A 2023 North Carolina law changing auto insurance rate-making set to go into effect July 1
A North Carolina law passed in 2023 that will go into effect July 1 could increase auto insurance premium prices starting July 1, according to a press release from Insurance Commissioner Mike Causey.
SB 452 amends insurance rate-making laws and could impact insurance premiums for policyholders who are both experienced and inexperienced drivers, the release says.
The legislation makes changes to minimum liability limits, underinsured motorist coverage, and expands the inexperienced operator surcharge and programs that impact drivers convicted of moving traffic violations.
Minimum liability limits of $30,000 per person and $60,000 per accident for bodily injury will be increased to $50,000 per person and $100,000 per accident. The minimum limits for property damage will be increased from $25,000 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,” the press release says.
Starting July 1, underinsured motorist coverage will be included in all new or renewed policies. Whether a motorist 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 release says.
A setoff or credit shall not reduce the amount of underinsured motorist coverage applicable to any claim for benefits against any coverage, including liability coverage. The only exception is for workers’ compensation, as provided for in the statute.
“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,” the release says.
Currently, the state’s inexperienced operator surcharge is applied to insureds with less than three years of driving experience. This will be expanded to include drivers with fewer than eight years of driving experience.
“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,” the release says.
Drivers convicted of a moving traffic violation that results in insurance points and a surcharge, which increases the policy premium, will also see changes in the future.
Convictions for which four or more insurance points are assigned will see a surcharge to the insured’s premium for five years, up from three years. It excludes speeding over 75 miles per hour when the posted speed limit is less than 70 miles per hour and speeding over 80 miles per hour when the posted speed limit is 70 miles per hour or greater.
Currently, if a driver is convicted of speeding 10 miles per hour or less over the posted speed limit, the violation is waived for insurance purposes, and no points or surcharge is applied. However, only applies if the driver has no other convictions for a moving traffic violation, except for a prayer for judgment continued (PJC), during the three years preceding the date of application or the preparation of the renewal.
The “lookback period” will be increased from three to five years, the release says.
According to the release, if the driver receives a PJC for a moving traffic violation, the lookback period also will be extended from three to five years.
“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,” the release says. “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.”
The legislative coverage changes are in addition to an average 5% rate increase for auto insurance that will be allowed by the Rate Bureau starting Oct. 1. The increase was a settlment between Causey and a Feburary Rate Bureau request.
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