New NC Law Raises Insurance Minimums. Will Rates Rise Too?

A new NC law raises insurance minimums on automobile policies. This law benefits victims of major accidents but may trigger increases in premiums. To learn more about the new law, the impacts on drivers in North Carolina, and things you can do to avoid big increases in your auto insurance rates, keep reading.   

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The New Law and New Coverage Requirements

North Carolina Senate Bill 452 became law in October 2023, but the parts of the bill that affect insurance didn’t go into effect until January 2025. The law raises minimum auto insurance coverage. Here is a comparison of cover minimums under the old and new laws:

Reasons for the New Law

Rising medical costs are a reason for the increases. In a recent article in the Carolina Journal, State Senator Jim Burgin stated that, “recent studies ranked North Carolina 50^th out of all 50 states for health care costs.” The new law addresses higher medical costs by providing bigger insurance payouts to accident victims.

Another reason for raising automobile coverage minimums is the rising cost of automobile repairs. According to Marketwatch, North Carolina now ranks 12^th in the nation among the states with the highest repair costs. Vehicles are more complicated than ever, driving the repair and maintenance costs higher. Additionally, labor rates are rising as well.

Rising costs for medical expenses and automobile repairs in North Carolina follow national trends, and the new law in North Carolina is similar to laws passed in several states, raising minimum coverage requirements to offset them.

Impacts from the Bill

The new law has both positive and negative impacts. 

Positive Impacts Benefit Accident Victims

On the positive side, the new minimum coverage requirements will provide larger payouts from insurance companies. This will reduce the gap between the insurance payout and the medical costs associated with injury recovery. Therefore, it will reduce the out-of-pocket expenses victims will face if the insurance payout doesn’t cover all their medical bills.

Another good thing for accident victims is a change in the application of uninsured motorist coverage. According to the law firm Price Petho & Associates, “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 allows injured drivers to get the full amount of coverage they paid for to help pay for their accident-related expenses. 

For example, let’s say you suffer injuries in an automobile accident. The at-fault driver’s insurance paid you $50,000, and you had a $60,000 UIM policy. Under the old law, you could claim only $10,000 in UIM coverage from your insurance company. Under the new law, you can claim the full amount of your UIM policy on top of the at-fault driver’s insurance payout. This really helps victims of major accidents get the money they need to fully recover from their injuries.

The new law could also reduce the number of personal injury lawsuits in North Carolina. Higher insurance payouts will reduce the number of victims turning to law firms to collect settlements that cover their expenses, which could reduce the workload on the court system.

Impacts on Rates, Uninsured, and Underinsured Motorists.

On the downside, insurance rates are rising. In addition to the increased minimum coverage, insurance companies in North Carolina requested that the North Carolina Rate Bureau increase rates by 22.6 percent. Since then, the state insurance commissioner, Mike Causey,  has stated he’s not in agreement with the Rate Bureau’s proposed increase. Meetings are planned to settle on increases shortly.

Rising rates can result in more uninsured and underinsured motorists on North Carolina roadways. This has negative financial and legal implications when uninsured motorists cause accidents. At-fault uninsured drivers can face license suspension, fines, wage garnishments, and property liens. Settlements for victims of uninsured motorist accidents can face a more complicated settle process.  Therefore, everyone benefits by having fewer uninsured motorists on the road.

What You Should Do in the Face of Premium Increases

The first thing to do to minimize the impact of the new law is to review your policy coverage. Not only to ensure you meet the new requirements, but to determine a sensible amount of uninsured motorist coverage. Being over-insured is wasting money, and being under-insured is risky. So to avoid both, have your insurance agent review your coverage to ensure it’s just right.

Next, look for ways to reduce your premiums. You can do several things to lower your rates, like bundling homeowners with automobile policies, taking a defensive driving course, or buying a different car with better safety ratings. A good insurance agent will dig deep to find every possible discount available to lower your premiums.

Conclusion to New Law Raising Auto Insurance Coverage Minimums

A new NC law raises insurance minimums on auto policies. Under the new law, bodily injury coverage required rises by 67% and property coverage rises by 100%. Victims of major accidents benefit the most from the new law, providing bigger payouts to cover claims and offset rising medical and repair bills. Additionally, injured drivers can stack their own UIM coverage, without offset, on top of the at-fault driver’s insurance payout to cover accident-related bills. This new law could increase premiums for all drivers and the number of uninsured drivers. However, there are things you can do to minimize rate increases.

Impact Insurance Partners can review your policy, even if you are not a current customer, to ensure you have the proper coverage and take advantage of all available discounts. Plus, they can share tips you can do to lower your rates further. That way, you get the right coverage at the best rates. For answers to frequently asked questions about auto insurance, check out our FAQ page.

Impact Insurance Partners is a licensed, independent insurance agency in Matthews, NC and serving the Southeastern United States. We work with almost a dozen insurance companies and offer auto insurance in Matthews NC, as well as all types of home, and life insurance products. Additionally, we protect boats, RVs, motorcycles, jewelry, pets, and your identity with affordable insurance policies. We even protect businesses through our commercial policies. If you learn more about us, you’ll see that we have deep roots in our community, and our commitment to customer service has earned over 70 5-star Google Reviews. Call us today to see how we deliver impactful insurance for what matters most.

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