North Carolina’s Updated Auto Insurance Coverage [July 1, 2025 Update]

by: Everett Lupton

On July 1^st, North Carolina has major changes to the statute that governs insurance policies on motor vehicles registered or principally garaged in North Carolina.

Per the state code North Carolina General Statutes (NCGS 20-279.21), effective July 1, 2025, every North Carolina automobile insurance policy issued or renewed on a personal (non-commercial) vehicle by an insurance carrier after July 1, 2025 is required to provide minimum bodily injury liability coverage limits of $50,000 per person and $100,000 per accident. This is a long overdue change as the minimum limits in North Carolina were last raised in 1999 to $30,000 per person/$60,000 per accident.

Uninsured and Underinsured Motorist Coverage

Uninsured motorist coverage (UM) and underinsured motorist coverage (UIM) in personal auto policies issued or renewed after July 1, 2025, also have significant changes. Prior to July 1^st, North Carolina auto policies were required to have at least $30,000 per person and $60,000 per accident in uninsured motorist bodily injury coverage but were not required to have underinsured motorist coverage. Effective July 1, 2025, all personal auto North Carolina policies issued or renewed after that date are required to carry both uninsured motorist bodily injury coverage and underinsured motorist bodily injury coverage with minimum limits of $50,000 per person and $100,000 per accident.

“Credit Rule” for Liability Insurance Payments

The July 1, 2025 changes to NCGS 20-279.21 also abolish the “credit rule” for liability insurance payments. Prior to July 1, underinsured motorist carriers were entitled to have a credit for liability insurance payments made by a tortfeasor’s liability insurance carrier. So if a judgment was entered in favor of an injured Plaintiff for $100,000 and Defendant’s liability coverage was $30,000, the underinsured motorist carrier would be responsible for the amount of the judgment up to but not beyond its underinsured motorist limits, but the underinsured motorist carrier would be entitled to a credit in the amount of the liability insurance coverage, in this example a $30,000 credit. It is important to note that the liability carrier may be liable for costs and interest above the liability policy limits, but an uninsured motorist carrier or underinsured motorist carrier is usually not responsible for paying interest and costs above its limits. Now in new policies or renewing policies underinsured motorist bodily injury coverage “stacks” on top of the liability coverage without a set off or credit for the liability coverage. So under the new rules, an injured person with 50/100 underinsured motorist bodily injury limits injured by a motorist with liability limits of 50/100 would be able to recover up to $100,000 ($50,000 in liability coverage plus $50,000 in underinsured motorist coverage).

Service of Process Changes

Another change to insurance law under the July 1, 2025 amendments is a change to the deadline to serve process on a North Carolina uninsured motorist carrier. Prior to July 1, 2025, an injured Plaintiff was required to have an uninsured motorist carrier served with process pursuant to Rule 4 of the North Carolina Rules of Civil Procedure prior to the expiration of the applicable statute of limitations for the injury claim (usually 3 years from the date of injury) or a wrongful death claim (usually 2 years from the date of death). This was the holding of a North Carolina appellate court opinion. This service rule deadline was different from the service deadlines for service on a defendant or service on an underinsured motorist carrier. The new changes to NCGS 20-279.21 eliminated this aberration and made the rules uniform between the Defendant and an uninsured motorist carrier. Effective July 1, 2025, the service of process deadline for the summons and Complaint on an uninsured motorist carrier is now the same as service of process on a Defendant.

Talk to an Experienced Personal Injury Lawyer

These changes to North Carolina law can be difficult to understand for any North Carolina native — which is why we’re here to help. Robert Slaughter & Everett Lupton have tried successful cases against almost all of the major insurance companies in both North Carolina and Virginia. Call the Slaughter & Lupton Law team at 757-999-1111 to find out what these changes can mean for your auto injury case.

Get the help that you need from lawyers who know North Carolina law like the back of their hand. Talk to our team today and ask about our free initial consultation.

Everett Lupton is a partner and practicing attorney at Slaughter & Lupton Law, PLLC. His expertise ranges from motor vehicle accidents, serious slip and falls, to wrongful death cases over decades practicing in Virginia and North Carolina. Learn more about Everett on his Attorney Profile.