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

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

December 1, 2021

What do you know about maintaining the right amount of auto insurance in North Carolina? If you're like most people, you set it and forget it. That might be perfectly fine, but you should get in the habit of checking your coverage limits and adjust them accordingly. Even if you have the minimum auto insurance coverage to be legal in North Carolina, you might not be carrying enough to be protected.

Minimum Coverage requirements

State law requires that liability coverage, which the the coverage that pays out for someone else's damages if you are responsible for a crash, be maintained continuously. This basically means that you can't have any gaps in coverage, even for a single day. Failure to maintain continuous coverage can result in fines (if you are driving the vehicle) and even revocation of your license plate.

You probably know the minimum coverage requirements as "30/60/25," which is $30,000 Bodily Injury for each person, $60,000 total Bodily Injury for all persons in an accident and $25,000 for Property Damage. North Carolina also requires Uninsured/ Underinsured Motorists (UM/UIM) coverage, which kicks in if another person has no insurance or insufficient coverage (but only if you have more coverage than the at-fault driver). The minimum coverage is identical to the minimum liability coverage and increases automatically if you raise your liability coverage. Having this coverage is essential to protecting yourself from other drivers who may carry the minimum liability limits but who cause damages in excess of this amount.

Collision Coverage

Collision coverage is optional in North Carolina, but most of us have it anyway due to the values of our vehicles and/or the fact that we have vehicles loans that require this coverage. When you are responsible for a collision, liability coverage takes care of damages to the other parties up to the limits of your coverage. Collision coverage takes care of damages to your vehicle if you are responsible for a crash or if you damage your vehicle due to various types of road hazards, such as damage to wheels from potholes or from striking objects that happen to be in the road.

Comprehensive Coverage

Comprehensive coverage is also optional in North Carolina, but most people carry it and some lenders may require it. Comprehensive coverage is also known as "other than collision" coverage or "acts of God" coverage. It covers damages done to your vehicle that are beyond your control. Most people use this coverage to repair or replace broken windshields caused by rocks. But it also covers things like theft, hail and storms, and even missile strikes, though we hope you never have to use that one.

Medical Payments Coverage

Medical Payments or Med-Pay coverage is also not required in North Carolina, but everyone should consider having the highest possible amount. It usually very inexpensive, even for maximum coverage, and takes care of reasonable and necessary medical and funeral expenses for you and anyone else in your vehicle if involved in a collision. It can help pay medical expenses as they are incurred as opposed to waiting for a legal case against another party to be settled.


A deductible is simply an amount that gets deducted from any payout to you. Many drivers have a $500 collision deductible, which means that you will owe $500 when you pick up your vehicle from the body shop after a collision you caused (or if fault is not determined). A higher deductible is more risk, but it also lowers your premiums. This is especially true for drivers who don't have a perfect driving history. For more experienced drivers who have clean records and no claims, a higher deductible may not save very much. You should evaluate your deductibles to determine whether raising them and assuming more risk is worth the savings. In some cases, lowering a deductible to $0, especially for comprehensive coverage, can cost only a few dollars more per year.

Having more than minimum coverage

The current limits of liability were put into place a long time ago and many things have changed since then, including inflation. The cost of everything has gone up. Medical care costs are much higher than they used to be, and your $2,000 medical payments coverage may not begin to scratch the surface today if you need an MRI. The same goes for everything from car parts to utility poles.

If you have the minimum liability coverage and you cause a total loss to a brand new $80,000 Corvette, your insurance will only pay out $25,000. And that's not taking into account if there is a second vehicle damaged or any street property damaged. The other motorist's underinsured coverage will kick in, but only if it's more than yours and it still might not be enough to cover the damages. In any case, you will likely be sued to make the other parties whole. For that reason alone, it's a good idea to have more than the minimum coverage. Of course, you end up paying more for the coverage, but the extra cost might not be that bad.

When to cut back on insurance coverage

There is no write or wrong answer to cutting back on coverage. Sometimes people wonder whether their older ages and reduced driving should mean they reduce coverage. Others think that having an older car is good reason to cut back. Both are good reasons, but also not good reasons.

The decision is ultimately yours and depends partly upon how much you are willing and able to spend and how much risk you want to take. In the end, you should have your medical payments as high as they can be to reduce unexpected medical and funeral expenses. Many insurers top out coverage around $15,000. You also shouldn't skimp on liability and UM/UIM coverage, both of which cover other drivers for your mishaps and protect you from other drivers. Costs for everything from auto parts to medical care have increased dramatically and you don't want to be footing a huge bill because you tried to save a few hundred dollars.

You can and should consider cutting back on collision coverage, especially if you don't drive the vehicle often and if the vehicle's value makes collision coverage uneconomical. Why pay $300 per year to cover a vehicle with a value of only $1,200? The same goes for driving habits. Reduced driving will reduce your risk of a crash you cause.

A better idea than cutting coverage is to contact your insurance company and ask for rate review. If you are driving less, you might lower your premium by much more than if you were to cut out certain coverages.