USA – NORTH CAROLINA Trends and Developments Contributed by: Dan Strong, Teague Campbell Dennis & Gorham LLP
stacking are likely to become recurring subjects of litigation. In addition, carriers may face heightened scrutiny regarding their claims-handling practices. Because UM and UIM claims often place a carrier in an adver- sarial role against its own insured, communications, investigations, and decision-making processes may be examined more closely than in traditional third- The reforms underscore the importance of disciplined claims management. Coverage positions should be documented carefully. Claims evaluations should be supported by clearly articulated reasoning. Adjust- ers and defence counsel should anticipate future challenges regarding claims-handling practices and ensure that claim files reflect a thorough and consist- ent evaluation process. Most importantly, carriers should recognise that dis- putes arising under UM/UIM coverage increasingly have both contractual and extra-contractual dimen- sions. A disagreement over claim value can quickly evolve into a broader challenge regarding the insurer’s conduct throughout the adjustment process. Trend two: bad-faith and UDTPA claims continue to expand insurer exposure While contractual coverage disputes remain signifi- cant, many defence practitioners view bad-faith and UDTPA claims as an even greater source of potential exposure. Several factors contribute to the growing focus on bad-faith and UDTPA litigation. Plaintiffs’ attorneys are increasingly scrutinising claims-handling practices and insurer communications. Allegations that once may have been framed solely as breach- of-contract disputes are now frequently accompanied by claims asserting bad faith, unfair settlement prac- tices, or unfair and deceptive conduct. The potential incentives are obvious. Extra-contractual claims cre- ate opportunities for enhanced damages, attorneys’ fees, and other forms of relief that can substantially increase litigation exposure. Current litigation efforts often focus on allegations involving: party liability disputes. Strategic considerations
• bad-faith refusal to settle claims; • improper or inadequate investigations; • unreasonable delays; • deficient claims communications; • challenges to coverage determinations; • alleged violations of statutory claims-handling obligations; and • UDTPA claims tied to insurer conduct during the adjustment process. Although not every disagreement gives rise to bad- faith liability, plaintiffs increasingly attempt to charac- terise routine claim disputes as evidence of broader misconduct. For insurers, documentation remains the most effec- tive defence. Detailed claim notes establish the ade- quacy of an investigation and the reasoning behind coverage decisions and adjustment activities. Clear explanations of claim determinations can help dem- onstrate that decisions were made reasonably and in good faith. Consistency is equally critical. Defence counsel fre- quently encounter situations in which communica- tions made during claim adjustment are later com- pared against positions taken during litigation. Any inconsistency can become a focal point for plaintiffs seeking to support extra-contractual allegations. Car- riers should also evaluate potential bad-faith expo- sure early in the life of a claim. Identifying areas of concern before litigation arises allows insurers to address potential weaknesses and develop a coher- ent defence strategy. Trend three: cyber coverage disputes have become a mainstream litigation concern Only a few years ago, cyber claims were often viewed as a specialised area affecting a relatively small seg- ment of the insurance market. That perception is rap- idly changing. North Carolina practitioners increas- ingly recognise cyber coverage as a major emerging practice area. Insurers increasingly encounter claims involving: • ransomware incidents; • business interruption losses;
350 I NSURANCE L I T IGATI O N 2026
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