Purchasing auto insurance can be confusing, especially if this is your first car. Understanding what type of coverage you need is essential, because different states have their own laws. For example, Florida and North Carolina have very different requirements. Florida is a no-fault state, whereas North Carolina is a tort law state. That means the required insurance coverage varies significantly. If you are planning to move, here’s what you need to know about car insurance in Florida vs. North Carolina.
Florida’s No-Fault Insurance Requirements
In a no-fault state, each party typically pays for their own injuries rather than pursuing a claim against the at-fault driver. Because of this, Florida financial responsibility laws require you to carry Personal Injury Protection coverage, referred to as PIP. You must also have property damage liability, called PLD. The minimum limit for these coverages is $10,000 each.
Should you be involved in an auto accident, you would file a claim with your own insurance company and submit medical bills for a claim under your PIP policy. If you carry the minimum limit of $10,000, you will not receive reimbursement for anything over your policy amount. PIP does not cover fault-based compensation either, such as pain and suffering. However, Florida has a serious injury threshold rule that will allow you to pursue a claim against the other driver in certain situations.
North Carolina’s Fault-Based Insurance Requirements
North Carolina is a “tort” state that is fault-based. Should you be involved in an accident, you can file a claim against the person who caused your injuries and property damage. Because of that, the insurance requirements in North Carolina are very different than in Florida. There is no PIP coverage in North Carolina. Instead, vehicle owners must carry liability insurance through a company licensed to do business in North Carolina. Out-of-state policies are not accepted when you have a valid North Carolina vehicle registration.
Minimum liability insurance requirements in North Carolina are:
- $30,000 for bodily injury (BI) for one person and $60,000 for bodily injury for all parties in one occurrence
- $25,000 property damage (PD)
North Carolina strictly enforces the liability insurance requirements. Failure to maintain required coverage could result in penalties and revocation of the vehicle’s license plate.
Factors that Impact Insurance Rates in North Carolina
Certain factors will impact your insurance premiums in North Carolina. Liability insurance premiums are all about risk. Insurers look at the risk of insuring you and your vehicle, which is why no two drivers necessarily pay the same monthly premium—even if they have the same coverage limits. The most common factors that determine your annual insurance rates in North Carolina include:
- Driving record: Your driving record has the most significant impact on your insurance premiums. The state charges points for any at-fault accidents and moving violation convictions received within the experience period. The experience period is defined as the three years immediately preceding your insurance application date or the policy renewal.
- Your address: Where you live in North Carolina also impacts your insurance rates. Road conditions, population density, medical costs, repair rates, and claims data are all factors related to your geographic region. Typically, rural areas have lower rates than urban ones.
- Type of automobile: If you haven’t already purchased a vehicle, consider the types of cars you are looking at before making a purchase. Some vehicles are more expensive to insure than others. Insurance companies look at the risk of theft, the cost to repair or replace the vehicle, and what style of auto it is (sports car, sedan, truck, SUV, etc.).
- Auto use: The number of miles you drive each year can impact your rates. Someone who works from home and has low annual mileage could have cheaper premiums than someone who commutes 30 miles to work daily.
Different states have rules on factors that could impact your insurance premiums, including age, marital status, and gender. In North Carolina, insurance companies cannot use gender as a rating factor. Some states ban using zip codes, credit scores, and other factors that don’t relate to your driving.
The North Carolina Department of Insurance has the Safe Driver Incentive Plan (SDIP) that assigns points and rate increases to various accidents and violations. The lowest offense is one point for an infraction, such as speeding 10 miles per hour or less in a zone where the speed limit is under 55 miles per hour. That infraction could result in a 40% increase in your insurance rates. The highest violations are 12 points. You’ll find the most severe offenses in this category, such as driving under the influence of alcohol or drugs, negligent homicide, hit-and-run resulting in bodily injury or death, and more. Your rate increase is 340% for any of these offenses.
Factors that Impact Florida Insurance Rates
Florida risk differs because drivers must carry PIP coverage rather than liability coverage. Some factors that can impact your PIP policy rates in Florida include:
- Type of vehicle
- Driving record
Overall, Florida rates are high because of:
- Severe weather
- High repair costs
- High-risk drivers
- Expensive healthcare costs
- Many uninsured drivers
How a PIP Claim Impacts Policy Premiums in Florida
Florida policyholders should not see an increase in their PIP premiums for making a claim or have their policy canceled without a valid reason. Florida law requires insurance companies to act in good faith. They can only raise rates or cancel your policy under certain circumstances.
Rate Comparison Between Florida and North Carolina
On average, drivers in North Carolina pay less than Florida drivers. Florida has one of the highest averages in the country regarding insurance premiums. According to Compare.com, Florida has the fifth-highest car insurance rates nationwide. North Carolina’s annual premiums average $655 versus $1185 for a Florida policy. PIP fraud is one of the reasons rates are so high. It’s estimated that PIP fraud results in one billion dollars in losses for the state.
North Carolina is one of the cheapest states for insurance rates in the United States. Part of the reason is that North Carolina has a lot of rural areas, and the state caps insurance rates. The cap makes insurance companies fight for your business by offering enticing discounts. According to Wallet Hub, you might pay around $114 a month for a full coverage in policy in North Carolina while it would cost $267 in Florida.
If you are moving to Florida from North Carolina or vice versa, be sure you don’t have any coverage gap. Contact your current insurance company to advise them you are moving and ask what to do rather than risk breaking the law and finding yourself without coverage when you need it most.
At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.