NC DMV Insurance and Financial Responsibility 2 — Questions and Answers
Question 1: Under North Carolina law, liability insurance used to register a vehicle must be issued by an insurance company that is:
- Licensed to do business in North Carolina (Correct answer)
- Headquartered in North Carolina
- Approved by your county tax office
- Rated A or higher by a rating agency
Correct answer: Licensed to do business in North Carolina
North Carolina only accepts liability policies written by insurers licensed to operate in the state.
Question 2: What happens if you let your North Carolina liability insurance lapse while your vehicle is still registered?
- The DMV may revoke your license plate and charge a civil penalty (Correct answer)
- Nothing, as long as you do not drive the vehicle
- Your driver license is automatically suspended for one year
- You are only penalized if you cause a crash
Correct answer: The DMV may revoke your license plate and charge a civil penalty
A coverage lapse on a registered vehicle triggers a civil penalty and possible 30-day plate revocation.
Question 3: When the NC DMV mails you a notice that your insurance company reported a coverage termination, how many days do you have to respond?
- 10 days (Correct answer)
- 3 days
- 30 days
- 60 days
Correct answer: 10 days
You must respond to a liability insurance termination notice within 10 days to avoid plate revocation.
Question 4: Which scenario satisfies North Carolina's continuous liability insurance requirement?
- Keeping the policy active the entire time the vehicle is registered, even when it is parked (Correct answer)
- Buying insurance only for the months you plan to drive
- Insuring the vehicle only after it passes inspection
- Carrying insurance only when driving outside your home county
Correct answer: Keeping the policy active the entire time the vehicle is registered, even when it is parked
NC requires continuous coverage for the entire registration period, regardless of whether the vehicle is driven.
Question 5: A driver sells insurance-covered Car A and cancels the policy, but forgets that Car A's plate is still active with the DMV. What should the driver have done?
- Surrendered the plate to the DMV before or when canceling the insurance (Correct answer)
- Nothing, since the car was sold
- Mailed the plate to the new owner
- Kept the insurance active for one more year
Correct answer: Surrendered the plate to the DMV before or when canceling the insurance
Turning in the plate before canceling coverage prevents a reported lapse and civil penalty.
Question 6: In North Carolina, uninsured motorist coverage in a standard auto liability policy is:
- Required as part of the policy (Correct answer)
- Optional and rarely offered
- Only required for commercial vehicles
- Only required for drivers under 21
Correct answer: Required as part of the policy
North Carolina requires uninsured motorist coverage to be included with liability policies.
Question 7: Which document does a new North Carolina driver license applicant typically use to prove they have liability insurance?
- Form DL-123 from their insurance provider (Correct answer)
- Form FS-1 from the county clerk
- A notarized letter from their employer
- A copy of their vehicle title
Correct answer: Form DL-123 from their insurance provider
The DL-123 is the insurance certification form used when applying for a North Carolina license.
NC DMV Insurance and Financial Responsibility 2
Under North Carolina law, liability insurance used to register a vehicle must be issued by an insurance company that is: