Higher auto insurance bills on the way for many in NC, especially new drivers

Many drivers in North Carolina could now pay more for auto insurance under changes to state law that went into effect this week.

People who are about to start driving can now be charged significantly more for their auto insurance under the law that went into effect Tuesday. While the change applies to all new drivers, it could disproportionately affect teens or parents who assist with their insurance costs.

Other new changes are aimed at raising rates on people with multiple speeding tickets or other dangerous driving habits, or who have the minimum level of coverage.

The increases from the new laws, which passed the legislature with bipartisan support, are in addition to rate increases that will also go into effect in October for all drivers in the state.

The state’s insurance commissioner is charged with negotiating rates with insurance providers. The insurance industry won permission from state Insurance Commissioner Mike Causey to raise rates by an average of 5% on North Carolina drivers starting in October. Causey negotiated that increase after rejecting the industry’s original request for a nearly 23% rate hike.

Inexperienced drivers

Insurance companies have long been allowed to bill an extra surcharge for policies that cover any “inexperienced” drivers.

Previously, the state has defined inexperienced drivers as people who’ve had their driver’s license for less than three years. The new law nearly triples that, bumping it up to eight years.

The new law does allow for people to request a partial discount to those extra charges after three years. But insurance companies don’t have to grant those discounts — and the law explicitly says no discounts will be allowed if the inexperienced driver has had any traffic convictions or at-fault accidents in the last five years. Similarly, if the inexperienced driver is given a discount between years three and eight, but then causes an accident or is convicted for driving offenses, they’d lose the discount.

People who got their licenses on June 30 or before would still fall under the three-year rule. But anyone who gets a license in North Carolina from now on could be stuck with those additional charges for eight years.

For someone who starts driving at 16, that means insurance companies can now tack on additional charges to their bills — or their parents’ bills — until they’re 24, not just 19. The law doesn’t dictate the cost of those surcharges, which the insurance industry says should lead to competition between providers.

“Luckily North Carolina remains a very competitive state on auto rates, with some of the lowest rates in the country and more than 200 carriers writing auto policies here, allowing customers to shop around,” said Jarred Chappell, an executive at the NC Rate Bureau which represents the insurance industry in North Carolina.

The average car insurance policy in North Carolina costs $1,165 a year, according to Quadrant Information Services data published last month by U.S. News and World Report. The average was the sixth-lowest in the country, the data showed.

Cut-rate coverage

Drivers who have been paying for the lowest-possible levels of insurance coverage are also about to see their bills go up.

That’s because a different law, which also went into effect Tuesday, raises the minimum liability levels in North Carolina.

Auto insurance plans are now required to cover at least $100,000 in medical bills per accident, up from $60,000 previously. Likewise, insurance plans will be required to cover at least $50,000 for property damage, up from $25,000.

Chappell noted that until now, the liability minimums hadn't changed since 1999 — even though medical costs and vehicle costs have skyrocketed since then.

The new minimum required coverage will be the highest in the nation, WRAL’s 5 On Your Side reported last year, provided other states don’t update their laws to surpass North Carolina.

People who cause more damage than they’re insured for can be sued to cover the difference, so raising the minimums could cut down on lawsuits over insurance disputes.

Relatedly, state law will also now start requiring all drivers to carry additional insurance to cover any potential disputes involving “under-insured” drivers.

Dangerous driving consequences

Other new changes that became law on Tuesday make it easier for insurance companies to raise premiums for people caught speeding.

Current law protects drivers from having their premiums hiked if they get a relatively minor speeding ticket, for going 10 mph or less over the limit, as long as they didn’t have any other tickets in the previous three years. Now, it’s five years.

As with inexperienced drivers, the changes won’t be retroactive. But for anyone who gets a speeding ticket from now on, they’ll have to have had a clean record for five years, not just three, to avoid higher premiums.

Likewise, new state law will also crack down on people with more dangerous driving habits.

Until now, people who commit an offense that earns them four or more insurance points on their license — which includes high-speed speeding tickets, reckless driving and other offenses — could see their premiums hiked by at least 90% for three years. Insurance companies will now be allowed to charge those extra fees for five years, under the new law.