Johnson v. North Carolina Farm Bureau Insurance

ARNOLD, Chief Judge. Plaintiffs argue that N.C. Gen. Stat. § 20-279.21 and the two Farm Bureau policies provide for underinsured coverage under these facts and that the trial court erred by ruling otherwise. We disagree. An underinsured motor vehicle is “a highway vehicle with respect to the ownership, maintenance, or use of which, the sum of the limits of liability under all bodily injury liability bonds and insurance policies applicable at the time of the accident is less than the applicable limits of liability under the owner’s policy.” G.S. § 20-279.21(b)(4). Underinsured insurance is derivative in nature and depends upon the insured having a legal claim against a negligent *625 tort-feasor operating an underinsured motor vehicle and the exhaustion of the underinsured operator’s liability insurance. Silvers v. Horace Mann Ins. Co., 324 N.C. 289, 378 S.E.2d 21 (1989). Uninsured coverage, on the other hand, is available when an insured plaintiff is injured by a motor vehicle with no liability insurance or with liability insurance in an amount less than our state’s statutory minimum. G.S. § 20-279.21(b)(3). An unidentified motor vehicle, such as the one which caused plaintiffs’ damages, is statutorily treated as an uninsured motor vehicle. Id. Plaintiffs are, therefore, faced with two barriers to recovery under the underinsured provisions of the policies: (1) there was no exhaustion of an underinsured tort-feasor’s liability insurance, a prerequisite to payment of underinsured proceeds, and (2) the motor vehicle that caused the injuries is deemed an uninsured motor vehicle by statute. Plaintiffs apparently acknowledge these deficiencies, but present us with a unique argument. Plaintiffs’ theory depends upon a mutated definition of underinsured motor vehicle. Because underinsured coverage depends upon the exhaustion of an underinsured tort-feasor’s liability coverage, plaintiffs argue that the uninsured coverage they received is a substitute for the unknown motorist’s liability coverage. Thus, plaintiffs argue that the uninsured motor vehicle in this case was transformed into an underinsured motor vehicle when Anna’s uninsured carrier paid out its policy limits. We disagree with plaintiffs’ reasoning. The legislature never intended for G.S. §§ 20-279.21(b)(3) and (4) to provide coverage in this situation. Plaintiff David Johnson was injured by an unknown uninsured motorist without making contact with the unknown motorist’s vehicle. An uninsured carrier is not obligated to pay uninsured proceeds when there is no contact between its insured and an unknown motorist’s vehicle, Andersen v. Baccus, 109 N.C. App. 16, 426 S.E.2d 105, disc. review allowed, 333 N.C. 574, 429 S.E.2d 568 (1993); Petteway v. South Carolina Ins. Co., 93 N.C. App. 776, 379 S.E.2d 80, disc. review denied, 325 N.C. 273, 384 S.E.2d 518 (1989), nor would the underinsured carrier be liable because the unknown driver is not an underinsured motorist. G.S. § 20-279.21(b)(3). Under normal circumstances then, plaintiffs would be left without recovery, a point which plaintiffs concede. This situation arose apparently only because Clarendon is a Florida insurance company, and in Florida there is no requirement of contact before an insured may recover uninsured proceeds. *626 The fortuitous payment of uninsured proceeds should not change the result under our statutory scheme which provides no coverage in this situation. The contact requirement was developed to protect insurance companies from fraudulent hit and run claims that were actually caused by the insured’s negligence. Andersen, 109 N.C. App. at 20, 426 S.E.2d at 108 (citing McNeil v. Hartford Accident and Indemn. Co., 84 N.C. App. 438, 442, 352 S.E.2d 915, 917 (1987)). Similar concerns arise here, where the only difference is that plaintiffs received insurance proceeds from an uninsured carrier. Payment of uninsured proceeds from one insurance company should not expose another insurance company to the risks which the contact requirement was designed to eliminate. The trial court’s judgment is affirmed. Affirmed. Judges WYNN and JOHN concur.