North Carolina's SB 452 Law Raises Auto Insurance Minimums and Affects Premiums

North Carolina's recently passed legislation, SB 452, effective July 1, 2024, introduces significant alterations to auto insurance regulations that are expected to impact premium rates across the state. This law raises minimum liability coverage limits significantly, with bodily injury minimums increasing from $30,000 per person and $60,000 per accident to $50,000 and $100,000 respectively, and property damage minimums doubling from $25,000 to $50,000. These increased coverage requirements are likely to lead to higher premiums upon policy renewals for drivers maintaining minimum coverage levels.

Additionally, the law mandates inclusion of underinsured motorist coverage in all new and renewed policies, changing the basis for determining underinsured motorist claims to the total damages sustained rather than the at-fault party's liability limits. This revision removes offsets against underinsured motorist coverage claims except in cases involving workers' compensation, consolidating coverage limits from multiple policies to maximize protection for the insured. Expansions to the inexperienced driver surcharge now extend this additional charge to drivers with less than eight years of experience, although surcharges are reduced for years four through eight compared to the first three. The legislation also modifies surcharge periods linked to moving violations, extending premium surcharges from three to five years for certain serious infractions with four or more insurance points, excluding some high-speed violations. The lookback period for assessing repeat violations has been extended from three to five years, affecting both standard convictions and Prayer for Judgment Continued (PJC) cases. These regulatory changes coincide with an approved baseline average auto premium increase of 5% set to take effect October 1, following settlements between the state insurance commissioner and the Rate Bureau. Insurance professionals should anticipate these changes influencing underwriting, risk assessment, and claims management strategies in North Carolina, emphasizing the importance of thorough policy review and communication with insured clients during renewals.