uninsured motorist is unidentifiable, then the insured can institute the action directly against the insurance company instead of John Doe.

Uninsured motorist claims are first party claims and the insurer has greater duties to your client, the insured under the policy.  The policies allow your client to select arbitration in lieu of going to court.  If the policy requires mandatory arbitration, the courts have held mandatory arbitration conflicts with the statutory beneficent purposes of the uninsured motorist statute favorable to the insured and the provision of statute controls. Wright v. Fidelity & Cas. Co., 270 N.C. 577, 155 S.E.2d 100 (1967).

VII. SUBROGATION

The Statute indicates if payment is made by the uninsured carrier “the insurer making payment shall be entitled to proceeds of any settlement or judgment resulting from the exercise of any limits of recovery of that person against any person or organization legally responsible for the bodily injury for which payment is made, including proceeds recoverable from assets of insolvent insurer.” N.C. Gen. Stat. §20-279.21(b).

The UM carrier can pursue the negligent third party to recover funds that the UM carrier paid out.  In addition, the UM carrier who has paid UM benefits to its insured, can contract with the insured to recover from the insured any proceeds the insured receives from the tort-feasor.  See Nationwide v. Chantos, 293 N.C. 431, 238 S.E.2d 597 (1977).

The insurer may institute an action against the tort-feasor in order to recover proceeds the UM carrier paid to the insured.  The carrier steps into the shoes of the insured and will be bound by what the insured could have recovered against the tort-feasor.  For instances, the UM carrier will need to bring an action within the 3 year statute of limitations for the underlying tort.  See Nationwide Mut. Ins. Co. v. State Farm Mut. Auto Ins. Co., 109 NC App 281, 426 S.E.2d 298, disc. review denied, 333 N.C. 792, 431 S.E.2d 26 (1993) and Aetna Casualty& Sur. Co. v Anders, 116  N.C. App. 348, 447 S.E.2d 504 (1994).

In Burger v. Doe, 143  N.C. App. 328, 546 S.E.2d 141, cert. denied, 354 N.C. 67, 553 S.E.2d 36 (2001), the insured was awarded a sum of money from an arbitration panel pursuant to her uninsured motorist policy.  The UM carrier proceeded to collect this amount from the tort-feasor. The UM carrier has a right under the statute to be indemnified by the wrongdoer. The purpose of the statute is to protect the innocent victims not to benefit the wrongdoer for not carrying insurance. Thus the UM carrier can proceed against the tortfeasor. Since the award was through arbitration where the defendant had not had a chance to defend his claim, the defendant sought to defend the action on damages which worked, the jury awarded less damages than the arbitration panel. On appeal, the Court indicated that the trial judge should have given the instruction that the arbitration award was a reasonable amount in order for the jury to award the arbitration amount as damages.

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