Your auto liability coverage protects other people from you. Uninsured and underinsured motorist coverage (UM and UIM) protects you and your family from everybody else. In North Carolina, both are built into your auto policy by law, and the amount you carry is tied directly to the liability limits you pick. Most people never look at these lines on their declarations page until they need them.
Here’s what each one does, how the limits work, and what changed in 2025.
What UM Coverage Pays For
Uninsured motorist coverage steps in when you are hurt by a driver who has no insurance, or by a hit-and-run driver. Under G.S. 20-279.21(b)(3), any auto policy with bodily injury liability issued in North Carolina has to include it for people insured under the policy who are legally entitled to recover damages from an uninsured or hit-and-run driver.
UM in North Carolina has two parts:
- UM bodily injury: injuries, including death, caused by an uninsured or hit-and-run driver.
- UM property damage: damage to your property caused by an uninsured driver. The statute applies an exclusion of the first $100 for each insured, so expect to absorb that piece yourself.
What UIM Coverage Pays For
Underinsured motorist coverage is for the driver who has insurance, just not enough of it. Under G.S. 20-279.21(b)(4), a vehicle counts as underinsured when the total of all bodily injury liability limits that apply to it is less than the total damages the injured person suffered.
That definition matters. It is based on your actual damages, not on a comparison between their limits and yours. If someone carrying the state minimum puts you in the hospital and your bills, lost wages and other damages run past their limits, UIM is the coverage that picks up from there, up to your UIM limit.
The State Minimum Is Not Much Protection
For policies issued or renewed on or after July 1, 2025, the North Carolina minimum liability limits are 50/100/50: $50,000 per person for bodily injury, $100,000 per accident for bodily injury, and $50,000 for property damage. That was raised from 30/60/25.
It’s an improvement. But $50,000 per person does not go far after a serious wreck with surgery, rehab and months out of work. Every driver on the road carrying the minimum is a driver whose insurance can run out before your damages do. That gap is exactly what UIM is for.
How Your UM and UIM Limits Are Set
The statute ties your UM and UIM limits to your own liability coverage. Here’s how it works:
- The default: your UM and UIM bodily injury limits equal the highest bodily injury liability limits on any one vehicle on your policy, capped at $1,000,000 per person and $1,000,000 per accident.
- You can choose different limits: the named insured can buy greater or lesser limits. UM bodily injury can’t go below the state minimum liability limits.
- UIM matches UM: your UIM bodily injury limits have to equal the UM bodily injury limits you buy.
- UM property damage follows your property damage liability limit, capped at $1,000,000 per accident.
Your insurer is also required to give you notice about this coverage when the policy is issued and when it renews. That notice is easy to skip past. Don’t.
The practical takeaway: if you carry low liability limits to save money, you are also cutting the coverage that protects your own family. Raising your liability limits raises your UM and UIM protection right along with it.
What Changed on July 1, 2025
Two changes made UIM coverage worth more than it used to be.
No More Setoff
UIM coverage is no longer reduced by a setoff for what the at-fault driver’s insurance pays (there is a narrow workers’ comp exception). Under the old rules, the at-fault driver’s payment was subtracted from your UIM limit, which meant a lot of people paid for UIM they could barely use.
For example, say the at-fault driver carries $50,000 per person, you carry $100,000 per person in UIM, and your damages are $150,000. Under the old setoff approach, your $100,000 of UIM would have been reduced by the $50,000 the other insurer paid, leaving $50,000 available. Without the setoff, the full $100,000 of UIM can be available on top of what the at-fault driver’s policy pays. Your actual recovery depends on your policy language and the facts of the claim.
Multiple Policies Stack
Multiple UIM policies that apply to the same injured person stack. If more than one policy covers you, the UIM limits can add together instead of only the largest one counting.
How Much UM and UIM Should You Carry?
There’s no single right number, but here’s the blunt version:
- Start with your liability limits. Because UM and UIM follow them by default, the real question is usually how much liability to carry. If you own a home, have savings, or have a good income to protect, the state minimum is too low on both sides.
- Think about who rides with you. UM and UIM protect people insured under your policy. If you are driving kids, a spouse or carpool passengers, that’s more people who could be hurt in the same wreck. Per-accident limits matter.
- Check your health and disability coverage. Health insurance may pay the medical bills, but it won’t replace lost income or cover pain and suffering. UIM can.
- Look at the price before you cut it. Ask what UM and UIM actually cost on your policy before lowering them to save money. Compare that number to what you’d be giving up if someone with minimum limits hits you.
What to Do Next
Pull out your auto declarations page and find three lines: bodily injury liability, uninsured motorist, and underinsured motorist. If they read 50/100, you are carrying the state minimum. If you have an umbrella policy, check how it treats UM and UIM, since that varies by carrier.
We’ll go through your current limits, show you what higher limits cost with the carriers we represent, and let you decide. Call Safenet Insurance Group at (336) 280-4606, or request a quote online.
Related Coverage
- Auto Insurance: liability, UM/UIM, collision and comprehensive for North Carolina drivers.
- Umbrella Insurance: extra liability protection above your auto and home policies.
- Homeowners Insurance: protect the home and assets your liability limits are guarding.
- Commercial Auto Insurance: coverage for vehicles your business owns or uses.