North Carolina Auto Insurance
Full Coverage vs Liability Car Insurance in North Carolina
Should you carry full coverage or liability only on your vehicle in North Carolina? The answer depends on your car's value, whether it is financed, and your financial situation. Here is how to decide.
Understanding your options
What full coverage and liability actually mean in North Carolina
The term "full coverage" does not actually exist as a defined policy in the insurance industry. When most people use it, they mean a policy that includes liability coverage plus collision and comprehensive. Understanding what each component actually covers helps you make a better decision for your situation.
Coverage breakdown
What each type of North Carolina car insurance covers
Liability coverage (required by NC law)
Pays for bodily injuries and property damage you cause to other people in an accident where you are at fault. North Carolina minimums are $50,000 per person / $100,000 per accident for bodily injury and $50,000 for property damage. Liability coverage does not pay anything toward your own vehicle or your own injuries.
Collision coverage
Pays to repair or replace your vehicle after a collision with another car or object, regardless of who is at fault. Subject to your deductible. Required by lenders on financed or leased vehicles. The higher your deductible, the lower the premium.
Comprehensive coverage
Pays for damage to your vehicle from non-collision events: theft, fire, vandalism, hail, flooding, hitting an animal, or a tree falling on your car. Also subject to your deductible. Also required by lenders. Together with collision, this is what people call full coverage.
Uninsured and underinsured motorist (required by NC law)
Uninsured motorist (UM) coverage is required in North Carolina at the same limits as your liability. It pays for your injuries and damages when an at-fault driver has no insurance. Underinsured motorist (UIM) is optional and covers the gap when an at-fault driver's limits are not enough. Both are strongly recommended given the number of uninsured drivers in NC.
How to decide
Full coverage or liability only: how to choose in North Carolina
Keep full coverage if:
Your vehicle is financed or leased (your lender requires it). Your vehicle is worth more than $10,000 to $15,000. You could not afford to replace it out of pocket if it were totaled or stolen. You drive frequently on congested NC roads like I-540, US-1, or Capital Boulevard.
Consider dropping to liability if:
Your vehicle is paid off and worth less than $5,000 to $7,000. The annual cost of comprehensive and collision premiums exceeds 10% of the vehicle's value. You have savings available to replace the vehicle if needed.
Never reduce liability limits below minimums:
Whatever you decide about comprehensive and collision, do not reduce your liability limits to state minimums if you have significant assets. In a serious accident, $50,000 per person is not enough. Higher limits protect your home, savings, and other assets from lawsuits.
Not sure what coverage you need?
IronHaven Insurance is based in Wake Forest and helps North Carolina drivers find the right coverage at the right price. Cooper will look at your specific vehicles, driving history, and financial situation and give you a straight answer on what makes sense. No pressure. Call (919) 249-8448.
Full coverage vs liability questions for North Carolina drivers
Liability-only insurance covers damage and injuries you cause to other people and their property. It does not pay for damage to your own vehicle. Full coverage adds collision coverage (pays to repair or replace your car after an accident regardless of fault) and comprehensive coverage (pays for theft, fire, weather events, hitting an animal, and other non-collision incidents). Full coverage is not a single policy type but a combination of coverages.
If you have a loan or lease on your vehicle, your lender or leasing company requires full coverage. If your vehicle is paid off, the choice is yours. The general rule: if your vehicle is worth significantly more than what you would pay in collision and comprehensive premiums over two to three years, full coverage makes financial sense. If your car is older and low in value, liability only may be the better choice.
North Carolina law requires at minimum: $30,000 bodily injury per person, $60,000 bodily injury per accident, and $25,000 property damage liability. NC also requires uninsured motorist coverage at the same minimums. Comprehensive and collision (what most people mean by full coverage) are not required by the state, though they are required by lenders on financed or leased vehicles.
Removing comprehensive and collision coverage from a standard NC auto policy can reduce the premium by 30 to 60 percent depending on the vehicle. The savings are larger on newer or more valuable vehicles. However, removing those coverages also means you are entirely responsible for repairs or replacement if your vehicle is damaged or stolen.
A common rule of thumb: if your vehicle's actual cash value is less than 10 times your annual comprehensive and collision premium, dropping to liability may make financial sense. You can check your vehicle's approximate value at KBB.com or NADA. Before dropping coverage, make sure you have savings available to cover the vehicle if it is totaled or stolen.
Yes. North Carolina requires uninsured motorist coverage at the same limits as your liability coverage. NC also has underinsured motorist coverage as an optional add-on that protects you when the at-fault driver's liability limits are not enough to cover your injuries. Given the number of uninsured and underinsured drivers on North Carolina roads, carrying adequate UM/UIM coverage is strongly recommended.
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