North Carolina Insurance Laws Guide

Comprehensive guide to NC insurance requirements, regulations, and your rights as a consumer

UPDATED FOR 2025 LAW CHANGES

Major 2025 Law Changes

Effective July 1, 2025

IMPORTANT: Implementation Date

These changes apply to all new and renewed auto insurance policies on or after July 1, 2025. Existing policies remain unchanged until their renewal date.

Higher Minimum Liability Limits

Coverage Type Old Minimums
(Before July 2025)
New Minimums
(July 2025+)
Bodily Injury (per person) $30,000 $50,000
Bodily Injury (per accident) $60,000 $100,000
Property Damage $25,000 $50,000

What This Means for You

  • • First increase since 1999 - long overdue adjustment for inflation
  • • Better protection against serious accident costs
  • • Premium increases expected for minimum coverage policies
  • • NC now has some of the highest minimum requirements in the US

Mandatory Underinsured Motorist Coverage

Big Change: Starting July 1, 2025, ALL auto policies must include Uninsured/Underinsured Motorist (UM/UIM) coverage matching the new minimum liability limits.

Before July 2025

  • • UM/UIM was optional on minimum policies
  • • Many drivers had no protection
  • • Limited coverage amounts

After July 2025

  • • UM/UIM mandatory on ALL policies
  • • Minimum $50,000/$100,000 coverage
  • • Better protection from uninsured drivers

Elimination of "Liability Setoff"

Major Improvement: You can now collect FULL UIM benefits in addition to liability payouts.

Example: If you have $50,000 UIM coverage and collect $30,000 from the at-fault driver's insurance, you can still collect the full $50,000 from your UIM policy (previously reduced to $20,000).

Extended Inexperienced Driver Surcharge

Affects New Drivers Only

This change applies only to drivers who get their license on or after July 1, 2025.

Previous Rule

Inexperienced driver surcharge for:

  • 3 years after getting license
  • • Higher surcharges throughout

New Rule (July 2025+)

Inexperienced driver surcharge for:

  • 8 years after getting license
  • • Years 1-3: Higher surcharges
  • • Years 4-8: Lower, decreasing surcharges

Prayer for Judgment Continued (PJC) Changes

The lookback period for Prayer for Judgment Continued violations has been extended.

Previous Rule

Insurance companies looked back 3 years for PJC history

New Rule

Insurance companies can now look back 5 years for PJC history

Note: This affects how long certain driving violations can impact your insurance rates.

Auto Insurance Requirements

What NC law requires for all drivers

Current Minimum Requirements (2025)

Liability Coverage (Required)

  • Bodily Injury (per person) $50,000
  • Bodily Injury (per accident) $100,000
  • Property Damage $50,000

Uninsured Motorist (Now Required)

  • UM Bodily Injury (per person) $50,000
  • UM Bodily Injury (per accident) $100,000
  • UM Property Damage $50,000

Why Higher Limits Make Sense

  • • Medical costs have risen dramatically since 1999
  • • Average ER visit now costs $1,000-$3,000+
  • • Vehicle repair costs have increased significantly
  • • Personal assets at risk if limits are too low

Optional but Recommended Coverage

Collision Coverage

Pays for damage to your vehicle in an accident

Required if you have a car loan

Comprehensive Coverage

Covers theft, vandalism, weather damage

Often required by lenders

Rental Car Coverage

Pays for rental while your car is repaired

Highly recommended

Gap Coverage

Covers loan balance if car is totaled

Essential for new car loans

Homeowners Insurance Requirements

Not required by law, but often mandatory for mortgages

Legal Requirements

No State Requirement

North Carolina law does NOT require homeowners insurance. However, if you have a mortgage, your lender will require coverage to protect their investment.

Typical Lender Requirements

Dwelling Coverage

Must equal at least the loan amount or replacement cost of the home

Lender as Additional Insured

Mortgage company must be listed on the policy

Continuous Coverage

Policy must remain active throughout the loan term

Proof of Insurance

Annual proof of coverage required

2025 Rate Changes

Base Rate Increases

  • June 1, 2025: 7.5% base rate increase statewide
  • June 1, 2026: Additional 7.5% increase planned
  • • Actual premium changes may vary by insurer
  • • "Consent to rate" policies may see higher increases

Understanding "Consent to Rate"

Many NC homeowners policies include a "consent to rate" clause that allows insurers to charge up to 250% more than the state's maximum approved rate.

