NC Car Accident Glossary

The Bottom Line

Car accident claims come with their own language -- legal jargon and insurance terminology that can make an already stressful situation feel even more confusing. This glossary defines 40+ terms in plain English so you can understand what adjusters, attorneys, and documents are actually saying. Bookmark this page and refer back to it as you navigate your NC car accident claim.

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A

Adjuster -- The insurance company employee (or independent contractor) assigned to investigate and evaluate your claim. The adjuster reviews the evidence, determines fault, and makes settlement offers. Remember: the adjuster works for the insurance company, not for you. Their goal is to pay as little as possible.

At-fault -- The driver determined to be legally responsible (negligent) for causing the accident. In NC's at-fault insurance system, the at-fault driver's insurance pays for the other party's damages.

B

Bad faith -- When an insurance company unreasonably denies, delays, or undervalues a legitimate claim. NC law allows policyholders to sue their own insurer for bad faith under certain circumstances, including unfair and deceptive trade practices. Bad faith claims against the other driver's insurer are more limited in NC.

Bodily injury (BI) -- Physical harm to a person caused by the accident. Your bodily injury claim includes medical treatment, pain and suffering, lost wages, and other losses resulting from your physical injuries. Bodily injury liability coverage pays for injuries you cause to others.

C

Claim -- A formal request to an insurance company for compensation after a loss. In a car accident, you may file a claim against the other driver's insurance (a third-party claim) or against your own insurance (a first-party claim, such as collision or UM/UIM).

Collision coverage -- Optional insurance that pays for damage to your own vehicle in a crash, regardless of fault. You pay a deductible, and the insurer covers the rest up to the vehicle's fair market value. Required by lenders if you have an auto loan.

Comparative negligence -- A fault system used by most states (but NOT North Carolina) where your recovery is reduced by your percentage of fault. For example, if you are 20% at fault, you recover 80% of your damages. NC uses contributory negligence instead, which is far harsher.

Compensatory damages -- Money awarded to compensate you for your actual losses. Includes both economic damages (medical bills, lost wages) and non-economic damages (pain and suffering). Distinguished from punitive damages, which are meant to punish.

Comprehensive coverage -- Optional insurance that covers damage to your vehicle from non-collision events: theft, vandalism, weather (hail, flooding), fire, animal strikes (deer), and falling objects.

Contingency fee -- A fee arrangement where your attorney receives a percentage of your recovery instead of charging hourly. The standard contingency fee is 33% before filing suit and 40% if the case goes to trial. If you recover nothing, you owe no attorney fee. See how lawyers get paid.

Contributory negligence (NC-specific) -- NC's rule that if you contributed to the accident in any way -- even 1% -- you cannot recover any damages from the other at-fault party. NC is one of only four states that still follow this rule. It is the single most important legal concept for NC accident victims to understand. See our full explanation.

D

Damages -- The monetary value of your losses from the accident. Damages fall into three categories: economic (documented financial losses), non-economic (pain and suffering), and in some cases, punitive (punishment for extreme misconduct).

Declarations page (dec page) -- The summary page of your insurance policy listing your name, vehicles, coverage types, limits, deductibles, and premiums. This is the first place to look when figuring out what your insurance covers.

Deductible -- The amount you pay out of pocket before your insurance kicks in. For example, with a $500 collision deductible, you pay the first $500 of repair costs and your insurer pays the rest. Higher deductibles mean lower premiums.

Demand letter -- A formal written document sent to the insurance company presenting your claim, documenting your damages, and demanding a specific dollar amount to settle. It is the opening move in settlement negotiations. See how to write a demand letter.

Deposition -- Sworn testimony given outside of court during the litigation phase. Both sides can depose witnesses, the parties, experts, and medical providers. Depositions are recorded by a court reporter and can be used at trial.

Discovery -- The pre-trial phase of litigation where both sides exchange information. Discovery includes interrogatories (written questions), requests for documents, requests for admissions, and depositions. This is how each side learns about the other's evidence and arguments.

Diminished value -- The reduction in a vehicle's market value after it has been in an accident and repaired. Even after a perfect repair, a car with an accident history is worth less than one without. NC recognizes diminished value claims against the at-fault driver's insurance.

