138 terms

NC P&C State Section

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16 Insurance is a ________ regulated industry
Insurance is a state regulated industry
16 The Department of Insurance is part of which branch of our state government?
The Department is part of the executive
branch of our state government.
16 The Department of Insurance is granted the authority to
promulgate (put into effect by public pronouncement) rules and regulations that producing agents and their companies must follow.
16 The Department of Insurance can
conduct hearings and levy administrative penalties such as fines and license revocation
16 Two words that surface frequently in this section are
notice and hearing. These two words assure you of due process under the law.
16 Contract of Insurance (58-1-10)
An insurance policy is a contract. North Carolina defines a contract of insurance as an agreement by which the company is bound to pay money or its equivalent, or indemnify the insured for the destruction, loss or injury of something in which the insured has an interest.
16 Compliance and Penalties (58-33-5 and 58-33-26)
You cannot legally transact the business of insurance in the state of North Carolina without being in compliance with the laws, rules and regulations of this state. While most violations of insurance law carry a specific penalty, any willful violation can be considered a Class 1 misdemeanor (now we're talking about a real judge).
16 Lying to the Company (58-2-161)
Any person who attempts to defraud a company or an insurance claimant either directly or by conspiring with and aiding another person is guilty of a Class H felony. Each claim will be considered to be a separate count. If it can be demonstrated that the defendant has engaged in a pattern of violations of this section, the court may award treble damages.
16 COMMISSIONER OF INSURANCE (58-2-5)
The chief officer of the North Carolina Department of Insurance is the Commissioner of Insurance, or the Insurance Commissioner. The Commissioner is elected by the people of the state at the general election for state officials. The Commissioner's term of office begins on January 1 in the year after the election, and lasts for four years.
16 Powers and Duties of the Commissioner (58-2-40)
• Manage the Department of Insurance
• Enforce the insurance laws, rules and regulations of North Carolina
• Faithfully execute the duties required by law
• Make rules and regulations as needed to carry out the insurance laws of North Carolina
• Adopt rules governing the solicitation of proxies relating to the capital stock or other equity securities of any domestic stock insurance company
• Prescribe the required forms for report statements from companies, associations, orders or bureaus
• Receive and examine all financial statements required by law
• Administer, or authorize a deputy to administer, all oaths required in the discharge of the Commissioner's official duties
• At the request of any North Carolina citizen, provide a statement or synopsis of the provisions of any insurance contract
• Compile and make available to the public lists of rates charged and explanations of coverages that are provided by insurers in connection
with policies of real property and automobile insurance
• Report in detail to the Attorney General any violations of insurance laws; the Commissioner may begin civil action or criminal prosecution with the Attorney General or a designated attorney for such violations.
16 Examinations and Investigations (58-2-50, 60, 69, 70, 155, 200)
The Commissioner may personally conduct examinations, hearings, and investigations provided for by law or may designate one or more deputies, investigators, actuaries, examiners or employees for the purpose. If the Commissioner or his staff feels there is evidence of criminal violation, he may arrest the suspected violator. A person under investigation who refuses to produce requested documentation or makes false statements during the investigation will be subject to license suspension or revocation.
The Commissioner may also go to court for a restraining order or injunction to stop any violation.
Any time a licensed agent is convicted in court or pleads guilty to a violation of insurance law, his or her license is automatically suspended. If you are convicted in court of any offense other than a motor vehicle infraction, you have to notify the Commissioner of the conviction in writing within 10 days.
The Commissioner also has authority to, in addition to suspending or revoking a license, impose a fine of $100 to $1,000 for each day a violation continues. He or she may also order restitution for any harm done.
16 Reporting to the Commissioner (58-2-160, 163, 180, 11 NCAC 19.0103)
An employee, agent or designee of the Commissioner making an investigation of fraudulent insurance transactions and acting without actual malice is not subject to civil liability for slander or libel. The Commissioner, of course, is not subject to civil liability for libel or slander during the investigation or publishing of the official report if not acting with actual malice.
The Commissioner may request any person to furnish information relative to the investigation. The person will release the information requested and fully cooperate with the Commissioner.
Any person who willfully misstates information is subject to a fine of $2000 to $10,000.
Each Company and Agent will keep an itemized log of every complaint listing the Department's file number, the name and policy number of the insured, the nature of the complaint and department involved, and the final disposition of the complaint. The records must be maintained for 5 years.
16 OBTAINING A LICENSE
Licensing Definitions (58-33-10) Agent
a person licensed to solicit applications for insurance
16 OBTAINING A LICENSE
Licensing Definitions (58-33-10) Adjuster
means a person who investigates claims arising from an insurance
contract other than life or annuity.
