Key takeaways
- Effective July 1, 2025, the minimum car insurance liability limits in North Carolina will increase to 50/100/50 from 30/60/25.
- The inexperienced operator surcharge timeframe extends from three to eight years for any new driver acquiring a license after July 1.
- The Prayer for Judgment Continued lookback period has increased from three to five years.
- Expanded uninsured and underinsured motorist insurance limits will give drivers access to more coverage.
Sweeping changes to car insurance laws are coming to North Carolina — and the impact may be felt through higher rates. As of July 1, 2025, new legislation will significantly increase minimum liability insurance requirements, expand uninsured and underinsured motorist coverage and introduce a consumer safeguard called policy stacking. Many of the changes are designed to enhance financial protection for accident victims, but they could also raise the cost of coverage.
North Carolina car insurance laws in effect this summer
The North Carolina General Assembly passed Senate Bill 452 on Oct. 3, 2024, impacting several aspects of North Carolina car insurance. Most changes go into effect July 1, 2025, and focus on how much insurance drivers must carry and how insurers assess drivers’ risk profiles and price policies. Here’s what NC drivers should know.
Higher minimum liability insurance requirements
All new policies and policy renewals occurring on or after July 1 will have higher mandatory minimum liability coverage limits. North Carolina is one of four states that increased minimum coverage limits in 2025 to better reflect the cost of medical care and property repairs in today’s economy. Notably, the new minimum limit of $50,000 for property damage will be the highest in the nation.
New minimum limits
| Coverage type | Required minimum limits |
|---|---|
| Bodily injury liability (BI) | $50,000 per person / $100,000 per accident |
| Property damage liability (PD) | $50,000 per accident |
| Uninsured motorist liability (UM) | $50,000 per person / $100,000 per accident |
| Underinsured motorist liability (UIM) | $100,000 per accident |
Old minimum limits
| Coverage type | Required minimum limits |
|---|---|
| Bodily injury liability (BI) | $30,000 per person / $60,000 per accident |
| Property damage liability (PD) | $25,000 per accident |
| Uninsured motorist liability (UM) | $30,000 per person / $60,000 per accident |
| Underinsured motorist liability (UIM) | $50,000 per accident |
Why it matters
Minimum liability limits refer to the lowest amount of car insurance coverage you’re legally required to carry, and they vary in each state. If a driver causes an accident and the damage goes beyond the minimum limits, they are responsible for the difference.
Bodily injury claims have become more frequent and claim payout amounts have increased over the past several years. With the average bodily injury claims at $27,600 per injured party, the new $50,000 minimum limit means drivers are less likely to exhaust their auto policies and incur out-of-pocket expenses. At the same time, minimum limit policies may cost a little more upfront.
According to Bankrate’s analysis of May 2025 data from Quadrant Information Services, North Carolina drivers carrying full coverage policies with liability limits of 30/60/25 pay an average of $1,816 per year. If they were to increase their coverage to 50/100/50, rates would average $1,860 — a $44 per year increase. However, other rating factors could make costs related to the new limits higher or lower.
Commissioner Mike Causey shared his thoughts on how these new laws will impact North Carolina drivers, many of whom may already be on a tight budget: “I applaud higher minimum limits. A lot of insurance agents don’t like minimum limits and prefer a $100K level to start off with,” says Causey.
The point I made when this was first brought up was that it seems like a good idea. About 35 percent of our drivers in North Carolina have minimum limit policies, and I would like to see them have higher limits. But it’s the poorest drivers in the state that will see a rate increase when this new law takes effect.
— Mike Causey, North Carolina Insurance Commissioner
Inexperienced operator surcharge extended for new drivers
Insurers factor in a driver’s age and experience when pricing policies in North Carolina, and young drivers tend to pay more for car insurance. By law, newly licensed drivers in North Carolina pay an additional inexperienced operator surcharge for the first three years they are licensed. As of July 1, the surcharge period will extend from three to eight years.
