AN ACT to Revise the law regarding the mandatory use of child passenger restraint systems and to add arbitration requirements for uninsured and underinsured motor vehicle liability policies.

The General Assembly of North Carolina enacts:

SECTION 1.(a)  G.S. 20‑137.1 reads as rewritten:

§ 20‑137.1.  Child restraint systems required.

(a)        Every driver who is transporting one or more passengers of less than 16 years of age shall have all such passengers properly secured in a child passenger restraint system or seat belt which meets federal standards applicable at the time of its manufacture. For purposes of this section, a child passenger restraint system means any device designed to restrain or position a child in a motor vehicle, including a booster seat.

(a1)      A child less than eight years of age and less than 80 pounds in weight 57 inches in height shall be properly secured in a weight‑appropriate height and weight appropriate child passenger restraint system. In vehicles equipped with an active passenger‑side front air bag, if the vehicle has a rear seat, a child less than five years of age and less than 40 pounds in weight shall be properly secured in a rear seat, unless the child restraint system is designed for use with air bags. If system as follows:

(1)        Beginning as a newborn, a child shall be properly secured in a rear‑facing child passenger restraint system with transition to a forward‑facing system according to the manufacturer's instructions related to the child's height and weight requirements for use of the system as indicated by the federally required label on the car seat which states those requirements.

(2)        The child shall be properly secured in a child passenger restraint system in a rear seat of a vehicle and may only be positioned in the front seat of a vehicle if one of the following exceptions applies:

a.         The vehicle does not have a rear seat. However, under no circumstances shall a child be placed in the front seat of a vehicle that has an active front air bag using a rear‑facing child passenger restraint system. When height and weight requirements for use of a child passenger restraint system require the seat to be rear‑facing, the seat must be secured in a vehicle with a rear seat.

b.         The vehicle is not equipped with an active passenger‑side front air bag.

c.         The child passenger restraint system is designed for use with front air bags when used according to the manufacturer's instructions as indicated by the federally required label on the car seat.

(a2)      A driver may satisfy the requirements of this section by properly securing a child passenger with a seat belt as follows:

(1)        Notwithstanding subsection (a1) of this section, if no seating position equipped with a lap and shoulder belt to properly secure the weight‑appropriate child passenger restraint system is available, a child less than eight years of age and between at least 40 and 80 pounds may be restrained by a properly fitted lap belt only.

(2)        A child who is at least eight years of age or 57 inches in height may be restrained by a properly secured lap and shoulder belt. For purposes of this subdivision, a lap and shoulder belt are properly secured if, when fastened, all of the following apply:

a.         The lap belt fits across the child's thighs and hips and not across the child's abdomen.

b.         The shoulder belt crosses the child's body diagonally at approximately the mid‑point of the child's shoulder and the center of the child's chest.

c.         The child is able to sit with the child's back straight against the vehicle's seat back cushion and with the child's knees bent over the vehicle's seat edge without slouching.

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SECTION 1.(b)  This section becomes effective December 1, 2026, and applies to offenses committed on or after that date.

SECTION 2.(a)  G.S. 20‑279.21 reads as rewritten:

§ 20‑279.21.  Motor vehicle liability policy defined.

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(f)        Every motor vehicle liability policy shall be subject to the following provisions which need not be contained therein:

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(5)        For any uninsured or underinsured claim under a policy, if the insured and the insurer do not agree whether the insured is legally entitled to recover compensatory damages from the owner of an uninsured or underinsured motor vehicle or the amount of compensatory damages, then the insured may demand to settle these disputes by arbitration.

a.         If an insured files a lawsuit against the insurer or the owner or operator of an uninsured or underinsured vehicle seeking damages that are subject to a claim for uninsured or underinsured motorist coverage under the policy, the insured shall have the right to demand arbitration only if both of the following apply:

1.         The suit is filed within the time limit required by the law of the state where the accident occurred for filing a lawsuit against the owner or operator of the uninsured or underinsured motor vehicle for the damages arising out of the accident.

2.         The insured gives the insurer a written demand for arbitration within 30 days after the filing of the lawsuit.

b.         For underinsured motorist claims, the insured shall provide the insurer notice of the arbitration demand within 30 days after the latest of the following:

1.         The date the insurer advances payment to the insured in an amount equal to a tentative settlement between the insured and the owner or operator of the underinsured motor vehicle.

2.         The date any applicable liability bonds or policies have been exhausted by payments of judgments or settlements.

3.         The filing of a lawsuit pursuant to sub‑subdivision a. of this subdivision.

c.         Unless the insured and insurer agree on a different procedure, the following procedures shall be used for all arbitrations under this subdivision:

1.         Each party will select a competent arbitrator. The two selected arbitrators will select a third competent and disinterested arbitrator.

2.         If the third arbitrator is not selected within 30 days, the insured or insurer may request a judge of a court of record to name one. The court must be in the county and state in which arbitration is pending.

3.         Each party will pay its chosen arbitrator and half of all other expenses of arbitration. Fees to lawyers and expert witnesses are not considered arbitration expenses and are to be paid by the hiring party.

4.         Unless the insured and insurer agree otherwise, arbitration will occur in the county and state where the insured resides. Arbitration will be subject to the rules of procedure and evidence in the county and state. The arbitrators will resolve the issues. A written decision on which two arbitrators agree is binding on the insured and insurer.

5.         Judgment upon award may be entered in any proper court.

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SECTION 2.(b)  This section is effective when it becomes law and applies to any claim for uninsured motorist coverage or underinsured motorist coverage that is pending and has not been finally adjudicated or settled as of that date.

SECTION 3.  Except as otherwise provided, this act is effective when it becomes law.