NORTH CAROLINA GENERAL ASSEMBLY

1971 SESSION

 

 

CHAPTER 1205

HOUSE BILL 1198

 

 

AN ACT TO AMEND ARTICLE 9A OF CHAPTER 20 OF THE GENERAL STATUTES RELATING TO SECURITY REQUIREMENTS FOR THE OPERATION OF MOTOR VEHICLES IN THIS STATE.

 

The General Assembly of North Carolina enacts:

 

Section 1.  G.S. 20-279.1(11) is hereby amended by rewriting this subdivision to read as follows:

"(11)    'Proof of financial responsibility': Proof of ability to respond in damages for liability, on account of accidents occurring subsequent to the effective date of said proof, arising out of the ownership, maintenance or use of a motor vehicle, in the amount of ten thousand dollars ($10,000) because of bodily injury to or death of one person in any one accident, and, subject to said limit for one person, in the amount of twenty thousand dollars ($20,000) because of bodily injury to or death of two or more persons in any one accident, and in the amount of five thousand dollars ($5,000) because of injury to or destruction of property of others in any one accident. Nothing contained herein shall prevent an insurer and an insured from entering into a contract, not affecting third parties, providing for a deductible as to property damage at a rate approved by the Commissioner of Insurance.

Sec. 2.  G.S. 279-21(b)(3) is hereby amended by deleting certain paragraphs from this subdivision which read as follows:

"No insurer may cancel, refuse to renew or reduce the coverage under any automobile liability insurance policy because an insured under such policy has made a claim in good faith under the uninsured motorist endorsement of such policy.

Where an insured's policy has been cancelled, or the insurer has failed to renew following a claim made by the insured under the uninsured motorist's endorsement, the insurer upon the written request of the insured shall furnish such insured with the reason or reasons why it has cancelled or failed to renew such policy. Such information furnished by the insurer to the insured shall be privileged, and shall not subject the insurer to liability for libel, slander or other defamation."

Sec. 3.  G.S. 20-279.34 is hereby amended by rewriting this section to read as follows:

"§ 20-279.34.  North Carolina Automobile Insurance Plan. — The Commissioner of Insurance shall develop a revised assigned risk plan to be denominated 'The North Carolina Automobile Insurance Plan' as follows:

(1)        The Commissioner of Insurance, after consultation with representatives of the insurance carriers licensed to write motor vehicle liability insurance in this State, shall consider such reasonable plans and procedures for providing the coverage and coverage limits as specified in subdivision (4) of this section as such insurance carriers may submit to him for the equitable apportionment among such insurance carriers of those applicants for motor vehicle liability insurance on motor vehicles registered or principally garaged in this State who are unable to secure such insurance through ordinary means. Such plans and procedures shall further provide for a reasonable method of allowing each insurance carrier a credit due to writing coverage limits in excess of those required to meet the minimum requirements for a motor vehicle liability policy as defined by G.S. 20‑279.21.

(2)        Upon approval by the Commissioner of Insurance of any such plans and procedures thus submitted, all insurance carriers licensed to write motor vehicle liability insurance in this State, as a prerequisite to further engaging in writing such insurance in this State, shall formally subscribe to, and participate in, such plans and procedures so submitted.

(3)        In the event the Commissioner of Insurance, in the exercise of his discretion, does not approve any plan so submitted, or should no such plan be submitted, then the Commissioner of Insurance shall formulate and put into effect reasonable plans and procedures providing coverage and coverage limits as specified in subdivision (4) of this section for the apportionment among such insurance carriers of all such applications for motor vehicle liability insurance on motor vehicles registered or principally garaged in this State submitted to him in accordance with the provisions of this section by persons desiring coverage pursuant to the provisions of this section. Such plans and procedures shall further provide for a reasonable method of allowing each insurance carrier a credit due to writing coverage limits in excess of those required to meet the minimum requirements for a motor vehicle liability policy as defined by G.S. 20-279.21.

