If a DWI victim recovers under their own uninsured or underinsured motorist coverage, does that recovery reduce what they can collect from North Carolina's Crime Victims Compensation Fund?

UM/UIM Coverage Counts as Collateral Source, Reduces NC Crime Victim Compensation Award (NC AG, May 8, 1995)

Plain-English summary

The Crime Victims Compensation Act (Chapter 15B of the NC General Statutes) provided innocent victims of "criminally injurious conduct" with a state-paid award covering economic losses (medical bills, lost wages, funeral expenses) that the victim could not recover elsewhere. The Act's basic design was to fill gaps left after other sources had paid out. To prevent double recovery, N.C.G.S. § 15B-11(d) required reducing the award by amounts the victim received or could readily receive from "collateral sources" defined in § 15B-2(3).

The question was whether uninsured-motorist (UM) and underinsured-motorist (UIM) coverage proceeds from the victim's own auto policy counted as a "collateral source" when the criminally injurious conduct was a DWI-related collision.

The AG concluded yes. The definition in § 15B-2(3)(g) reached "proceeds of a contract of insurance payable to the victim for loss that he sustained because of the criminally injurious conduct." UM and UIM coverage was mandatory under N.C.G.S. § 20-279.21 for every NC motor-vehicle liability policy. The supreme court in Moore v. Hartford Fire Insurance and Brown v. Lumberman's Mutual described UM coverage as a statutorily mandated mechanism that puts the insurer in the place of an uninsured tortfeasor. So payments from the victim's own UM/UIM coverage were proceeds of a contract of insurance payable for the DWI-related injury, which fell squarely within the collateral-source definition.

Practical consequence at the time: A DWI victim who collected $50,000 in UM benefits from her own carrier had her Crime Victims Compensation award reduced dollar-for-dollar by that $50,000.

Currency note

This opinion was issued in 1995. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The Crime Victims Compensation Act and motor-vehicle financial responsibility statutes have been amended multiple times since 1995. A claimant or attorney evaluating a current claim should consult the current version of Chapter 15B and any later AG opinions on collateral-source treatment.

Background and statutory framework

Crime Victims Compensation in 1995 worked through a strict tiered structure. The victim could receive a state-funded award up to statutory caps for medical bills, lost wages, funeral expenses, and counseling, but the award was reduced by anything the victim collected from collateral sources. The statutory list of collateral sources covered most of the standard ones: workers' compensation, Social Security, life insurance, health insurance proceeds, employer-paid sick leave, and (relevant here) "proceeds of a contract of insurance payable to the victim for loss that he sustained because of the criminally injurious conduct."

The Act's coverage of DWI-related collisions was deliberate. N.C.G.S. § 15B-2(5) included within "criminally injurious conduct" any "offense involving impaired driving as defined in N.C.G.S. § 20-4.01(24a)." A DWI driver who struck and injured an innocent person committed criminally injurious conduct, and the injured person became eligible for compensation, regardless of whether the driver was prosecuted to conviction.

The collateral-source rule existed because the Act was a payer of last resort. The legislature wanted to make innocent victims whole, not to layer state-paid awards on top of full insurance recoveries. The recurring question in administering the Act was how broadly to read the collateral-source list. Were funds available only theoretically (i.e., the victim had a claim but had not yet pursued it) included? What about settlements where some portion was attributed to non-economic damages? The AG's 1995 ruling was an answer to one specific corner of that question.

The factual context driving the 1995 request was the unique structure of UM/UIM coverage. UM coverage paid the victim when the at-fault driver had no insurance. UIM coverage paid the victim when the at-fault driver's policy limits were inadequate to cover the loss. In both cases, the victim collected from the victim's own auto carrier, not the tortfeasor's. The carrier then stood in the place of the uninsured or underinsured tortfeasor, and the victim's recovery effectively substituted for what the tortfeasor's coverage would have paid.

The Division of Victim and Justice Services wanted to know: when UM/UIM substitutes for tortfeasor coverage, is it a collateral source to the victim, or is it more like the victim's recovery from the tortfeasor (and thus not a collateral source in the same sense as health insurance proceeds)? The AG's answer turned on the text of § 15B-2(3)(g): proceeds of a contract of insurance payable to the victim for the loss. UM/UIM coverage was, structurally, a contract of insurance between the victim and the victim's own carrier. The proceeds were payable to the victim. The loss was the loss sustained from the DWI collision. Three boxes checked, and the analysis was straightforward.

The AG drew on the supreme court's UM/UIM cases. Moore v. Hartford Fire Insurance (1967) described the statutory purpose as providing "some financial recompense to innocent persons who receive bodily injury or property damage" from an uninsured driver. Brown v. Lumberman's Mutual (1974) extended the same reasoning to the insurer-as-substitute role. Both cases treated UM coverage as a contractually performed substitution for the tortfeasor's missing or inadequate insurance.

That doctrinal framing reinforced the AG's textual reading. UM/UIM was a contract of insurance, the proceeds were payable to the victim because of the DWI conduct, and the recovery filled the role of a collateral source under § 15B-2(3)(g). Reducing the Crime Victims Compensation award by the UM/UIM recovery prevented double payment on the same economic loss, which was the entire point of the collateral-source provision.

Common questions

Did this opinion mean DWI victims with full UM/UIM coverage got nothing from the state?

In practice, often yes. If the victim's UM/UIM coverage was high enough to cover the full economic loss (medical bills, lost wages, etc.) up to NC's collateral-source-reduced statutory cap, the state-paid award could be reduced to zero. The Act was designed to make innocent victims whole, not to top off victims who were already fully compensated by insurance.