Duty of care -- The legal obligation to act reasonably to avoid causing harm to others. All drivers have a duty of care to follow traffic laws, pay attention, and drive safely. Violating this duty is negligence.

E

Economic damages -- Financial losses that can be documented with receipts, records, and calculations: medical bills, lost wages, property damage, rental car costs, and out-of-pocket expenses. Distinguished from non-economic damages.

F

Filing deadline -- See Statute of limitations.

First-party claim -- A claim you file against your own insurance company (for example, collision, comprehensive, MedPay, or UM/UIM). Distinguished from a third-party claim, which is filed against the other driver's insurance.

G

Gap insurance -- Coverage that pays the difference between your vehicle's fair market value and what you still owe on your loan or lease when the vehicle is totaled. Without gap insurance, you could owe money on a car you can no longer drive.

Governmental immunity (NC-specific) -- The legal protection that prevents government entities from being sued in many circumstances. In NC, sovereign immunity for state agencies is partially waived by the Tort Claims Act. Municipalities can waive their immunity by purchasing liability insurance.

Gross negligence -- Conduct that goes beyond ordinary negligence and shows a conscious disregard for the safety of others. In NC, gross negligence can overcome a contributory negligence defense in certain circumstances and may support punitive damages.

I

Indemnify -- To compensate someone for a loss or to make them whole. Insurance policies indemnify policyholders by paying for covered losses.

Interrogatories -- Written questions sent from one party to another during the discovery phase of litigation. You must answer interrogatories under oath within a specified time period (usually 30 days in NC).

L

Last clear chance (NC-specific) -- An exception to NC's contributory negligence rule. If the defendant had the last clear opportunity to avoid the accident but failed to do so, the plaintiff may recover damages even if they were also negligent. This doctrine requires proof that the defendant actually saw (or should have seen) the plaintiff's peril and had time to act.

Liability -- Legal responsibility for causing harm. In a car accident, the at-fault driver is liable for the other party's damages. Liability insurance pays claims against you when you are at fault.

Lien -- A legal claim against your settlement by a party who paid your medical bills or other expenses. Health insurers, Medicare, Medicaid, and medical providers may have liens against your settlement. These must be resolved before you receive your money.

Litigation -- The process of resolving a dispute through the court system. If settlement negotiations fail, your attorney files a lawsuit and the case enters litigation, which includes discovery, motions, potentially mediation, and trial.

Loss of consortium -- A claim by the spouse of an injured person for the loss of companionship, affection, and marital relations caused by the injuries. In NC, loss of consortium is a separate claim that can be brought alongside the injured person's claim.

M

Maximum medical improvement (MMI) -- The point at which your medical condition has stabilized and further improvement is not expected. Your doctor determines when you have reached MMI. You should generally not settle your claim until you have reached MMI so you know the full extent of your damages.

Mediation -- A dispute resolution process where a neutral third party (mediator) helps both sides negotiate a settlement. Most NC courts require mediation before trial. The mediator does not decide the case -- they facilitate negotiation. Either side can reject the mediation outcome and proceed to trial.

MedPay (Medical Payments coverage) -- Optional coverage that pays your medical bills after an accident regardless of fault. In NC, MedPay is especially valuable because it pays even if contributory negligence bars your claim against the at-fault driver.

N

Negligence -- The failure to use reasonable care, resulting in harm to another person. To prove negligence in a car accident, you must show the other driver owed you a duty of care, breached that duty, and caused your injuries as a result.

Non-economic damages -- Losses that do not have a fixed dollar amount: pain and suffering, emotional distress, loss of enjoyment of life, inconvenience, and scarring or disfigurement. NC does not cap non-economic damages in personal injury cases.

P

Pain and suffering -- A category of non-economic damages covering the physical pain and emotional distress caused by your injuries. There is no formula for calculating pain and suffering -- it is based on the severity, duration, and impact of your injuries on your life.

Policy limits -- The maximum amount your insurance company will pay for a covered claim. For example, if your liability limit is $50,000 per person, that is the most your insurer will pay for one injured person's claim, regardless of the actual damages.

Premises liability -- The area of law covering injuries that occur on someone else's property due to unsafe conditions. While primarily associated with slip-and-fall cases, premises liability can apply to accidents in private parking lots or driveways.

