New drivers in North Carolina will face higher insurance costs for eight years instead of three under legislation that took effect Monday, extending a surcharge period that insurance companies say reflects the elevated risk of inexperienced operators. The change applies to anyone who receives their license on or after July 1, 2025, and comes as the state grapples with rising auto insurance costs that have increased 35% over the past two years.
The extended surcharge period represents the most substantial change to North Carolina's auto insurance landscape in decades, affecting both teenagers getting their first licenses and adults who obtain driving credentials later in life.
The inexperienced operator surcharge, which insurance companies apply to drivers with limited road experience, will now last eight years for newly licensed drivers, up from the current three-year period12. The change affects only drivers licensed after July 1, while those who obtained licenses before that date remain under the three-year structure2.
"In my personal opinion, I think it's a little much. I would prefer it limited to five years," said North Carolina Insurance Commissioner Mike Causey, according to Bankrate1. "This change will impact some of our poorest citizens more than other families."
The law allows for potential discounts after three years of maintaining a clean driving record, though details remain unclear and would require approval from the North Carolina Rate Bureau12.
The surcharge extension coincides with other insurance requirement changes that took effect Monday. Minimum liability coverage increased to $50,000 per person and $100,000 per accident for bodily injury, up from $30,000 and $60,000 respectively12. Property damage coverage minimums rose from $25,000 to $50,00012.
Underinsured motorist coverage is now mandatory, and major driving violations will carry surcharges for five years instead of three34. These changes stem from Senate Bill 452, passed in 20235.
The new requirements come as North Carolina drivers already face mounting insurance costs. A 5% rate increase is scheduled for October following a settlement between state regulators and the insurance industry1. The North Carolina Rate Bureau had initially requested an average 22.6% increase before reaching the settlement with Commissioner Causey1.
North Carolina drivers experienced a 35% increase in full coverage rates from January 2023 to January 2025, according to Bankrate2. The combination of extended surcharge periods and rising base rates may prompt some families to reconsider whether teenage family members should obtain licenses immediately.
"This happens sometimes with legislation, with overkills. We try to fix one problem and make another bigger problem," Causey said2.
