North Carolina auto insurance laws

Whether you’re a longtime resident or new to the Tar Heel State, understanding North Carolina’s auto insurance laws is key to driving safely and avoiding penalties. The state requires all drivers to meet certain minimum coverage levels, but knowing what’s legally required is just the start. By learning how North Carolina’s insurance rules work, including liability limits and uninsured motorist coverage, you can make more confident decisions about your policy and avoid potential gaps in coverage.

Auto insurance laws in North Carolina

Before buying car insurance, it’s good to know what type of auto insurance is required by law in NC. While insurers aren’t allowed to sell less than the state-mandated minimum coverage, knowing the specifics can help when you’re shopping around and exploring coverage options.

Here are the general North Carolina car insurance laws and requirements, per the North Carolina Department of Motor Vehicles (NCDMV), along with the minimum liability limit updates as of July 1, 2025:

• Liability insurance: All drivers in North Carolina are required to have continuous liability insurance provided by a company licensed to do business in North Carolina.
• Uninsured/underinsured insurance requirement: All drivers in North Carolina are required to carry uninsured/underinsured motorist coverage, as well. This helps pay for the fallout after an accident caused by someone without enough coverage to pay for the damage or injuries they caused. In 2022, about 10.3 percent of North Carolina drivers had no insurance, per the Insurance Information Institute.
• Coverage lapse notification: North Carolina insurance companies are legally required to notify the state’s DMV if a driver’s insurance coverage is canceled or lapses for any reason.
• Proof of insurance: All drivers in North Carolina must carry proof of insurance documentation in their vehicle at all times and provide proof of insurance when requested by law enforcement. Valid ways to show proof include your policy documents, a certificate of insurance (FS-1) or a DL-123 insurance form. Digital insurance information is not accepted.
• Inexperienced operator surcharge: Drivers who are licensed on or after July 1, 2025, will receive an inexperienced operator surcharge for eight years. The first three years of the surcharge will be the most expensive, and they will decrease slowly over the remaining five years as drivers gain more experience behind the wheel.

Liability insurance in North Carolina

Liability insurance helps pay for other drivers’ damage and injuries if you cause an accident. As of July 1, 2025, North Carolina has initiated significant changes to its minimum car insurance liability limits. Here are the new amounts of coverage that the state requires:

• $50,000 in bodily injury liability coverage per person
• $100,000 in bodily injury liability coverage per accident
• $50,000 in property damage liability coverage per accident
• $50,000 in uninsured/underinsured motorist bodily injury coverage per person
• $100,000 in uninsured/underinsured motorist bodily injury coverage per accident
• $50,000 in uninsured motorist property damage coverage per accident

However, drivers in North Carolina should know that minimum coverage insurance may not be enough to cover the full cost of an at-fault accident. For example, if someone causes an accident and the other driver has $80,000 in medical bills, minimum coverage insurance would only cover $50,000 in expenses. The at-fault driver would be responsible for paying the remaining $30,000 out of pocket.

It is also important to note that liability insurance does not protect your vehicle. A minimum liability policy pays for medical expenses or property damage for the other party if you are at fault in the accident. If you want protection for your vehicle, you must add full coverage to your policy.

Most insurance professionals recommend that drivers purchase coverage above and beyond the minimum state requirements for more protection. Getting more coverage means paying a higher premium, but it offers a greater level of coverage and reduces financial risk.

Is North Carolina a no-fault state?

No, North Carolina is an at-fault state. That typically means when someone gets into an accident, the at-fault driver is responsible for the damage. However, the state acknowledges contributory negligence, meaning if you are found to be partially at fault, you may not be able to collect a liability payout from the other party’s insurer, even if the other driver was more at fault.

Penalties for driving without insurance in North Carolina

Driving without car insurance in North Carolina is illegal and comes with penalties. If a driver’s insurance policy is canceled or their coverage lapses, the North Carolina DMV will send a notification to the vehicle owner. The driver has 10 days after receiving the notification to respond with proof of insurance.

If the driver does not respond to the notification within 10 days, the DMV can revoke the vehicle’s license plates and the driver will pay a $50 fine and $50 restoration fee. For a second offense, a driver will pay a $100 fine and $50 restoration fee, and all subsequent insurance lapses come with a $150 fine and $50 restoration fee.

Auto insurance coverage options in North Carolina

North Carolina requires all drivers to carry vehicle insurance to meet the state’s minimum coverage standards. When selecting auto insurance, you typically have two main options: minimum coverage, which complies with the legal requirements, or full coverage, which offers more extensive financial protection and is usually more expensive. Full coverage is often a necessity if you are financing or leasing your vehicle. Full coverage insurance generally includes:

• Comprehensive coverage: Covers damage from non-collision events such as theft, fire, vandalism, hitting an animal and natural disasters like hail or flooding.
• Collision coverage: Covers damage to your vehicle from accidents where you’re at fault, and sometimes pays for your repairs if another driver hits you and flees.

Both coverage types usually involve a deductible, the amount you must pay out of pocket before your insurance covers the rest.

There are also several add-on coverage options that could benefit drivers in North Carolina:

• Roadside assistance: Roadside assistance helps cover basic vehicle repairs, towing, battery services and fuel delivery if a vehicle breaks down.
• Rental reimbursement: Rental reimbursement helps pay for or reimburse you for the cost of a rental car while your vehicle undergoes repairs due to a covered comprehensive or collision claim.
• Gap insurance: After an accident, gap insurance covers the difference between a vehicle’s value and the remaining balance on the loan.
• New car replacement coverage: New car replacement coverage will pay for a new car if your vehicle is totaled in a covered accident.

Frequently asked questions

• What is the best car insurance company in North Carolina?
  

  To find the best car insurance company for your situation, it can be helpful to consider your priorities. If cost is most important to you, for example, consider a company that is known for writing cheap policies. If superior customer service is your top priority, you may want to review the companies that rank high on J.D. Power’s Customer Satisfaction Ranking. Other companies may be a good choice if you are a high-risk driver, or if you are retired or work from home and drive infrequently.

• How much does car insurance cost in North Carolina?
  

  The average cost of a full coverage car insurance policy in North Carolina as of June 2025 is $1,955, while state-mandated minimum coverage costs an average of $595. North Carolina drivers may be pleased to know these rates are below the national averages, which are $2,680 for full and $802 for minimum insurance. Keep in mind that your own rate is likely to vary from the averages, since it is based on a broad range of factors that are unique to you, from your age, credit history and driving record, to your car’s age, make and model.

• What is the cheapest car insurance company in North Carolina?
  

  The cheapest car insurance company in North Carolina depends on many factors. The type of coverage you need, the kind of vehicle you drive, your driving history and the drivers you have listed on your policy all affect how much your premium will be (among other factors). The best way to find the most affordable policy is to shop around and compare rates for the same coverage types and policy limits (or as close to the same as possible).