Policy Limits

What Are Policy Limits?

Policy limits are the numbers on the declarations page that cap the insurer’s obligation. Auto liability limits are usually written as three figures, such as 50/100/50: the most the insurer will pay for bodily injury to any one person, the most it will pay for bodily injury to everyone hurt in one accident, and the most it will pay for property damage in one accident. Uninsured and underinsured motorist coverage carry their own per-person and per-accident limits, and medical payments coverage carries a per-person limit.

The per-accident limit matters when several people are hurt. If three passengers are injured by a driver with $100,000 per-accident coverage, the three claims share that $100,000, and each is also capped by the $50,000 per-person figure. Limits are exhausted when the insurer pays or tenders them, and once they are exhausted the insurer’s duty to pay ends, though its insured’s personal liability does not.

What Are The Minimum Policy Limits In North Carolina?

N.C. Gen. Stat. § 20-279.21 sets the floor. Every North Carolina auto liability policy must carry at least $50,000 for bodily injury to one person, $100,000 for bodily injury to two or more people in one accident, and $50,000 for property damage. The same statute requires uninsured motorist coverage with limits equal to the policy’s highest bodily injury liability limits (never below the minimums) and underinsured motorist coverage with limits equal to the UM limits. Insurers must offer UM and UIM limits up to $1,000,000 per person and $1,000,000 per accident but are not required to sell more. The North Carolina Department of Insurance confirms that the 50/100/50 minimums and the inclusion of UIM apply to policies new or renewed on or after July 1, 2025, so an older policy may still carry lower limits until it renews.

How Do You Find Out The At-fault Driver’s Policy Limits In North Carolina?

Insurers do not volunteer limits, but North Carolina makes them disclose. Under N.C. Gen. Stat. § 58-3-33, a person who claims to have been physically injured or to have suffered property damage under a private-passenger auto policy may request the limits by certified mail to the adjuster or the insurer’s corporate secretary. The claimant must then provide a written release for medical records covering the three years before the crash and all injury-related records, written consent to participate in mediation, and a copy of the accident report with a description of what happened. Within 30 days of receiving those documents the insurer must disclose the limits. The statute states that disclosure is not an admission that the injury is covered, and it does not apply to medical malpractice claims or where the insurer denies coverage.

The disclosure is the first thing a lawyer wants before a demand goes out. A claim worth $300,000 against a $50,000 policy is handled differently from the same claim against a $500,000 policy: the demand, the UIM claim, the search for other policies, and the decision whether to sue the driver personally all turn on the number.

• Send the request by certified mail with the policyholder’s name and, if known, the policy number.
• Provide the three items: medical-records release, consent to mediate, and the accident report with your account.
• Calendar 30 days from the insurer’s receipt of those documents; the limits are due by then.
• Look for other policies: the vehicle owner, an employer, a rideshare company, or an umbrella policy may add coverage.

What Happens When Damages Exceed The Policy Limits In A North Carolina Crash?

An illustrative example: a family of three in Durham is hit by a driver who ran a stop sign and carries the North Carolina minimum of $50,000 per person and $100,000 per accident. The father’s injuries alone are reasonably valued at $180,000, and the mother’s and daughter’s claims total another $60,000. The insurer’s total exposure is capped at $100,000 for the accident, and the father’s share is capped at $50,000. If the family’s own policy carries $250,000 per person in UIM coverage, then once the at-fault insurer tenders its limits the father’s UIM claim applies to the first dollar beyond the $50,000 he received, up to his UIM limit. The at-fault driver remains personally liable for any shortfall, but collecting from an individual is rarely practical. All figures are hypothetical.

Insurers know that a fair claim above the limits exposes them to a judgment against their insured for more than the policy. North Carolina courts have recognized that an insurer’s unreasonable refusal to settle within the limits can create liability to its own insured, and N.C. Gen. Stat. § 58-63-15(11)(f) makes failing to attempt a good-faith settlement where liability is reasonably clear an unfair claim settlement practice. A well-documented demand for the limits uses that pressure.

Why Do Policy Limits Matter For A North Carolina Injury Claim?

Because they set the realistic ceiling on recovery and drive the whole strategy. Knowing the limits early tells the injured person whether a demand should be for the limits or for a calculated figure below them, whether a UIM claim must be preserved before any release is signed, and whether it is worth looking for additional policies. North Carolina’s contributory negligence rule adds a second dimension: when the claim clearly exceeds the limits, the insurer’s only way to avoid paying them is to prove the injured person shared fault, so expect the fault investigation to intensify as the limits come into view. If your losses exceed the at-fault driver’s limits after a North Carolina car accident, the UIM claim and the search for other coverage start now.