Punitive damages -- Damages awarded to punish the defendant for particularly egregious behavior (such as drunk driving) and to deter similar conduct. In NC, punitive damages are capped at $250,000 or three times the compensatory damages, whichever is greater. There is no cap when the defendant was impaired by alcohol or drugs.

S

Settlement -- An agreement between you and the insurance company (or at-fault party) to resolve your claim for a specific amount of money. Once you sign a settlement release, you give up the right to pursue any further claims related to the accident. Most car accident cases settle without going to trial.

Statute of limitations -- The legal deadline for filing a lawsuit. In NC, the statute of limitations for personal injury and property damage from a car accident is 3 years from the date of the accident. For wrongful death, it is 2 years from the date of death. Missing this deadline permanently bars your claim.

Subrogation -- The process by which your insurance company seeks reimbursement from the at-fault party's insurance after paying your claim. For example, if your collision coverage pays $8,000 to repair your car, your insurer will pursue the at-fault driver's insurer to recover that $8,000. If successful, you may also recover your deductible.

T

Third-party claim -- A claim you file against the other driver's insurance company (as opposed to a first-party claim against your own insurer). After an accident where the other driver is at fault, you file a third-party claim against their liability coverage.

Tort -- A civil wrong (as opposed to a criminal offense) that causes harm and can be the basis for a lawsuit. Car accident claims are tort claims. NC is a "tort" or "at-fault" state, meaning the at-fault driver's insurance pays for the other party's damages.

Tortfeasor -- The person who committed the tort (civil wrong). In a car accident, the at-fault driver is the tortfeasor.

Total loss -- When the cost of repairing your vehicle exceeds its fair market value (or a percentage of it, depending on the insurer). When a vehicle is totaled, the insurance company pays you the fair market value instead of repair costs. NC does not have a statutory total loss threshold, so insurers use their own formulas.

U

UM/UIM (Uninsured/Underinsured Motorist coverage) -- Required coverage in NC that protects you when the at-fault driver has no insurance (UM) or insufficient insurance (UIM). As of October 2025, the minimum UM/UIM limits are 50/100/50. This coverage is paid by your own insurer.

Underinsured -- A driver whose insurance limits are not enough to cover your damages. For example, if the at-fault driver has $50,000 in liability coverage but your damages are $120,000, they are underinsured. Your UIM coverage fills the gap.

Uninsured -- A driver who has no auto insurance at all. Despite NC's legal requirement, an estimated 1 in 7 NC drivers is uninsured. Your UM coverage protects you in this situation.

V

Verdict -- The decision reached by a judge or jury at the end of a trial. A verdict determines whether the defendant is liable and, if so, how much they must pay in damages. Most car accident cases settle before reaching a verdict.

W

Workers' compensation -- A separate insurance system that covers injuries sustained on the job. If you were in a car accident while working (for example, driving for your employer), you may have both a workers' compensation claim and a third-party personal injury claim. These two claims interact in complex ways and typically require legal guidance.

Frequently Asked Questions

Frequently Asked Questions

What is contributory negligence in NC?▾

Contributory negligence is NC's rule that if you are found even 1% at fault for an accident, you cannot recover any compensation from the other driver. NC is one of only four states that follow this harsh rule. Most other states use comparative negligence, which reduces your recovery proportionally rather than eliminating it entirely.

What is subrogation in auto insurance?▾

Subrogation is when your insurance company pays your claim and then seeks reimbursement from the at-fault driver's insurance. For example, if you use your collision coverage to repair your car, your insurer will pursue the at-fault driver's insurer to recover what they paid. If successful, you may also get your deductible back.

What does contingency fee mean in a car accident case?▾

A contingency fee means the attorney does not charge upfront. Instead, they take a percentage of your settlement or verdict, typically 33% before a lawsuit is filed and 40% if the case goes to trial. If the attorney does not win your case, you owe them nothing for their legal fees.

What is the difference between economic and non-economic damages?▾

Economic damages are financial losses you can document with receipts and records: medical bills, lost wages, property damage, and out-of-pocket expenses. Non-economic damages are subjective losses that do not have a fixed dollar amount: pain and suffering, emotional distress, loss of enjoyment of life, and loss of consortium. Both are recoverable in NC car accident cases.