'North Carolina Reinsurance Facility: What a Surcharge Letter, "Policy Ceded" and Recoupment Mean and What to Ask Your Agent'

A North Carolina Reinsurance Facility surcharge is a charge tied to the state's system for making auto liability insurance available to every eligible driver. Your insurer can cede eligible liability coverage to the Facility and still keeps servicing your policy and handling your claims, according to the North Carolina Reinsurance Facility (opens in a new tab). A bill can also carry a Facility recoupment surcharge, an inexperienced-operator factor or a driver-point surcharge, and each of these comes through the insurer's bill rather than from your agent. Find the surcharge's name, the period it covers, how it's calculated and the reason on your notice, ask the insurer or agent to explain each line, and contact the North Carolina Department of Insurance if the answer still doesn't add up.

What is the North Carolina Reinsurance Facility?

The North Carolina Motor Vehicle Reinsurance Facility is a nonprofit, unincorporated legal entity created by G.S. 58-37-5 (opens in a new tab). Every insurer that's licensed and actively writing motor vehicle insurance in North Carolina must belong to it. Its job is to make motor vehicle liability insurance available to eligible drivers and to spread the results of that business among the member insurers.

A Board of Governors runs the Facility. The North Carolina Rate Bureau (NCRB) maintains the automobile manuals and filings, and the North Carolina Department of Insurance (NCDOI) reviews filed rates and regulates insurers and agents, according to the NCRF (opens in a new tab).

Only certain coverages can go to the Facility: bodily injury and property damage liability, medical payments, uninsured motorist, and combined uninsured and underinsured motorist coverage. Physical damage coverage on your car, such as collision and comprehensive, isn't eligible for cession, according to the NCRF (opens in a new tab) and G.S. 58-37-35 (opens in a new tab).

Does "policy ceded" mean your insurer changed?

No. A policy is ceded when your insurer transfers eligible risk to the Facility under the approved plan of operation. Your insurer is still your insurer. It decides whether to keep an eligible risk or cede it, and when it doesn't keep the risk, it must follow the Facility's cession procedures under G.S. 58-37-45 (opens in a new tab). The insurer must give ceded business the same type of service it gives its other customers, under G.S. 58-37-25 (opens in a new tab).

You don't file a separate Facility application or take a separate step. You keep paying the premium and any surcharges through the insurer.

A ceded policy isn't automatically a sign of a bad driving record. An insurer can cede eligible business it chooses not to keep. What changes is what the insurer has to tell you. When the Facility rate is higher than the rate the insurer would normally charge if it kept the policy, G.S. 58-37-25 (opens in a new tab) requires the insurer to tell you:

• That your policy is ceded.
• That the coverage is written at the Facility rate, and what the rate difference is.
• The reason or reasons for the cession.
• That you can get the specific reason or reasons by asking the insurer in writing.
• That you can seek insurance from other insurers, who may choose not to cede your policy.

If you send a written request, the insurer must give you the specific reasons in writing. Separately, G.S. 58-36-45 (opens in a new tab) requires written notice at least 15 days before an insurer changes your premium rate, unless you asked for the change.

Which surcharge is on your bill?

Several different charges can show up on a North Carolina auto bill, and they have different causes. The first step is matching the line on the bill to the right type.

Facility recoupment. Recoupment recovers losses or rating differences tied to Facility business. G.S. 58-37-40 (opens in a new tab) lets the Facility recover them through assessments on member companies or surcharges on motor vehicle policies. It's a Facility charge that the insurer collects on its bill, and it isn't a fee your agent created.

Clean-risk recoupment. A clean risk is the owner of a nonfleet private passenger vehicle whose owner, principal operator and every licensed household operator have at least two years of licensed driving experience and no Safe Driver Incentive Plan (SDIP) points in the three years before the policy is applied for or renewed, under G.S. 58-37-35 (opens in a new tab). Facility rates for clean risks can't exceed the rates clean risks pay outside the Facility, and the difference between that rate and an actuarially sound rate can be recouped under G.S. 58-37-40 (opens in a new tab). That's why a driver with no accidents or tickets can still see a recoupment line. Older Facility papers call this the "Clean Risk Allocation" for past periods; current circulars use "Clean Risk Recoupment" or "Combined Recoupment."

