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Insurance – Auto – UIM – Setoff – Multiple Policies – ‘Excess Coverage’

Where (1) defendant William Creed fell asleep at the wheel of passenger/plaintiff Theodore Creed’s car, crashed into a tree, and caused serious injuries to Theodore; (2) William’s two liability policies each paid $100,000 to Theodore; and (3) defendant Nationwide Property and Casualty Insurance Co. tendered $100,000 to Theodore in liability coverage under one of Theodore’s three separate policies with Nationwide, each of which also provided $100,000 in UIM coverage, then, as the primary UIM carrier, Nationwide is entitled to an offset credit for all liability payments.

We reverse summary judgment for Theodore and remand for entry of summary judgment for Nationwide.

Since Theodore owns the vehicle involved in the accident, William’s insurers’ UIM coverage is “excess,” and Nationwide’s UIM coverages are “primary.” The provider of primary UIM coverage is entitled to the entire offset credit from a liability payment. To rule that because Nationwide had three policies it is not entitled to the same interpretation of its contractual language would allow for a windfall to Theodore.

UIM coverage is intended to place a policy holder in the same position that the policy holder would have been in if the tortfeasor had had liability coverage equal to the amount of the UM/UIM coverage. The UIM coverage here satisfied the Financial Responsibility Act’s goal of placing Theodore in the same position as if the tortfeasor had liability coverage equal to $500,000, the stacked value of UIM coverage. Theodore has already received payments of $300,000 in liability coverage.

As William’s UIM coverages were “excess,” Nationwide’s offset credit is not subject to any pro rata reductions. Nationwide has fulfilled its $300,000 UIM obligation to Theodore.

Reversed and remanded.

Creed v. Creed (Lawyers Weekly No. 012-042-18, 11 pp.) (Hunter Murphy, J.) Appealed from Mecklenburg County Superior Court (Daniel Kuehnert, J.) Andrew Schwaba for plaintiff; William Robinson and Dorothy Gooding for defendant. N.C. App. Unpub.


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