Auto Insurance Requirements in North Carolina

Before hitting the road in North Carolina, all drivers must carry a car insurance policy that includes at least the state-mandated coverage minimums, along with proof of coverage.

Drivers who cause a car accident must pay for any damage that results. While car insurance is the most common form of coverage, you may instead choose an alternative type of financial responsibility.

North Carolina car insurance minimum requirements

A minimum North Carolina car insurance policy must includes uninsured motorist (UM) coverage, which protects you and your passengers after an accident, and liability insurance, which protects anyone else who's impacted. Every car insurance policy must include the following basic coverages, each with minimum requirements:

Bodily injury (BI): $30,000/person and $60,000/accident

Requirement

Covers

Does not cover

Property damage (PD): $25,000/accident

Requirement

Covers

There are two components to UM: bodily injury (UMBI) and property damage (UMPD), which have the same minimums as regular liability insurance. If you choose to increase your limits, you'll need to get combined UMBI/UIMBI coverage.

Uninsured motorist property damage (UMPD): $25,000

Requirement

Covers

Uninsured motorist bodily injury (UMBI): $30,000/person and $60,000/accident

Requirements

Covers

UMBI/UIMBI

UMBI/UIMBI is required when you have BI limits higher than the state minimum and decide to raise your UMBI limits to match it. The underinsured motorist coverage kicks in when you have exhausted the other driver's BI limits in these scenarios:

Cheapest companies in North Carolina for minimum liability

Optional car insurance coverage in North Carolina

A minimum insurance policy in North Carolina pays what's due to the other driver and shields some of your assets when you cause the accident. However, the minimum coverage in North Carolina does little when it comes to your own medical care. You may be left with a sizable bill for your own injuries and car repairs. Here are three optional coverages that pay for your expenses:

Collision pays for damage to your car that results from a collision, whether you've hit another car or run into a street lamp. Your coverage limit is based on the market cash value of your insured vehicle. You'll need to pay a deductible, ranging from $50 to $2,000, before your insurer picks up the rest of the bill.

Comprehensive is sometimes called "other-than-collision coverage" because it pays for your car's repairs if it's vandalized, stolen or impacted by an "act of God." Comprehensive coverage comes with a deductible, which will be reflected in your coverage premiums.

Medical payments coverage pays for all necessary medical expenses following an accident — for you and your passengers. If the policyholder dies in the accident, MedPay will also cover funeral expenses. Depending on the insurer, your coverage limits might range from $500 to $10,000. Motorists with health insurance may find this type of coverage redundant, but take a look at your policy. Most health insurance plans won't cover funeral costs, and some won't cover injuries resulting from a car accident.

Alternative proof of financial responsibility in North Carolina

North Carolina's Vehicle Financial Responsibility Act of 1957 requires all drivers to carry some form of proof of financial responsibility. An insurance policy is the easiest way to satisfy the requirements, but you have other options:

Surety bond: Once you buy a surety bond worth at least $85,000 from a licensed North Carolina surety company, you'll get a certificate of compliance from the state's insurance commissioner. The bond guarantees you'll pay for any expenses following an accident if there's a judgment against you, much like an insurance company would under a minimum-liability policy. If you can't fulfill this promise, the surety company will pay in your place and collect from you later.

Real estate bond: This type of bond guarantees you'll pay up to $85,000 following any car accident you cause. It's backed by a piece of property and must be approved by a county superior court clerk. The bond must be signed by two other individuals who own real estate in North Carolina with a combined equity of at least $170,000. If you fail to make the necessary payments, the commissioner will take the property to make good on your liability.

Cash/security deposit: You may choose to make an $85,000 deposit using cash or another type of security, such as a government bond or note. If you're involved in an accident, the commissioner will take your deposit and satisfy any judgment that results from it.

Self-insurance: If you own or lease at least 26 cars, you may apply with the commissioner to become a self-insurer. The commissioner will ask for documents that prove your financial standing — such as a statement of income and/or financial statement — and will issue a certificate. If any of your cars is involved in an accident, you'll need to pay for the damage using your own funds.