Car insurance laws vary depending on what state you are in, so things can get confusing. Thankfully, they are relatively straightforward in North Carolina. These laws are still important to know, however, because car insurance is mandatory in the state. Bankrate can help you avoid hefty fines from the DMV by giving a better understanding of North Carolina car insurance laws and how they pertain to you.


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Auto insurance laws in North Carolina

Drivers shopping for car insurance in North Carolina should review its auto insurance laws before purchasing a policy. That way, drivers can ensure they have enough coverage to meet state requirements and understand other laws they must follow. Here are the most relevant North Carolina auto insurance requirements:

  • Liability insurance: All drivers in North Carolina are required to have continuous liability insurance provided by a company licensed to do business in North Carolina.
  • Uninsured/underinsured insurance requirement: All drivers in North Carolina are required to carry uninsured/underinsured motorists coverage. .
  • Coverage lapse notification: North Carolina insurance companies are legally required to notify the state’s department of motor vehicles (DMV) if a driver’s insurance coverage is canceled or lapses for any reason.
  • Proof of insurance: All drivers in North Carolina must carry proof of insurance documentation in their vehicle at all times and provide proof of insurance when requested by law enforcement.

Liability insurance in North Carolina

In North Carolina, drivers must carry liability insurance, which includes bodily injury liability coverage and property damage liability coverage, as well as uninsured/underinsured motorist coverage. Here is the amount of coverage that the state requires:

  • $30,000 in bodily injury liability coverage per person
  • $60,000 in bodily injury liability coverage per accident
  • $25,000 in property damage liability coverage per accident
  • $30,000 in uninsured/underinsured motorist bodily injury coverage per person
  • $60,000 in uninsured/underinsured motorist bodily injury coverage per accident
  • $25,000 in uninsured motorist property damage coverage per accident

However, drivers in North Carolina should know that minimum coverage insurance may not be enough to cover the full cost of an at-fault accident. For example, if someone causes an accident and the other driver has $80,000 in medical bills, minimum coverage insurance would only cover $30,000 in expenses. The at-fault driver would be responsible for paying the remaining $50,000 out-of-pocket.

It is also important to note that North Carolina minimum car insurance does not protect your vehicle. A minimum liability policy pays for medical payments or property damage for the other party if you are at fault in the accident or if the other party is uninsured or does not have enough insurance to cover your expenses. If you want protection for your vehicle, you must add full coverage to your policy.

Most insurance companies recommend that drivers purchase coverage above and beyond the minimum state requirements for more protection. Getting more coverage means paying a higher premium, but it offers a greater level of coverage and reduces financial risk.

Is North Carolina a no-fault state?

North Carolina is an at-fault state. That means when someone gets into an accident, the at-fault driver’s insurance company is responsible for paying the other driver’s medical bills and lost wages. In no-fault states, policies usually include personal injury protection (PIP) which is used to pay for the driver and passengers medical expenses after an accident, regardless of who caused the crash.

Penalties for driving without insurance in North Carolina

Driving without car insurance in North Carolina is illegal and comes with penalties. If a driver’s insurance policy is canceled or their coverage lapses, the North Carolina DMV will send a notification to the vehicle owner. The driver has 10 days within receiving the notification to respond with proof of insurance.

If the driver does not respond to the notification within 10 days, the DMV can revoke the vehicle’s license plates and the driver will pay a $50 fine and $50 restoration fee. For a second offense, a driver will pay a $100 fine and $50 restoration fee, and all subsequent insurance lapses come with a $150 fine and $50 restoration fee.

Auto insurance coverage options in North Carolina

Getting car insurance in North Carolina is a fairly simple process. After choosing an insurance company, drivers can get a quote and apply for a policy. Before signing the policy, drivers will decide the liability coverage limits and whether they want full coverage insurance.

A full coverage insurance policy covers damage to your vehicle with the addition of comprehensive and collision coverage. Comprehensive and collision usually carry a deductible.

  • Comprehensive coverage (COMP or OTC): Comprehensive coverage pays for damage to your vehicle caused by things typically outside your control. Some examples of comprehensive claims include hitting an animal, fire, theft, vandalism and acts of nature, such as hail and flooding.
  • Collision coverage (COLL): Collision coverage pays for the damage to your vehicle if you are at fault in an accident. This coverage is also sometimes used to pay for repairs to your vehicle if someone hits you and flees the scene of the accident.

There are also several add-on coverage options that could benefit drivers in North Carolina:

  • Roadside assistance: Roadside assistance helps cover basic vehicle repairs, towing, battery services and fuel delivery if a vehicle breaks down.
  • Rental reimbursement: Rental reimbursement helps pay for or reimburse you for the cost of a rental car while your vehicle undergoes repairs due to a covered comprehensive or collision claim.
  • Gap insurance: After an accident, gap insurance covers the difference between a vehicle’s value and the remaining balance on the loan.
  • New car replacement coverage: New car replacement coverage will pay for a new car if your vehicle is totaled in a covered accident.

Frequently asked questions

    • The best car insurance company is different for every driver. For instance, some drivers care about great customer service, and others care more about getting the cheapest rate. Shopping around and comparing quotes is the only way to find the best car insurance company to fit your needs.
    • In North Carolina, the average cost of full coverage car insurance is $1,392 per year, and the average cost of minimum coverage car insurance is $431 per year. These are average rates, and many factors will affect your actual cost of car insurance.
    • The cheapest car insurance company in North Carolina depends on many factors. The type of coverage you need, the kind of vehicle you drive, your driving history, and the drivers you have listed on your policy all affect how much your premium will be. The best way to find the most affordable policy is to shop around and compare rates.