North Carolina Auto Insurance Law Raises Minimum Coverage, Extends Penalty Periods

North Carolina implemented substantial updates to its automobile insurance regulations effective July 1, 2025, aimed at increasing minimum liability coverage and altering how driving records impact premiums. The new legislation raises minimum bodily injury liability limits to $50,000 per person and $100,000 per accident, and doubles property damage minimums to $50,000, which is expected to drive premium increases, especially for drivers currently at minimum coverage levels.

Additionally, underinsured motorist coverage is now required on all new and renewed policies regardless of the liability coverage level. A significant adjustment to underinsured motorist coverage calculation now bases coverage eligibility on total damages sustained rather than the at-fault driver's coverage limits, potentially expanding protection for policyholders.

Changes to surcharge policies for inexperienced drivers and serious moving violations will affect premium rates over longer periods; inexperienced operator surcharges will extend from three to eight years for drivers licensed after July 1, 2025, while penalties for accumulating four or more insurance points will increase surcharge periods from three to five years.

Minor speeding violation lookback periods for insurance underwriting have also extended from three to five years but may revert to three years for violations before the new law’s effective date pending legislative review. These regulatory reforms precede scheduled statewide rate base increases averaging 5%, signaling continued upward pressure on North Carolina auto insurance premiums. Given North Carolina's historically low auto insurance rates, these measures represent a strategic recalibration affecting insurers' underwriting, pricing policies, and risk assessment practices in the state.