Inexperienced-operator factor. This is a filed rating factor for drivers with limited licensed driving experience. It's a rating rule, not a Facility recoupment.

SDIP surcharge. Charges under the Safe Driver Incentive Plan come from points tied to convictions, accidents or other listed driving events. The SDIP is separate from a Facility recoupment surcharge, according to the NCRB's Rule 5 circular (opens in a new tab). Our article on North Carolina insurance points explains how points are charged.

Recoupment is figured on liability-related premium: bodily injury liability, property damage liability, medical payments, uninsured motorist and underinsured motorist coverage. It appears on the bill alongside the premium charges, even though it isn't treated as written premium for statutory purposes, according to the NCRF Standard Practice Manual (opens in a new tab). On a nonfleet private passenger policy, recoupment applies to every vehicle on the policy and must be billed to the exact cent. On a commercial auto policy, the insurer can apply it per vehicle or per policy and can round to the nearest dollar.

Is the charge tied to a new or teen driver?

It can be. When you add a teen to your policy, the teen may fall into the inexperienced-operator classification, and the exact charge depends on the filed rating factor, the policy's classification, which vehicle the teen is assigned to and the insurer's calculation.

The length of that classification depends on when the driver was first licensed, according to the NCRB's Rule 5 circular (opens in a new tab):

• Drivers first licensed before July 1, 2025 stay in the inexperienced-operator period until they reach three years of licensed driving experience.
• Drivers first licensed on or after July 1, 2025 stay in it until they reach eight years of licensed driving experience.

The longer period doesn't reach back to drivers licensed before July 1, 2025. For the newer group, the factors for the fourth through eighth years begin applying no earlier than July 1, 2028.

How long does a Facility recoupment surcharge last?

A recoupment surcharge generally runs for a 12-month period tied to the policy's effective date. If your policy runs longer than one year, the surcharge in effect at each anniversary applies to the following term, for no more than one year, according to the NCRF (opens in a new tab).

For private passenger policies effective October 1, 2025 through September 30, 2026, the combined clean-risk and loss recoupment surcharge was 8.03% before agent compensation, under circular RF-25-16 (opens in a new tab). For policies effective October 1, 2026 through September 30, 2027, circular RF-26-8 (opens in a new tab) sets the combined surcharge at 0.50% before agent compensation, which works out to 0.56% with the 10% agent compensation. Each period is listed in the NCRF circulars (opens in a new tab), and your insurer can tell you which percentage applies to your policy.

For commercial auto, circular RF-26-9 (opens in a new tab) sets a loss recoupment surcharge of 1.01% before agent compensation for policies effective October 1, 2026 through September 30, 2027. With the stated 10% agent compensation included, the total billed percentage is 1.12%.

Will changing insurers remove the surcharge?

Sometimes, but not automatically. The notice rules in G.S. 58-37-25 (opens in a new tab) say you can seek insurance from other insurers that may choose not to cede your policy. A new insurer can also cede the policy, and it applies its own filed rating rules.

The statute gives you one protection if you move quickly. If you get liability coverage from another insurer that doesn't cede your policy, and you cancel the ceded policy within 45 days of its effective date, the earned premium on the ceded policy is figured on a pro-rata basis. That pro-rata rule doesn't apply when a premium finance company cancels the policy. Line up the new policy before you cancel the old one so you don't create a gap. Our article on how to switch car insurance walks through the timing.

Other charges end on their own schedule. A charge tied to a defined effective period can end when that period ends, and a driver-rating factor follows the filed classification and experience rules. A driver-improvement course doesn't automatically remove a Facility surcharge; its effect depends on the SDIP or the insurer's rule, so ask before you count on it.

What happens if you don't pay the surcharge?

Your policy can be canceled. Policies may be canceled for nonpayment of the recoupment surcharge, according to the NCRF Standard Practice Manual (opens in a new tab). If you think a charge is wrong, pay the bill to keep the coverage in force while you ask the insurer for the calculation and, if needed, take it to NCDOI. A lapse in liability coverage brings its own problems with NCDMV, which our article on North Carolina car insurance requirements covers.

Will North Carolina auto insurance go up in 2026?

A North Carolina policy can cost more in 2026 for several separate reasons: a filed base-rate change, a driver's classification, the new inexperienced-operator factors, an SDIP charge, a Facility recoupment surcharge, or a change in the policy's vehicles, drivers, coverage or rating information.

