The new liability limits represent the first increase in North Carolina's mandatory auto insurance coverage since 1999.1 Breaking down the 50/100/50 requirements:

• Bodily Injury: $50,000 per person (up from $30,000) and $100,000 per accident (up from $60,000) - this covers medical expenses, lost wages, and other damages if you injure someone in an accident12

• Property Damage: $50,000 per accident (up from $25,000) - this covers damage to others' vehicles or property123

These increases reflect rising medical costs and vehicle repair expenses in today's economy.3 While the enhanced coverage provides better protection, drivers currently carrying minimum coverage should expect premium increases when their policies renew after July 1, 2025.4 According to Bankrate's analysis, drivers increasing from 30/60/25 to 50/100/50 coverage may see an average annual increase of about $44, though individual rates will vary based on other factors.5

One of the most significant changes in North Carolina's auto insurance law is that underinsured motorist (UIM) coverage will become mandatory for all policies issued or renewed after July 1, 2025. Previously optional, UIM coverage will now be required with minimum limits matching the new liability requirements: $50,000 per person and $100,000 per accident.12 This coverage protects drivers when they're injured by someone whose insurance isn't sufficient to cover all damages.

The law also eliminates the "liability credit" or "setoff" rule that previously reduced UIM payouts. Under the new system, UIM coverage stacks on top of the at-fault driver's liability coverage rather than just covering the difference.23 For example, if you suffer $200,000 in damages, the at-fault driver has $50,000 in coverage, and you have $100,000 in UIM coverage, you could recover up to $150,000 total ($50,000 from liability plus $100,000 from UIM) instead of just $100,000 under the old rules. This change significantly increases the potential compensation available to accident victims with serious injuries.

The new law extends North Carolina's inexperienced operator surcharge from three years to eight years for drivers who receive their license on or after July 1, 2025.12 This means new drivers will pay higher insurance premiums for a significantly longer period—potentially until age 24 for teens who get licensed at 16. Importantly, drivers licensed before July 1, 2025, remain grandfathered under the previous three-year surcharge period.34

Insurance Commissioner Mike Causey has expressed concerns about the extended surcharge period, stating he "would prefer it limited to five years" and noting it will "impact some of our poorest citizens more than other families."1 However, there is some relief—the surcharge decreases significantly after the first three years if the inexperienced driver maintains a clean record.2 Despite these changes, North Carolina drivers still pay substantially less for insurance than the national average, with 18-year-olds paying about $4,307 for full coverage compared to the national average of $7,382.1