The Tar Heel State began registering vehicles on July 1, 1909 and in 1957 adopted the compulsory insurance law which is commonly referred to as Financial Responsibility. This law requires that all automobiles registered in the state must be covered by a liability policy at all times in order to maintain registration; NC became one of the first states to adopt these laws. Policies must be issued by a company that is licensed and authorized to do business in the state and coverage must be maintained continuously; companies are required by law to notify the Division of Motor Vehicles (DMV) if a new policy has been issued or an existing policy has been cancelled.

According to North Carolina auto insurance laws, when the DMV is notified of a lapse or cancellation in coverage by an insurer they are required to send the motorist a Form FS 5-7 which will need to be responded to within 10 days of the date of the form. If a lapse has been falsely reported the individual will need to provide the correct information on the form and return it to the DMV. If an individual has had a break in coverage, they must “re-certify” by providing valid policy information and pay an assessed civil penalty within 10 days of the notice. As of July 1, 2008, the fees for a lapse is based on how many times an individual has had a lapse in the past three years; the fee for a first offense is $50, $100 for the second and $150 for subsequent lapses.

Failure to respond to the FS 5-7 can result in the individual losing their license plate for a period of 30 days which will then need to be restored following the 30 days. Individuals who need to restore their license plates will need to obtain a Form FS-1 from their insurer or agent to prove that they are currently insured, pay a restoration fee, and the assessed civil penalty; if a plate pickup order is issued there will be an additional $50 service fee.

Required NC Car Insurance

The state requires that all motorists maintain the minimum limits of liability at all times and these laws are very strictly enforced. According to the North Carolina Department of Transportation the current minimum requirements are $30,000 for bodily injury caused to one person, $60,000 for bodily injury to two or more people and $25,000 for property damage resulting from a traffic accident; this is commonly abbreviated as 30/60/25. Although this is the minimum required, it is often suggested that motorists purchase higher limits; many consumer guides and industry professionals recommend that consumers consider purchasing limits of 100/300/50 for more extensive protection which may help prevent financial hardship if a policyholder causes injuries or damages in excess to the minimum limits.

In addition to liability coverage, motorists are required to carry Uninsured/Underinsured Motorist (UM/UIM). Previously the limits purchased had to match the the limits of liability, but as of February 1, 2010 residents have the option to lower the amount of coverage to the to meet the minimum liability requirements. This type of coverage will provide protection to the insured, family members and anyone occupying the covered vehicle if they are struck by a driver that does not carry a policy or has inadequate coverage; this also covers being victims of a hit and run. In addition, this will also provide compensation for damage sustained by the property of the insured. If a vehicle is struck by a hit and run driver it should be reported promptly to the police as soon as it has been discovered and especially if occupying the automobile at the time of the collision.