N.C. Gen. Stat. » Chapter 20
NC General Statutes

N.C. Gen. Stat. § 20-309 (2026)

Financial responsibility prerequisite to registration; must be maintained throughout registration period

✓ current as of July 2026
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(a) No motor vehicle shall be registered in this State unless the owner at the time of registration provides proof of financial responsibility for the operation of such motor vehicle, as provided in this Article. The owner of each motor vehicle registered in this State shall maintain financial responsibility continuously throughout the period of registration. For purposes of this Article, the term "motor vehicle" includes mopeds, as that term is defined in G.S. 20-4.01.

(a1) An owner of a commercial motor vehicle, as defined in G.S. 20-4.01(3d), shall have financial responsibility for the operation of the motor vehicle in an amount equal to that required for for-hire carriers transporting nonhazardous property in interstate or foreign commerce in 49 C.F.R. § 387.9.

(a2) Notwithstanding any other provision of this Chapter, an owner's policy of liability insurance issued to a foster parent or parents, which policy includes an endorsement excluding coverage for one or more foster children residing in the foster parent's or parents' household, may be certified as proof of financial responsibility, provided that each foster child for whom coverage is excluded is insured in an amount equal to or greater than the minimum limits required by G.S. 20-279.21 under some other owner's policy of liability insurance or a named nonowner's policy of liability insurance. The North Carolina Rate Bureau shall establish, with the approval of the Commissioner of Insurance, a named driver exclusion endorsement or endorsements for foster children as described herein.

(a3) (Effective July 1, 2026) No person subject to an inexperienced operator premium surcharge pursuant to G.S. 58-36-65(k) shall operate a motor vehicle unless the liability insurance policy benefiting that person includes any required premium surcharge. This subsection shall not apply to persons who demonstrate financial responsibility in an authorized manner other than a liability insurance policy.

(b) Financial responsibility shall be a liability insurance policy or a financial security bond or a financial security deposit or by qualification as a self-insurer, as these terms are defined and described in Article 9A, Chapter 20 of the General Statutes of North Carolina, as amended.

(c) When it is certified that financial responsibility is a liability insurance policy, the Commissioner of Motor Vehicles may require that the owner produce records to prove the fact of such insurance, and failure to produce such records shall be prima facie evidence that no financial responsibility exists with regard to the vehicle concerned. It shall be the duty of insurance companies, upon request of the Division, to verify the accuracy of any owner's certification.

(c1) The proof of insurance required to demonstrate financial responsibility under subsection (c) of this section may be satisfied by producing records of insurance in either physical or electronic format. Acceptable electronic formats include display of electronic images on a mobile phone or other portable electronic device produced through an application or website of the insurer.

(d) When liability insurance with regard to any motor vehicle is terminated by cancellation or failure to renew, or the owner's financial responsibility for the operation of any motor vehicle is otherwise terminated, the owner shall forthwith surrender the registration certificate and plates of the vehicle to the Division of Motor Vehicles unless financial responsibility is maintained in some other manner in compliance with this Article.

(e) Repealed by Session Laws 2006-213, s. 5, effective July 1, 2008, and applicable to lapses occurring on or after that date.

(f) The Commissioner shall administer and enforce the provisions of this Article and may make rules and regulations necessary for its administration and shall provide for hearings upon request of persons aggrieved by orders or acts of the Commissioner under the provisions of this Article.

(g) Repealed by Session Laws 2007-484, s. 7(a), effective July 1, 2008, and applicable to lapses occurring on or after that date.

(h) Recodified as G.S. 20-311(g) by Session Laws 2007-484, s. 7(d), effective July 1, 2008, and applicable to lapses occurring on or after that date.  (1957, c. 1393, s. 1; 1959, c. 1277, s. 1; 1963, c. 964, s. 1; 1965, c. 272; c. 1136, ss. 1, 2; 1967, c. 822, ss. 1, 2; c. 857, ss. 1, 2; 1971, c. 477, ss. 1, 2; c. 924; 1975, c. 302; c. 348, ss. 1-3; c. 716, s. 5; 1979, 2nd Sess., c. 1279, s. 1; 1981, c. 690, s. 25; 1983, c. 761, s. 146; 1983 (Reg. Sess., 1984), c. 1069, ss. 1, 2; 1985, c. 666, s. 84; 1991, c. 402, s. 1; 1999-330, s. 4; 1999-452, s. 20; 2000-140, s. 100(a); 2000-155, s. 20; 2005-276, s. 6.37(p); 2006-213, s. 5; 2006-264, s. 38; 2007-484, ss. 7(a), (d); 2009-550, s. 4; 2015-125, s. 3; 2015-135, s. 4.3; 2015-146, s. 4; 2025-25, s. 29(5); 2025-45, s. 8(b).)

 

§ 20-309.1:  Repealed by Session Laws 1993 (Reg.  Sess., 1994), c. 761, s. 28.

