The Personal Auto Policy itself (Parts A through F, insureds, covered autos, exclusions) is covered in the national Personal Auto Policy guide. North Dakota is a no-fault state. Every owner must carry basic no-fault benefits as well as liability coverage, and the right to sue for pain and suffering is limited by a serious injury threshold. This guide covers the Auto Accident Reparations Act (N.D.C.C. chapter 26.1-41), North Dakota's UM/UIM law (26.1-40-15.1 to 15.7), the auto cancellation rules (chapter 26.1-40) and the financial responsibility law (Title 39).

What every owner must carry

• Security for both. Owners must continuously provide security for basic no-fault benefits and for liability (26.1-41-02).
• Minimum liability limits: 25/50/25 (39-16.1-11):
  • $25,000 bodily injury per person
  • $50,000 per accident
  • $25,000 property damage
• UM is mandatory at those minimum limits (26.1-40-15.2). UIM is provided at limits equal to the UM limits (26.1-40-15.3).
• An owner who doesn't carry the required security is absolutely liable for basic no-fault benefits as if they were an insurer (26.1-41-02(5)).

Basic no-fault benefits (26.1-41)

Limits (26.1-41-01)

• Economic loss means medical, rehabilitation, work loss, replacement services, survivors' loss and funeral costs. Pain and suffering is noneconomic loss and isn't covered.
• Optional excess no-fault must be offered, up to $80,000 total per person (26.1-41-04).
• No-fault limits can't be stacked (26.1-41-14).

Who pays first (26.1-41-13)

• An injured occupant is paid by the insurer of the vehicle occupied.
• A pedestrian struck in North Dakota is paid by the insurer of the vehicle that hit them.
• Bus passengers are paid first by their own (or a relative's) no-fault insurer.
• WSI (workers' comp) benefits for the same loss are subtracted.

Exclusions (26.1-41-07). No benefits for a person who:

• occupied a vehicle without consent
• was in their own uninsured vehicle
• was racing
• intentionally caused the injury

Definitions and scope

• A motor vehicle has more than three load-bearing wheels, so motorcycles aren't motor vehicles for no-fault purposes (26.1-41-01(10)).
• Coverage applies in the United States, its possessions and Canada.

Claims rules

• Benefits are overdue after 30 days from reasonable proof and then bear interest.
• Services billed more than 180 days after treatment don't have to be paid.
• Suit is due within 2 years after the loss is known, and no later than 4 years after the accident.
• The insured must submit to an exam by an insurer-designated physician.
• If a vehicle won't be driven for 30 consecutive days, the owner may have coverage suspended pro rata.
• An assigned claims plan pays eligible people when no basic no-fault coverage applies.

The tort threshold

A secured person is exempt from liability for noneconomic damages (pain and suffering) unless the injury is a serious injury (26.1-41-08). A serious injury means:

• death,
• dismemberment,
• serious and permanent disfigurement or disability lasting more than 60 days, or
• medical expenses over $2,500 (26.1-41-01(21)).

Fault rules for lawsuits

• Modified comparative fault (32-03.2-02). A claimant may recover unless their fault is as great as the combined fault of all others. Damages are reduced by the claimant's share. Each defendant's liability is several only, limited to its share of fault.
• Two-party property damage (32-03.2-02.1). In a two-party accident where the other driver is more than 50% at fault, direct property damage up to $5,000 (and indirect up to $1,000) isn't reduced for the claimant's fault.

Uninsured and underinsured motorist rules

Limits

• An insurer must offer UM limits up to the lesser of the BI limits or $100,000/$300,000 (or a $300,000 single limit). Once limits are selected, they needn't be re-offered at renewal.
• UIM limits equal UM limits.
• An underinsured vehicle is one whose BI limit is less than the insured's UIM limit (26.1-40-15.1(2)).

What counts as uninsured (26.1-40-15.1)

• A vehicle whose insurer denies coverage or becomes insolvent.
• A hit-and-run vehicle, if there was physical contact or a disinterested witness independently verifies it.
• Not included: vehicles insured under the same policy, government-owned vehicles, and vehicles used as a residence.

Stacking and priority (26.1-40-15.4)

• UM/UIM limits can't be stacked across vehicles.
• The policy on the vehicle occupied pays first.
• Damages are reduced by WSI and PIP or medical payments benefits.

