The standard automobile insurance policy in North Carolina contains many different kinds of insurance coverage. Among those are liability coverage and underinsured motorist (UIM) coverage. These insurance coverages provide different kinds of protection for those injured in an automobile accident. Liability coverage protects you in the event that you cause a collision injuring another party. On the other hand, underinsured motorist (UIM) coverage protects you if you are struck by someone with insufficient liability coverage. A “Release of All Claims and Covenant Not to Enforce Judgment” is a type of release or settlement agreement that is used in situations where the at-fault party’s insurer has “tendered its limits” and offered you the full amount of its insured’s coverage.
The easiest way to explain the interplay between liability and UIM coverage is through an example. Imagine that you are seriously hurt in a North Carolina car collision. Your damages for medical bills and lost wages, along with physical pain and suffering, are fairly estimated at $250,000. Now imagine that the negligent motorist that caused the accident has only the minimum insurance liability insurance. In North Carolina, this amounts to only $30,000. While the driver’s insurer should pay out the full $30,000, this still leaves you with $220,000 in unpaid damages. You could file suit against the driver for the remainder, but he or she is unlikely to have those resources.
Underinsured Motorist Coverage
Luckily, Underinsured Motorist Coverage picks up where liability claims leave off. UIM is a part of your own personal insurance policy, rather than the negligent driver’s. Up to the limit you have purchased, it will make up the difference between your damages and the amount paid out by the at-fault party’s liability carrier. Assume you had purchased a $300,000.00 UIM policy. In this scenario, you could theoretically recover the full $220,000.00 from your own insurer. On the other hand, if you had only purchased a $100,000.00 UIM policy, you could recover only $70,000.00 from your policy. Assuming no other policies were in play, you would pursue the remaining $150,000 from the negligent driver.
Covenant Not to Enforce Judgement
The Covenant Not to Enforce Judgment prevents you from attempting to collect against the personal assets of the negligent party. So, in the above example, the at-fault party’s insurer would indicate that it would pay the $30,000.00 in exchange for you agreeing to never collect against the 19 year old. This might be fine if you have $300,000.00 in UIM coverage but maybe not if you only had $100,000.00 in UIM.
Signing a Covenant Not to Enforce Judgment without first speaking to an attorney is almost never a good idea. Insurance coverage issues can be incredibly complicated, and the at-fault party may have assets or otherwise have additional insurance policies which provide liability coverage. For example, it may the case that the at-fault 19 year old live at home with his or her parents but has a separate automobile policy. The liability coverage under both of these policies would apply, and by executing the Covenant Not to Enforce Judgment, you likely waive the right to the liability funds from that other policy. An attorney can help ensure that you are aware of all potential insurance coverages and maximize your recovery under each. Even though your UIM carrier owes you certain obligations, they still treat you as an adverse party. If they refuse to pay reasonable compensation, an attorney can help you file suit for the best possible settlement.
Representation for Underinsured Motorist Coverage Personal Injury Cases
Maginnis Howard handles personal injury cases, including those involving Underinsured Motorist coverage, on a contingency basis. This means that you pay no attorneys’ fees unless we reach a settlement or obtain a verdict in your case. We offer free consultations and would be glad to discuss your case with you, including any issues involving insurance coverage or a Release of all claims and Covenant Not to Enforce Judgment. To contact the firm, call 919.480.8526 or use our contact page. The firm represents injury claimants throughout North Carolina, including Raleigh, Chapel Hill, Durham, Cary, Fayetteville, Apex, Greenville, and Greensboro.