16 OBTAINING A LICENSE
Licensing Definitions (58-33-10) Broker
a person who is licensed and procures insurance for someone
through a licensed agent of an authorized company.
16 OBTAINING A LICENSE
Licensing Definitions (58-33-10) Business entity
a corporation, association, partnership, limited liability
company or partnership. Business entity does not mean a sole proprietorship.
16 OBTAINING A LICENSE
Licensing Definitions (58-33-10) FINRA
the Financial Industry Regulatory Authority or successor entity.
16 OBTAINING A LICENSE
Licensing Definitions (58-33-10) Insurance Producer
a person required to be licensed to sell insurance.
Producer includes an agent, broker and limited representative.
16 OBTAINING A LICENSE
Licensing Definitions (58-33-10) Limited Line Credit insurance includes
mortgage life, mortgage guaranty, mortgage disability, automobile dealer gap insurance and any other form of insurance the Commissioner determines should be designated a form of Limited Line Credit insurance.
16 OBTAINING A LICENSE
Licensing Definitions (58-33-10) Motor Vehicle Damage Appraiser
an individual who investigates the nature and amount of damage to motor vehicles in North Carolina and is not an adjuster, an agent for an insurance company or an attorney not required to be licensed as an adjuster.
16 OBTAINING A LICENSE
Licensing Definitions (58-33-10) Solicit
attempting to sell insurance. It does not mean a referral to a licensed insurance Agent or Broker that does not include a discussion of specific insurance policy terms and conditions.
16 Lines of Authority (58-33-26)
You may not sell, solicit or negotiate for any line of insurance unless you are licensed for that line. Likewise, a company may not accept applications from an unlicensed person. Since January 1, 2008, a North Carolina agent may be licensed in any one or more of the following lines: Life-Health Lines; Property-Casualty Lines; Other Lines
16 Life Insurance
coverage on human lives, including endowment and annuities; may include benefits for accidental death or dismemberment
and disability income.
16 Accident and Health or Sickness Insurance
— coverage for sickness, bodily injury or accidental death; may provide benefits for disability income.
16 Medicare Supplement/Long-Term Care Insurance
— a supplement to an existing Accident and Health or Sickness license.
16 Variable Life/Variable Annuity Products
— No separate exam is required, but agent must hold a current North Carolina Life license and be registered with the NASD to sell variable products.
16 Property Insurance
— coverage for the direct or indirect loss or damage to property of every kind.
16 Casualty Insurance
— coverage against legal liability for death, bodily injury, disability, or property damage.
16 Personal Lines
Property and Casualty insurance coverage sold to individuals and families for primarily noncommercial purposes.
16 Auto Physical Damage Agent
coverage for collision and other types of damage to automobiles
16 Other Lines - Surplus Lines Agent
— a person licensed to place insurance on risks located or to be performed in North Carolina with non-admitted insurers eligible to accept such insurance.
16 Other Lines - Adjuster
an individual who is paid to investigate and report on claims arising under insurance contracts other than life or annuity.
16 Other Lines Crop Hail Adjuster
Crop Hail Adjuster
16 Restricted License for Overseas Military Agents (58-33-15)
You may be licensed by the Commissioner as a foreign military sales agent to represent a domestic Life insurance company provided you represent the insurance company only in a foreign country and either on a United States military installation or with United States military personnel.
16 Limited License for Rental Car Companies (58-33-17)
The Commissioner may issue a Limited license authorizing a rental car company to act as an Agent in the sale of insurance in connection with the rental of vehicles and only with respect to the following kinds of insurance:
• Excess liability insurance that provides coverage in excess of the standard liability limits provided by the rental car company.
• Accident and Health insurance the provides coverage for accidental death or dismemberment and for medical expenses resulting from an accident that occurs during the rental period.
• Personal effects insurance that provides coverage for the loss of, or damage to, personal effects that occurs during the rental period.

The rental period of the rental agreement may not exceed 30 consecutive days. Brochures must be readily available explaining the terms of coverage and the name of the insurance company offering the insurance. There must be disclosure that the policy being offered may provide a duplication of coverage already provided by the renter's personal auto policy. Purchase of the offered policy may not be a requirement for car rental. The claims process must also be explained.
No Limited licensee may claim to be a licensed insurance Agent or Broker.
16 Acting Without A License 958-3-130, 58-33-82, 1200
If anyone, without a valid license, would pretend to be an agent, broker, or any kind of insurance representative in order to handle any kind of insurance transaction, at the very least he or she would be guilty of a Class 1 misdemeanor.
