Everything you need to know about auto insurance laws in the Tar Heel state
Each state has its own laws and requirements for car insurance. Whether you’re driving in your home state or out of state, you’re required to carry an auto insurance policy that meets the standards set forth by the state where your vehicle is registered.
North Carolina law requires that every registered vehicle must have continuous liability insurance coverage provided by a company licensed to do business in the state.
State law requires these minimum liability insurance coverage amounts:
- $30,000 for bodily injury (one person)
- $60,000 for bodily injury (2 or more people)
- $25,000 property damage
You’re also required to have uninsured motorist coverage in addition to these minimums.
What’s covered under liability insurance?
Liability coverage pays for medical bills, vehicle damage, and other costs for any person injured in an accident you caused (pedestrians, cyclists, other drivers, or passengers). A serious accident can have a high price tag, so you might benefit from purchasing a policy with higher coverage than the mandatory minimums. If the accident costs exceed the amount of your policy, you’d be responsible for paying the remaining costs out of pocket.
Your liability policy covers you (the driver), family members and any other person who has your permission to drive your car.
Supplemental insurance including personal injury protection (PIP) and collision coverage can be added to your policy to cover your own losses after an accident.
Why it’s important to have the correct North Carolina insurance coverage
Failure to have sufficient insurance coverage can result in fines and penalties. But the more important reason to make sure your policy is always up-to-date is that North Carolina is one of only 5 states in the U.S. that has a pure contributory negligence system of fault.
North Carolina is also an at-fault state.
In at-fault states, the person who is legally at fault for the collision is responsible for the costs. Usually, their insurance carrier pays for damages and injuries of anyone else injured.
What if the drivers don’t agree about who’s at fault?
That’s where things get tricky.
Most accidents aren’t clear-cut — and even if it seems to you as though fault is obvious, it’s always possible that the other driver resists because they don’t want to be held responsible.
Sometimes, the evidence doesn’t point to a clear conclusion. The police report, photos, and witness accounts might tell more than one story, or might tell an incomplete version of a story.
That’s where your personal injury lawyer comes to your defense. If there are questions concerning liability (in other words, if no drivers acknowledge being completely at fault), it might come down to whose lawyer makes the best argument to convince the insurance companies (or a judge or jury) how the accident happened.
How to file an insurance claim for a North Carolina car accident
If you were involved in an accident in North Carolina and you’re not at fault, you may file a claim in one of 3 ways:
- File a claim with your own insurance company. Your insurer will file for reimbursement from the at-fault driver’s insurance company.
- File a claim directly with the at-fault driver’s insurance company.
- File a personal injury lawsuit against the at-fault driver.
The insurance company has 30 days to respond to your claim. It can pay your claim, offer an alternate amount as settlement, deny your claim, or let you know that the investigation is still pending.
If you agree to settle the claim, the insurance company must deliver payment within 10 days.
North Carolina uninsured/underinsured motorist coverage
North Carolina requires uninsured motorist coverage (UM). Most insurance policies include it with your other required coverage, so you probably don’t need to worry about adding it separately. We recommend contacting your auto insurance company if you don’t know whether or not UM coverage is included with your policy.
The purpose of UM coverage is to provide compensation if you’re in an accident with a driver who doesn’t have insurance. This coverage would also cover a hit-and-run (i.e. when another driver hits your car and flees without you being able to obtain their information).
North Carolina does NOT require underinsured motorist coverage (UIM), but it can be helpful. This type of policy benefits you in a catastrophic accident if your injuries total more than the limits of the other driver’s liability insurance policy. For example, if the at-fault driver has a policy that meets the $30,000 minimum for personal bodily injury but your injuries cost $50,000, then your UIM policy can help cover the $20,000 difference.
Does my North Carolina auto insurance cover me when I’m out of state?
Yes, your North Carolina auto insurance policy has a “broadening clause,” which means it automatically expands coverage to meet the minimum requirements of whatever state you’re traveling in.
It also covers you while driving in Canada, but it doesn’t extend to Mexico. If you’re going to drive into Mexico, you must buy a Mexican liability policy. For travel into Canada, your insurance carrier can provide a special insurance card that will protect you if you need to show proof of insurance to a Canadian police officer.
North Carolina penalties for driving without insurance
If your insurance lapses, the insurance company will notify the North Carolina Division of Motor Vehicles (DMV). If you receive a liability insurance termination notification from the DMV, you must respond within 10 days or your vehicle’s license plate will be revoked. You will also face civil penalties, late fees, interest and collections.
The penalty for a first insurance lapse is $50. The second lapse is $100, and each subsequent lapse is $150. There is also a $50 restoration fee. In addition, you can face up to 45 days of probation for a first offense and your registration could be suspended for up to 30 days. Subsequent offenses could result in jail time.
Do you need a lawyer after a North Carolina car accident?
Drivers in at-fault states like North Carolina often need to work harder to defend against an insurance claim. In a no-fault state, where it doesn’t matter who was at fault, an insurance company might settle a claim more quickly. But whether you’re at fault or not, the insurance companies might not agree on a settlement.
In addition to being an at-fault state, North Carolina laws further complicate things because of its pure comparative negligence rule that a plaintiff can’t recover if they bear even a small amount of liability.
For this reason, you might need a personal injury lawyer after a North Carolina car accident. Unless the other driver’s liability is clear and the insurance company acknowledges that the driver has 100% fault, there’s a good chance that there’s going to be some negotiation.
Need help finding the right attorney? Visit the free Enjuris lawyer directory to locate a North Carolina lawyer near you who’s experienced and ready to help you receive the compensation you need for your car accident recovery.
See our guide Choosing a personal injury attorney.