Whether you’re a longtime resident or accustomed to Tar Heal, understanding North Carolina’s auto insurance laws is key to driving safely and avoiding penalties. The state requires all drivers to meet a certain minimum coverage level, but knowing what they need legally is just a start. Learning how North Carolina insurance rules work will help you make more confident decisions about your policies, including limitations of liability and uninsured driver coverage, and avoid potential gaps in coverage.
North Carolina Auto Insurance Law
Before purchasing car insurance, it’s good to know what kind of car insurance you need under NC law. Insurance companies aren’t allowed to sell less than the state’s mandatory minimum range, but you can find that details can be useful when shopping or exploring coverage options.
According to the North Carolina Department of Automobiles (NCDMV), the following updates to North Carolina’s Auto Insurance Act and requirements and minimum liability restrictions as of July 1, 2025 are:
- Liability insurance: All North Carolina drivers are required to take out ongoing liability insurance provided by licensed companies to operate in North Carolina.
- Uninsured/Uninsured Insurance Requirements: All drivers in North Carolina must also carry uninsured/uninsured driver coverage. This will help you pay for the fallout after an accident caused by someone who has not sufficient compensation to pay for the damage or injuries they caused. In 2022, approximately 10.3% of North Carolina drivers were uninsured, according to the Insurance Information Institute.
- Coverage Lapse Notification: North Carolina insurance companies are legally required to notify the state DMV if the driver’s insurance is cancelled or expired for any reason.
- Insurance Proof: All North Carolina drivers must always carry proof of vehicle insurance documents and provide proof of insurance if requested by law enforcement. Effective methods of showing proof include insurance documents, insurance card (FS-1), or DL-123 insurance form. Digital insurance information is not accepted.
- Inexperienced operator extra charge: Drivers licensed after July 1, 2025 will receive an additional charge for an inexperienced operator for eight years. The first three years of extra charges are the most expensive, and will slowly decrease over the remaining five years as drivers gain more experience behind the wheels.
North Carolina Liability Insurance
Liability insurance will help other drivers pay for damages and injuries in the event of an accident. As of July 1, 2025, North Carolina has begun a major change to its minimum automobile insurance liability limit. The new coverage the state will require is:
- $50,000 for physical injury liability compensation per person
- $100,000 for physical injury liability compensation per accident
- $50,000 liability for property damages for each accident
- $50,000 for physical injury coverage for non-insured/uninsured drivers
- $100,000 per uninsured/uninsured driver physical injury accident
- $50,000 for property damage coverage for uninsured drivers for each accident
However, North Carolina drivers should know that minimum coverage insurance may not be sufficient to cover the full cost of a disability accident. For example, if someone has an accident and another driver has $80,000 in medical expenses, the minimum coverage insurance covers only $50,000. Disabled drivers are responsible for paying the remaining $30,000 from their pocket.
It is also important to note that liability insurance does not protect your vehicle. If you are disabled in an accident, the minimum liability policy will pay for the other party’s medical expenses or property damages. If you need protection for your vehicle, you should add full coverage to your policy.
Most insurance experts recommend that drivers purchase coverage beyond the minimum state requirements for more protection. Getting more coverage means paying a higher premium, but it offers a higher level of coverage and reduces financial risk.
Is North Carolina disabled?
No, North Carolina is in a disability state. That usually means that when someone gets involved in an accident, a disabled driver is liable for the damage. However, the state has admitted negligence in its contribution. This means that if it turns out to be partially disabled, it may be impossible for other drivers to collect liability payments from the other party’s insurance company, even if more.
Penalties for driving without insurance in North Carolina
Driving without car insurance in North Carolina is illegal and involves penalties. If your driver’s license is cancelled or coverage expires, the North Carolina DMV will send a notification to the vehicle owner. The driver will be there 10 days after receiving the notification to respond with insurance proof.
If the driver does not respond to the notification within 10 days, the DMV can cancel the license plate on the vehicle, and the driver will pay a $50 fine and a $50 restoration fee. In the case of a second violation, the driver will pay a $100 fine and a $50 restoration fee, with all subsequent insurance being supplied with a $150 fine and a $50 restoration fee.
North Carolina Auto Insurance Coverage Options
North Carolina requires all drivers to carry vehicle insurance to meet the state’s minimum coverage standards. When choosing car insurance, there are usually two main options. Minimum coverage provides minimum coverage that complies with legal requirements, or broader financial protection, and is usually more expensive. If you fund or lease your vehicle, full coverage is often necessary. A full coverage insurance typically includes:
- Comprehensive coverage: It covers damage caused by non-collision events such as theft, fire, vandalism, animal blows, and natural disasters such as h crime and floods.
- Collision coverage: You may sometimes pay for your repair if you cover damage to the vehicle due to a negligent accident and another driver bumps into you and runs away.
Both coverage types include deductibles. It includes the amount you have to pay from your pocket before your insurance covers the rest.
There are also several add-on coverage options that could benefit North Carolina drivers.
- Roadside support: Roadside assistance can help cover basic vehicle repairs, towing, battery service and fuel delivery if the vehicle breaks down.
- Rental refund: Rental refunds can help you pay or refund the cost of your car while your vehicle is undergoing repairs for a comprehensive or collision claim.
- Gap Insurance: After the accident, GAP Insurance covers the difference between the value of the vehicle and the remaining balance of the loan.
- New Car Replacement Coverage: Replacement coverage for new cars pays for new cars if the vehicle is totaled in a covered accident.