In North Carolina, drivers pay the lowest car insurance rates in the nation. The state legislature has the power to cap car insurance premiums and wields it, which brings the average down to just over $1,000 a year. Compared with Michigan, where annual rates are typically $2,476, drivers in North Carolina are getting a good deal on their premiums. But why stop there? It’s easy to save even more with just a little bit of shopping around.
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Our Top 5 Picks for the Best Cheap Car Insurance in North Carolina
North Carolina’s Minimum Coverage Requirements for 2020
In order to legally drive in the state, North Carolina requires two types of insurance: liability and uninsured motorist coverage. Liability coverage pays for any bodily injury and property damage caused by the driver. You’re required to have at least $30,000 bodily injury per person, $60,000 total bodily injury for all people in an accident, and $25,000 to cover property damage. In insurance speak, that’s a 30/60/25 plan.
There is one additional rule that you should be aware of: If you buy more than the state’s minimum coverage, you have to increase your uninsured motorist and underinsured motorist coverage together. You can’t increase them separately.
Why do quotes vary so widely?
Because car insurance rates are so personalized, there’s no way to recommend just one company as the best value. Insurance agencies use a number of factors to calculate their rates, including age, vehicle type, driving history and even ZIP code. On top of that, every insurer uses its own formula to weigh these factors. The only way to find the company with the lowest rate for you is to do a bit of comparison shopping. You’ll need to get a bunch of quotes and compare; get at least five in order to make a decent comparison.
How long does the quote process take?
Getting a quote online is an easy process. It takes five to 10 minutes, and you need just a few basic pieces of information, such as your car’s make, model, list of car insurance companies that meet your criteria for customer service and financial stability. It’s recommended to go with an insurer that has an “above average” (or higher) J.D. Power rating in the Southeast region and a minimum A.M. Best rating of “excellent.” J.D. Power ranks customer service satisfaction surveys, and A.M. Best scores insurance companies based on their financial solvency. Statistically speaking, you’re going to get in a wreck every 17.9 years. When that happens, you’ll need to be confident that your insurer will be there for you with great customer service and the money to pay your claim, too.
Why are North Carolina’s rates so low?
First, it is a predominantly rural state. North Carolina’s 90.5 percent rural land mass leaves a meager 9.5 percent in urban classification, which insurance companies consider riskier because they’re more densely populated and are likely to have higher crime and accident rates.
Secondly, the insurance commissioner of North Carolina wields the power to cap insurance rates. In 2014, the insurance companies tried to change that by initiating a bill called the “Good Driver Discount Bill.” The name masked the true intent: to give insurance companies the choice to opt out of the current cap system and increase their rates. Similar legislation passed in South Carolina in the 1990s and rates went up 23 percent shortly afterward. Luckily for North Carolina’s drivers, the bill did not pass.
Is North Carolina a no-fault state or a fault state?
As a “fault” state, North Carolina follows a system in which a driver who causes an accident is considered at fault and is held responsible for any damages that result. You have several ways to proceed if you are the victim of a car accident under the “fault” system. You can either file a claim with your own insurance company, file a claim with the at-fault driver’s insurance company, or file a lawsuit against the other driver in civil court and sue for damages.
What is SR-22 car insurance?
SR-22 actually refers to a document and is not an insurance policy. It is a certificate that proves you are in compliance with the state’s insurance laws and hold the legal minimum amount of coverage. As a contract between a state government and insurance company, it requires insurers to alert the government if a policy has been canceled. An SR-22 is a way for the government to keep track of high-risk drivers.
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Is going with cheap car insurance the best option?
Getting more coverage than the state mandates will cost a little bit more, but it can pay off in a big way. Consider the following statistics: On average, drivers have an accident every 17.9 years. The average cost of an accident that causes a disabling but nonfatal injury is $93,800. If you hit a more expensive car or cause complicated injuries, that number could be a lot higher.
If you sign up for North Carolina’s minimum coverage — 30/60/25 -– it will cost you around $1,166 a year. Imagine if you were to get in a wreck and permanently injure someone; after the damage and the hospital bills, you could end up owing tens of thousands of dollars out of pocket. Depending on your financial circumstances, the upgrade may be worth the peace of mind and the protection to your savings accounts.
What happens if you’re caught without insurance?
Penalties for driving without the minimum required car insurance in North Carolina will result in fines of $50 to $150, your license will be suspended for 30 days, and you’ll have to pay a $50 license reinstatement fee. You’ll also risk being on probation for up to 45 days or even doing jail time. Plus, without insurance, if you do get into an accident, you’re on the hook for the full damages, which could wipe you out financially.
Why should you go with more than minimum coverage?
Drivers should consider more than minimum coverage in order to protect their assets. If you are in a car wreck and are sued, your insurer will pay up to your policy’s coverage limits. If an injured party has damages (medical expenses, lost wages, pain and suffering) that exceed your policy limits, you could be on the hook personally for that excess amount. It does not take long for medical expenses related to car accidents to exceed $25,000. Any collision causing a serious injury could put a person in intensive care, where the costs of care could mount to $50,000 or more per day. Surgery drives the costs up more. Future lost wages for a permanent disability can reach into the millions. If a huge claim is made against a driver with minimum coverage, that driver will almost invariably be driven into bankruptcy unless he or she has little to no assets or income to collect against.
What is the main takeaway?
Insurance policies are so personalized that there’s no way to recommend one company over another as being the best for every driver. The only way to find the best deal is to get quotes and compare prices and coverage levels. It’s possible to save several hundred dollars a year for the same coverage simply by picking one insurer over another. Just dedicate an hour of your time to compare rates and your efforts are likely to pay off.
Shop for a New Policy Every Couple of Years, Even if You’re Happy With Your Insurance
Insurance companies used to calculate rates based on risk profile alone. Today, companies use big data about online shopping habits, social media activity and more to gauge a customer’s tendency to shop for the best price. This tactic is called price optimization, and a study by Earnix found that 62 percent of insurers polled were either already using price optimization or had plans to incorporate it. Essentially, it allows companies to charge just enough to maximize profit with incremental price increases but not too much to make loyal customers uncomfortable with their rates.
That’s why it’s best to shop for a new policy every few years. Applying for quotes with as many companies as you can will not just help you find potential savings, it will keep your present insurer from hiking your rates without good reason. Insurance companies are privy to your dealings with other providers, and once they find out you’re a savvy shopper, they won’t be as likely to gouge you.
If you have noticed incremental, unexplainable increases in your premium, contact your agent and demand an answer as to why. If they can’t give you a solid explanation, it’s safe to assume you’ve become a victim of price optimization and there’s money to be saved with another provider.
Fifteen states, including Ohio and California, have released legal bulletins addressing the use of price optimization. Many states have gone so far as to ban the practice altogether while others, like Vermont, have mandated transparency on the factors used to calculate rates. Unfortunately, North Carolina has not released any statements regarding price optimization practices, hasn’t banned anything and doesn’t require transparency. For now, you’ll need to stay on your toes and look around for competitive quotes in order to beat the system.
Keep an eye out for “good driver” discounts. If you are accident-free or violation-free for a number of years, you will be seen as a responsible driver and will often receive a better rate as a result. If you are a young driver under the age of 25, you could qualify for a student discount if you can show proof of good grades.
You’ll also have options if you are a bad-credit driver. Take the extra time to shop around because you’ll find a wide disparity in prices for the same policy. Specialized insurance companies that offer coverage for high-risk drivers will generally offer a better rate than what you could find elsewhere.
Best Car Insurance in North Carolina
- Auto-Owners Insurance
- North Carolina Farm Bureau
- State Farm