North Carolina Casualty Study Guide

If there is one line where North Carolina refuses to look like the rest of the country, this is it. The state applies a negligence rule that only four other jurisdictions still use, runs its auto residual market through a mechanism most states do not have, and changed two of its central auto rules on July 1, 2025. Anything you study that predates last summer is teaching you the wrong numbers.

Pure contributory negligence

Start here, because it colours everything else. North Carolina is a tort state — there is no mandatory PIP and no no-fault system — and it applies pure contributory negligence: any negligence by the claimant that is a proximate cause of the injury bars all recovery.

Not reduces. Bars. A claimant found 1% at fault recovers nothing.

North Carolina is one of only a handful of jurisdictions that still does this, alongside Virginia, Alabama, Maryland and the District of Columbia. Everywhere else has moved to comparative fault, where an award is reduced in proportion to the claimant’s share of the blame. The exam tests this by giving you a fact pattern with a slightly-at-fault claimant and offering you a reduced award as an answer. In North Carolina the answer is zero.

The July 1, 2025 auto changes

Two things changed on the same date, and both are heavily tested.

Minimum limits rose to 50/100/50 — $50,000 bodily injury per person, $100,000 per accident, $50,000 property damage — up from 30/60/25 (G.S. 20-279.21(b)(2)). Anything still printing 30/60/25 for North Carolina is more than a year out of date.

Underinsured motorist coverage is now included on every new or renewed policy. Previously UIM attached only where the policy carried more than minimum limits. Commercial-only and fleet-only policies are excepted.

And the UIM trigger was redefined, which is the subtler and more valuable point. An “underinsured highway vehicle” is now one where the sum of all applicable liability limits is less than the total damages sustained — a limits-versus-damages test. The old rule compared the at-fault driver’s limits against the claimant’s own UIM limits: a limits-versus-limits test. Material teaching “UIM applies when the at-fault driver’s limits are lower than your UIM limits” is describing the pre-July-2025 law.

Set-offs against UIM were also eliminated, except against workers’ compensation.

Uninsured motorist coverage, by contrast, has long been mandatory, and its limits track the policy: UM equals the highest bodily injury liability limits on any one vehicle on the policy, capped at $1,000,000 per person and per accident.

The Reinsurance Facility — cede the risk, keep the customer

North Carolina’s auto residual market is not an assigned risk plan, and the distinction is the tested point. The North Carolina Motor Vehicle Reinsurance Facility (Article 37) is a nonprofit unincorporated entity comprising all insurers licensed to write motor vehicle insurance in the state; membership is a prerequisite to writing that business.

Here is how it differs. An assigned risk plan takes an applicant nobody wants and assigns them out to a carrier. The Facility does the opposite: the insurer must write the eligible risk, issues the policy, keeps the policyholder relationship and services the account — and then cedes the risk to the Facility, where losses are shared among all members. Only the risk moves. The customer may never know their policy was ceded.

One Facility term is worth memorising: a “clean risk” is a nonfleet private passenger risk where the owner, the principal operator and all licensed household operators have 2 years’ driving experience and zero SDIP points in the preceding 3 years. Clean-risk rates “shall not exceed” voluntary-market rates for comparable risks.

Auto cancellation — the lopsided notice periods

North Carolina’s auto termination notices are asymmetric in a way that surprises people:

• Nonpayment of premium: 15 days from mailing.
• Any other reason: at least 60 days after mailing.

Four times as long for anything that is not a missed payment. The reason sits in the next provision: the insured has 10 days after receiving a termination notice to request a Department review, and the policy remains in effect during administrative and judicial review. The notice form itself must be approved by the Commissioner before use and must state both the reason and the effective date (G.S. 58-36-85).

Workers’ compensation

North Carolina requires coverage once an employer regularly employs three or more employees (G.S. 97-2(1)) — a distinctive threshold, since many states start at one and a few at four or five. Two carve-outs go with it, and both get tested: one employee triggers coverage if anyone works with or around radiation, and ten is the threshold for nonseasonal agricultural workers.

Benefits under § 97-29 run at 66⅔% of average weekly wages, with a minimum of $30 per week (rising to $50 on July 1, 2027) and a maximum recomputed annually each July 1. Temporary total disability runs up to 500 weeks, with extended compensation available after 425 weeks on proof of total loss of wage-earning capacity. A claim must be filed within 2 years after the accident (§ 97-24(a)). The system is administered by the North Carolina Industrial Commission.