 

Notes of Decisions
Cited in 43 cases (3 in the last 5 years), 1960–2026 · leading case: Allstate Ins. v. McCrae, 384 S.E.2d 1 (N.C. 1989).
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Allstate Ins. v. McCrae, 384 S.E.2d 1 (N.C. 1989). · cites it 26× “This interpretation is bolstered by the title to the chapter enacting the civil penalty: “AN ACT TO REWRITE G.S. 20-309(E) TO PROVIDE FOR NOTICE OF TERMINATION RATHER THAN INTENT TO TERMINATE BY CARRIERS OF MOTOR VEHICLE LIABILITY INSURANCE COVERAGE AND PENALTY FOR NONCOMPLIANCE.”
North Carolina Sch. Boards Ass'n v. Moore, 585 S.E.2d 418 (N.C. Ct. App. 2003). · cites it 22× “Defendants except to the trial court's ruling that these payments belong to the public schools, contending instead that N.C. Gen.Stat. § 20-309 is remedial in nature and that the payments authorized thereunder are thus not subject to Article IX, Section 7.”
Odum v. Nationwide Mut. Ins., 401 S.E.2d 87 (N.C. Ct. App. 1991). · cites it 6× “Chapter 20 represents a complete and comprehensive legislative scheme for the regulation of motor vehicles and, as such, its insurance provisions regarding automobiles prevail over the more general insurance regulations of Chapter 58.”
Corn v. Precision Contracting, Inc., 226 F. Supp. 2d 780 (W.D.N.C. 2002). · cites it 8× “The only dispute between the parties is whether the 1999 amendment to N.C. Gen.Stat. § 20-309 which increased the minimum amount of insurance coverage for commercial carriers applies to this insurance contract.”
Lowe v. Tarble, 323 S.E.2d 19 (N.C. 1984). · cites it 4× “Defendants contend that section 24-5 fails to meet that standard because it is not clear whether the phrase "claims covered by liability insurance" in the statute includes claims under uninsured motorist coverage, claims for which, despite policy violations by insureds, the…”
Pearson v. Nationwide Mut. Ins., 382 S.E.2d 745 (N.C. 1989). · cites it 3× “In Cotten the statute at issue, N.C.G.S. § 20-309(e), required the insurer to notify the Department of Motor Vehicles “immediately” upon termination of an insured’s policy.”
Nationwide Mut. Ins. Co. v. Cotten, 185 S.E.2d 182 (N.C. 1971). · cites it 7× “G.S. 20-309 (e), which is part of The Vehicle Financial Responsibility Act of 1957, prior to the amendment of 1971, which has no effect upon this action, provided: “(e) No insurance policy provided [sic] in subsection (d) [i.”
State v. Sullivan, 687 S.E.2d 504 (N.C. Ct. App. 2009). · cites it 4× “The methods of demonstrating financial responsibility are contained in N.C. Gen. Stat. § 20-309 (b): “Financial responsibility shall be a liability insurance policy or a financial security bond or a financial security deposit or by qualification as a self-insurer, as these terms…”
Harrelson Ex Rel. Randolph v. State Farm Mut. Auto. Ins., 158 S.E.2d 812 (N.C. 1968). · cites it 3× “G.S. 20-309 et seq. The court below concluded that (1) the defendant did not cancel the policy prior to the accident, and (2) the defendant did not have the right to cancel such policy.”
Nationwide Mut. Ins. Co. v. Davis, 171 S.E.2d 601 (N.C. Ct. App. 1970). · cites it 4× “By amendment effective 1 October 1963, this provision became the portion of G.S. 20-309 (e) quoted above and it now provides that a liability insurance policy issued pursuant to The Vehicle Financial Responsibility Act of 1957 may not be cancelled or terminated by an insurer…”
In Re a Filing by the North Carolina Auto. Rate Admin. Off., 180 S.E.2d 155 (N.C. 1971). · cites it 3× “Mize testified that the figures showing the effect of the proposed increases were based on the old manual rates or policy limits of 5/10/5 despite the fact a policy written or renewed after January 1, 1968, was required to have minimum limits of 10/20/5 to serve as proof of…”
Hendrickson v. Lee, 459 S.E.2d 275 (N.C. Ct. App. 1995). · cites it 2× “Under N.C. Gen. Stat. § 20-309 (1993), financial responsibility as provided in Article 9A of Chapter 20 of our General Statutes — i.”
Show all 43 citing cases →
— N.C. Gen. Stat. § 20-309(E) — 1 case
