Increased Coverage Law Now Applies to All Crashes
All states in the country have financial responsibility laws which require car insurance for all drivers. In most states, the only mandatory coverage is liability insurance. This is the coverage that protects innocent victims and pays from your policy if you cause an accident. These laws require drivers to carry liability coverage to pay for property damage claims and injury claims.
Unfortunately, laws across the country have failed to mandate adequate insurance limits to fund victims’ claims. For example, in many states the required coverage to fund all injury claims for a single crash victim is just $25,000. See chart below for current mandatory insurance requirements for all states. With a $25,000 per-person limit in effect, this is the most a crash victim can collect from the at-fault driver’s policy even if they are left severely disabled with huge medical bills and unable to work. Get this – California just increased their rates, but only to $30,000 for a single victim’s injury claim and $15,000 for property damage. The new property damage limit is far below half the average cost of a new vehicle and certainly would not be enough to pay for complex vehicle repairs. The old limits were just $15,000 for the injury claims of a single crash victim, and just $5,000 for property damage!
After a 19 year battle for higher rates, we finally won favorable legislative change in North Carolina. Our new coverage laws went into effect last year and apply only for auto insurance policies issued or renewed after July 1, 2025. Most auto insurance policies have a one year term. Thus, before the end of June, we continued to see “old law” policies with lower limits for any policy that had not yet renewed. With July1, 2026 now behind us, the new higher coverage law applies for every crash that now occurs in our state.
Old Law – What Was Changed?
Before these changes took place, the North Carolina financial responsibility act required all drivers to carry two types of coverage:
Liability Coverage – this coverage pays other parties if you cause an accident. The mandatory coverage previously required was $25,000 for all property damage arising from a single collision, $30,000 for the injury claims of any single victim, and $60,000 total coverage for the injury claims of all victims involved in a covered accident.
Uninsured Motorist Coverage – UM coverage was included on all NC auto policies. This coverage benefits the named insured and their family members, and all occupants of the insured vehicle when a crash occurs. This coverage pays only if the at-fault driver had no car insurance, or if the at-fault driver is a hit-and-run driver who is never found. In the hit-and-run case, property damage claims are not covered but injury claims are. Before our law changed, our state’s minimum mandatory UM limits were $25,000 for property damage caused by an uninsured driver, $30,000 per person for bodily injury, and $60,000 per accident for the bodily injury claims of all victims injured in the same crash.
Our New Coverage Requirements
Because we have passed the one year anniversary of the effective date of our new insurance laws, all policies now carry the following minimum coverage:
Liability – $50,000 for all property damage arising from a single collision, $50,000 for the bodily injury claims of any single crash victim, and $100,000 aggregate coverage for the bodily injury claims of multiple crash victims.
Uninsured/Underinsured Motorist (UM/UIM) – Same as liability: $50,000 per occurrence for property damage, $50,000 per person for bodily injury, $100,000 per accident for multiple injury claims (to be shared/divided by all victims). Notice that UIM is now mandatory.
Summary of Changes: Almost All Injured Crash Victims Now Have at Least $100,000 for Injury Claim Coverage
The new liability limits are an obvious benefit for someone seriously injured in a North Carolina motor vehicle accident. Where the law previously guaranteed $30,000 in coverage for a single crash victim, our new law increases that coverage to $50,000. Considering the current cost of healthcare, we fought and hoped for even higher limits. However, the recent changes are certainly a step in the right direction for NC crash victims.
The increased liability limits are only part of the story as there is additional great news for North Carolina drivers. The new laws have eliminated the “liability set-off” which previously applied in all cases involving underinsured motorist (UIM) coverage.
Before our law changed, UIM coverage was optional in North Carolina. The UIM policy pays additional benefits to an insured victim in cases where the at-fault driver’s liability insurance is insufficient to fund the full value of the victim’s injury claims. However, under the old law, UIM only paid benefits in cases where the UIM coverage limit was higher than the per-person bodily injury coverage limit on the at-fault driver’s policy.
An example will show how this worked: John crosses the centerline and strikes Sharon‘s oncoming vehicle. John carried the minimum required coverage under our old law which afforded $30,000 in total coverage for Sharon’s bodily injury claims. If Sharon chose to purchase UIM coverage on her own policy with limits of $50,000 per person, and if her injury claims were worth that full amount, she would collect a total of $50,000. John’s policy would pay $30,000. John is “under insured” because his liability limits are lower than Sharon’s UIM limits. Under the old law, the at-fault driver is underinsured only to the extent that the UIM coverage limit exceeded the bodily injury liability limit. The “liability set-off” reduced the UIM per-person bodily injury coverage limit by the amount of available liability coverage. So after collecting $30,000 from John’s policy, Sharon could only collect an additional $20,000 from her own UIM policy.
Great Change: Liability Set-off Eliminated!
After our law changed, all policies now carry UIM coverage and there is no liability set-off. Simply put, the UM/UIM policy now pays the total coverage limit available, regardless of how much liability coverage was paid to the crash victim. Of course, the value of the victim’s injury claim must warrant the claim for all policy benefits. However, it is great news to know that every UIM policy now provides additional benefits to crash victims.
Another example will show how these legal changes make a big difference: Same collision with John crossing the center line. John has the minimum mandatory bodily injury coverage limit and his carrier offers $50,000 to Sharon. Sharon‘s policy is also a state minimum policy, so the per-person limit for UM/UIM is $50,000. Since the liability set-off has been eliminated, if Sharon is severely injured, she can now collect $100,000 in total benefits from these two policies. John’s liability coverage pays $50,000, and Sharon can seek an additional $50,000 from her own auto insurance.
