Lloyd, Cauble v. Coffey v. Markel Insurance; Notice to UIM carrier of settlement

In Lloyd v. Markel Insurance (unpublished), decided on January 21, 2014, the Court of Appeals affirmed a dismissal of a claim against a UIM carrier. In this case, the claimants were injured when the tortfeasor struck the rear of a bus. They settled with the liablity carrier for the vehicle. Their lawyer sent a notice to the UIM carrier of the claim, but did not give the UIM carrier thirty (30) days in which to advance the amount of the tentative settlement, in order to preserve its subrogation rights. The lower court and the Court of Appeals ruled that the UIM claim was lost because the claimants (Lloyd and Cauble) did not give the UIM insurer notice of the tentative settlement, pursuant to the North Carolina statute (20-279.21).

This case highlights some of the complexities of Underinsured Motorist law in North Carolina. In my opinion, this decision was wrongly decided. There is no clear precedent holding that the insured loses his UIM rights if he does not provide the UIM carrier with 30 days notice of the settlement. The statute simply states that the failure to give notice to the UIM carrier results in the UIM carrier preserving its subrogation rights against the tortfeasor (defendant). The court’s decision is illogical. The primary precedential case (Williams v. Bowden (1998)) does not clearly mandate the result reached in Lloyd v. Markel. That case could be read to mean simply that the UIM carrier did not waive its subrogation rights; but that precedential case is itself ambiguous.

John Kirby has handled may underinsured motorist cases, and has taught classes to attorneys and insurance adjusters on underinsured motorist law in North Carolina

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