Changes to North Carolina Auto Insurance Law: What to Expect in 2025
In 2025, North Carolina is making some big changes to their auto insurance laws. This year, you’ll see higher minimum liability limits and new rules regarding inter-policy stacking. Lawmakers hope these changes provide better protection for drivers and accident victims. However, increasing the limits can also lead to higher insurance costs for drivers. Today, we’ll explain what these changes mean, how they might affect you, and what you can do to prepare.
Raising the minimum liability limits from $30,000/$60,000 to $50,000/$100,000
Until 2024, North Carolina law required drivers to carry minimum liability insurance of $30,000 per person for bodily injury and $60,000 per accident. The old limits provide a basic level of coverage, however, they can fall short of covering the full extent of damages in serious car accidents.
Beginning January 2025, Senate Bill 452 increases minimum liability limits to $50,000 per person and $100,000 per accident. Here’s what these numbers mean:
- $50,000 per person. The maximum the insurance company will pay for injuries to a single person in an accident.
- $100,000 per accident. The maximum the insurance company will pay for injuries to all people involved in a single accident.
To compare, under the $30,000/$60,000 limits, if you’re at fault in an accident and the victim’s medical bills exceed $30,000, you may be personally liable for the difference. The new $50,000/$100,000 limits provide better financial protection in these situations.
In addition to the changes in minimum liability limits, another important change to North Carolina’s auto insurance law involves how uninsured motorist (UM) coverage is applied. Starting in January, injured drivers can collect the full limit from their own uninsured motorist policy without any offsets for the at-fault driver’s liability coverage. This is a significant departure from the previous law, which allowed insurers to deduct the amount paid by the at-fault driver’s liability insurance from the uninsured motorist payout.
Under the old law, if the at-fault driver had liability insurance, even if it wasn’t enough to cover the full extent of damages, the amount paid by their insurance would be subtracted from what you could claim under your own UM coverage.
For example, if an at-fault driver’s insurance paid out $30,000 and you had a $50,000 UM policy, the insurer could offset the liability amount, leaving only $20,000 available from your uninsured motorist policy. With the new law, no such offset will apply, allowing you to recover both the full amount from your UM policy and the payout from the at-fault driver’s insurance, thereby maximizing your recovery.
Hopefully, the update will better protect drivers who sustain injuries. The increase will be especially important in cases where the at-fault driver has a policy that only offers minimal liability coverage. With the change, injured drivers won’t face penalties from offsets. Instead, they can access the full amount of coverage they paid for under their uninsured motorist policies.
Why is the state increasing the limits?
The need for higher minimum coverage limits stems from several factors.
First, medical costs are much higher today than they were a decade ago. If your injury leads to a hospital stay, surgery, physical therapy, and medication, you can easily rack up bills that far exceed the $30,000/$60,000 limits.
Also, with more severe injuries resulting from auto accidents, the existing minimums often leave victims without enough coverage to pay for their medical bills and lost wages.
Finally, the higher minimums should help the public by making it easier for injury victims to get the treatment they need – hopefully with fewer heated and costly legal battles.
What will be the impact on my premiums?
These higher limits will provide more coverage in a serious accident, but may also result in slightly higher premiums for North Carolina drivers. The cost of auto insurance is influenced by various factors, including the amount of coverage purchased, and increasing the minimum coverage typically results in higher premiums.
However, it’s important to note that many drivers in North Carolina already carry more than the state minimum limits. If you already have coverage beyond $50,000/$100,000, this change may not impact your premiums. If you’re carrying the minimum coverage, expect a modest increase in your insurance rates starting in 2025.
Inter-policy stacking: expanding coverage options
Inter-policy stacking of uninsured motorist (UM) and underinsured motorist (UIM) coverage is one of the most significant changes to the law. Now, policyholders may combine or “stack” the limits of multiple auto insurance policies when seeking compensation for damages caused by an uninsured or underinsured driver.
How does stacking work?
Imagine you have two vehicles, each insured under separate policies with $50,000 in UM/UIM coverage. Under the new law, if an underinsured driver injures you, you will be able to “stack” the coverage from both policies, giving you a total of $100,000 in available coverage. This provides additional protection and can be especially helpful in severe accidents where the damages exceed the coverage limits of the at-fault driver’s insurance.
What are the benefits of inter-policy stacking?
The most obvious benefit of stacking is the increased amount of coverage available. If you own multiple vehicles or have multiple policies, this could provide much more protection in the event of an accident.
North Carolina, like many states, has its share of uninsured drivers. Stacking gives you an additional layer of security by allowing you to combine coverage from multiple policies to cover the costs of an accident caused by an uninsured motorist.
Stacking can reduce the financial burden on accident victims by making it easier to access higher compensation levels without relying solely on the at-fault driver’s insurance. However, this might also reflect higher insurance costs.
How can I prepare for these insurance changes?
As the changes approach, here are some steps you can take to ensure you’re ready:
- Review your current auto insurance policy and see how the new limits will impact your coverage.
- If you own multiple vehicles or have multiple policies, ask your insurance agent about stacking options and how they might benefit you.
- With the changes coming, it’s a good time to shop for auto insurance. Different companies may offer different rates, and you might find a policy that provides the coverage you need at a price you can afford.
The upcoming changes to North Carolina’s auto insurance laws aim to provide drivers with better coverage and financial security. While this may lead to higher premiums for some, it can also offer valuable protection in the event of a serious accident.
At Price Petho & Associates, we’re dedicated to protecting your rights and helping you work through the complexities of auto insurance claims. If you’ve been injured in a car accident, these new laws could affect your ability to recover full compensation. Don’t face the challenges alone—let us evaluate your case, explain your options, and fight for the compensation you deserve. Please call our office or submit our contact form to schedule a free consultation at one of our Charlotte, Rutherfordton, or Rockingham offices today.
Attorney Doug Petho is the owner and founder of Price, Petho & Associates. His primary focus is the litigation of plaintiff’s personal injury suits, and he has successfully tried hundreds of cases to jury verdict involving car accidents, trucking accidents, pedestrian accidents, slip and fall accidents, and work-related accidents. Contact his office in Charlotte today.