NC Law Extends Inexperienced Driver Surcharge, Raises Auto Insurance Minimums

North Carolina implemented an amended state law on July 1 that affects auto insurance premiums by extending the inexperienced operator surcharge to drivers into their mid-20s, up from the previous age of 19. This change means that new drivers face higher premiums for a longer duration, with the surcharge applicable for up to the first eight years of driving experience for those licensed on or after July 1. While the surcharge decreases progressively after the third year, it is completely removed only if the driver maintains a clean record without accidents or convictions.

Additionally, the law raises the minimum mandatory financial liability limits for auto insurance policies. The minimum coverage for bodily injury per person increases from $30,000 to $50,000, bodily injury per accident from $60,000 to $100,000, and property damage per accident from $25,000 to $50,000. This increase in coverage thresholds leads to higher baseline premiums for many policyholders, including those without recent violations or claims.

The updated regulations also mandate underinsured motorist coverage in all new or renewed policies, a feature previously not required for policies meeting the old minimum limits. Changes in how underinsured liability is calculated focus on the total damages sustained rather than the limits of applicable liability insurance at the time of an accident.

Furthermore, the duration of premium surcharges linked to traffic violations has been extended. Drivers with convictions resulting in four or more Safe Driver Incentive Plan points will have surcharges lasting five years instead of three. The lookback period for prior moving violations is similarly extended to five years, though legislation to revert this period to three years for violations before July 1, 2025, is being monitored.

These amendments come alongside a scheduled overall 5% increase in North Carolina auto insurance rates effective October 1, related to rising vehicle and repair costs and increased accident severity, partly due to distracted driving. Notably, the state is also seeing a 16.3% decrease in motorcycle liability insurance rates. Insurers and agents advise policyholders to consult about how these changes may specifically impact their premiums and coverage.