On the Property & Casualty exam, the personal automobile policy is tested through how a state regulates auto insurance—and North Carolina regulates it unlike almost anywhere else. Two North Carolina rules dominate: the state follows the strict pure contributory negligence fault doctrine, and its auto rates are filed by the North Carolina Rate Bureau, not the Department of Insurance. This guide gives you the national policy framework, then makes North Carolina law the centerpiece.

The standard policy framework (national base)

The personal automobile policy is divided into lettered parts so each protection is clearly labeled:

• Part A — Liability (bodily injury and property damage, plus the duty to defend).
• Part B — Medical Payments.
• Part C — Uninsured/Underinsured Motorists.
• Part D — Coverage for Damage to Your Auto (Collision; Other Than Collision).
• Part E — Duties After an Accident or Loss.
• Part F — General Provisions.

An insured includes the named insured, resident spouse, resident relatives, and permitted users of your covered auto. Liability is written as split limits (e.g., 50/100/50) or a Combined Single Limit (CSL). Physical damage pays Actual Cash Value (ACV). North Carolina keeps this structure but overlays its fault rule, mandatory coverages, and rate-filing system.

North Carolina is a pure contributory negligence state

This is the marquee North Carolina liability fact. North Carolina follows the strict, old-line pure contributory negligence doctrine: if the injured claimant is found even 1% at fault for the accident, they generally recover nothing from the other party. There is no proportional reduction as under "comparative" systems used by most states.

• North Carolina is one of only a handful of jurisdictions still using this rule—commonly listed as North Carolina, Alabama, Maryland, Virginia, and Washington, D.C.
• A narrow "last clear chance" doctrine can let a contributorily negligent claimant still recover if the defendant had the final opportunity to avoid the harm.
• Practical effect: North Carolina is a tort/at-fault state (not no-fault), and the harshness of contributory negligence makes liability limits, UM, and UIM especially important to a client.

For the exam, drill the contrast: comparative negligence reduces a recovery by the claimant's fault percentage; North Carolina's contributory negligence usually bars it entirely if the claimant is at all at fault.

Mandatory limits—raised in 2025

North Carolina is a compulsory liability state: owners must carry minimum bodily injury and property damage liability to register and drive. The exam-critical update is that these minimums were raised in 2025 for the first time in decades.

• New minimums: 50/100/50 — $50,000 bodily injury per person / $100,000 per accident / $50,000 property damage.
• Previous minimums: 30/60/25.
• Hedge on the exact date: the increase was originally written for January 1, 2025, then delayed to July 1, 2025; it applies to policies issued or renewed on or after the effective date. If the exam asks only for the figure, answer 50/100/50 (recent increase from 30/60/25).

Uninsured and underinsured motorists

North Carolina mandates Uninsured Motorist (UM) coverage on every auto liability policy, and requires Underinsured Motorist (UIM) once liability limits exceed the statutory minimum (a threshold tied to the minimum limits):

• UM is required at limits at least equal to the policy's liability limits (so a minimum-limits policy now carries UM matching 50/100).
• UIM becomes mandatory when the insured buys liability above the statutory minimum; below that, UIM may not attach.
• Recent law also addressed the old "set-off" so UIM benefits stack more favorably for the injured insured—verify specifics, but know UIM was strengthened alongside the 2025 limit increase.

Because North Carolina's contributory negligence rule can wipe out a claim against another driver, UM/UIM is the safety net and is a frequent test subject.

The Reinsurance Facility (high-risk auto)

North Carolina does not use a typical assigned-risk plan for hard-to-insure drivers. Instead it uses the North Carolina Reinsurance Facility:

• Every auto insurer must write applicants (no declining eligible drivers), but may cede high-risk policies to the Facility, which reinsures those risks and spreads the losses across all auto writers.
• This is why North Carolina advertises that essentially every licensed driver can get coverage.
• Don't confuse it with the Rate Bureau (which files the rates) or a guaranty association (which pays claims of insolvent insurers).

Physical damage and rate filing

• Collision covers impact/overturn regardless of fault; Other Than Collision (Comprehensive) covers fire, theft, vandalism, glass, flood, hail, falling objects, and animal strikes.
• Remember the classic line: hitting an animal is Other Than Collision (comprehensive), not collision.
• Auto rates are developed and filed by the North Carolina Rate Bureau and reviewed/approved by the Commissioner—so a rate question's correct actor is the Rate Bureau, not the NCDOI.

Key North Carolina numbers to memorize

Common exam traps

• Calling North Carolina a comparative-negligence state. It is pure contributory negligence—1% fault can bar the whole claim.
• Calling it no-fault. North Carolina is tort/at-fault; there is no PIP requirement.
• Using the old 30/60/25 minimums. The current answer is 50/100/50 (2025 increase).
• Saying the DOI sets the rates. Auto rates are filed by the Rate Bureau.
• Confusing the Reinsurance Facility with the Rate Bureau or a guaranty fund. Facility = high-risk reinsurance; Bureau = rate filings; Guaranty Association = insolvency claims.
• Treating UM/UIM as optional. UM is mandatory; UIM is mandatory above minimum limits.
• Classifying animal strikes as collision. They are comprehensive (OTC).

Quick recap

For the North Carolina P&C exam, the auto policy is the standard lettered-part PAP wrapped in two distinctive state rules. North Carolina follows pure contributory negligence, so a claimant who is even 1% at fault generally recovers nothing—one of only a few jurisdictions (with AL, MD, VA, DC) still doing this—making UM/UIM essential. It is a compulsory tort state whose minimum limits were raised in 2025 to 50/100/50 (from 30/60/25; effective date moved to July 1, 2025), with mandatory UM and UIM above the minimum. High-risk drivers are handled through the North Carolina Reinsurance Facility, and auto rates are filed by the North Carolina Rate Bureau and approved by the Commissioner—not set by the DOI. Anchor on "1% bars recovery, 50/100/50, Rate Bureau files the rate" and you own the hardest North Carolina auto questions.