(4)        Should no such plan be submitted by the insurance carriers and approved by the Commissioner of Insurance, then as a prerequisite to further engaging in the selling of motor vehicle liability insurance in this State, every insurance carrier licensed to write motor vehicle liability insurance in this State shall formally subscribe to and participate in the plans and procedures formulated by the Commissioner of Insurance as provided by subdivision (3) of this section, and every such insurance carrier shall accept any and all risks on motor vehicles registered or principally garaged in this State assigned to it by the Commissioner of Insurance under such plan and shall upon payment of a proper premium issue a policy covering the same, such policy to meet the minimum requirements for a motor vehicle liability policy as defined by G.S. 20-279.21, and at the option of the applicant, coverage and coverage limits may be obtained through the assigned risk plan of up to but not more than twenty-five thousand dollars ($25,000) because of bodily injury to or death of one person in any one accident, and subject to said limit for one person, to limits of up to but not more than fifty thousand dollars ($50,000) because of bodily injury to or death of two or more persons in any one accident and up to but not more than a limit of ten thousand dollars ($10,000), without any deductible therefrom, because of injury to or destruction of property of others in any one accident. In addition, at the option of the applicant, at a coverage limit not to exceed five hundred dollars ($500.00) insurance coverage for the payment of medical expenses shall be available under the plan to the same extent and manner and subject to the same conditions and exclusions as such insurance coverage is being currently written voluntarily outside the plan as a part of insurance policies affording the coverages required by G.S. 20-279.21.

In addition, at the option of the applicant, uninsured motorist coverage as defined in G.S. 20-279.21

(5)        Any such assigned risk plan adopted or approved by the Commissioner shall provide that every person who has been unable to obtain a motor vehicle liability insurance policy through ordinary methods or every person who desires to obtain coverage under the provisions of this section on motor vehicles registered or principally garaged in this State shall have the right to apply to the Commissioner of Insurance or the person designated under the plan to have his risk assigned to an insurance carrier licensed to write, and writing motor vehicle liability insurance in this State, and the insurance carrier shall issue a motor vehicle liability policy which will meet the minimum requirements for a motor vehicle liability policy defined by G.S. 20-279.21 and at the option of the applicant provides additional coverage and coverage limits as specified in this section. In such instance where application is made to the Commissioner of Insurance or the person designated under the plan, to have a risk assigned to an insurance carrier, it shall be deemed that the applicant desires coverage under this section, and the Commissioner of Insurance or the person designated under the plan shall upon receipt of such application immediately assign the risk to an insurance carrier, which carrier shall be required, as a prerequisite to the further engaging in selling motor vehicle liability insurance in this State, to issue a motor vehicle liability policy which will meet at least the minimum requirements for a motor vehicle liability policy as defined by G.S. 20‑279.21, and at the option of the applicant provides additional coverage and coverage limits as specified in this section.

Any such assigned risk plan adopted or approved by the Commission shall establish reasonable plans and procedures for decreasing the number of persons obtaining insurance through the North Carolina Automobile Insurance Plan by an equitable method of allowing credit as business written through the Plan for business composed of persons insured through the Plan, which such carriers will write voluntarily outside the Plan.

(6)        The Commissioner of Insurance shall establish, or cause to be established, such rate classifications, rating schedules, rates, rules and regulations to be used by insurance carriers issuing assigned risk motor vehicle liability policies in accordance with this Article as appear to him to be proper; provided the Commissioner of Insurance is authorized but not required to establish rates for assigned risk liability policies which are higher than approved manual rates; and in the case of assigned risk policies issued in excess of the minimum limits the Commissioner may establish higher rates or a surcharge adequate to cover the costs of underwriting such excess limits. In the establishment of rate classification, rating schedules, rates, rules and regulations, the Commissioner of Insurance shall be guided by such principles and practices as have been established under his statutory authority to regulate motor vehicle liability insurance rates, and he may act in conformity with his statutory discretionary authority in such matters, and may in his discretion assign to the North Carolina automobile rate administrative office, or other State bureau or agency any of the administrative duties imposed upon him by this Article.

(7)        The Commissioner of Insurance or the person designated in the plan adopted or approved by the Commissioner is empowered, after reviewing all information pertaining to the applicant or policyholder available from the records of the Department of Motor Vehicles and after determining that the applicant's license to operate a motor vehicle has been suspended and continues to be suspended or has been revoked and the revocation remains in effect:

a.         To refuse to assign an application;

b.         To approve the rejection of an application by an insurance carrier;

c.         To approve the cancellation of any motor vehicle liability insurance policy written through the plan by an insurance carrier; or

d.         To refuse to approve the renewal or the reassignment of an expiring policy.

Otherwise, nonrenewal or cancellation of insurance under the provisions of this section shall be exercised only in the event of nonpayment of premiums.

(8)        The Commissioner of Insurance shall not be held liable for any act, or omission, in connection with the administration of the duties imposed upon him by the provisions of this Article, except upon proof of actual malfeasance.

(9)        The provisions of this section relevant to assignment of risks shall be available to nonresidents who desire to obtain motor vehicle liability insurance with respect only to motor vehicles registered and principally garaged in this State.

(10)      The provisions of this section shall apply to vehicles operated by a county or municipality as an ambulance service or as a rescue squad, and the assigned risk plan shall provide for the assignment of policies on such vehicles."