What about non-economic damages? Were those treated differently?

The Crime Victims Compensation Act addressed economic loss specifically. Pain-and-suffering recoveries from a settlement were a separate question. The collateral-source rule under § 15B-2(3)(g) was about "proceeds of a contract of insurance payable to the victim for loss that he sustained because of the criminally injurious conduct," which the AG read to mean the same kinds of economic losses covered by the Act. Allocations within a settlement could matter; that was a fact-specific question.

What if the UM/UIM claim was disputed and the victim had not yet collected?

The statute defined collateral source as a source "that the victim or claimant has received or that is readily available to him." The "readily available" prong meant a not-yet-collected but easily collectible recovery could still reduce the award. A genuinely disputed claim (where collection was uncertain) was a different story. The Division would have had to make a fact-specific judgment about how readily available the recovery was.

Was this opinion consistent with the supreme court's UM/UIM cases?

Yes. Moore and Brown both described UM/UIM coverage as a contract-based substitute for the tortfeasor's coverage. The 1995 AG opinion treated UM/UIM as exactly what those cases said it was: a contract of insurance payable to the victim for loss caused by the wrongdoer. The statutory definition of collateral source mapped naturally onto that structure.

Did this affect the victim's right to subrogation against the DWI driver?

Subrogation was a separate question handled outside the Crime Victims Compensation framework. If the state paid an award to the victim, the state had statutory subrogation rights against the tortfeasor for the amount paid. The victim's UM/UIM carrier independently had subrogation rights for what it paid. The 1995 opinion did not address how those competing subrogation claims sorted out; it addressed only the prior question of how UM/UIM treatment affected the size of the state-paid award.

Source

• Landing page: https://ncdoj.gov/opinions/crime-victims-compensation-collateral-source-under-insured-or-uninsured-coverage/

Citations

• N.C. Gen. Stat. § 15B-2(3) (definition of "collateral source")
• N.C. Gen. Stat. § 15B-2(5) (definition of "criminally injurious conduct")
• N.C. Gen. Stat. § 15B-11(d) (reduction of award by collateral-source recoveries)
• N.C. Gen. Stat. § 20-4.01(24a) (definition of impaired driving)
• N.C. Gen. Stat. § 20-279.21 (mandatory UM/UIM coverage)
• Moore v. Hartford Fire Insurance Company, 270 N.C. 532, 155 S.E.2d 128 (1967)
• Brown v. Lumberman's Mutual Casualty Company, 285 N.C. 313, 204 S.E.2d 829 (1974)

Original opinion text

FORMAL OPINION

DATE: May 8, 1995

Subject: Crime Victims Compensation; Collateral Source; Under-Insured or Uninsured Coverage

Requested By: Gary B. Eichelberger, Director, N.C. Crime Control and Public Safety Division of Victim and Justice Services

Question: Does "collateral source," as defined by N.C.G.S. § 15B-2, include proceeds from under-insured or uninsured coverage paid to the victim on account of a DWI related collision?

Conclusion: Yes. Payments made to the victim pursuant to under-insured or uninsured coverage are a collateral source.

The Crime Victims Compensation Act, Chapter 15B of the General Statutes, provides that an award of compensation to an innocent victim of criminally injurious conduct will be reduced to the extent that the economic loss will be recouped from a collateral source. N.C.G.S. § 15B-11(d).

N.C.G.S. § 15B-2(3) states in pertinent part:

"Collateral source" means a source of benefits or advantages for economic loss otherwise compensable that the victim or claimant has received or that is readily available to him from any of the following sources: . . . .

g. Proceeds of a contract of insurance payable to the victim for loss that he sustained because of the criminally injurious conduct; . . . . (Emphasis added).

Criminally injurious conduct is defined in N.C.G.S. § 15B-2(5) which states in pertinent part: "Criminally injurious conduct includes conduct which amounts to an offense involving impaired driving as defined in N.C.G.S. § 20-4.01(24a)."

N.C.G.S. § 20-279.21 provides for mandatory uninsured and under-insured coverage in motor vehicle liability policies issued or delivered in the State of North Carolina. The statute specifically provides that the policy is for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles and hit and run motor vehicles, because of bodily injury, sickness or disease including death resulting therefrom.

The supreme court has held that the purpose of the uninsured motorist statute "was to provide within fixed limits, some financial recompense to innocent persons who receive bodily injury or property damage, and to the dependents of those who lose their lives through the wrongful conduct of an uninsured motorist who can not be made to respond in damages." Moore v. Hartford Fire Insurance Company, 270 N.C. 532, 535, 155 S.E.2d 128, 130 (1967).

Uninsured and under-insured coverage are in effect statutorily mandated clauses in liability insurance policies issued or delivered in the State of North Carolina. The law requires the insurance company to stand in the place of the tort-feasor where the tort-feasor has failed to, or cannot be made to comply with North Carolina's financial responsibility laws. See Brown v. Lumberman's Mutual Casualty Company, 285 N.C. 313, 204 S.E.2d 829 (1974).

Therefore uninsured or under-insured coverage is a source of benefits or advantage for economic loss that a victim or claimant has readily available from a contract of insurance payable for the loss a victim or his family sustained as a result of criminally injurious conduct. The General Assembly has made clear its intent that for purposes of N.C.G.S. § 15B-2(3) uninsured and under-insured funds payable to the victim or the claimant are a collateral source.

MICHAEL F. EASLEY
Attorney General

Isaac T. Avery, III
Special Deputy Attorney General

Robert T. Hargett
Assistant Attorney General