The Tar Heel State implemented the Financial Responsibility law in 1957 which requires all motorists to be financially responsible for bodily injuries and property damage that they may cause as a result of a traffic accident. The Financial Responsibility Act of 1957 was developed to protect residents and ensure that there will be compensation in place should they suffer injuries or losses following a collision where another driver is found to be at fault.
The most common method used to comply with the state’s laws is to purchase a North Carolina car insurance policy consisting of at least the minimum liability limits required by law. All liability policies must contain limits of $30,000 for bodily injury for one person, $60,000 for bodily injury for two or more people and $25,000 for property damage; this is the minimum and higher limits may be purchased for an additional premium to protect assets in the event that compensation due to the other party exceeds these amounts. In addition, as of January 1, 2009, the state also requires motorists to purchase Uninsured and Underinsured Motorist coverage in amounts no lower than the bodily injury liability limits of the insured’s policy.
Motor vehicles are required to have an active policy covering them at all times and penalties can be assessed for failing to comply. North Carolina law mandates every auto insurance company to notify the Division of Motor Vehicles if a policy has been cancelled; they are also required to notify the DMV of the issuance of new policies. If the Division of Motor Vehicles receives a notice that a vehicle’s coverage has lapsed they will then send a Form FS 5-7 Notice to the automobile owner which will then need to be returned to the DMV within 10 days.
Individuals who have received a Form FS 5-7 and have not had a lapse in coverage will simply need to enter their correct insurance information onto the form and return it within the ten days from the date the notice was sent. Motorists who have had a break in coverage will need to re-certify with correct policy information and submit a civil penalty within the 10 days in order to keep their license plates. The civil penalty varies dependent on the number of prior violations; a first lapse will result in a fine of $50, the penalty for a second lapse will be $100 and subsequent lapses will end of penalties of $150.
According to the North Carolina Division of Motor Vehicles failure to respond to the Form FS 5-7 can result in the loss of license plates for 30 days and to regain license plates the owner will have to provide proof of coverage Form FS-1, a restoration fee for the assessed civil penalty, a $50 service fee and a license plate fee. With all that in mind it may just be worth it to stay insured and avoid not having the ability to operate a vehicle for 30 days and having to go through the hassle of relicensing.
Source: http://www.onlineautoinsurance.com/north-carolina/
