New Auto Insurance Requirements Coming to North Carolina in 2025

Beginning July 1, 2025, drivers in North Carolina will be required to carry more auto insurance coverage than they do today. The state is increasing the minimum liability limits to better match the high cost of medical care and vehicle repairs. This is the first major update to the state’s auto insurance laws in over 20 years and aims to improve financial protection for everyone on the road. While these changes could lead to slightly higher premiums, they offer more coverage and better peace of mind in the event of a serious accident.

What Are the New Insurance Limits?

If you’re a licensed driver in North Carolina, you must carry liability insurance. This type of insurance helps pay for injuries or damages you cause in an accident. As of July 1, 2025, the minimum required liability limits will increase:

Uninsured and underinsured motorist (UM/UIM) coverage must also match these higher limits. This coverage protects you if you’re in a crash caused by someone with little or no insurance.

Another important change: policyholders will now be allowed to access their full UIM limits in addition to the payout from the at-fault driver’s insurance. This means more money is available to cover serious injuries and losses.

When Do These Rules Take Effect?

The new requirements begin on July 1, 2025. If your insurance policy renews after that date, your insurance company will automatically adjust your coverage to meet the new minimums. It’s a good idea to talk with your insurance agent ahead of time so you understand how your policy will be affected.

Why Is This Law Changing?

• Rising Costs: Medical bills and car repairs have become more expensive since the last change in 1999.

• Better Protection for Victims: The law ensures more support for people injured in crashes.

• Reduced Financial Risk: Higher coverage helps protect drivers from lawsuits or personal expenses.

• Improved Fairness: UIM coverage updates make sure you’re not penalized if the other driver isn’t properly insured.

How Will It Affect Insurance Premiums?

If you currently carry only the minimum coverage, you might see an average increase of about $50 per year (or around $4 to $5 per month).

Those with higher existing coverage may not see much change. Rates also depend on:

• Your driving record

• Your location

• The car you drive

• Your age and driving experience

Even with the increase, North Carolina remains one of the more affordable states for auto insurance due to rate regulation.

How to Prepare for the New Requirements

1. Talk to Your Insurance Agent: Review your policy and ask how the new rules will affect you.

2. Connect with All About Insurance: Our independent agents compare multiple companies to help you find the best value.

3. Bundle Your Insurance: Combining auto and home policies can qualify you for a discount.

4. Ask About Discounts: Good drivers, students, and military families may qualify for savings.

5. Explore Usage-Based Insurance: Some insurers offer lower rates for safe driving habits.

6. Review Your Deductibles: A higher deductible may reduce your monthly premium.

7. Assess Optional Coverages: Remove extras you don’t need to save on your policy.

Final Thoughts

North Carolina’s new auto insurance laws provide more protection for everyone involved in a crash. While premiums may increase slightly, drivers will benefit from more financial support when it matters most. Now is the perfect time to review your policy and talk with a professional.

Need help? The team at All About Insurance is ready to answer your questions and make sure you’re prepared before July 1, 2025.

Sources

1. O’Connor Insurance Associates Blog

2. WRAL News, May 2024 and Dec 2024

3. Senate Bill 452, North Carolina General Assembly

4. North Carolina Department of Insurance (ncdoi.gov)

5. Insurance Journal, 2025

6. Bankrate/Insurance.com, 2024

7. North Carolina Rate Bureau