Allstate Ins. v. McCrae, 384 S.E.2d 1 (N.C. 1989). “This interpretation is bolstered by the title to the chapter enacting the civil penalty: “AN ACT TO REWRITE G.S. 20-309(E) TO PROVIDE FOR NOTICE OF TERMINATION RATHER THAN INTENT TO TERMINATE BY CARRIERS OF MOTOR VEHICLE LIABILITY INSURANCE COVERAGE AND PENALTY FOR NONCOMPLIANCE.”
— N.C. Gen. Stat. § 20-309(a) — 4 cases
Odum v. Nationwide Mut. Ins., 401 S.E.2d 87 (N.C. Ct. App. 1991). “Chapter 20 represents a complete and comprehensive legislative scheme for the regulation of motor vehicles and, as such, its insurance provisions regarding automobiles prevail over the more general insurance regulations of Chapter 58.”
Corn v. Precision Contracting, Inc., 226 F. Supp. 2d 780 (W.D.N.C. 2002). “The only dispute between the parties is whether the 1999 amendment to N.C. Gen.Stat. § 20-309 which increased the minimum amount of insurance coverage for commercial carriers applies to this insurance contract.”
Nc Farm Bureau Mut. Ins. Co. v. Simpson, 678 S.E.2d 753 (N.C. Ct. App. 2009).
Farm Bureau Mut. Ins. Co. v. Armwood, 638 S.E.2d 922 (N.C. Ct. App. 2007).
— N.C. Gen. Stat. § 20-309(a1) — 2 cases
Nc Farm Bureau Mut. Ins. Co. v. Simpson, 678 S.E.2d 753 (N.C. Ct. App. 2009).
Farm Bureau Mut. Ins. Co. v. Armwood, 638 S.E.2d 922 (N.C. Ct. App. 2007).
— N.C. Gen. Stat. § 20-309(al) — 1 case
Corn v. Precision Contracting, Inc., 226 F. Supp. 2d 780 (W.D.N.C. 2002). “The only dispute between the parties is whether the 1999 amendment to N.C. Gen.Stat. § 20-309 which increased the minimum amount of insurance coverage for commercial carriers applies to this insurance contract.”
— N.C. Gen. Stat. § 20-309(b) — 5 cases
Odum v. Nationwide Mut. Ins., 401 S.E.2d 87 (N.C. Ct. App. 1991). “Chapter 20 represents a complete and comprehensive legislative scheme for the regulation of motor vehicles and, as such, its insurance provisions regarding automobiles prevail over the more general insurance regulations of Chapter 58.”
Griffin v. Hartford Accident & Indem. Co., 141 S.E.2d 300 (N.C. 1965).
N.C. Farm Bureau Mut. Ins. Co. v. Dana (N.C. 2021).
N.C. Farm Bureau Mut. Ins. Co., Inc. v. Dana (N.C. 2021).
Farm Bureau Mut. Ins. Co. v. Armwood, 638 S.E.2d 922 (N.C. Ct. App. 2007).
— N.C. Gen. Stat. § 20-309(e) — 11 cases
Allstate Ins. v. McCrae, 384 S.E.2d 1 (N.C. 1989). “This interpretation is bolstered by the title to the chapter enacting the civil penalty: “AN ACT TO REWRITE G.S. 20-309(E) TO PROVIDE FOR NOTICE OF TERMINATION RATHER THAN INTENT TO TERMINATE BY CARRIERS OF MOTOR VEHICLE LIABILITY INSURANCE COVERAGE AND PENALTY FOR NONCOMPLIANCE.”
North Carolina Sch. Boards Ass'n v. Moore, 585 S.E.2d 418 (N.C. Ct. App. 2003). “Defendants except to the trial court's ruling that these payments belong to the public schools, contending instead that N.C. Gen.Stat. § 20-309 is remedial in nature and that the payments authorized thereunder are thus not subject to Article IX, Section 7.”
Pearson v. Nationwide Mut. Ins., 382 S.E.2d 745 (N.C. 1989). “In Cotten the statute at issue, N.C.G.S. § 20-309(e), required the insurer to notify the Department of Motor Vehicles “immediately” upon termination of an insured’s policy.”
Harrelson Ex Rel. Randolph v. State Farm Mut. Auto. Ins., 158 S.E.2d 812 (N.C. 1968). “G.S. 20-309 et seq. The court below concluded that (1) the defendant did not cancel the policy prior to the accident, and (2) the defendant did not have the right to cancel such policy.”
Nationwide Mut. Ins. Co. v. Davis, 171 S.E.2d 601 (N.C. Ct. App. 1970). “By amendment effective 1 October 1963, this provision became the portion of G.S. 20-309 (e) quoted above and it now provides that a liability insurance policy issued pursuant to The Vehicle Financial Responsibility Act of 1957 may not be cancelled or terminated by an insurer…”
— N.C. Gen. Stat. § 20-309(f) — 1 case
Allstate Ins. v. McCrae, 384 S.E.2d 1 (N.C. 1989). “This interpretation is bolstered by the title to the chapter enacting the civil penalty: “AN ACT TO REWRITE G.S. 20-309(E) TO PROVIDE FOR NOTICE OF TERMINATION RATHER THAN INTENT TO TERMINATE BY CARRIERS OF MOTOR VEHICLE LIABILITY INSURANCE COVERAGE AND PENALTY FOR NONCOMPLIANCE.”
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