North Carolina Car Insurance Changes Effective July 1, 2025 – What Drivers Need to Know

North Carolina Car Insurance Changes, July 2025

North Carolina has enacted several significant updates to its auto insurance laws, effective July 1, 2025. These changes affect coverage requirements, policy features, and how insurers calculate premiums. If you’re a North Carolina driver, here’s what you need to know to stay compliant and avoid surprises at renewal time.

1. Higher Minimum Liability Limits

Starting with policies issued or renewed on or after July 1, 2025, you must carry at least:

$50,000 for bodily injury per person
$100,000 for bodily injury per accident
$50,000 for property damage per accident

These limits replace the old $30,000 / $60,000 / $25,000 minimums. If you currently have lower limits, your insurer will automatically raise them at renewal — which may increase your premium.

2. Mandatory Underinsured Motorist (UIM) Coverage

Under the new law, UIM coverage is now required on all new and renewed policies. This protection helps pay your expenses if you’re in an accident caused by a driver whose liability limits aren’t high enough to cover your damages.

3. Longer Surcharges for Inexperienced Drivers

Previously, North Carolina’s “inexperienced operator” surcharge applied for the first three years after a driver was licensed. That period has now been extended to eight years for anyone first licensed on or after July 1, 2025. The surcharge decreases gradually after the first few years, but it can still have a noticeable impact on premiums.

4. Extended Lookback for Minor Violations

Certain minor traffic violations now affect your rates for a longer period. Speeding 10 mph or less over the limit (under specific conditions) and “Prayer for Judgment Continued” (PJC) outcomes will remain on your insurance record for five years instead of three, if they occur on or after July 1, 2025.

5. Major Violation Surcharges Last Longer

For convictions that carry four or more Safe Driver Incentive Plan (SDIP) points — such as DUI or reckless driving — the surcharge period increases from three to five years. This change excludes certain extreme speeding violations already treated differently under the SDIP system.

What This Means for Your Premium

The North Carolina Rate Bureau and insurers project an average statewide premium increase of around 5%, with the actual impact varying by driver. Young drivers, those carrying state-minimum coverage, and anyone with recent violations may see larger jumps.

How to Prepare

Review your coverage limits before renewal — you may benefit from going beyond the new minimums.
Check your UIM limits and consider matching them to your liability limits.
Drive carefully to avoid violations that can now affect your rates for up to five years.
Shop around — comparing quotes can help offset increases caused by these changes.

For more details, visit the official North Carolina Department of Insurance announcement.