Know the Basics of Auto Insurance Coverage and the Minimum Requirements in North Carolina

the state sets minimum auto insurance requirements, but you probably want more than the minimum due to the cost of your vehicle or your auto loan

Maintaining the right auto insurance in North Carolina means more than meeting the minimum legal requirements. With rapidly rising repair and medical costs, new vehicle technologies and a shifting legal landscape, you need a dynamic approach. Review your policy at least once a year, consider your driving habits, vehicle value and personal risk tolerance. Update your limits, explore discounts and consider additional coverages to protect your assets and avoid financial exposure after an accident.

Minimum Coverage Requirements

North Carolina mandates continuous liability coverage with limits commonly known as 30/60/25: $30,000 bodily injury per person, $60,000 bodily injury per accident and $25,000 property damage. You cannot allow any lapse in coverage without risking fines and license plate revocation. Liability pays others’ medical bills, vehicle repairs and property damage when you are at fault. Since the current minimum limits date back decades, inflation has eroded their effectiveness, leaving policyholders exposed to out-of-pocket claims that exceed those caps.

Uninsured and Underinsured Motorist Coverage

UM/UIM coverage protects you when other drivers carry no insurance or too little to pay your losses. North Carolina requires UM/UIM limits that match your liability limits and rise automatically if you increase liability. These cover medical expenses, lost wages and vehicle repairs when at-fault drivers lack adequate insurance. Without UM/UIM, you may have to cover the balance yourself or pursue costly legal action. Matching these limits is essential for full financial protection on the road.

Collision Coverage

Collision coverage pays to repair or replace your own vehicle after a crash you cause and covers damage from road hazards like potholes and debris. Most lenders require it on financed vehicles. When filing a collision claim, insurers use actual cash value, which factors in depreciation rather than original purchase price. To protect against an ACV gap, consider gap insurance, which pays the difference between ACV and your loan balance if your vehicle is totaled early in its loan term.

Comprehensive Coverage

Comprehensive coverage, also called other than collision—handles non-crash losses such as theft, vandalism, hail, flood and animal strikes. It covers windshield repair or replacement without a collision claim, often through a separate glass endorsement that waives the deductible. As electric vehicles and advanced driver assistance systems become more common, repair costs have jumped. Verify that your policy includes OEM part coverage or a specialized deductible for higher-cost components.

Medical Payments Coverage

Medical payments coverage, or Med-Pay, is optional but affordable and pays reasonable medical and funeral expenses for you and any passenger, regardless of fault. Unlike liability, Med-Pay covers immediate costs without waiting on a claim or lawsuit. In North Carolina, it works alongside health insurance to limit your out-of-pocket expenses after an accident, especially if you lack or have high-deductible health coverage.

Deductibles and Discounts

Your deductible, the out-of-pocket amount you pay before insurance kicks in—directly affects your premium. Raising your deductible from $500 to $1,000 can lower your annual premium by 10 to 20 percent, though savings vary by carrier. Safe driving discounts, good student discounts and bundling with home or other policies also trim costs. Usage-based insurance programs track your driving habits via smartphone apps or telematics devices to reward low-mileage or low-risk drivers with additional savings.

Optional Endorsements and Add-Ons

Beyond core coverages, you can add endorsements tailored to modern needs. Rental reimbursement pays a daily allowance, commonly $30 to $50 per day—while your vehicle is in the shop after a covered claim. Roadside assistance covers towing, jumpstarts and lockouts. Identity theft coverage helps manage expenses and legal fees if you become a victim. If you drive for ride-share services, add a rideshare endorsement to bridge gaps between your personal policy and commercial insurer limits.

Why You Should Carry More Than the Minimum

For many drivers, minimum limits are simply insufficient. With average repair costs rising over 15 percent since 2020 and hospital bills climbing annually, a single accident can generate six-figure expenses. If you total an $80,000 electric SUV or damage multiple third-party vehicles, 30/60/25 leaves you responsible for the remainder. Lawsuits to recover shortfalls may target your assets, including savings and future earnings. Increasing liability limits to 100/300/50 or beyond delivers critical financial security.

When to Consider Cutting Back

While cutting nonessential coverages saves money, proceed cautiously. On a low-value vehicle worth $1,200, dropping collision could save $200 to $300 per year, making sense if repair costs exceed vehicle value. However, eliminating Med-Pay or UM/UIM exposes you to uncovered medical or property costs. Before trimming coverages, calculate your potential out-of-pocket exposure and discuss mileage-based or pay-per-mile options with your insurer for lower costs without sacrificing critical protections.

Key Rate Factors and Policy Review

Insurers set rates by analyzing factors such as driving record, credit score, age, vehicle make and model, ZIP code and annual mileage. Newer drivers and those with convictions pay more, while high-credit scores and clean records earn discounts. Electric and luxury vehicles cost more to insure. Legally, you should review your policy annually, shop rates, adjust coverages and negotiate discounts. Even small changes in your life or driving habits can unlock lower premiums without reducing protection.

North Carolina Resources

North Carolina drivers can seek assistance from the NC Department of Insurance Consumer Services Division at 1-855-408-1212 for policy questions and complaints. The North Carolina Rate Bureau oversees rate filings and publishes average premium data. For DMV requirements, visit the nearest county office or check online at the North Carolina Division of Motor Vehicles. Keep contact information handy and consult these resources whenever you need clarification or dispute insurer decisions.

Your auto policy should evolve with your life and vehicle. Start by requesting an annual review with your insurer or agent. Compare quotes from multiple carriers, ask about new discounts and tailor your limits and endorsements to your current needs. With informed choices and regular maintenance of your coverage, you can drive with confidence knowing you’re adequately protected on North Carolina roads.