Key Highlights to Watch For
- Starting July 1, 2025, liability insurance minimums jump from 30/60/25 to 50/100/50.
- New drivers licensed after July 1 will face an extended inexperience surcharge lasting eight years instead of three.
- The period for considering Prayer for Judgment Continued (PJC) violations expands from three to five years.
- Uninsured and underinsured motorist coverages see a boost, offering motorists greater protection.
North Carolina is on the brink of major car insurance reforms that could shake up premiums and coverage rules alike. Enacted on July 1, 2025, these modifications ramp up mandatory liability levels, broaden uninsured motorist protections, and introduce a fresh consumer benefit known as policy stacking. Although these moves primarily aim to shield accident victims more effectively, they’re also expected to nudge rates upward. Many facets of auto insurance—from required coverage minimums to how insurers evaluate risk—are set for a makeover in the Tar Heel State. Let’s delve into what motorists should keep an eye on.
Bumping Up Minimum Liability Coverage: What’s Changing?
All freshly minted and renewed insurance policies from July 1 onward will carry heftier baseline liability requirements. North Carolina joins a select group of states taking steps to align minimums with skyrocketing medical and repair expenses. Particularly, the $50,000 minimum for property damage liability will stand as the loftiest nationwide.
Fresh Minimum Limits to Remember
| Bodily Injury Liability (BI) | $50,000 per individual / $100,000 per incident |
| Property Damage Liability (PD) | $50,000 per accident |
| Uninsured Motorist Liability (UM) | $50,000 per person / $100,000 per accident |
| Underinsured Motorist Liability (UIM) | $100,000 per accident |
Previous Minimum Limits for Comparison
| Bodily Injury Liability (BI) | $30,000 per individual / $60,000 per accident |
| Property Damage Liability (PD) | $25,000 per incident |
| Uninsured Motorist Liability (UM) | $30,000 per person / $60,000 per accident |
| Underinsured Motorist Liability (UIM) | $50,000 per accident |
Claim frequency and payout amounts have been climbing steadily over recent years. Current average bodily injury claims hover near $40,000, meaning the new $50,000 minimum limit helps prevent drivers from maxing out their policies and facing out-of-pocket costs. Naturally, this upgraded baseline is likely to bump premiums slightly upward.
In an analysis conducted by Bankrate using May 2025 data from Quadrant Information Services, motorists insured under full coverage with 30/60/25 limits shell out about $1,816 annually. Scaling up coverage to 50/100/50 nudges the average yearly premium to roughly $1,860 — a modest $44 jump. Still, other rating elements can sway this number either way.
Insights from Insurance Commissioner Mike Causey
“I’m on board with raising minimum limits,” says Causey. “Many agents aren’t fans of bare-minimum policies and advocate for a $100K starting point. Around 35% of North Carolina drivers stick to minimums right now, and I’d like to see their coverage improve. However, the tradeoff is that low-income drivers will likely face premium hikes when this law kicks in.”
“The poorest drivers in the state will feel the pinch as these limits rise, even though boosting coverage is a solid step forward.”
— Mike Causey, North Carolina Insurance Commissioner
Longer Surcharge Period for Novice Drivers
Price tags on insurance policies already reflect driver age and experience in North Carolina, with surcharges applied throughout the first three years of licensure. From July 1, this penalty window will stretch to eight years for anyone newly licensed after that date.
Why This Hits Home
Teen motorists pay some of the steepest premiums on the market, and families with fresh drivers can expect that financial burden to stick around longer. Presently, a North Carolina parent with a single 16-year-old behind the wheel faces average full coverage costs of $4,542 annually, or $1,643 for minimal coverage.
Boosted Protection: The New Policy Stacking Rule
Under the revamped regulations, uninsured/underinsured motorist (UM/UIM) coverage must adhere to the stack-and-compare principle. This means drivers can “stack” their UM coverage with that of the at-fault party, granting them enhanced access to compensation beyond previous limits.
The Previous Setup vs. The New Reality
Before, UIM payments were adjusted by subtracting the at-fault driver’s bodily injury limits from the victim’s claim, limiting recoverable amounts. After July 1, these limits will be added together, substantially increasing potential coverage for those harmed in accidents. Naturally, this enhancement is anticipated to hike UM/UIM premiums across the state.
Modifications to Prayer for Judgment Continued (PJC) Policies
North Carolina’s distinctive PJC system lets drivers delay or suspend guilty verdicts on certain infractions, like speeding, to avoid insurance surcharges—provided they keep a clean slate for three years. The lookback period for considering PJC violations will lengthen to five years under the new scheme.
Why It Matters
If a driver with a PJC conviction racks up a second moving violation within this extended five-year window, surcharges kick in for both offenses. This change aims to discourage repeated reliance on PJC while still offering some grace for isolated slip-ups.
Expanded Surcharge Rules for Minor and Major Violations
From July 1 onward, even drivers with a PJC won’t face surcharges for speeding tickets only 10 mph over the limit—unless they’ve had a moving violation in the preceding five years. On the flip side, any speeding violation of 15 mph or more over the limit will trigger penalties. This tweak aims to balance fairness and deterrence.
Did you know? In North Carolina, approximately 15% of drivers utilize the PJC option annually, making these rules a crucial factor in insurance risk assessments.
Upcoming Rate Increases May Compound Costs
The North Carolina Rate Bureau (NCRB) has floated a proposal to hike average auto insurance premiums by nearly 10% starting October 1, 2025. Commissioner Causey warns these rises will stack atop the July 1 policy changes, placing extra strain on drivers already pinched by pocketbook pressures.
“This bump threatens to push more folks into uninsured driving territory, a problem we’ve grappled with for years,” Causey cautions.
For context, the most recent NCRB rate increase was requested in February 2023 at 28.4%, but Causey successfully negotiated it down to a 9% increase phased over two years. A public hearing on the latest proposed rate hike is slated for September 22.
“I consistently oppose rate hikes that are excessive or unfairly target certain areas,” Causey explains. “There’s a decent chance of settling before the court date, but nothing’s guaranteed.”
By comparison, the national average annual premium sits higher at $1,955, but North Carolina has historically maintained a relatively balanced insurance market, a trend Causey is keen to preserve.
Empowering Consumers
Though the Department of Insurance doesn’t craft legislation—that’s the legislature’s job—Causey reminds residents they have avenues to voice concerns. Filing complaints with the DOI or contacting state legislators can influence future policy decisions.
“People might doubt it matters, but reaching out does make a difference. We assist callers daily on insurance grievances, and hearing from constituents is vital.”
— Mike Causey, North Carolina Insurance Commissioner