What Happens When Car Accident Claims Exceed Insurance Limits In North Carolina?

Our law firm only handles North Carolina motor vehicle crash cases, and we frequently see injury claims that exceed available insurance coverage.  Victim’s in these cases need to understand the various sources of extra coverage that they might find, and also understand their legal options in cases where all available insurance still does not fully compensate a crash victim.

In North Carolina, if you cause an accident and the claims resulting from a car accident exceed the limits of your auto insurance policy, you could be held personally responsible for paying the excess amount. Here’s what typically happens:
 

 

1. Insurance Pays Up to the Policy Limits

• Your insurance company will pay out the maximum amount allowed under your policy’s liability limits. In North Carolina, the minimum required auto insurance coverage is:
  • $30,000 per person for bodily injury liability
  • $60,000 per accident for bodily injury liability (if more than one person is injured)
  • $25,000 for property damage
• The minimum mandatory insurance limits will increase effective July 1, 2025, with coverage limits increasing to:
  • $50,000 per person for bodily injury liability
  • $100,000 per accident for bodily injury liability (if more than one person is injured)
  • $50,000 for property damage

• Victims with personal injury claims may have additional coverage on their own policies that would add to what they collect from the at-fault driver. This coverage is called Underinsured Motorist (UIM) coverage. Sources of UIM include the policy for the car that the victim occupied at the time of the crash, the victim’s own personal auto policy AND any other family-owned car insurance policies that cover people who lived with you on the crash date who are related to you by blood or marriage. Under current NC insurance law, every one of these policies provide coverage, and you add all of the policies together to determine the total amount of “per-person” coverage available to a single victim.

2. Personal Financial Responsibility

• If the damages (medical bills, property damage, etc.) exceed your insurance coverage, the injured party or parties can pursue the remaining amount from you personally. This could involve legal action, and if they win, they might be able to levy and take personal property or bank accounts, or place a lien on your real estate to collect money for damages/claims that exceed your car insurance coverage.

3. Umbrella Insurance (Optional)

• Some people purchase umbrella insurance, which provides additional liability coverage beyond the limits of your standard auto insurance policy. If you have this type of coverage, it would help cover any claims exceeding your primary auto policy limits.  Umbrella insurance is part of a homeowner’s insurance policy, so this is where you will look to see if there is additional funding available for victim’s car accident injury claims.

4. Settlement Negotiation

• Sometimes, the injured parties may agree to settle for less than the total damages if they believe recovering the excess amount from you personally may be difficult or time-consuming. Settlements are often negotiated between lawyers or with the help of mediators.

5. Bankruptcy (Last Resort)

• If the amount owed is far beyond your ability to pay, bankruptcy may be a last resort option. Filing for bankruptcy can discharge certain debts, but it comes with significant financial and credit consequences. It is worth noting that if a drunk driver causes a car accident in North Carolina, they cannot bankrupt their personal liability for injury claims that exceed available car insurance coverage. Our bankruptcy laws protect victims’ claims in this setting, and the drunk driver cannot use bankruptcy laws to avoid judgments in these cases.

To avoid being underinsured, you may want to consider increasing your liability limits or purchasing an umbrella policy to protect yourself from financial exposure in the event of a severe accident.

We frequently see injury claims that exceed available insurance coverage.  Victims in these cases need to understand the various sources of extra coverage that they might find, and also understand their legal options in cases where all available insurance still does not fully compensate a crash victim

Our statewide NC car accident law firm focuses purely on serious injury claims arising from car accidents and other roadway mishaps. We help our clients to locate and access all available insurance coverage, investigate car crashes to identify all responsible parties who might have additional coverage to compensate our clients, research the assets and ability to pay for drivers who fail to carry sufficient car insurance, and work to seek reductions in medical bills and other bills that would reduce our client’s settlement money. Simply put, we go after all fund sources aggressively, and then we micro-manage the search for insurance and the handling of all settlement accounting to maximize our clients’ tax free compensation.