Sec. 4.  G.S. 20-310 is hereby amended by deleting the present wording of this section and substituting in lieu thereof the following words:

"§ 20-310.  Grounds and procedure for cancellation or nonrenewal of a motor vehicle liability insurance policy; review by Insurance Commissioner. — (a) As used in this section the following definitions shall apply:

(1)        'Policy of automobile insurance' or 'policy' means a policy or contract for bodily injury or property damage liability insurance delivered or issued for delivery in this State covering liability arising from the ownership, maintenance or use of any motor vehicle, insuring as the named insured one individual or husband and wife residents of the same household, and under which the insured vehicle therein designated is of the following type only:

a.         A four-wheeled automobile or station wagon that is not used as a public or livery conveyance (which terms shall not be construed to include car pools) nor rented to others;

b.         Any other four-wheeled motor vehicle with a load capacity of 1500 pounds or less which is not used in the occupation, profession or business of the insured, nor is used as a public or livery conveyance nor rented to others;

'Policy of automobile insurance' or 'policy' shall not apply to any policy issued under the North Carolina Automobile Insurance Plan or to any policy insuring more than four motor vehicles, or to any policy covering the operation of a garage, sales agency, repair shop, service station, or public parking place or to any policy providing insurance only on an excess basis, or to any other contract providing insurance to such named insured even though such contract may incidentally provide insurance with respect to such motor vehicles.

(2)        'Renewal' or 'to renew' means the issuance and delivery by an insurer of a policy superseding at the end of the policy period a policy previously issued and delivered by the same insurer through the agent who originally placed the policy or his successors or assigns, such renewal policy to provide types and limits of coverage at least equal to those contained in the policy being superseded, or the maximum limits of coverage provided for under G.S. 20‑279.34(4), whichever is less, or the issuance and delivery of a certificate or notice extending the term of a policy beyond its policy period or term with types and limits of coverage at least equal to those contained in the policy being extended or the maximum limits of coverage provided for under G.S. 20-279.34(4), whichever is less; provided, however, that any policy with a policy period or term of less than 12 months or any period with no fixed expiration date shall for the purpose of this section be considered as if written for successive policy periods or terms of six months.

(3)        'Insurer' means any insurance company, association or exchange authorized to transact the business of automobile insurance in the State of North Carolina.

(b)        This section shall apply only to that portion of a policy of automobile insurance providing bodily injury and property damage liability, and uninsured motorists coverage.

(c)        No insurer shall cancel or refuse to renew a policy of automobile insurance solely or primarily because of the age, sex, residence, race, color, creed, national origin, ancestry, marital status or lawful occupation (including the military service) of anyone who is insured or solely because another insurer cancelled a policy of automobile insurance or refused to write or renew such policy or solely because of any combination of the hereinabove mentioned factors.

(d)        No insurer shall cancel a policy of automobile insurance except for the following reasons:

(1)        The named insured fails to discharge when due any of his obligations in connection with the payment of premium for the policy or any installment thereof, whether payable to the company or its agent either directly or indirectly under any premium finance plan or extension of credit.

(2)        The named insured or any other operator who resides in the same household and customarily operates an automobile insured under such policy has had his driver's license suspended or revoked for more than 31 days after the effective date of the policy if said policy had been in effect less than one year or after the last anniversary of the effective date if the policy had been in effect longer than one year.

(3)        The named insured or any other operator who resides in the same household and customarily operates an automobile insured under such policy during such policy period is finally convicted of operating a motor vehicle while under the influence of intoxicating liquor or of any impairing drug.

(e)        No insurer shall refuse to renew a policy of automobile insurance except for one or more of the following reasons:

(1)        The insured has violated any of the material terms or conditions of the policy.

(2)        The named insured or any other operator who resides in the same household and customarily operates an automobile insured under such policy has had his driver's license suspended or revoked for more than 31 days after the effective date of the policy if said policy had been in effect less than one year or after the last anniversary of the effective date if the policy had been in effect longer than one year; or is or becomes subject to any physical or mental condition which impairs his ability to operate a motor vehicle.

(3)        The named insured or any other operator who resides in the same household and customarily operates an automobile insured under such policy is finally convicted of, pleads nolo contendere or forfeits bail during the policy period for any of the following:

a.         Any felony involving the use of a motor vehicle.

b.         Homicide, arising out of the operation of a motor vehicle.

c.         Operating a motor vehicle while under the influence of intoxicating liquor or of any impairing drug.

d.         Leaving the scene of a motor vehicle accident in which the insured is involved without identifying himself and furnishing his address as required by law.

e.         Theft of a motor vehicle or the unlawful taking of a motor vehicle.

f.          A second moving traffic violation by any one person who customarily operates the insured vehicle or an aggregate of four moving traffic violations by all persons customarily operating the insured vehicle within a 12 month period any part of which falls within the policy period, whether or not the violations were repetitions of the same offense or were different offenses.

