The structure of the Personal Auto Policy (Parts A through F, insureds, covered autos, exclusions) is covered in the national Personal Auto Policy guide. North Carolina uses its own Rate Bureau version of the auto policy. Its auto system is unlike other states' in several ways the exam tests:

• higher minimum limits since 2025
• mandatory UM and UIM
• the Safe Driver Incentive Plan of insurance points
• the Reinsurance Facility
• a contributory negligence fault rule

This guide covers those North Carolina rules.

Financial responsibility and minimum limits

• A vehicle can't be registered without proof of financial responsibility, and coverage must stay in force continuously while it's registered (G.S. 20-309).

• Financial responsibility may be shown by a liability policy, a financial security bond or deposit, or self-insurance.

• If the policy ends and there's no other proof, the owner must surrender the registration and plates. The insurer notifies DMV when liability coverage is canceled or nonrenewed (20-309.2).

• Electronic proof on a phone is acceptable (20-309(c1)).

• Minimum liability limits for policies issued or renewed on or after July 1, 2025 are 50/100/50 (20-279.21(b)(2), as amended by S.L. 2023-133):

  • $50,000 bodily injury per person
  • $100,000 bodily injury per accident
  • $50,000 property damage

  The old minimums were 30/60/25.

• An owner's policy covers the named insured and anyone driving with express or implied permission. It applies to accidents in the United States and Canada.

• North Carolina is an at-fault (tort) state with no no-fault PIP.

Fault: contributory negligence

North Carolina keeps the traditional contributory negligence rule. A plaintiff who is even slightly at fault generally can't recover from the other driver. The defendant who raises contributory negligence has the burden of proving it (G.S. 1-139). This is why UM, UIM and medical payments matter so much to North Carolina insureds.

Uninsured and underinsured motorist coverage (20-279.21(b)(3), (b)(4), (m))

Required coverages. Every private passenger policy must include:

• UM bodily injury
• UM property damage
• UIM bodily injury

Since July 1, 2025, UIM is required on all private passenger policies. Policies covering only commercial or only fleet vehicles are exempt.

Limits

• UM bodily injury limits default to the highest BI liability limit on any one vehicle. They may be lowered, but not below the statutory minimums. Required limits are capped at $1 million.
• UIM limits equal the UM bodily injury limits purchased.
• UM property damage excludes the first $100 of damage.
• UIM covers bodily injury only, never property damage.

Stacking. UM limits for different vehicles on the same policy can't be stacked. A person insured under two separate nonfleet private passenger policies may combine the highest UM limit under each.

When UM applies

• In a hit-and-run, the insured must report the accident to police or the Commissioner of Motor Vehicles within 24 hours, or as soon as practicable.
• An at-fault driver whose insurer becomes insolvent is treated as uninsured.

Notice and settlement

• The required UM/UIM notice must appear on or with the declarations page in at least 12-point type.
• Settling with the at-fault party without the insurer's written consent can void UM/UIM coverage.

Rating: the Rate Bureau and SDIP

• The North Carolina Rate Bureau files nonfleet private passenger auto rates.
• Rating limits:
  • Rates may not be based on age or sex, except for an approved downward deviation for drivers 55 and older (58-36-65(l), 58-36-30(d)).
  • Credit scores may be the sole basis only for a discount, never for termination (58-36-90).
• Consent to rate. Physical damage premiums above Bureau rates need the insured's consent, shown in a bold notice on or before the declarations page (58-36-30(b)).
• Safe Driver Incentive Plan (SDIP) (58-36-65, 58-36-75). The plan surcharges at-fault accidents and moving-violation convictions.

Points for violations

• DWI carries 12 points.
• Reckless driving and passing a stopped school bus carry 4 points.
• Speeding 10 mph or less over the limit carries no points, unless:
  • the driver had another conviction in the past 5 years, or
  • it was in a school zone.
• When an accident and a conviction come from the same incident, only the higher surcharge applies.

