Important Legislative Changes for North Carolinians Injured in Car Accidents | Ward and Smith, P. A

Important Legislative Changes for North Carolinians Injured in Car Accidents |  Ward and Smith, P. A

Each state has its own specific set of auto insurance laws that specify certain requirements for its residents.

In 2023, North Carolina passed notable legislative changes to the state’s auto insurance laws, increasing minimums on liability insurance policies for the first time in nearly 25 years and eliminating set-offs for uninsured motorist (UIM) policies.

The legislative changes will come into effect for car insurance policies and renewals issued on or after 1 January 2025. Fortunately, these changes will increase the potential recovery for North Carolinians injured in car accidents. This article provides insight into these legislative changes and details how they can help North Carolinians.

Changes in liability auto insurance

North Carolina requires its drivers to carry automobile liability insurance. Liability insurance pays for car accident victims’ injuries, including medical care, lost wages, pain and suffering, scarring and disfigurement, and property damage. In a car accident, the at-fault party is responsible for all injuries and damages caused by the wreck, but the at-fault driver’s liability insurance steps in to cover injuries and damages (up to the policy limits).

Since 1999, North Carolina’s liability insurance minimums have remained the same. These minimums are commonly referred to as “30/60/25” because the law requires that liability policies provide limits of $30,000 per person injured in a car accident, $60,000 per wreck, and $25,000 for property damage. This means that if one person is injured in a wreck, assuming the at-fault driver’s policy carries the minimum limits, the at-fault driver’s insurance will cover up to $30,000 for the victim’s injuries. If more than one person is injured, the policy will cover up to $60,000 for all injured individuals. While these numbers may seem high, hospitalization after a wreck can easily exceed $30,000. The value of many of the vehicles exceeds $25,000. Therefore, having low minimums may result in available insurance funds not covering the full amount of damages.

On October 3, 2023, Senate Bill 452 became law. This new law significantly increases the required minimums from 30/60/25 to 50/100/50. In other words, for policies and renewals issued on or after January 1, 2025, liability policies must provide limits of $50,000 per person injured in a car accident, $100,000 per wreck (an increase of $40,000 from previous minimums), and $50,000 US for property damage (double the previous minimum). Note that 30/60/25 remains the minimum requirement for policies and renewals issued before January 1, 2025.

Currently, only Alaska, Maine, and Michigan have minimum limits of 50/100. No state has a minimum of more than $25,000 for property damage. Therefore, North Carolina’s new minimums place the state among a select few states that protect drivers and passengers with higher minimums.

Changes in uninsured motorist coverage

UIM insurance is insurance you buy to protect yourself when the at-fault driver does not have enough liability insurance to compensate you for injuries and damage caused by a wreck. In other words, UIM policies cover the gap remaining between the at-fault party’s liability insurance and the injured party’s damages. This coverage is especially beneficial because it can serve as protection for the victim when the at-fault driver does not have sufficient insurance to cover damages caused by a wreck. Although UIM coverage is optional for drivers, many North Carolinians purchase it.

The new law significantly changes the benefits of UIM policies. Before Senate Bill 452, an insurance company providing UIM coverage could subtract the amount the at-fault driver’s liability insurance pays to the injured party. For example, imagine that Amy causes a car accident, which injures Bob. Amy carries $50,000 per person for liability coverage. Bob carries a $250,000 UIM policy and has suffered serious injuries. Before the enactment of Senate Bill 452 (and under current North Carolina law), the maximum Bob could recover was $250,000: $50,000 from Amy’s liability policy and $200,000 from his UIM policy.

However, for UIM policies issued on and after January 1, 2025, the insured can collect the sum insured. The entire value of their UIM policy after exhausting the at-fault driver liability policy. But the UIM insurer does not automatically pay the full policy to the insured; Instead, UIM will consider all damages (including past, present, and future medical bills; lost wages; diminished earning capacity; past, present, and future pain and suffering; and sustainability and scarring) to determine the amount it believes the insured is entitled to. Using the same example as above, starting in 2025, Bob can recover up to $300,000 (instead of $250,000): $50,000 from Amy’s liability policy and $250,000 from his UIM policy. This change in UIM coverage makes a real difference for injured North Carolinians who choose to carry coverage.

Conclusion

These changes are huge for North Carolina’s auto insurance law landscape, allowing accident victims to receive much greater compensation when they sustain serious injuries. Hiring a North Carolina car accident lawyer can help you navigate the aftermath of a car accident, including the complex nature of insurance.

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