Limits on recovery (26.1-40-15.5 to 15.7)

• UM/UIM never pays punitive damages.
• The accident must be reported to police as soon as practicable.
• UIM applies only after the at-fault driver's limits are exhausted or offered in writing.
• If the UIM insurer doesn't advance a tentative settlement amount within 30 days of written notice, it loses its subrogation right.
• Arbitration happens only if both parties agree.
• Each side pays its own attorney fees, unless the insurer acted in bad faith.
• UM/UIM needn't be offered on umbrella or excess policies.

Policy features required by statute

• Named driver exclusions are allowed by written agreement with the named insured (26.1-40-16).
  • A named insured who lets an excluded driver use the car is not relieved of personal liability.
  • A restrictive endorsement can't cut coverage below the statutory minimums.
  • Resident family members can't have benefits reduced just because they're related (26.1-40-16.1).
• Loaner cars. When a dealer, repair shop or rental business lends a car, the borrower's own policy is primary (26.1-40-17).
• Rental cars (26.1-40-17.1):
  • A private passenger policy's property damage liability must cover damage to, and loss of use of, a car rented for 30 days or less, regardless of fault.
  • Loss of use is paid at 60% of the daily rate for up to 15 days.
  • Rental companies can't require a damage deposit.
  • Covered rentals include pickups and vans, but not motor homes.
• Total losses. After a total loss, the insurer gives notice that future physical damage claims on an unrepaired car will be reduced by the amount paid (26.1-40-24).
• Proof of insurance may be written or electronic (26.1-40-25, 39-08-20).

Rating

• Accident prevention course (26.1-25-04.1). A completed course earns a premium reduction for at least two years. Drivers 55 and older get three years.
• No accident surcharge for a comprehensive claim, or for damage while the car was legally parked and unattended (26.1-25-04.2).

Cancellation and nonrenewal (26.1-40)

Scope. These rules don't apply to:

• policies in force under 60 days (unless a renewal)
• assigned risk policies
• policies on more than six vehicles
• garage policies

Reasons allowed for cancellation (26.1-40-02)

• nonpayment

• suspension or revocation of the license or registration of the named insured or a household or customary driver, during the policy or within 180 days before renewal

  The insurer can't cancel if that driver is excluded, and must tell the named insured about that option first.

• a move to a state where the insurer isn't licensed

• a hazardous vehicle or use, such as hauling explosives or carrying passengers for hire. A car pool isn't use for hire.

Notice periods

• Cancellation: at least 20 days, or 10 days for nonpayment with the reason stated (26.1-40-03, 26.1-40-04).
• Nonrenewal: at least 30 days (26.1-40-05). No notice is needed if the insurer offered to renew or the insured didn't pay.
• Notices other than nonpayment must mention possible eligibility through the automobile insurance plan (26.1-40-06).
• Proof of mailing is kept 1 year.

Other rules

• A physical damage deductible of $100 or less (other than collision) isn't a cancellation.
• Declinations (26.1-40-10, 26.1-40-11). Reasons are given within 21 days of a written request made within 90 days. An insurer can't decline or terminate solely for age, sex or marital status, though it may rate on them. It can't decline because of prior residual market or substandard coverage.
• Violations bring fines of up to $500, or $5,000 if willful (26.1-40-12).

Financial responsibility and the residual market

• Driving uninsured (39-08-20). The court impounds the plates. The driver must keep an insurer's certificate on file for one year or lose driving privileges, and must pay the other driver's deductible (39-08-20.1).

• Proof of financial responsibility may be:

  • an insurer's certificate,
  • a bond, or
  • a $25,000 cash or securities deposit certified by the Bank of North Dakota (39-16.1-08, 39-16.1-15).

  Insurers report a certified policy's cancellation within 10 days.

• Binders and absolute liability. A binder satisfies the policy requirement. The insurer's liability becomes absolute once a covered injury occurs (39-16.1-11).

• North Dakota Automobile Insurance Plan. This is the auto residual market. Every auto insurer must subscribe, and a plan policy is proof of financial responsibility (26.1-25-15).

Common exam traps

• North Dakota is no-fault: $30,000 basic benefits and $150/week work loss.
• The serious injury threshold is $2,500 of medical expenses, or disability beyond 60 days.
• Minimum limits are 25/50/25. UM is mandatory, and UIM equals UM.
• Motorcycles aren't "motor vehicles" for no-fault benefits.
• Cancellation notice is 20 days (10 for nonpayment). Nonrenewal notice is 30 days.
• A claimant as much at fault as everyone else combined recovers nothing.