More Coverage & Hidden Sources
Aggressive Personal injury attorneys always look for multiple coverage sources in severe injury cases. We force the at fault driver to disclose the purpose of their journey and whether they were working when the collision occurred. If they were employed or working as a delivery or rideshare driver, we typically find a high coverage limit commercial policy to fund the victim’s claim. We also occasionally locate and access homeowners umbrella policies which provide excess liability coverage for the at-fault driver. If a homeowner carries this coverage, we typically see limits of $500,000, $1 million or more.
The second step to maximizing insurance benefits for crash victims involves applying North Carolina’s insurance stacking laws. Our state allows crash victims to collect cash benefits from multiple UIM policies. Stacking applies only when there are separate policies, not when a family insures all of their cars under a single auto policy. If there are separate policies with different policy numbers, each UIM policy applies and the limits of coverage for each policy are added together to determine the total amount of UIM benefits available for a crash victim.
Here’s a list of all potential sources of UIM coverage for a NC crash victim:
- The insurance policy covering the vehicle the victim was riding in when the crash occurred.
- The victim’s own personal auto policy if they were riding in a non-owned vehicle.
- Every separate auto policy held by any “resident relative” on the collision date. Resident relative is defined as anyone related to the crash victim by blood or marriage.
Here’s another example to illustrate how stacking works: Same crash involving John and Sharon, with John’s liability policy offering $50,000 and Sharon having an additional 50,000 in UIM coverage. Sharon lives with her brother who has a UIM policy with a per-person limit of $100,000. Her parents also live at the same address and carry their own policy with $100,000 in UIM coverage. Here, all UIM policies stack and provide $250,000 in aggregate benefits. With no liability set-off, Sharon can now secure benefits from the liability policy and from all UIM policies allowing her to collect $300,000 in total benefits for her injury claims.
In cases involving serious injury, we take great care to locate and access every available insurance source. We also take careful steps to avoid settling liability claims improperly because liability carriers ask for a General Release before they pay. The General Release is a settlement contract that forgives and releases any and all further potential claims against the at fault driver. Settling the liability claim without first considering UIM is a huge and costly mistake! Early settlement with the liability carrier with a General Release voids all additional claims that could be made against UIM coverage.
The main point in this context is with no liability set-off, UIM coverage can be stacked from all policies, and the coverage is never reduced by the amount of available liability coverage. UIM is now a pure cash source to fund injury claims.
The Two Exceptions: Some Victims Still See Less Than $100K
For almost every crash victim in North Carolina, we now apply both liability and UIM and see a minimum insurance coverage limit of $100,000 to fund all injury claims. While the required minimum liability coverage was increased only from $30,000-$50,000, the additional changes to our UM/UIM policies bring an additional $50,000 in funding in most cases. This is an incredibly positive development for roadway accident victims who experience meaningful injuries.
There are two exceptions where the crash victim may have less than $100,000 in available coverage:
- Multiple victims with serious injuries and no stacking – In some cases, we see two or more vehicles collide, and the only coverage available is through the policies covering each vehicle. Here, we have no stacking available. If a driver crosses center, hits a van and injures six people, the per-accident limits on each policy apply. Total coverage is $200,000 for all victims ($100,000 in per-accident liability coverage and $100,000 UIM). If all claim values are equal, each victim would be compelled to accept less than $100,000. Six victims must agree to divide $200,000. Here we would hope to find excess liability coverage for the at-fault driver, or some other source of funding.
- Guest passenger in the at-fault vehicle who has no outside coverage – Under North Carolina law, if a driver causes an accident, he owes for the injury claims of an innocent guest passenger. The liability policy limit of $50,000 would be the only benefits afforded under that policy. If the passenger did not have his own auto insurance and had no family-owned coverage, total available coverage would be capped at $50,000. The victim cannot collect again through UIM coverage on the same policy.
Summary of The Good News
Our state has the toughest negligence law in the country. In North Carolina, if a crash victim is slightly at fault (even just 1%) for causing their collision, they have no right of compensation for property damage or personal injury. While there are a few narrow exceptions, this harsh rule applies and blocks all claims for many NC crash victims.
While we have some difficult laws in our state, we are grateful for recent legal reform which vastly increased the amount of coverage and funding available for NC car accident victims who suffer serious injuries. Crash victims with severe injuries previously faced having merely $30,000 in total insurance coverage. This limit remained regardless of the extent of injury or the amount of total medical charges. For a crash involving numerous victims with injuries, the total available coverage for all injured parties was previously just $60,000.
The vast majority of crash victims with injuries in North Carolina now have at least $100,000 in available insurance coverage to fund their injury claims. This more than triples the coverage required before last year’s change took effect.
Other current legislative reforms are being pushed on the federal level to increase mandatory insurance for truck drivers and other commercial drivers up to $4 million per occurrence. Because large trucks typically produce serious injuries when they collide into private passenger vehicles, this higher level of coverage is warranted. We hope to see these changes take place. At this point, we are grateful for the increases here in North Carolina. We also hope to see continued reform to keep insurance requirements in line with current medical care costs and injury case verdict trends.
Our firm only handles personal injury claims arising from roadway accidents. Our founder, Carl Nagle, worked for years inside the insurance industry. We have mastered insurance coverage analysis, and we are glad to help you identify all layers of coverage if you are dealing with a complex injury case. We invite your call and we gladly offer a free legal consultation, even if you prefer to handle your case without legal representation. Don’t sign anything until you know you are being paid full value for your injury claims, and that you have accessed all available insurance coverage to fund your medical needs and your claim for pain, suffering, and lost quality-of-life.
Current Coverage Requirements Across the US:
