While most drivers understand the importance of having auto insurance, many don’t take time to understand their coverages and what their policy entails. In an effort to save on their monthly premium without this understanding, they often look to save by lowering their liability limits to the state-enforced minimums. Unfortunately, a little savings upfront can cost you thousands in the long run in car insurance NC.
Keep reading to learn how car insurance in NC works, and why you need to understand your policy to make sure you have the right limits of coverage.
How Does Car Insurance in NC Work?
Every state has different regulations regarding auto insurance and the amount you’re legally required to carry as a driver.
However, all car insurance works the same way and offers similar coverages. The main three coverages are liability, uninsured motorist and auto damage.
Liability
Liability coverage entails coverage for bodily injury and property damage. It also covers additional payments a driver may be legally responsible for.
Bodily injury liability pays for the costs associated with a person’s physical injuries. This includes medical payments and pain and suffering. It also covers income loss related to injuries.
Property damage liability covers any property that is damaged you caused or that was caused in an accident you were responsible for. It pays to fix physical property like other vehicles, houses, fences, and landscaping.
Additional coverages for liability include extenuating circumstances like emergency care, loss of income, and bail bonds.
Uninsured Motorist
If you’re in an accident with a driver who is underinsured or doesn’t have insurance, this coverage will bridge the gap to cover bodily injury and physical damages. What it covers depends on the gap in coverage.
Auto Damage and Repair
This covers damage to your vehicle and any repairs it requires. This doesn’t just include accidents with other vehicles. It can include loss and damage related to incidents like weather and theft.
Liability Car Insurance Minumum Limits in NC
In North Carolina, the law dictates certain minimums that you are legally required to carry on your vehicle. In fact, you won’t be able to obtain licensing for your vehicle unless you show proof of this insurance.
The law requires you to carry the following minimum coverages.
- Bodily injury liability – $30,000 per person injured in an accident you cause
- Total bodily injury liability – $60,000 when two or more people are injured in an accident you cause
- Property damage – $25,000 per accident you cause.
This means that if you are at fault in an accident, your insurance will pay up to these amounts for medical bills and repairs. This includes other drivers, passengers, pedestrians and property involved.
Liability insurance can also cover people who have permission to drive the insured vehicle and your family members, depending on the coverage.
North Carolina is a Fault State
It’s important to note that North Carolina is a fault state. This means the legal responsibility for an accident and the costs incurred fall to the person at fault in the accident.
In a fault state, a person who is injured or has property damaged in an accident you were responsible for has three options.
1. File a claim with their own insurance, if it’s covered.
2. File a third-party claim with your insurance carrier.
3. File a personal lawsuit in civil court with the responsible party.
Remember, the driver responsible would be liable to any and every person involved in the accident, including other drivers, passengers, and pedestrians. You would also be liable for property damaged.
And this is why you should consider carrying more than the legal minimum limit on your liability insurance.
Why Have Higher Liability Limits?
Unlike a no-fault state, where those involved in an accident must look to their own insurance to pay any medical bills and repairs, fault states leave the entire burden on the person who caused the accident.
As mentioned, the legal minimum limit for liability insurance in NC is $30,000 to $60,000 in bodily injuries and $25,000 for property. But what if you cause an accident that goes above those limits?
You will be legally responsible to pay the difference.
Imagine how quickly the medical expenses and damage repair costs would add up in a multiple car accident. If you have the legal minimums only, there’s a good chance you’ll be paying out of pocket to finish making the required reparations.
You might save yourself a few bucks a month on your insurance premium by keeping only to what is legally required. But what if you find yourself in an accident where multiple people are injured and a substantial amount of damage is done to the physical property?
You could find yourself paying thousands of dollars out of pocket once those minimums are exhausted. It sometimes pays to have a slightly higher rate for better coverage.
How Are Rates Determined?
Insurance rates are factored based on the following criteria.
- Driving record – accidents, DUI charges, and moving violations all add up to higher premiums.
- Type of car – the year, make and model of your car dictates how much repairs and replacement would be. A brand new corvette, for instance, would be more expensive to insure than a ten-year-old sedan.
- Type of use – if a car is driven every day it will cost more than one driven occasionally.
- Credit score – a bad credit score could affect your insurance rate by indicating you might not be reliable at paying monthly bills.
- Location – Different areas have different hazards. Population density, costs of treatment for hospitals, road conditions, and even crime rates affect insurance premiums. Bigger cities often have higher premiums.
- Age, gender, and marital status – Drivers over the age of 25 are given better rates than younger drivers who haven’t had as much experience. A married driver is considered more financially stable and will be offered better rates. Women have been shown to have fewer accidents than men, and as such, will pay less.
What Limits Should I Have For my Auto Liability Insurance?
In order to make sure you’re covered properly, your best bet would be contacting a licensed agent who can help you go through coverages and any special circumstances you may have.
Contact Amistad Insurance Agency today to talk to a licensed insurance agent about car insurance in NC and make sure you’re covered in case of an accident!