These are the 2026 dates on file:

• Facility private passenger rates take effect October 1, 2026, according to the NCRF private passenger filings (opens in a new tab).
• Facility commercial auto rates took effect April 1, 2026, according to the NCRF commercial auto filings (opens in a new tab).
• The commercial auto loss recoupment surcharge is 1.01% before agent compensation for October 1, 2026 through September 30, 2027, under RF-26-9 (opens in a new tab).
• The NCRB lists a personal auto rate review filing dated April 1, 2026 in its personal auto circulars (opens in a new tab).

For policies effective from October 1, 2026, the private passenger recoupment is 0.50% before agent compensation under RF-26-8 (opens in a new tab); your insurer's billing materials show what applies to your policy. Our article on the average cost of car insurance in North Carolina covers premiums more broadly.

Is the Facility the same as an assigned-risk plan?

No. North Carolina's auto residual market is built around the Reinsurance Facility. A policy ceded to the Facility is issued and serviced by a member insurer, and the Facility reinsures the eligible risk behind it. An assigned-risk plan works differently: it generally assigns an applicant to a carrier through a plan administrator. The assigned-risk plan the NCRB runs is for workers' compensation, according to the NCRB (opens in a new tab).

Questions to ask your agent

Bring your renewal bill and declarations page, and ask:

• What is the exact name of this charge?
• Is it a Facility recoupment, a clean-risk charge, an inexperienced-operator factor, an SDIP surcharge or another filed rating item?
• Is my policy ceded, and if so, what is the specific reason?
• Which coverage premium is the charge calculated on?
• Does it apply to every vehicle or only one?
• What are the start and end dates, and does it change at renewal or at each policy anniversary?
• Is the amount shown before or after agent compensation?
• What change would end this charge under the rule that applies?
• If I look for another insurer, could that insurer also cede the policy?
• What happens if this charge isn't paid?
• Can you give me the explanation and the calculation in writing?
• What documents should I send NCDOI if I believe the charge is wrong?

Riskado's directory lists insurance agencies across the US, including North Carolina, by city and by category, if you want a second agency to look at the bill.

Where can you verify an agent or file a complaint?

To check an agent's license, use the North Carolina insurance license lookup (opens in a new tab) or NCDOI's insurance producer and adjuster licensing page (opens in a new tab), which has an individual license-status lookup by NPN. NCDOI Agent Services can be reached at 919-807-6800.

For a surcharge you can't resolve with the insurer, call NCDOI Consumer Services at 855-408-1212 or use the Department's consumer assistance and complaint process (opens in a new tab). Send the declarations page, the renewal bill, the surcharge notice, the policy number, the insurer's response and any written reason for cession.

The Facility itself is at 4140 Parklake Avenue, Suite 320, Raleigh, North Carolina 27612, and its phone number is 919-783-9790, according to the NCRF contact page (opens in a new tab).

Frequently asked questions

Does a ceded policy mean the Facility is my insurer?

No. The member insurer keeps servicing the policy and handles claims under it. The Facility reinsures the eligible liability risk behind the policy.

Can a driver with a clean record pay a Facility surcharge?

Yes. The private passenger combined recoupment applies to all nonfleet private passenger policies: 0.50% before agent compensation for policies effective October 1, 2026 through September 30, 2027 under RF-26-8 (opens in a new tab), after 8.03% for the year before, under RF-25-16 (opens in a new tab). It isn't a sign of an accident or ticket.

Does the Facility cover collision or comprehensive?

No. Physical damage coverage isn't eligible for cession. The Facility takes liability, medical payments, uninsured motorist and combined uninsured and underinsured motorist coverage, according to the NCRF (opens in a new tab).

Who decides whether my policy is ceded?

Your insurer does, under the Facility's rules in G.S. 58-37-45 (opens in a new tab). If the Facility rate is higher than its normal rate, it must tell you the policy is ceded and why.

Before you call

Gather the renewal bill and declarations page, circle each surcharge line, and write down the dates on the notice. Ask the insurer or agent to name each charge, show the calculation and put the reason for any cession in writing. If the explanation still doesn't match the bill, NCDOI Consumer Services can review it.