I thought I would take a moment to answer some of the more frequently asked questions about car insurance. Please remember I am mainly writing about N.C. Law and the law changes frequently so you should always consult an attorney about any issue you may have.
Coverage For Damage to Others
People are always asking what is Bodily Injury or What is Uninsured Motorist Coverage… well here is the answer:
Bodily Injury: This coverage pays for an injury you cause someone else through an accident. It can pay for medical bills, rehabilitation, funeral expenses, etc…
Property Damage: This coverage pays for property damage to someone else’s car when you have caused an accident. It can pay for the actual repair cost or the cost to total out the vehicle.
Coverage For Your Damages
Collision: This coverage pays for damages when your vehicle is damaged in an accident no matter who is at fault.
Comprehensive: This coverage pays for miscellaneous damages such as fire, theft, hail damage, broken glass etc..
Uninsured Motorists Coverage (UM): This coverage pays for both physical damage and vehicle damage when someone hits your car and it turns out they do not have insurance.
Underinsured Motorists Coverage (UIM): This coverage pays for bodily injury to you when you are in an accident and the person that hits you does not have enough insurance to cover your injuries. UIM coverage does not pay for property damage.
Medical Payments Coverage: This coverage will pay for medical expenses up to your policy limits if you or an insured is injured in an automobile accident.
How Does the Insurance Company Determine My Rate?
The insurance company uses several things including your driving record. In N.C. points are assessed on your driver’s license for traffic violations and at fault accidents. If you have points on your license your insurance will be higher. Insurance companies also look at where you live and how far you drive on a daily basis. If you live in an urban area your rates are probably higher than someone that lives in the country. If you drive the vehicle every day and for more than a few miles each way your will pay more than you would for a weekend vehicle that is only occasionally driven. You will also pay higher rates for a vehicle that is more frequently stolen or for a vehicle that would be expensive to repair or replace.
Many of these factors you can’t control. You can however control whether you have points on your license. If you get a ticket you may want to consult an attorney who can very likely help you get it reduced rather than paying the ticket and having the points assessed.
What About Insurance Points
Insurance points are very real and they will cost you. In N.C.
Adding An Inexperienced Driver
How bad is the pain going to be when I add my teenager to my insurance policy? Unfortunately, it is going to hurt. I recently added my own teenage daughter to my policy and had sticker shock. The NC Dept of Insurance put out the following chart in a recent brochure. They based the rates on drivers with no insurance points.
If you have more questions, the N.C. Dept of Insurance puts out an excellent brochure on insurance laws in N.C. http://www.ncdoi.com/consumer/consumer_publications/automobile%20and%20vehicle/consumer%20guide%20to%20automobile%20insurance.pdf
N.C. Gov. Bev Perdue must decide whether to sign new legislation into law after the N.C. Senate voted 47-0 to give final approval for new laws imposing stiffer penalties for those so violent that they would torture, starve, or kill an animal.
The punishment could be up to eight months behind bars, but a judge could agree to community service instead.
The bill was introduced after a Greensboro man received probation after burning, beating and leaving his 8-week-old puppy to die.
The female pit-bull mix was later adopted and named Susie.
Update: On June 23, 2010, Governor Be Perdue signed Susie’s Law, making tougher penalties for those who abuse animals.
- The Nation’s First Animal Abuser Registry (animals.change.org)
According to a recent study by John Hopkins, graduated driver’s licensing programs reduce fatal crashes by 11% among 16-year-old drivers. All states except North Dakota have some form of graduated licensing requirements.
|Learner Stage||Intermediate Stage||Full Privilege
|Nighttime Driving Restriction||Passenger
(* family members exempt)
|NorthCarolina||15||12||16||9 p.m. – 5 a.m.||No more than 1 pass. <21*;if family member <21 is passenger,
no other non-family memb. pass. <21
|16 / 6||None|
In addition, it is against the law in N.C. for all drivers to text while driving and it’s against the law for those under 18 to use a cell phone while driving. For more information on your state laws see
You might be surprised to learn who is behind the push to move North Carolina from a contributory negligence state to a comparative negligence state. It’s attorneys! Primary sponsors of the House Bill are Rick Glazier, an attorney from Cumberland County, John Blust, an attorney/accountant from Guilford County, Deborah Ross, an attorney from Wake County, and Bonner Stiller, an attorney from Brunswick County.
