Common Legal Terms Used in North Carolina Insurance Claims

When navigating an insurance claim, it’s essential to understand the key terms and provisions in your policy. Below are common legal terms you may encounter during the insurance claims process in North Carolina.

Declarations or “Dec Page”

The declarations page identifies the insured parties, property or vehicles covered by the policy, and lists the various types of coverage included. It’s the starting point for understanding the scope of your insurance policy.

Coverage

This term refers to the specific events, persons, or property that the insurance policy protects. Coverage can vary significantly depending on the type of policy and its terms.

Definitions

Insurance policies often use technical language, and the definitions section clarifies specific terms used throughout the policy. It’s important to read this section carefully, as insurance terminology may differ from everyday usage.

Exclusions

Exclusions list specific situations, acts, or types of damages that are not covered under the insurance policy. Understanding exclusions is critical, as it outlines what the insurer will not compensate.

Conditions

Conditions are the requirements that must be met for the policy to be valid or for coverage to apply. These may include paying premiums on time or reporting a loss promptly.

Limits

Limits define the maximum amount the insurance company will pay for a claim. Different coverages within the same policy may have different limits, so it’s essential to know what your maximum protection is.

Liability Insurance

Liability insurance provides coverage if you are sued for damages caused by an accident or incident. It typically covers your legal defense costs and any judgment or settlement, up to the policy limits.

Hazard Insurance

This type of insurance protects property from damages caused by events like fire, wind, or other natural disasters. It is commonly included in homeowners’ insurance policies.

Stacking

In North Carolina, “stacking” refers to combining coverage from multiple policies or vehicles to increase the available limits in an insurance claim. This may apply in situations where you have underinsured motorist coverage on more than one vehicle.

Proof of Loss

Insurance companies may require a proof of loss form, where the insured details the nature of the claim and the damages. Submitting accurate and timely proof of loss is critical in the claims process.

Replacement Value

Policies that offer replacement value coverage will compensate you based on the cost to replace damaged or destroyed property. This is generally more favorable than fair market value, which accounts for depreciation.

Fair Market Value

Fair market value is the estimated price a property would sell for in a transaction between a willing buyer and seller. In property claims, this valuation may determine the amount of compensation.

Umbrella Policy

An umbrella policy provides additional liability coverage above and beyond the limits of your underlying policies, such as auto or homeowners insurance. This can offer broader protection for personal or business activities.

Uninsured and Underinsured Motorist Coverage

In North Carolina, uninsured motorist (UM) and underinsured motorist (UIM) coverage protects you if you’re involved in an accident with a driver who either has no insurance or insufficient insurance to cover your damages.

Medical Payments Coverage

This coverage, known as “MedPay” in North Carolina, provides for medical expenses incurred due to an auto accident, regardless of who is at fault. It typically applies to both the driver and passengers.

Subrogation

Subrogation allows an insurance company to recover funds from a third party responsible for causing an insurance claim. If your insurer pays you for a loss, they may pursue the at-fault party to recoup their costs.

Reservation of Rights

If an insurer provides a defense or begins investigating a claim without deciding whether it is covered, they may issue a reservation of rights letter. This allows them to reserve their right to deny coverage later. Consulting with an attorney is advisable if you receive such a notice.

Examination or Statement Under Oath

An insurance company may request a sworn statement or examination under oath to gather more information about a claim. It’s wise to consult an attorney if asked to provide this statement, as it can affect the outcome of your claim.