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North Carolina auto insurance laws

Highways and roads going into Charlotte, NC.

If you drive, the vast majority of states require that you have car insurance. However, the specific requirements for the type and level of coverage you need vary from place to place. Per North Carolina auto insurance laws, drivers must have a minimum amount of liability coverage and uninsured motorist coverage, or they risk incurring fines and other penalties for failing to carry the appropriate coverage.

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Auto insurance laws in North Carolina

Before buying car insurance, it’s good to know what type of auto insurance is required by law in NC. While insurers aren’t allowed to sell less than the state-mandated minimum coverage, knowing the specifics can help when you’re shopping around and exploring coverage options.

Here are North Carolina’s auto insurance requirements, per the North Carolina Department of Motor Vehicles (NCDMV):

  • 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 motorist coverage, as well. This helps pay for the fallout after an accident caused by someone without enough coverage to pay for the damage or injuries they caused. In 2019, about 7.4 percent of North Carolina drivers had no insurance, per the Insurance Information Institute.
  • Coverage lapse notification: North Carolina insurance companies are legally required to notify the state’s 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. Valid ways to show proof include your policy documents, a certificate of insurance (FS-1) or a DL-123 insurance form. Digital insurance information is not accepted.

Liability insurance in North Carolina

Liability insurance helps pay for other drivers’ damage and injuries if you cause an accident. 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 liability insurance does not protect your vehicle. A minimum liability policy pays for medical expenses or property damage for the other party if you are at fault in the accident. If you want protection for your vehicle, you must add full coverage to your policy.

Most insurance professionals 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 typically means when someone gets into an accident, the at-fault driver is responsible for the damage. However, the state acknowledges contributory negligence, meaning if you are found to be partially at fault, you may not be able to collect a liability payout from the other party’s insurer, even if the other driver was more at fault.

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 after 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

When buying auto insurance, drivers typically have two basic options. They can purchase a minimum coverage policy, which conforms to the state law, or opt to get a full coverage policy for greater financial protection. Of course, full coverage will generally be more expensive than minimum coverage. Note that if you are financing or leasing a vehicle, the lender or lessor may require full coverage.

A full coverage insurance policy often covers damage to your vehicle with the addition of comprehensive and collision coverage. Comprehensive and collision usually carry a deductible, which is an amount you have to pay out of pocket before the insurance kicks in.

  • Comprehensive coverage (COMP or OTC): Comprehensive coverage is designed to help pay 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 helps pay for 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 $1,446 per year, and the average cost of minimum coverage car insurance is $432 per year. These are average rates, though — many factors will affect your actual premium. Either way, insuring a car here is cheaper than in many other states, as the national annual average cost of car insurance is $2,014 for full coverage and $622 for minimum coverage.
    • 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 (among other factors). The best way to find the most affordable policy is to shop around and compare rates for the same coverage types and policy limits (or as close to the same as possible).

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