You or any company cannot pay a commission or other compensation (including anything of "valuable consideration") to a person selling insurance who is not licensed as an agent. This does not prohibit paying renewal commissions to agents who were at one time properly licensed.
16 Representing an Unauthorized Insurer (58-33-95)
Anyone who transacts any kind of insurance business in North Carolina for an unauthorized insurer is personally liable for any losses or unpaid claims, and is subject to civil action. If you did not know the insurer was unauthorized, you are still guilty of a Class 1 misdemeanor; if you did know, it's a Class H felony for each offense. Don't do it.
16 Resident Agent License Requirements (58-33-30h(1) and 58-33-31)
To get a North Carolina resident insurance agent's license, you must first of all be a resident of the state of North Carolina, and not hold or apply for a resident insurance license in any other state. You must apply to the Commissioner on the Uniform application, declaring under penalty of refusal, revocation or suspension that your affirmations are true and complete. You must then satisfy all of the following requirements:
• Be at least 18 years of age
• Demonstrate that you are competent, trustworthy, and financially responsible
• Have not willfully violated the insurance laws of North Carolina or any other state
• Complete an approved pre-licensing education course
• Pass the appropriate written examination
• Pay the required fees
Any licensed agent who ceases to be a resident must surrender his or her license to the Commissioner in person or by mail within 30 days.
The Commissioner will notify every appointing company and the Central Office of the NAIC about any surrender of a license, along with any license suspension, revocation or non-renewal.
The Commissioner may issue a duplicate license for any lost, stolen or destroyed license with a written
16 Pre-licensing Course (58-33-35, 132)
Before taking the licensing exam, you must have a completed Examination Admission Ticket certifying that you have completed and passed an approved insurance pre-licensing education course of 20 hours (10 hours for Medicare Supplement/Long-Term Care license). The ticket must be validated by the school. An applicant for both Life and Health licenses or Property and Casualty licenses would need to have 40 hours of approved pre-licensing education.
All course providers, presenters and instructors must be qualified and possess a license from the Commissioner or administrator. The Commissioner or administrator may suspend or terminate the authority if the course presentation
is determined to be inaccurate or receives an evaluation of poor from any Department monitor and a majority of attendees responding to Department questionnaires about the presentation.
16 Licensing Examination
To obtain a resident license, you must pass a written exam demonstrating your knowledge of the material relevant to that license. An Examination Admission Ticket is valid for only 90 days from the date of course completion, or a maximum of five examination attempts, whichever comes first. If you do not pass the exam within 90 days of the date of course completion, or during five attempts during the 90 days, you must again complete a course at an approved school before you can retake the licensing exam. If you fail to show up for a scheduled exam or fail to pass the exam, you must pay all the required fees to schedule another exam.
People who hold the following insurance designations are exempt from the resident agent licensing exams as well as from the corresponding pre-licensing education requirements.
16 Licensing Examination- Life Agent
Exam Exemptions - LUTCF, ChFC, FLMI or CLU
16 Licensing Examination - Accident and Health or Sickness Agent
Exam Exemptions - None
16 Licensing Examination - Property Agent
Exam Exemptions - CPCU
16 Licensing Examination - Casualty Agent
Exam Exemptions - CPCU
16 Licensing Examination
Exam Exemptions - CPCU
16 Licensing Examination - Personal Lines
Exam Exemptions - CPCU
16 Licensing Examination - Auto Physical Damage Agent
Exam Exemptions - CPCU
16 Licensing Examination - Title Agent
Exam Exemptions - Attorneys who are in good standing and are compensated only by salary
16 Licensing Examination - Surplus Lines Agent (must hold Property and Casualty agent licenses)
Exam Exemptions - None
16 Licensing Examination - Medicare Supplement/Long-Term Care Agent (must hold current Health, Accident and Sickness license)
Exam Exemptions - None
16 Fees (58-33-125)
Fees for a temporary license will be the same as a regular license. The fee paid for the temporary license will be credited against the fee required for an appointment by the sponsoring company.
A fee of $50 will be paid to the Commissioner for each person requiring a license.
This fee will be paid for licensing for each additional kind of insurance.
All fees are nonrefundable.
16 Licensed Agents Transferring to North Carolina
Suppose an agent licensed in Iowa is moving to North Carolina. He or she wants a North Carolina resident license, but you can't hold a resident license in more than one state. The agent will simply surrender the Iowa license and apply for a North Carolina resident license. As long as the agent is in good standing in Iowa and applies within 90 days of surrendering the Iowa license, he or she may get the equivalent North Carolina license without taking the pre-licensing course or taking the North Carolina exam.