(4)        The named insured fails to discharge when due any of his obligations in connection with the payment of premium for the policy or any installment thereof, whether payable to the company or its agent either directly or indirectly under any premium finance plan or extension of credit.

(5)        The named insured, or any other operator who resides in his household and who customarily operates an automobile insured under said policy within a 24 month period any part of which falls within the policy period, have been involved as an operator of an automobile in four or more automobile accidents where there is evidence to indicate fault on the part of such operator.

(f)         No cancellation or refusal to renew by an insurer of a policy of automobile insurance shall be effective unless the insurer shall have given the policyholder notice at his last known post office address by certificate of mailing a written notice of the cancellation or refusal to renew. Such notice shall:

(1)        Be approved as to form by the Insurance Commissioner prior to use;

(2)        State the date, not less than 60 days after mailing to the insured of notice of cancellation or notice of intention not to renew, on which such cancellation or refusal to renew shall become effective, except that such effective date may be 15 days from the date of mailing or delivery when it is being cancelled or not renewed for the reasons set forth in subdivision (1) of subsection (d) and in subdivision (4) of subsection (e) of this section;

(3)        State the specific reason or reasons of the insurer for cancellation or refusal to renew;

(4)        Advise the insured of his right to request in writing, within ten days of the receipt of the notice, that the Insurance Commissioner review the action of the insurer; and the insured's right to request in writing, within ten days of receipt of the notice, a hearing before the Insurance Commissioner;

(5)        Either in the notice or in an accompanying statement advise the insured of his possible eligibility for insurance through the North Carolina Automobile Insurance Plan; and that operation of a motor vehicle without complying with the provisions of this Article is a misdemeanor and specifying the penalties for such violation.

(g)        Nothing in this section shall apply:

(1)        If the insurer has manifested its willingness to renew by issuing or offering to issue a renewal policy, certificate or other evidence of renewal, or has manifested such intention by any other means;

(2)        If the named insured has notified in writing the insurer or its agent that he wishes the policy to be cancelled or that he does not wish the policy to be renewed;

(3)        To any policy of automobile insurance which has been in in effect less than 60 days, unless it is a renewal policy, or to any policy which has been written or written and renewed for a consecutive period of 48 months or longer.

(h)        There shall be no liability on the part of and no cause of action of any nature shall arise against any insurer, its authorized representative, its agents, its employees, or any firm, person or corporation furnishing to the insurer information as to reasons for cancellation or refusal to renew for any statement made by any of them in complying with this section or for the providing of information pertaining thereto except as provided by this section and any applicable federal law.

(i)         Notwithstanding any provision herein contained, any insured may within ten days of the receipt of the notice of cancellation or notice of intention not to renew, or the receipt of the reason or reasons for cancellation or refusal to renew if they were not stated in the notice, be entitled to request in writing that the Insurance Commissioner review the action of an insurer in cancelling or refusing to renew the policy of such insured. Within said ten day period the insured may also request in writing a hearing in regard to such review; otherwise, the right of the insured for a hearing shall be deemed waived. On receiving a request in writing for a review of the action of such insurer, the Insurance Commissioner shall immediately notify the insurer involved of the insured's request and the charges involved, if known, and on receipt of said notification and within ten days thereafter the insurer may make a request in writing for a hearing in regard to such review; otherwise, the right of the insurer to such a hearing shall be deemed waived. If neither the insurer or the insured by request in writing or the Insurance Commissioner of his own motion requires a hearing, then in such event the Insurance Commissioner shall make such investigation as he deems appropriate to determine if the insurer has violated the provisions of this section, and shall after appropriate findings of fact either approve the cancellation or nonrenewal of such policy or order the insurer ro renew, reissue, or reinstate such policy on such terms as may be just. At the written request of the insured or insurer or on his own motion, the Insurance Commissioner shall after notice conduct a hearing to determine if the insurer has violated the provisions of this section, and after appropriate findings of fact, shall within 40 days after receipt in writing of a request for review by the insured, either approve the cancellation or nonrenewal of such policy or order the insurer to renew, reissue, or reinstate such policy on such terms as may be just. In addition, if the Insurance Commissioner finds after notice and hearing and after appropriate findings of fact, that the insurer has willfully violated the provisions of this section or has acted without reasonable investigation into the grounds for action of cancellation or nonrenewal, he may order the insurer involved to pay the reasonable expenses and costs of the investigation and hearing conducted by the Commissioner not to exceed the sum of three hundred dollars ($300.00) and such costs as are ordered paid by the Commissioner pursuant to the provisions of this section shall be paid as a condition of such insurer continuing to write automobile insurance business in this State. Any insured or insurer aggrieved by any order or decision of the Insurance Commissioner may appeal said order and decision to the Superior Court of Wake County pursuant to and subject to the provisions of G.S. 58-9.3. All examinations, investigations, and hearings provided by this subsection may be conducted by the Commissioner personally or by one or more of his deputies, actuaries, examiners or employees designated by him for the purpose. All hearings shall be held at such time and place as shall be designated in a notice which shall be given by the Commissioner in writing to the person cited to appear at least ten days before the date designated thereon. The notice shall state the subject of the inquiry and the specific charges, if any. It shall be sufficient to give such notice either by delivering it or by depositing the same in the United States mail, postage prepaid and addressed to the last known address of such insured or insurer. The policy shall remain in full force and effect during the pendency of review by the Insurance Commissioner or the Court except where the Insurance Commissioner has sustained the action of the insurer and except where the cancellation or failure to renew was for nonpayment under subdivision (1) of subsection (d) and subdivision (4) of subsection (e) of this section, in which case the policy shall terminate as of the date provided in the notice under subsection (f) of this section.