In contract law, the question of whether acceptance of an offer is within a reasonable time where no time for acceptance is specified is generally a question of fact for the fact finder given the surrounding circumstances. What is reasonable depends on the need or lack thereof for timely acceptance, what the parties believed to be the time frame for acceptance, and the expiration of the need for the offeree to perform the act required by the offeror.
In the case of a settlement contract, the consideration is generally thought of as forbearance to bring a suit or the forbearance to appeal a less than favorable verdict depending on the party that is making the offer. Once the statute of limitations has run there is no longer a need for the offeree to perform on an offer from the insurance company, because the insurance company no longer needs the offeree to forbear in bringing a suit or release the insurance company of any claims. There is no longer consideration for the contract. Therefore, a settlement contract cannot be formed after the statute of limitations has run.
In Smith and N.C. Farm Bureau v. Murrell and Progressive Insurance, 167 N.C. App. 655 (2004), the court held that Farm Bureau’s acceptance of Progressive’s offer to settle after the statute of limitations had run was not acceptance within a reasonable time because the release included in Progressive’s offer was no longer meaningful.
However, if the offeror mislead the offeree to believe that the offer would remain open past the statute of limitations then the court could find that a contract existed based on an equitable estoppel argument. Simply making an offer to settle and leaving the offer open should not create an equitable estoppel argument because equitable estoppel is based on the giving of misinformation or deceit.
Being as specific as possible about how long the offer to settle is on the table and when and how acceptance is to be made may be the best way to avoid the possibility of a person coming back after the statute of limitations has run and expecting to still be able to accept an offer to settle.
In North Carolina, the insurance contract controls whether insurance coverage exists. There are several variations in insurance policies that are directly bearing on the question of coverage in this type of situation. In order to determine whether there could be coverage a determination needs to be made as to whether the insurance policy contains “Any Person”, “Reasonable Belief” or “Permissive Use” language and whether the person driving the car (tortfeasor) was in “lawful Possession” of the vehicle.
Some insurance policies define the insured as “any person using your “covered auto”. This provision provides coverage to anyone using your car. It has no limiting language, so presumably even someone who has stolen the insured’s car would be an insured and the insurance company would likely have to provide coverage to that person.
The analysis used to determine whether the tortfeasor had “Lawful Possession” or “Reasonable Belief” that he could use the vehicle when the accident occurred is almost identical. In Nationwide Mut. Ins. Co. v. Baer, 113 N.C. App. 517, 520 (1994), the court held that the “Reasonable Belief” exclusion included in the Nationwide insurance policy was not in conflict with the N.C. Financial Responsibility Act. The court reasoned that the exclusion requiring a person have a reasonable belief that he was entitled to use the vehicle was simply another way of determining whether a person knows that he lacks the owner’s permission to use the vehicle. In previous cases, the court had concluded that the exclusion broadens the inquiry into whether the tortfeasor had a subjective, reasonable belief that he was entitled to use the vehicle.
However, some insurance policies particularly corporate policies contain a “Permissive Use” clause. These types of policies usually extend coverage to “any person while using the insured auto with the permission of the named insured provided his actual operation is within the scope of such permission”.
If the insurance policy in question contains the “Permissive Use” clause, the analysis of coverage is as follows:
- First, did the insured grant permission for the tortfeasor to use the vehicle? The permission can be either express or implied. If not there may not be coverage.
- Secondly, did the tortfeasor exceed the scope of the permission granted? The scope of the permission can be limited temporarily, geographically, and to limited purposes. N.C. courts follow the minor deviation rule, which provides that if the use of the vehicle by the permittee is not a gross deviation of the terms then coverage will apply.
The N.C. Financial Responsibility Act requires that the policy provide minimum coverage if the tortfeasor is in “Lawful Possession” of the vehicle. “Lawful Possession” basically means that the tortfeasor did not steal the vehicle. Most insurance policies do not include language regarding “Lawful Possession” however this does not prevent the insurance company from having to provide coverage if the tortfeasor was in “Lawful Possession” of the vehicle at the time of the accident. The statute will control in situations where the language of the statute and the language of the insurance policy are in conflict with each other.