  • • Review your policy for this clause
  • • Ask your agent about alternatives
  • • Consider shopping for better rates

Coverage Not Included in Standard Policies

Flood Damage

Standard policies do NOT cover flooding

Separate flood insurance required through NFIP or private insurers

Earthquake Damage

Usually excluded from standard policies

Available as separate coverage or endorsement

Sewer Backup

Not covered by standard policies

Water backup endorsement available

Home Business

Limited coverage for business property/liability

Separate business policy may be needed

Your Rights as a Consumer

Know your rights when dealing with insurance companies

Claims Handling Rights

Fair Treatment Rights

  • Prompt acknowledgment of claims (within 30 days)
  • Reasonable claim investigation
  • Clear communication about claim status
  • Fair settlement offers based on policy terms
  • Written explanation of claim denials

Protection Against Unfair Practices

  • Misrepresenting policy terms
  • Unreasonable claim delays
  • Lowball settlement offers
  • Refusing to pay valid claims
  • Cancelling policies without proper notice

Policy Rights

Right to Review

Free look period to review new policies (typically 30 days)

Right to Renewal

Cannot be cancelled mid-term except for non-payment or fraud

Right to Shop

Can change insurance companies at any time

Right to Documentation

Access to all policy documents and claim files

Legal Protections

Unfair Claims Settlement Practices Act

NC General Statute § 58-63-15 protects consumers from unfair insurance practices.

  • • Right to hire attorney or public adjuster
  • • Ability to sue for bad faith claims handling
  • • Protection against discrimination
  • • Right to appeal denied claims

Lawsuit Deadlines

Check your policy for "suit against us" provisions - typically 12 months from date of loss or claim closure. State law may provide additional time, so consult an attorney if needed.

Filing Complaints

How to get help when things go wrong

When to File a Complaint

Claims Issues

  • • Claim denied without proper explanation
  • • Unreasonable delays in processing
  • • Lowball settlement offers
  • • Poor communication from adjuster
  • • Failure to investigate properly

Policy Issues

  • • Unexpected policy cancellation
  • • Misrepresentation of coverage
  • • Excessive rate increases
  • • Discrimination in underwriting
  • • Agent misconduct

NC Department of Insurance

Contact Information

Phone

855-408-1212

Website

ncdoi.gov

Email

Online complaint form

What to Include in Your Complaint

Basic Information
  • • Policy number
  • • Claim number (if applicable)
  • • Insurance company name
  • • Agent/adjuster names
  • • Dates of all communications
Supporting Documents
  • • Copies of all correspondence
  • • Policy documents
  • • Claim forms and estimates
  • • Photos of damage
  • • Receipts and invoices

Other Resources

Attorney General's Office

Consumer Protection Division

For broader consumer fraud issues

Better Business Bureau

BBB serving Eastern NC

For general business disputes

Legal Aid

Free legal assistance

For qualifying low-income consumers

Private Attorney

For complex legal issues

May work on contingency for valid claims

Additional Resources

Helpful links and contact information

Official Government Resources

NC Department of Insurance

Primary regulator for insurance in NC

ncdoi.gov
National Flood Insurance Program

Flood insurance information

fema.gov/flood-insurance
NC General Assembly

Full text of NC insurance laws

ncleg.gov
DMV Vehicle Registration

Vehicle registration and insurance requirements

ncdot.gov/dmv

Bill Layne Insurance Agency Resources

Need Personal Assistance?

Our experienced agents stay up-to-date on all NC insurance law changes and can help you navigate the requirements to find the right coverage for your needs.

Legal Disclaimer

This guide provides general information about North Carolina insurance laws and requirements as of July 2025. Laws and regulations change frequently, and this information should not be considered legal advice. For specific legal questions or current law interpretations, consult with a qualified attorney. For insurance coverage questions specific to your situation, contact a licensed insurance agent. Bill Layne Insurance Agency makes no warranties regarding the accuracy or completeness of this information.