Auto Insurance Surcharge Now Follows Teen Drivers Into Mid-20s

Teenage drivers now have to wait into their mid-20s — rather than 19 — before the inexperienced operator surcharge is removed from their auto insurance premium as part of an amended state law that went into effect July 1.

Meanwhile, increases of minimum financial liability limits is resulting in premium costs going up for most North Carolina motorists.

The state Insurance Department posted Wednesday a news release that serves as a primer for the changes "that may impact insurance premiums for policyholders and both experienced and inexperienced drivers."

That includes even motorists who have avoided a traffic violation ticket or a new accident claim in recent years.

“That’s because the new law raises the minimum coverage levels across the board," said Jon Ruggiero, vice president of sales at Raleigh-based independent insurance agency Guardian Service.

"It’s a meaningful step toward better protection, but for many, it also means a higher baseline cost.”

Auto insurers have been allowed in North Carolina to apply a premium surcharge for motorists with less than three years of driving experience.

With the changes, the surcharge can be applied for up to the first eight years of driving experience for motorists who are first licensed on or after July 1.

The surcharge for the new years 4 through 8 would become progressively lower than the surcharge for years 1 through 3.

However, the discount goes away if the inexperienced driver causes an accident or is convicted for driving offenses in years 4 through 8.

The minimum financial limits that new and renewed policies are required to have go up from $30,000 to $50,000 per person, as well as from $60,000 to $100,000 for bodily injury, and from $25,000 to $50,000 per accident for property damage.

That increase is not expected to affect the majority of N.C. motorists.

"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 department said.

"There can be other factors that could affect an insured’s premium.

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 amended law mandated on July 1 underinsured motorist coverage in all new or renewed policies.

Previously, policies with minimum limits of $30,000 per person and $60,000 per accident for bodily injury and $25,000 per accident for property damage were not required to include underinsured motorist coverage.

The new law makes several changes to underinsured liability, mostly based upon the total damages sustained by an individual seeking payment of underinsured motorist coverage benefits.

That's different than the liability being determined based upon the limits of all liability insurance and bodily injury liability bonds applicable at the time of the accident.

Previously, when a driver is convicted of a moving traffic violation that results in Safe Driver Incentive Plan insurance points, that driver’s policy has a surcharge for three years that could jump their premium rate as much as 90%.

The new law would extend the surcharge period for five years for violations after July 1 if they include four or more insurance points under the plan.

If a motorist is convicted of speeding 10 mph or less over the speed limit, and the violation is waived for insurance purposes by a prayer for judgment request, they typically are not assigned insurance points and their insurance premium is not increased.

However, they can be assigned points and their insurance premium increase if they had a subsequent violation during what is known as the "lookback" period.

The amended law extends that lookback period from three to five years.

The department said it is "monitoring legislation that has been introduced and would clarify that the lookback period will remain three years for prior moving traffic violations occurring before July 1, 2025."

North Carolina motorists already will experience an average 5% auto insurance rate increase on new and renewed policies in a settlement taking effect Oct. 1 involving the N.C. Rate Bureau.

Automobile insurance rate requests are made by territory and listed by ZIP codes. Some counties, such as Davidson and Guilford, are split into two or more territories.

The agreement also features an average statewide 16.3% decrease in motorcycle liability insurance rates.

Jarred Chappell, the bureau's chief operating officer, said the Rate Bureau's rate hike request is justified because it "reflects the fact that vehicles and repairs are getting more expensive, partly because automakers pack so much technology into modern vehicles."

"Accidents have become more common, partly because distracted driving has eroded driving habits. Vehicle weights are up, and so is horsepower, both of which make accidents more severe."

© 2025 the News & Record (Greensboro, N.C.). Visit www.news-record.com. Distributed by Tribune Content Agency, LLC.

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