RALEIGH — Beginning Tuesday, July 1, the penalties charged to vehicle owners who habitually drop liability insurance coverage will increase.

The new law, passed by the General Assembly in 2007, will affect vehicle owners who have numerous insurance lapses within a three-year period. This is the first change in the insurance lapse penalty of $50 since 1957.

The new rates will be $50 for no previous lapses within three years, $100 for one previous lapse within three years, and $150 for two or more previous lapses within three years.

North Carolina law requires drivers to have liability coverage on all registered vehicles. Insurance companies are required to notify the N.C. Division of Motor Vehicles within 20 business days after they issue a new or replacement policy, terminate a policy or reinstate a policy. DMV then sends a letter to the vehicle owner requiring their response within 10 days.

Resulting actions are based on the vehicle owner’s response and their record of accidents and financial responsibility. Owners may face a combination of penalties or revocation of vehicle registration.

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