Why it matters
Teen drivers already pay some of the highest rates for car insurance, and this change may mean families with new drivers pay more for longer. Currently, North Carolina parents with one 16-year-old driver pay an average of $4,542 per year for full coverage car insurance and $1,643 per year for minimum coverage. The new law states discounts for new drivers may be available, but according to the North Carolina Department of Insurance (NCDOI), discount details are unclear.
Expanded uninsured and underinsured motorist coverage (UM/UIM)
Along with requiring higher UM/UIM limits of 50/100/50, uninsured motorist coverage is required and will follow the stack-and-compare rule. Drivers will be able to add or “stack” the UIM coverage from the at-fault driver’s insurance policy.
Why it matters
Before this law change, UIM claim payouts were based on the difference between the at-fault driver’s bodily injury policy limit and the balance of the victim’s damages. The at-fault driver’s coverage would be subtracted from the UIM payout. As of July 1, the at-fault driver’s coverage will be added to the limits of the victim’s policy, giving the injured party access to more coverage. This adjustment will likely increase the cost of UM/UIM coverage across the board.
Changes to Prayer for Judgment Continued rules
North Carolina has a unique traffic law system where drivers can suspend the guilty verdict of a speeding ticket with a Prayer for Judgment Continued (PJC). This allows drivers to avoid a surcharge as long as they maintain a clean driving record for three years. Changes to the law will update the PJC experience period from three to five years.
Why it matters
If a driver with a PJC is found guilty of a second moving violation within five years, their insurance will be surcharged for both violations. The extended timeframe aims to reduce repeated use of the PJC option while still offering leniency for isolated incidents.
Increased surcharge period for major moving violations and waivable speeding
As of July 1, drivers (even those with a PJC) will not be surcharged if they receive a speeding ticket for 10 mph or fewer over the speed limit, unless they had a prior moving violation within the last five years. Additionally, any violation that incurs four or more Safe Driver Incentive Plan (SDIP) insurance points will incur surcharges for five years instead of three.
Why it matters
Typically, only the most severe driving violations have SDIP points of four or higher, such as reckless driving, highway racing and negligent homicide. These violations generally increase car insurance rates by between 90 to 340 percent, according to the NCDOI. Two additional years of surcharges could significantly impact the insurance budget of high-risk drivers.
NC proposes across-the-board rate hike on top of new laws
The NCRB proposed a statewide average rate increase of 22.6 percent effective Oct. 1. According to Commissioner Causey, these rate changes would be in addition to the other changes effective July 1 and are a cause for concedrn.
“This rate increase is going to impact a significant number of people already having a difficult time,” says Causey. “It could force more people to drive uninsured, which is already an issue.”
The last rate increase requested by the NCRB was in February 2023 for 28.4 percent. However, Commissioner Causey negotiated the increase down to 9 percent, spread out over two years. A public hearing regarding the most recent rate increase request is set for Sept. 22.
“I always say no to the proposed rate increases if they are excessive or unfairly discriminatory to certain parts of the state,” says Causey. “There is a good chance a settlement could be reached before the court date, but you never know.”
The national average cost of car insurance is $2,692 per year for full coverage as of May 2025. Drivers in North Carolina pay less on average, at $1,955 per year. “We have been able to keep a stable and healthy insurance market,” says Causey, “and I want to keep it that way.”
The Department of Insurance doesn’t create state laws; they are written by the North Carolina legislature. Causey says he knows his department may get the blame for these increases, but the reality is “the commissioner must follow state law.” That doesn’t mean there aren’t steps citizens can take to push back against these changes, though.
People need to understand that they can file a complaint with the DOI with any concerns they have about their insurance. They can give us a call or send an email — we help people every day. If there is something they don’t like about the new laws, they need to get in touch with their state senators. They don’t think it will do any good, but I can tell you that it does.
— Mike Causey
North Carolina Insurance Commissioner
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.