North Carolina Auto Insurance Law Changes Increase Costs for New and High-Risk Drivers

North Carolina has enacted new auto insurance regulations effective this week that will impact policy pricing, particularly for new and higher-risk drivers. Drivers starting to drive, including teens and new license holders, will face increased surcharges extending from three to eight years of licensed driving experience, allowing insurers to charge higher premiums longer. The legislation also modifies rules around discounts on these surcharges, restricting eligibility for drivers with recent traffic violations or accidents.

In addition to longer surcharge periods, other changes target drivers with multiple speeding violations and those maintaining only minimum coverage levels. The minimum liability coverage requirements have risen significantly, with medical coverage now at $100,000 per accident and property damage coverage at $50,000, marking the highest minimums nationally. These increases aim to better align coverage limits with current medical and vehicle repair costs and may reduce lawsuits related to coverage gaps.

The legislation also modifies premium adjustment criteria for speeding tickets; drivers will need a five-year clean driving record to avoid surcharge increases for minor speeding offenses, up from three years. Furthermore, insurance companies can extend premium hikes for serious driving offenses from three to five years, reflecting heightened risk assessments.

These regulatory changes follow a separate approved 5% rate increase for all North Carolina drivers effective October, negotiated to replace a previously requested 23% hike. The state's insurance commissioner negotiates rate levels to balance insurer requests and consumer protection.

The increased surcharges and raised minimum coverages will likely affect parents financially supporting young drivers and individuals with prior violations, while also potentially driving competition among insurers. The North Carolina auto insurance market remains competitive, with over 200 carriers active statewide and some of the country's lowest average premiums. The evolving legal framework reflects efforts to calibrate risk, cost, and coverage adequacy in a changing economic environment for auto insurance.