Nationwide Insurance v. Integon; Primary and Excess UIM coverage

In Nationwide Insurance v. Integon, the Court addressed the priority among Underinsured Motorist (UIM) policies. In this case, the tortfeasor had $50,000 in liability coverage. The claimant had two policies which were issued to him, and one of these specifically covered the vehicle he was operating at the time of the accident; he was insured under a third policy issued to his parents. (The first two policies had limits of $100,000 and $50,000, and the third had limits of $50,000.) The liability carrier paid its limits, and the UIM carriers argued about the offset for the $50,000 liability policy.

The Court of Appeals held that it was bound by a prior decision (Bost), which holds that where the insured (plaintiff) is a "Class I" insured under multiple UIM policies, that those UIM policies share UIM coverage on a pro rata basis; i.e. there is no primary and secondary policy. The Court thus held that all three UIM carriers receive a pro-rata credit for the liability policy (rather than one policy alone receiving that offset). A Class I insured in North carolina is either the named insured, or a person who is covered because he resides with the named insured (i.e. based on "who" he is); a Class II insured is a person who is insured because he is in a covered auto (i.e. based on the vehicle he is in). North Carolina is somewhat peculiar in this terminology.

This result was mandated by the precedent in this area in North Carolina law. It should be noted, however, that this case is counter to the general rule, which is that the policy which is issued to the person who owns the vehicle involved in the accident is primary, and other policies are excess. (The policy states that it is primary with respect to a vehicle owned by the named insured.)

John Kirby has handled many UM/UIM claims in North Carolina, and has argued such cases before the North Carolina Court of Appeals and the North Carolina Supreme Court. He has also taught lawyers and insurance adjusters about UM/UIM law in North Carolina.


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