The Tar Heel State began registering vehicles on July 1, 1909 and in 1957 adopted the compulsory insurance law which is commonly referred to as Financial Responsibility. This law requires that all automobiles registered in the state must be covered by a liability policy at all times in order to maintain registration; NC became one of the first states to adopt these laws. Policies must be issued by a company that is licensed and authorized to do business in the state and coverage must be maintained continuously; companies are required by law to notify the Division of Motor Vehicles (DMV) if a new policy has been issued or an existing policy has been cancelled.
According to North Carolina auto insurance laws, when the DMV is notified of a lapse or cancellation in coverage by an insurer they are required to send the motorist a Form FS 5-7 which will need to be responded to within 10 days of the date of the form. If a lapse has been falsely reported the individual will need to provide the correct information on the form and return it to the DMV. If an individual has had a break in coverage, they must “re-certify” by providing valid policy information and pay an assessed civil penalty within 10 days of the notice. As of July 1, 2008, the fees for a lapse is based on how many times an individual has had a lapse in the past three years; the fee for a first offense is $50, $100 for the second and $150 for subsequent lapses.
Failure to respond to the FS 5-7 can result in the individual losing their license plate for a period of 30 days which will then need to be restored following the 30 days. Individuals who need to restore their license plates will need to obtain a Form FS-1 from their insurer or agent to prove that they are currently insured, pay a restoration fee, and the assessed civil penalty; if a plate pickup order is issued there will be an additional $50 service fee.
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