Insurance--automobile insurance--UIM coverage--bodily injury coverage exceeding
minimum
The requirement of N.C.G.S. § 20-279.21(b)(4) that UIM coverage be available when an
automobile liability policy has coverage exceeding the minimum limits refers to bodily injury
coverage only and does not apply if only the property damage limits exceed the minimum. Appeal by petitioners from judgment entered 18 March 1998 by
Judge Timothy L. Patti in Mecklenburg County Superior Court.
Heard in the Court of Appeals 7 January 1999.
DeVore, Acton & Stafford, P.A., by Fred W. DeVore, III, for
petitioner appellants.
Kennedy Covington Lobdell & Hickman, L.L.P., by Wayne P.
Huckel and Sara W. Higgins, for respondent appellee.
HORTON, Judge.
This is an action for declaratory judgment in which
petitioners sought a determination that underinsured motorist
(UIM) coverage was available to them under an automobile
liability insurance policy issued by State Farm Mutual Automobile
Insurance Company (respondent). The policy in question was
issued in the names of Mary W. Strange (Mrs. Strange) and Henry
L. Strange (Mr. Strange) (collectively the Stranges), for the
period from 4 June 1994 through 4 December 1994 and had minimum
bodily injury liability limits of $25,000/$50,000, $25,000 for
property damage, and $1,000,000 uninsured motorist coverage. At
all times relevant hereto, Mark Strange (Mark) lived with his
mother, Mary W. Strange, in Rowan County. David M. Morris
(David) also lived in the Strange household and had an automobile
liability policy issued by respondent which was identical to theStrange policy.
On 21 July 1994, Mark, the minor son of the Stranges, was
riding in an automobile owned by his father, Mr. Strange, and
driven by David, when Mark was involved in an automobile accident
and seriously injured, resulting in large medical bills. The
parties stipulated that the Stranges never selected or rejected
UIM coverage on an approved form although the respondent mailed
selection/rejection forms to its policyholders annually. At the
trial court, petitioners contended that their policy affords Mark
$1,000,000 in UIM coverage less any setoff. The trial court
concluded as a matter of law that the Strange policy did not
provide UIM coverage on the date in question and entered judgment
to that effect. Petitioners appealed.
N.C. Gen. Stat. § 20-279.21(b)(4) (Cum. Supp. 1997) provides
that an owner's policy of liability insurance “[s]hall . . .
provide [UIM] coverage, to be used only with a policy that is
written at limits that exceed those prescribed by subdivision (2)
of this section and that afford uninsured motorist coverage as
provided by subdivision (3) of this subsection . . . .” All
parties agree that the Strange policy afforded uninsured motorist
[UM] coverage. The question before this Court is whether the
Strange policy was written at limits which exceed the minimum
limits stated in N.C. Gen. Stat. § 20-179.21(b)(2) of “twenty-five thousand dollars ($25,000) because of bodily injury to or
death of one person in any one accident and, subject to said
limit for one person, fifty thousand dollars ($50,000) because of
bodily injury to or death of two or more persons in any one
accident, and fifteen thousand dollars ($15,000) because of
injury to or destruction of property of others in any one
accident . . . .”
Petitioners agree that their policy has the minimum limits
for bodily injury liability, but contend that, because their
property damage coverage is $25,000, they have more than a
minimum liability policy and qualify for UIM coverage.
Petitioners then argue that because they never specifically
rejected UIM coverage on an approved form, they have UIM coverage
as a matter of law in an amount equal to their UM coverage of
$1,000,000. We disagree.
There is no language in the statute tying property damage
coverage to the existence of UIM coverage. N.C. Gen. Stat. §
20-179.21(b)(4) provides in part that “[UIM] coverage is deemed
to apply when, by reason of payment of judgment or settlement,
all liability bonds or insurance policies providing coverage for
bodily injury caused by the ownership, maintenance, or use of the
underinsured highway vehicle have been exhausted.” (Emphasis
added). UIM coverage is to be in an amount “not to be less thanthe financial responsibility amounts for bodily injury liability
as set forth in G.S. 20-279.5 . . . .” Id. (emphasis added).
Furthermore, in Morgan v. State Farm Mut. Auto. Ins. Co., 129
N.C. App. 200, 497 S.E.2d 834, aff'd per curiam, __ N.C. __, 507
S.E.2d 38 (1998), as in the case sub judice, the policy in
question had limits of $25,000/$50,000 for bodily injury and
$25,000 for property damage. In pertinent part, this Court held
that, “since the policy in question only provided the minimum
statutory-required coverage of $25,000/$50,000, the policy was
not required to provide UIM coverage under section 20-
279.21(b)(4).” Id. at 205, 497 S.E.2d at 837.
We hold, therefore, that the requirement of N.C. Gen. Stat.
§ 20-279.21(b)(4) that UIM coverage be available when an
automobile liability insurance policy has coverage exceeding the
minimum limits refers to bodily injury coverage only, and does
not apply if only the property damage limits exceed the minimum.
Although we have carefully considered all other arguments
advanced by petitioners, we find them unpersuasive. The trial
court correctly decided that there was no UIM coverage available
to petitioners under the policy in question.
Affirmed.
Judges WYNN and EDMUNDS concur.
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