The North Carolina Supreme Court's recent opinion in Lunsford v. Mills (Dec. 19, 2014) held that UIM coverage is triggered upon a single liability carrier's payment of its policy limits - even if there are other potentially liable tortfeasors who have not exhausted their liability coverage. In the latest issue of the North Carolina Insurance Law Newsletter, I discuss the case and highlight its practical impact on the need for UIM carriers to protect their subrogation rights.
In short, in cases involving more than one tortfeasor, the timing of the resolution of the insured's UIM claim will be of utmost importance. A UIM carrier will want to investigate, evaluate, and resolve its insured's claim as soon as possible - even before all of the available liability coverage has been exhausted. At first glance, the idea of paying a UIM claim before the liability coverage has been exhausted may seem to break all the rules of handling a UIM claim, but as I discuss in further detail in the newsletter, if a UIM carrier wants to protect its subrogation rights (as it often will), that is exactly what must be done in cases involving joint tortfeasors.
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