16 Non-Resident Licenses (58-33-30h(2))
Now suppose an agent licensed in South Carolina has an office in Myrtle Beach and wants to occasionally come across the state line to write business in North Carolina. Obviously, he or she wants to maintain the South Carolina resident license, but North Carolina requires a license to do business here. Assuming the agent passed a licensing exam in South Carolina, North Carolina will recognize that; there's no need to take the North Carolina pre-license course or exam. All that needs to be done is:
• Complete the Uniform Application and pay the fees
• Provide satisfactory evidence that the agent is in good standing in South Carolina.
16 "Get Even" Laws — Reciprocity (58-33-30i, j, 32, 60)
In the two situations discussed above, North Carolina law made it relatively easy for an Iowa agent to transfer here and for a South Carolina agent to do business here ... no class, no exam. However, this assumes reciprocity between the states.
If Iowa passed a law saying that agents transferring into Iowa had to take a 100- hour pre-licensing course and score 95% on their licensing exam, the North Carolina response would be "Same to you, bud." North Carolina law provides for retaliation. In essence, we play fair only with the states that play fair with us. In most times, all 50 states have reciprocity with one another.
There will be no requirement that a licensed resident agent must countersign a policy on behalf of a nonresident agent or share in commissions.
16 Business Entity (Agency) License (58-33-26(j) and 58-33-31(b))
An agency that sells, solicits, or negotiates insurance must be licensed. The agency must apply using the Uniform Business Entity Application. Every member of the partnership and every officer, director, stockholder, and employee of the agency personally engaged in selling insurance must have an individual license. The agency must designate a licensed individual as compliance officer.
The license will expire on April 1 of each year unless the business entity pays the renewal fee.
16 Temporary License (58-33-66)
The Commissioner can issue a temporary license in any circumstances where he or she deems it is in the public interest. Two typical circumstances in which the Commissioner will issue a temporary license are:
1) Disruption of an existing business
2) Entering military service
16 Temporary License (58-33-66)
1) Disruption of an existing business
1) Disruption of an existing business - Suppose Bobby Talley operates the Talley Agency with only himself as a licensed producer. If Bobby dies or becomes disabled, his 800 clients are left without a producer. In this situation, the Commissioner can issue a temporary license to Bobby's wife, next of kin, personal representative or designee to operate the
business and continue serving Bobby's clients. The license is good for 180 days and can be renewed once in the event of Bobby's continued disability.
Normally, one of three things will happen:
• Bobby will recover
• The agency will be sold
• The temporary agent will obtain a North Carolina resident license and
take over the agency. In all three events, the temporary license would than be surrendered. Naturally, the Commissioner may impose any limitations on the temporary license necessary to protect the public. For example, the Commissioner might restrict the temporary license to doing business with Bobby Talley's existing clientele. And he can certainly revoke a temporary license if public interest requires.
16 Temporary License (58-33-66)
2) Entering military service
The Commissioner may grant a temporary license to the designee of a licensed agent who is called to active duty in the U.S. armed forces.
16 KEEPING YOUR LICENSE
Penalties (58-33-46)
The Commissioner may place on probation, suspend, revoke or refuse to renew any license for any of the following reasons (some of these may also involve criminal penalties):
• Any circumstance that would have caused the Commissioner to refuse to issue a license in the first place.
• Lying on your application or any communication with the Department of Insurance
• Obtaining a license through fraud or misrepresentation
• Intentionally misrepresenting the terms of an insurance policy
• Committing an unfair trade practice or fraud
• Using dishonest or coercive practices; demonstrating incompetence or irresponsibility in the conduct of business
• Misappropriation of funds received from insurance
• Willfully over-insuring property
• Violating the insurance laws, rules or regulations of North Carolina or any other state
• Conviction of a felony, or a misdemeanor involving dishonesty, breach of trust or moral turpitude
• Having a license denied, suspended or revoked in another jurisdiction
• Forgery
• Cheating on the state examination for license, pre-license or Continuing Education course
• Failing to notify the Commissioner of your bankruptcy, insolvency or receivership
• Failing to comply with a child support order
• Failing to pay state income tax
16 License Renewal or Reinstatement (58-35-20)
Once you have obtained your license, it will remain in force as long as you pay your fees and stay current on your continuing education (CE) requirements (which we'll discuss shortly). If you allow your license to lapse by failing to meet the CE requirements, and don't make up the missing credit hours within 120 days then if you want a license you must start the licensing process again from scratch — new pre-license class, new exam.