When no points are charged

• No points for an accident that wasn't your fault.
• No points for accidents while driving fire, rescue or police vehicles in an emergency.
• A minor accident may carry no points if all of these are true:
  • there's no related conviction,
  • the household has a clean record for three years, and
  • the insured has been with the same company group at least six months.

Surcharge periods

• Surcharges generally last three policy years.
• A conviction on or after July 1, 2025 carrying four or more points (other than speeding) is surcharged for five years.
• Inexperienced drivers first licensed on or after July 1, 2025 may be surcharged for up to eight years. A safe driver discount becomes available after three clean years.

Disputed fault. If the insured disputes an at-fault finding, with no court finding or admission, the dispute goes to a Rate Bureau hearing (58-36-65(h)).

The Reinsurance Facility (Article 37)

• Every auto insurer must be a member of the North Carolina Motor Vehicle Reinsurance Facility.

• Take all comers. Insurers must accept eligible risks whose coverage can be ceded. A producer must accept an eligible risk's application during business hours and bind coverage for at least six months (58-37-25, 58-37-30).

• A person with an unsatisfied judgment for unpaid auto premiums isn't an eligible risk.

• Cession at a higher rate. The insured must be told of:

  • the cession,
  • the rate difference, and
  • the right to shop elsewhere.

  Specific reasons are given in writing on request. If the insured cancels within 45 days to move to an insurer that won't cede, the refund is pro rata.

• Ceded business gets the same service as voluntary business. An insurer can't refuse or surcharge physical damage coverage because liability was ceded (58-37-60).

• The Facility reinsures at least $50,000/$100,000 bodily injury and $50,000 property damage. Higher limits up to $250,000/$500,000/$100,000 are available to meet umbrella requirements.

Terminating an auto policy (58-36-85)

Permitted reasons. "Termination" includes nonrenewal. It's allowed only for listed reasons, such as:

• nonpayment
• the named insured becoming a nonresident
• no longer being an eligible risk
• knowing misrepresentation of the driving record (58-36-65(g))

Notice periods

• Nonpayment: effective 15 days after mailing.
• Any other reason: at least 60 days after mailing.

Contents of the notice. It must give the reason, the penalty for driving uninsured, and the right to ask NCDOI for review. Proof of mailing is proof of notice.

Review. The insured has 10 days after receiving the notice to request Department review. The policy stays in force during review.

Claims rules (11 NCAC 04 .0416 to .0423)

• Claim payments are mailed or delivered within 10 business days after settlement. The insurer can't offset premium owed on another policy without consent.
• Total loss (.0418):
  • A vehicle is a total loss when damage reaches 75% of its pre-accident actual cash value.
  • Comparable vehicles come from within 100 miles.
  • The settlement includes sales tax and registration fees when the insurer takes the salvage.
• Diminished value. A third-party claimant may recover the drop in the car's fair market value (20-279.21(d1)).
• The insurer can't require a particular repair shop.
• New business must be investigated and billed at the right rate class within 90 days.

Policy features on the North Carolina form (per NCDOI)

• A newly acquired car is covered automatically if reported within 30 days.
• Family member includes a ward or foster child.
• Medical payments doesn't cover occupants of vehicles with fewer than four wheels unless endorsed.
• Rental coverage applies to daily rentals of 21 consecutive days or less.
• Flood damage to a car is covered under other than collision.
• Liability is excluded while the driver is logged into a rideshare app.
• The policy automatically meets other states' minimum limits.

Common exam traps

• Minimums are 50/100/50 for policies on or after July 1, 2025. The old figures were 30/60/25.
• UM BI, UM PD and UIM are all required, and UIM limits equal UM BI limits.
• North Carolina uses contributory negligence, not comparative.
• Termination notice: 15 days for nonpayment, 60 days for everything else.
• Speeding 10 mph or less carries no points unless there's a prior conviction or it was in a school zone.
• A producer must bind an eligible Facility risk for at least six months.