It is not a state requirement to have full coverage (meaning at least the minimum state auto insurance limits plus Physical Damage coverages) but normally a requirement listed in your paperwork from your finance company or lender. The lender is your lien holder and thus the car is their asset until you pay it off. This is why they have a say about what insurance coverages you obtain and maintain on the financed vehicle.

The North Carolina Department of Insurance (DOI) notes in its auto insurance consumer guide that Physical Damage coverages of Collision and Comprehensive are not required by the state but can be required by your lender.

The NC DOI also notes that if you drop require auto insurance coverages from a financed vehicle it is a violation of your finance contract and may put your loan in jeopardy. Second, the lender could place single interest coverage on the vehicle and add the premium to the loan. This type of coverage is expensive and does not provide any coverage for you, just the lender.

So to find out if you must have full coverage on a specific financed vehicle you would need to speak to the lien holder and/or read through your lease or loan paperwork. Most all lien holders require full coverage since the car is their asset and if it is damaged or totaled out and you do not have insurance to cover it than they will have to come after you personally to repair it or pay off a totaled car which is much harder than your insurance company taking care of it for you.

The North Carolina Financial Responsibility Laws require that Automobile Liability coverage be maintained. The minimum requirements of Liability insurance for private passenger vehicles in North Carolina are 30/60/25. These numbers stand for $30,000 for bodily injury for 1 person, $60,000 bodily injury for 2 or more people in one accident and $25,000 for property damage occurring in one accident.

NC insurance companies and their agents are required to offer Uninsured Motorist and Combined Uninsured/Underinsured Motorist coverage. If you do not wish to have this coverage, it must be rejected.

Beyond these minimum Liability coverages the choice is usually up to you to add full coverage with optional coverages such as Collision and Comprehensive unless you have a lien holder that requires you to carry such coverages on a vehicle you are still paying for. So while the state does not require you to carry full coverage the company you financed your vehicle through can mandate what insurance you keep on the vehicle.

To shop for either Liability or Full Coverage for your car in NC, click here for a low cost car insurance quote.