Big Changes Coming to North Carolina Auto Insurance

These changes take effect for all auto policies issued or renewed on or after July 1, 2025. Whether you’re a driver, a policyholder, or someone who handles injury claims, these reforms will bring new obligations, expanded rights, and new legal exposures.

Anyone who deals with North Carolina auto insurance claims involving an accident in Wilmington should take note. Sweeping changes are coming. Thanks to two new laws passed by the General Assembly, specifically S.L. 2023-133 (Senate Bill 452) and S.L. 2024-29 (Senate Bill 319), the rules around liability coverage and under insured motorist (UIM) protection are getting a major overhaul.

Here’s a breakdown of what’s changing and why it could make a difference in accident claims for damages in North Carolina.

Liability Minimums for Auto Insurance Are Rising for the First Time in 25 Years

North Carolina’s mandatory minimum auto liability limits are increasing to:

1. $50,000 per person / $100,000 per accident for bodily injury
2. $50,000 per accident for property damage

This long-overdue adjustment reflects skyrocketing medical costs (up more than 120% since 2000) and better aligns coverage with real-world expenses. It also means that people injured in a crash may have access to more compensation from the at-fault party’s insurer.

Underinsured Motorist (UIM) Auto Insurance Coverage Becomes Mandatory

Starting in July 2025, UIM coverage will be required on most policies, including those issued at the new minimum limits.

That’s a big deal. Until now, many drivers injured in an accident in Wilmington, Wrightsville Beach, or anwyere in North Carolina for that matter, by someone with insufficient insurance, had no way to make up the shortfall.

In effect those injured due to no negligence or fault of their own, were victimized twice. Once by the injury itself. And once by the big insurance companies and their profits in mind.

With UIM now required, those gaps can be filled.

What this means for drivers: If you’re seriously injured and the other driver doesn’t have enough insurance, UIM might be available to help cover the difference. It can be an important protection and now you can’t go without it.

Want more information? Check out our FAQs about Car Accidents in Wilmington NC

Underinsured Auto Insurance Gets a More Claimant-Friendly Definition

Under current law, a vehicle is only considered underinsured if the at-fault driver’s liability limits are lower than your own UIM limits. In the past, that test often unfairly blocked claims.

Starting July 2025, the law changes. A vehicle will be considered underinsured if the at-fault driver’s liability limits are less than your total damages. That’s an important, helpful change that will most certainly benefit a lot of North Carolina motorists.

This aligns the law with common sens. It will help more injured people access the UIM coverage they’ve been paying for, instead of financially benefiting the big insurance companies.

UIM Coverage Now Acts as True Excess Insurance

In the past, your UIM coverage could be reduced by whatever the at-fault driver’s insurance paid, once again benefitting the insurance companies and their profit margins instead of the consumer. Furthermore, the negligent party’s insurance company doesn’t get to take advantage of the fact that the innocent victim in the wreck took responsibility and purchased sufficient auto insurance. That’s no longer the case.

The new law says UIM benefits cannot be reduced by payments from any other coverage, with one exception: Workers’ Compensation benefits under N.C.G.S. § 20-279.21(e).

How this will affect your auto insurance policy:

Your UIM benefits now stack on top of whatever the other driver’s insurer pays. No more offsets. No more surprises and no more unfair setoffs for the benefit of the at-fault driver and their insurance provider.

Stacking of UIM Coverage Still Allowed

North Carolina has long allowed policyholders to “stack” UIM coverage across multiple policies. The new law makes clear this right still exists.

It also clarifies that UIM recovery won’t be reduced by payments from the at-fault driver’s insurer, removing any doubt and strengthening claimants’ (the victim of the negligence by the at-fault party) rights.

No More UIM Offsets for Medical Payments Coverage (MPC)

Although the new law doesn’t name MPC directly, its reference to “any coverage” effectively overrules the court’s decision in Kessler v. Shimp (181 N.C. App. 753 (2007).

That means insurance companies can’t reduce your UIM payout based on what they already paid under your MPC benefits. It’s another win for innocent injury victims and another way the law now favors full and fair recovery.

Liability Exhaustion Now Includes “Tender,” Not Just Payment

One often-litigated issue in UIM claims has been whether liability insurance must actually be paid before UIM kicks in. The new law clears this up: tendering the liability limits is enough.

This codifies what North Carolina courts have already recognized—and gives injury claimants a clearer, faster path to triggering UIM benefits.

The New North Carolina Auto Insurance Law: What You Need to Know

Starting July 1, 2025:

• Coverage is broader
• Offsets are fewer
• Claimants have stronger rights
• Insurers face greater exposure

If you’ve been in a crash in Wilmington NC, or if you handle injury claims professionally, now is the time to review existing policies and understand how these changes could affect you. For victims of negligence, the new auto insurance laws mean more possible avenues to recovery. For insurers and at-fault drivers, it means greater financial responsibility for negligence and negligent driving.

Either way, these changes mark the most significant update to North Carolina auto insurance law in a generation—and they’re worth your attention now.

Injured in an Accident in Wilmington NC? Call Attorney Bradley Coxe

North Carolina’s sweeping auto insurance reforms represent a significant shift in how accident claims and coverage will be handled throughout the state. With higher liability minimums, mandatory UIM protection, and a fairer framework for claimants, the changes benefit not only injured drivers and passengers but anyone who depends on the security of truly beneficial insurance coverage.

For accident victims injured due to the negligence (or gross negligence) of another driver facing injury or loss after a serious accident, these new rules could mean broader opportunities for recovery than ever before.

Navigating the evolving insurance landscape can be complex. If you have questions about your rights, your coverage, or how these laws could impact your accident or injury claim, please give us a ring. The Law Office of Bradley Coxe is dedicated to helping clients and advocating for their best interests. The consultation is free of charge.

To discuss your situation or schedule a confidential consultation, contact WilmingtonLawyers at wilmingtonlawyers.com or call now 910-834-8400: The answers you need may be closer than you think. Find the Law Office of Bradley Coxe on Google Maps.