(j)         If any provision of this section or application thereof to any person or situation is held invalid, such invalidity shall not affect other provisions or applications of the section which can be given effect without the invalid provision or application, and to this end the provisions of this section are declared to be severable.

(k)        Each insurer shall maintain for a period of three years records of refusals to renew and cancellations and shall, on request, forward to the Insurance Commissioner copies of every notice or statement referred to in subsection (e) of this section which it shall at any time send to any of its insureds.

(l)         The provisions of this section shall not apply to any insurer who shall limit the issuance of policies of automobile liability insurance to one class or group of persons engaged in any one particular profession, trade, occupation or business nor shall any insurer be required to renew should the insured become a nonresident of North Carolina."

Sec. 5.  G.S. 58-248.8 is hereby amended by rewriting this section to read as follows:

"§ 58-248.8.  Rates to distinguish between safe and nonsafe drivers. — (a) The Commissioner of Insurance, in the manner prescribed by Article 25 of Subchapter V of Chapter 58 of the General Statutes, is directed to establish a Safe Driver Reward Plan which adequately and factually distinguishes between classes of drivers having safe-driving records and those having a record of chargeable accidents, a record of convictions of major traffic violations; a record of a series of minor traffic violations; or a combination thereof; and which plan will provide for automobile property damage and bodily injury insurance premium differentials between such classes of drivers.

(b)        The Commissioner of Insurance is empowered and directed to maintain a Safe Driver Reward Plan which will balance the additional premium realized from surcharges assessed against drivers having other than safe driving records with discounts allowed to those drivers having safe driver records.

(c)        Whenever any policy issued pursuant to the provisions of G.S. 20-279.21 loses the safe driver discount provided by the plan adopted pursuant to this section, or the same is surcharged due to an accumulation of points under the Safe Driver Reward Plan, the insurer shall, prior to the billing for additional premium or simultaneously therewith, inform the named insured of the surcharge or loss of discount by mailing to such insured a notice which shall state a valid basis for the surcharge or loss of discount, and which shall advise that upon receipt of a written request from the named insured it will promptly mail to the named insured a statement of the amount of increased premium attributable to the surcharge or loss of discount. Such explanation shall be privileged, and shall not constitute grounds for any cause of action against the insurer or its representatives or any firm, person, or corporation who furnishes to the insurer the information upon which its reasons are based."

Sec. 6.  Sections 1 and 2 of this act shall become effective on January 1, 1972.

Section 3 of this act shall become effective on January 1, 1972, but shall apply only to insurance policies written or renewed after said date. The present provisions of G.S. 20‑279.34 and the plan adopted pursuant thereto shall apply to all insurance policies written or renewed under the North Carolina Automobile Assigned Risk Plan prior to January 1, 1972.

Section 4 of this act shall become effective on January 1, 1972, but shall apply only to insurance policies written or renewed after said date. The present provisions of G.S. 20-310 shall apply to all insurance policies written or renewed prior to January 1, 1972.

Section 5 of this act shall become effective upon ratification.

In the General Assembly read three times and ratified, this the 21st day of July, 1971.