07/03/2025
Changes to the Rating of Automobile Insurance Policies, Effective July 1, 2025
North Carolina residents need to be aware of changes to the rating of automobile insurance policies that will take effect July 1, 2025. The changes are the result of recently enacted legislation.1 The changes may impact insurance premiums for policyholders and both experienced and inexperienced drivers.
Increased Minimum Limits
Currently, insurance policies are required to have minimum liability limits of $30,000 per person and $60,000 per accident for bodily injury and $25,000 per accident for property damage. Starting July 1, 2025, for all new or renewed policies on or after that date, the minimum limits for bodily injury will be increased to $50,000 per person and $100,000 per accident and the minimum limits for property damage will be increased to $50,000. Policyholders who have policies with the current minimum limits can expect their premiums to increase when their policies are renewed with the new higher coverage limits.
Underinsured Motorist Coverage
Beginning July 1, 2025, underinsured motorist coverage will be included in all new or renewed policies. Currently, policies with minimum limits of $30,000 per person and $60,000 per accident for bodily injury and $25,000 per accident for property damage do not include underinsured motorist coverage. Additionally, the legislation makes other changes to underinsured motorist coverage: whether a motor vehicle is underinsured will be determined based upon the total damages sustained by an individual seeking payment of underinsured motorist coverage benefits, as opposed to being determined based upon the limits of all liability insurance and bodily injury liability bonds applicable at the time of the accident; the amount of underinsured motorist coverage applicable to any claim for benefits shall not be reduced by a setoff or credit against any coverage, including liability coverage, except for workers’ compensation as provided for in the statute; and if a claimant is insured under the underinsured motorist coverage on separate or additional policies, the total amount of underinsured coverage applicable to the claimant is the sum of the limits of the claimant’s underinsured motorist coverages as determined by combining the highest limit available under each policy, and shall not be reduced by a setoff against any coverage, except as specified in the statute.
Inexperienced Operator Surcharge Will Be Applied to New Drivers for Eight Years.
Currently, insurers apply a premium surcharge for insureds with less than three years of driving experience. This is commonly referred to as an inexperienced operator surcharge. Beginning July 1, 2025, the inexperienced operator surcharge is expanded for drivers who are first licensed on or after that date and will be applied for insureds with less than eight years of driving experience. For those drivers, this increases the time period for the surcharge from three to eight years. The surcharges for the new years four through eight are lower than the surcharges for years one through three, and the new surcharges get progressively lower as the years of driving experience increase.
Convictions of Four or More Safe Driver Incentive Plan (SDIP) Points – Surcharge Will be Applied for Five Years.
Currently, when a driver is convicted of a moving traffic violation that results in insurance points, that driver’s policy receives a surcharge (which increases the policy premium) for three years. For certain convictions occurring on or after July 1, 2025 - specifically, convictions for which 4 or more insurance points are assigned under the SDIP, other than speeding in excess of the posted speed limit (speeding in excess of 75 mph when the posted speed limit is less than 70 mph and speeding in excess of 80 mph when the posted speed limit is 70 mph or greater)- the surcharge will be applied to the insured’s premium for 5 years (up from 3 years).
Convictions of Speeding 10 mph or Less and Prayers for Judgment Continued (PJCs) – Lookbacks Increase from Three to Five Years.
Currently, if a driver is convicted of the violation of speeding 10 mph or less over the posted speed limit2, that violation is waived for insurance purposes, meaning that no insurance points will be assigned and the premium will not increase IF the driver has no other conviction for a moving traffic violation, except for a PJC, during the three years preceding the date of application or the preparation of the renewal. This three years is the “lookback period.” For convictions for speeding 10 mph or less occurring after July 1, 2025, the lookback period increases from three to five years and applies to prior convictions occurring after that date.3
Similarly, if a driver receives a PJC for a moving traffic violation, that violation is waived for insurance purposes, meaning that no insurance points will be assigned and the premium will not increase IF the driver and no one else in the household have no other PJCs during the three-year lookback before the date of application or preparation of the renewal. For PJCs granted on or after July 1, 2025, the lookback period also increases from three to five years and applies to PJCs occurring after that date.4
The above information is a general explanation of the effects the changes may have on an insured’s premium. There can be other factors that could affect an insured’s premium. Insureds should talk with their insurance companies or their insurance agents to learn the effect a conviction for a particular moving traffic violation will have on their insurance premiums.
1 S.L. 2023-133, as amended by S.L. 2024-29.
2 A conviction of speeding 10 mph or less over the speed limit does not include the offense of speeding in a school zone in excess of the posted school zone speed limit.
3 The Department is monitoring legislation that has been introduced and would clarify that the lookback period will remain 3 years for prior moving traffic violations occurring before July 1, 2025.
4 The Department is monitoring legislation that has been introduced and would clarify that the lookback period will remain 3 years for prior PJCs occurring before July 1, 2025.
