Auto Insurance Law FAQs

North Carolina raised the minimum required auto insurance coverage and expanded protection for accident victims. Every new or renewed policy issued on or after July 1, 2025 must now carry higher liability limits and automatic uninsured and underinsured motorist coverage.

These updates mean:

• Higher mandatory coverage: $50,000 per person, $100,000 per accident, and $50,000 for property damage.
• Uninsured (UM) and underinsured (UIM) motorist coverage are now mandatory.
• The “setoff” rule that reduced UIM payments is gone.
• Service of process for UIM carriers is now simpler and fairer.
  The overall goal is to give crash victims with North Carolina policies access to fairer and fuller compensation when another driver causes serious injury.

New and renewed policies must include at least $50,000 for bodily injury per person, $100,000 per accident, and $50,000 for property damage. Before July 1, 2025, the minimums were $30,000 / $60,000 / $25,000. These old limits had not been adjusted in decades and rarely covered the real costs of modern injuries or vehicle damage. This change raises the baseline coverage for every driver insured under a North Carolina-issued policy.

The new insurance law reforms apply to North Carolina-issued insurance policies. If you move to North Carolina or renew your existing policy after July 1, 2025, the new limits and mandatory UM/UIM coverage will apply. Drivers insured through out-of-state carriers remain governed by their own state’s minimum requirements. That distinction matters in cross-state crashes because your recovery may depend on where the policy was issued.

“50/100/50” is shorthand for the new minimum liability coverage limits:

• $50,000 for injuries to one person
• $100,000 total for all people injured in one crash
• $50,000 for property damage
  Those figures represent the lowest limits allowed by law. Serious accidents frequently exceed those amounts, so higher limits remain a smart choice for drivers who can afford them.

Uninsured Motorist (UM) coverage protects you when the at-fault driver carries no insurance. Underinsured Motorist (UIM) coverage applies when the negligent driver’s policy doesn’t cover the full cost of your injuries. It is separate and apart from MedPay coverage in North Carolina.

Under the 2025 reforms:

• Both UM and UIM coverage are now mandatory.
• They must match the liability limits in your policy.
• They activate automatically when another driver’s insurance falls short.
  These protections reduce the risk of being left unpaid after a serious wreck caused by an uninsured or underinsured driver.

Under the old law, your UIM payment was reduced by the amount paid by the at-fault driver’s insurer. That “credit rule” allowed insurance companies to avoid paying the full policy amount and limited the total recovery for injured victims. The 2025 reform eliminates that rule. You can now collect the full value of both policies. For example:

• At-fault driver’s policy pays $50,000.
• Your UIM coverage adds $50,000
• Total available insurance = $100,000.
  The change removes a decades-old cap that previously protected insurance companies instead of the people they insured.

The old UIM law in North Carolina compared policy limits. If the negligent driver’s limits were equal to or greater than your UIM limits, your coverage did not apply. The new law looks at actual losses. A driver is underinsured when their coverage is insufficient to pay for all your damages, not just when their limits are lower than yours. This modernized definition focuses on whether you are fully compensated, not on technical comparisons between policy limits.

The new UM/UIM insurance laws are now more fair. Before the reform, you had to serve your insurance carrier within the statute of limitations period, even if the insurer already knew about the case. Missing that deadline often kills otherwise valid claims.

Now, as long as you file your lawsuit on time and properly issue and preserve the summons, you can serve the UM or UIM carrier later under North Carolina’s normal civil procedure rules.

This aligns insurance carriers with every other defendant and removes a procedural trap that unfairly punished accident victims.

The old law still applies to any accident that happened before July 1, 2025, regardless of when you file your claim. The new rules apply only to accidents occurring on or after that date and to policies issued or renewed after that date. If you were injured earlier, your recovery will still be limited by the former minimums and by the old UIM setoff rule.

For catastrophic injuries or fatal crashes, higher coverage limits and the removal of the UIM setoff can mean significantly more available compensation. These cases often exceed $100,000 in medical bills alone, so the added coverage provides a larger base for recovery.

However, severe cases still require careful evaluation of:

• Total damages and future medical needs
• Applicable policy limits
• Coordination between liability, UM, and UIM coverage
  Working with a trial lawyer familiar with the new rules is essential when losses surpass the available insurance.

Yes. The 2025 reform updated the Safe Driver Incentive Plan (SDIP).

• Inexperienced operator surcharge: now lasts eight years instead of three for drivers licensed after July 1, 2025, but rates taper down gradually.
• Violations worth four or more SDIP points: trigger premium surcharges for five years instead of three.
• Minor speeding or PJC lookback: extends from three years to five years for convictions after July 1, 2025.

The insurance adjustments give insurers a longer window to assess risk while still rewarding clean driving records over time.

The reforms provide several direct benefits:

• Higher coverage means more money available for medical bills and losses.
• Mandatory UM and UIM protection will eventually ensure victims of accidents in North Carolina driver should have some level of baseline coverage.
• Removal of the UIM setoff allows full access to both policies.
• Simplified service of process rules prevent technical dismissals of valid claims.

Together, these changes to the accident insurance laws in North Carolina will make the claims process fairer and hopefully reduce the chance that victims of negligence are left unpaid because of outdated policy limits or procedural traps involving Service of Process of a lawsuit.

If you were hurt in a wreck, it helps to work with a lawyer who understands how the 2025 insurance reforms affect real-world claims. Evaluating coverage and identifying all available sources of recovery are important aspects of full and fair compensation for your injuries and damages.