Effective July 1, 2025, North Carolina will implement significant changes to auto insurance laws, including increased minimum liability limits and extended surcharge periods. Learn how these updates may affect your premiums and coverage.
On July 1, 2025, North Carolina will enact substantial reforms to its auto insurance laws — the first significant update in over two decades. These changes aim to enhance financial protection for drivers but may also lead to increased insurance premiums.
This article breaks down the key modifications and their potential impact on North Carolina drivers.
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- A minimum coverage policy in North Carolina will now include 50/100/50 in personal liability and UM/UIM insurance.
- Certain driving convictions will stay on your driving record longer under the new car insurance laws.
- These updates could raise the statewide minimum coverage premium by an average of $47 annually, from $476 to $523.
Increased minimum liability coverage
North Carolina drivers will be required to carry higher personal liability coverage limits of 50/100/50, which includes $50,000 in bodily injury liability coverage per person, $100,000 in bodily injury liability coverage per accident and $50,000 in property damage liability coverage per accident.
The previous liability minimums were 30/60/25.
“The minimum liability limit increases, effective July 1, 2025, reflect the rising costs of auto accident claims in North Carolina. This includes the escalating cost of vehicle repairs and medical care for accident-caused injuries,” says Mark Friedlander, senior director of media relations for the Insurance Information Institute (Triple-I).
The last time North Carolina updated its car insurance requirements was in 1999.
Mandatory uninsured and underinsured motorist coverage
North Carolina’s car insurance laws require all auto insurance policies to include uninsured motorist and underinsured motorist (UM/UIM) insurance that matches the new minimum liability limits. Drivers must carry at least 50/100/50 in UM/UIM bodily injury and property damage liability coverage.
Additionally, the new law enables drivers to “stack” UIM coverage, allowing a higher payout if the at-fault driver in an accident doesn’t have enough coverage to pay for their losses in full.
Under the new law, the at-fault driver’s UIM insurance will be added to the UIM limits of the not-at-fault driver’s policy.
Extended surcharge periods for inexperienced drivers
North Carolina insurance companies can apply a surcharge to an inexperienced driver’s insurance premium if they’ve been driving for less than three years.
Starting July 1, 2025, insurers can apply a surcharge to drivers with less than eight years of driving experience. This rule only applies to drivers who get a license after July 1.
The surcharge decreases as drivers gain experience. For example, the surcharge for drivers with one to three years of experience is higher than that for those with four to eight years of experience.
However, this change will significantly extend the surcharge period for all new drivers and will likely increase premiums.
This change emphasizes the importance of maintaining a clean driving record for inexperienced drivers in the Tarheel State. The new rule is an incentive to drive safely and avoid incidents that could lead to a more expensive rate.
Adjustments to the Prayer for Judgment Continued policy
The Prayer for Judgment Continued (PJC) is a legal system where North Carolina drivers can avoid a premium increase after a traffic conviction if they maintain a clean driving record.
Starting July 1, 2025, the PJC policy will require drivers to maintain a clean record for five years. Previously, drivers had to maintain a clean record for only three years.
If a driver with a PJC is convicted of a second traffic violation within the five-year period, both incidents will impact their car insurance premium. The change to this law will require drivers to wait longer before using another PJC without insurance consequences.
Read more:North Carolina’s Prayer for Judgment system
Changes to conviction impact on premiums
Starting on July 1, 2025, certain convictions resulting in four or more insurance points will now impact premiums for five years. Previously, these convictions only affected rates for three years.
Additionally, minor speeding violations, where the driver travels less than 10 mph over the posted limit, will not result in an insurance surcharge (even if they have a PJC), unless the driver has another moving violation within the last five years.
Anticipated effects on insurance premiums
North Carolina’s new car insurance laws are expected to raise premiums for many drivers. With the increase of liability limits from 30/60/25 to 50/100/50, average premiums in the state will increase $47 annually, from $476 to $523.
Read more:How much does car insurance cost in North Carolina?
How North Carolina drivers can save money on car insurance
These new car insurance laws will affect all North Carolina drivers. Here are some things to consider as you navigate the updated requirements:
- Review your current auto policy. Starting July 1, 2025, all new car insurance policies and renewed policies in North Carolina will include minimum coverage limits of 50/100/50. You don’t have to update your coverage limits to comply with the new laws. However, it’s a good time to review your current coverages to ensure you have adequate protection.
- Ask about discounts. Talk to your insurance company to determine if your premium will increase with the new changes. You can also ask about discounts and other ways to lower your rate. For example, many insurance companies offer savings for drivers who insure multiple cars on the same policy or take a defensive driving course. If you’re a young driver, ask about student discounts.
- Maintain a clean driving record. North Carolina’s new car insurance laws emphasize the importance of maintaining a clean driving record. Even if your premium isn’t increasing by much, it’s still important to avoid tickets, accidents and claims to avoid new long-term penalties.
- Get new quotes. If you’re using every opportunity to save and your premium is still high, consider getting new quotes to see if a different insurance company can offer you a better price.
“The North Carolina auto insurance market is very competitive. If your rates increase because of the minimum liability change, it’s recommended to shop your policy and obtain at least three comparative quotes,” Friedlander says.
Resources & Methodology
Methodology
CarInsurance.com editors collected rates from Quadrant Information Services for a 40-year-old driving a Honda Accord LX with a good insurance score and no violation on record for a full coverage insurance policy with limits 100/300/100 and $500 comprehensive and collision deductibles.
The hypothetical driver has a 12-mile commute and 10,000 annual mileage. We analyzed 53,409,632 records, 34,588 ZIP codes and 170 insurance companies nationwide.
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