Coverage analysis should begin with the insurance policy. If the policy contains “Any Person” language, there is almost certainly coverage regardless of the reason why the tortfeasor had possession of the vehicle. If the policy contains the “Reasonable Belief” language, the analysis is one-step. Did the tortfeasor have a “Reasonable Belief” that he was entitled to use the vehicle? If the answer is yes then he is likely entitled to full coverage. If the answer is no, he probably not entitled to any coverage.
If the insurance policy has a provision, regarding “Permissive Use” the coverage determination hinges on whether the individual had permission from the insured to use the vehicle and that he did not exceed the scope of that permission. If both of these elements are met, then the policy will likely provide coverage. If the individual did not have permission to the use the vehicle, you then must look the N.C. Financial Responsibility Act to determine if the individual was in “Lawful Possession” of the vehicle and therefore entitled to minimum limits coverage. For these types of analyses, you should also consult an attorney specifically one familiar with insurance law, insurance defense, and insurance coverage.
Consider the following, you are a small businessperson and the vehicle
you normally drive is owned by and insured under your business automobile insurance policy. One day your normal vehicle, the one insured under the policy, is low on gas or maybe it needs new brakes so you borrow your wife’s car for the day. Unfortunately, you are involved in a horrible accident and incur several hundred thousand dollars worth of medical bills. The person who hits your vehicle has little or no insurance. Your wife’s vehicle has a $100,000 policy. The company policy for the vehicle you normally drive is $1million in coverage. Are you covered under your company’s automobile policy’s uninsured or underinsured motorist coverage? The answer is it depends.
Typical UIM language in an automobile policy might include the following:
B. Who is An Insured
If the named insured is designated in the Declarations as:
2. A partnership, limited liability company, corporation or any other form of organization then the following are “insured”:
a. Anyone “occupying” a covered”auto” or a temporary substitute for a covered “auto”. The covered “auto” must be out of service because of its breakdown, repair, servicing, “loss” or destruction.
The analysis to the above hypothetical revolves around determining what is meant by out of service because of a “breakdown, repair, servicing, “loss” or destruction” of your covered auto. In Ransom v. Fidelity and Casualty Co., 250 N.C. 60 (1959), the N.C. Supreme Court held that Francis Lee who drove his brother’s car because his own car was low on gas was not covered under his insurance policy because his car was not withdrawn from normal use. In Maryland Casualty Co. v. State Farm Mutual Automobile Insurance Co., 83 N.C. App. 140 (1986), the court held that Thomas who had borrowed a truck that day did not have coverage under his insurance policy because even though his covered vehicle was rusted and worn out it was not withdrawn from normal use. However, perhaps if your insured vehicle needed repairs you would be safe to borrow another car for the day. In Martini v. Companion Property and Casualty Ins. Co. the N.C. Court of Appeals found coverage for Douglas Martini who had borrow his wife’s car for the day because his Sequoia, insured under his company policy, was in need of new brakes. The court distinguished Martini’s case from Ransom and Maryland and found the facts more in line with the decision in Nationwide v. Fireman’s Fund Ins. Co., 279 N.C. 240 (1971) which held that coverage did exist for a man who borrowed a vehicle while having his insured vehicle painted.
The moral of this story is be careful when you borrow someone else’s car that they either have adequate insurance coverage or that your own insured vehicle is truly out of service otherwise you might be left without insurance coverage.
According to US Tort Liability Index: 2010 Report put out by Pacific Research North Carolina ranks 3rd just behind Alaska and Hawaii in tort costs and law. The Report attempts to measure which states have the highest and lowest tort liability costs. The worst? New Jersey with New York and Florida joining it in the bottom three.
The Report goes on to classify states as either saints, sinners, salvageable, or suckers based on tort litigation risks, lawsuit awards, and the strength of tort laws on the books.
The saints: Alaska, Kansas, Louisiana, Ohio, and South Carolina.
The sinners: Alabama, California, Illinois, New York, and Pennsylvania.
The salvageables: Colorado, Florida, Georgia, Mississippi, Oklahoma, and Texas.
The suckers: Idaho, Iowa, North Carolina, North Dakota, South Dakota, and Virginia.
Want to know more see the full Report at http://www.pacificresearch.org/docLib/20100525_Tort_Liability_Index_2010.pdf