North Carolina Law Update – Progress Toward Increased Mandatory Coverage Limits

North Carolina’s legislature has made amazing progress toward enacting new laws that will increase the insurance available to fund injury claims for NC crash victims. North Carolina drivers are required to carry liability insurance, which pays the victim if the insured driver causes a collision. The current mandatory coverage limits have not been increased in over two decades, despite the huge increases in medical care costs and the increased costs of repairing or replacing damaged vehicles.

Under our current law, to legally register a car and drive in our state, a driver must carry liability insurance with bodily injury coverage limits of $30,000 per-person, and $60,000 per-occurrence. This means that if the driver causes an accident resulting in severe injuries, no individual victim could collect more than $30,000. This amount is all that would be available to pay the victim’s medical bills, lost wages and additional compensation for pain & suffering. Further, if the crash results in serious injuries to multiple victims, the entire group must divide and share the total per-occurrence limit of $60,000.

The mandatory coverage limits under current North Carolina law are actually higher than many states in the country. However, our state legislators have unanimously agreed that change is overdue. The House and Senate have both passed Senate Bill 452 (with unanimous support by the Senate) which increases North Carolina’s mandatory auto insurance liability limits to $50,000 for property damage (up from the current limit of $25,000), $50,000 per-person for bodily injury, and $100,000 per-occurrence for bodily injury in cases involving multiple victims. The bill will be passed to Governor Roy Cooper for his consideration and signature. All indications are that Governor Cooper will sign the bill into law. If this occurs, the new law and increased coverage limits will be effective January 1, 2025.

North Carolina’s mandatory insurance laws require all policies to provide coverage for property damage and bodily injury liability, and for Uninsured Motorist (UM). Uninsured Motorist coverage pays benefits in crashes caused by hit & run drivers who cannot be identified, and in crashes caused by drivers who fail to carry car insurance. Fortunately, the new increases in mandatory coverage applies to all UM policies as well. Thus, for any driver who suffers a crash caused by an uninsured driver, the new UM limits are as follows: $50,000 for property damage, $50,000 per-person for bodily injury, and $100,000 per-occurrence for bodily injury.

One other huge change under Senate Bill 452 will be elimination of the liability offset for Underinsured Motorist (UIM) coverage. UIM coverage is optional in North Carolina. To understand how UIM works, consider a hypothetical: Victim who is injured in an accident caused by the at-fault driver. The at-fault driver carries $50,000 in per-person bodily injury liability coverage, and Victim carries a UIM policy with injury coverage of $100,000 per person. Under present law, the UIM policy applies because the at-fault driver’s coverage is lower than the UIM policy. Further, the UIM pays only the difference between the liability coverage limit and the UIM coverage limit. Thus, the at-fault driver’s policy would pay $50,000, and the UIM policy would pay an additional $50,000 – bringing the total available benefits to $100,000.

Senate Bill 452 eliminates the “liability setoff”, which is a hidden reduction in available coverage. Those who buy $100,000 in UIM coverage might expect to be able to collect $100,000 if their injuries are significant. However, under present law, the UIM limits are reduced, or set off, by the amount of available liability coverage. If Governor Cooper signs Senate Bill 452 into law, those who carry UIM coverage can now collect the full face value of their policy. Considering the hypothetical above, even though the at-fault driver’s policy pays $50,000 under the bodily injury liability policy, the UIM carrier will no longer be able to reduce the available UIM limits by the liability payment. Thus, the Victim who could previously only collect a total of $100,000 in benefits can now collect $150,000! This is a huge benefit for North Carolina crash victims who suffer significant injuries.

We are thrilled to share the news of true progress, and we credit the North Carolina Advocates for Justice and their advocacy team for pushing for this long-overdue change in our state’s insurance laws. Also, while there will be some changes in policy premiums due to the increased coverage, we expect these changes to be very conservative. This is true progress and vastly increased financial protection for North Carolina car accident victims.