If you cannot comply with the renewal procedures due to military service or other extenuating circumstances, you may apply for a waiver.
16 Assumed Business Name and Changes (58-33-83, 58-2-69)
If your legal name is Felix, and you do business as "Buddy's Insurance," you must notify the Commissioner before using your assumed ("dba") name.
If you change your legal name or address, you must notify the Commissioner within 10 business days of the change. You can notify the Commissioner in writing or you can do it online. If you don't, you won't lose your license, but you'll be charged a $50 administrative fee. The regulators want to know who you are and where you are. Even if you simply change apartments within the same complex, or if your office moves to a different suite within the same building, you have moved and timely notification is required.
16 Keeping Records (58-2-185, 195)
You must maintain at your place of business all records pertaining to your insurance transactions. You have to be able to furnish the Commissioner a copy of these records on request, and you must (during regular business hours) be able to show a client on request any records that pertain to his or her policies.
16 Reporting Legal Actions (58-2-65, 69)
This is more serious: if you are convicted or plead guilty, even nolo contendere, to a crime (not counting a motor vehicle violation) in any court, you have to notify the Commissioner in writing within 10 days of your conviction.
If you have committed an act that would subject your license to suspension or revocation, you may, with the consent and approval of the Commissioner, surrender the license for a period of time established by the Commissioner.
16 CONTINUING EDUCATION
Who Needs It? (58-33-130, 11 NCAC 6a)
You do, if you are licensed in any of the following lines:
• Life
• Accident or health and sickness
• Variable Life or Variable Annuities
• Property
• Casualty
• Personal Lines
• Adjuster
However, no one is exempt from the requirements to take the ethics course or flood course.
16 CONTINUING EDUCATION
Who Doesn't? (11 NCAC 6A.0802(i))
You don't have to worry about the North Carolina continuing education
requirements if:
• You are 65 or older and have held your license for at least 25 years, AND
• You hold a nationally-recognized professional designation or can certify that you are an inactive agent.
However, no one is exempt from the requirements to take the ethics course or flood course.
16 What About Nonresident Agents? (11 NCAC 6A.0802(h))
Agents holding a North Carolina nonresident license are considered to comply with the North Carolina requirements as long as they meet the CE requirements in their home state. The Department can confirm a nonresident agent's status through the national Producer Database. This exemption assumes the nonresident's home state has reciprocity with North Carolina; almost all states do.
16 Insurance Continuing Education Credits (ICEC, or Credit Hours) (11 NCAC 6A.0802)
Unless you are exempt, to fulfill your continuing ed requirement you must
complete 24 credit hours every two years in courses approved by the
Commissioner. Your Compliance Date is based on your month of birth and either odd or even year of birth. Three of the 24 credit hours every two years must be on the Lesson of ethics, and, if you're licensed for property-casualty, three hours have to be on flood insurance.
Those of you who have multiple licenses (say, life as well as property and
casualty) do not have to take 48 hours every two years — just 24. You can't get credit for the same course more than once in the same compliance period. If you go nuts one year and do 100 credit hours of CE, you are allowed to carry over the extra hours to the next several biennial compliance periods.
16 Continuing Education Advisory Committee (58-33-135)
The Commissioner appoints an Advisory Committee to make recommendations regarding continuing education requirements. The Commissioner may adopt, reject or modify the recommendations. The Property and Liability committee will consist of:
• Two employees of the Department of Insurance
• Two representatives chosen from four nominees submitted by the
Independent Insurance Agents of North Carolina
• One representative of a licensed Property and Liability insurance
company writing business in North Carolina that operates through an
exclusive agency force
• One representative chosen from two nominees submitted by the North
Carolina Adjusters Association
• One representative of Property and Liability companies chosen from
two nominees submitted by the Association of North Carolina Property
and Casualty Insurance Companies
• One representative chosen from two nominees submitted by the
Community Colleges System Office.
16 Certifying Compliance
All the administration of insurance continuing education is handled by Prometric, Inc., for the Department of Insurance. Continuing ed course providers must report all credit hours completed to Prometric. Your record must show transcripts for the required 24 credit hours of completed courses during your compliance period. If you fail to meet the requirement, the Department will cancel your license and you
will be unable to do business. The Commissioner takes this very seriously.
Your license can be reinstated if you complete the requirements within 120 days after cancellation. You will also need to be re-appointed by your company. If you fail to be reinstated, and still want to be licensed, you must start over by meeting the requirements for pre-licensing education and pass the state exam.
16 The Dog Ate My Continuing Education Transcripts (11 NCAC 6A.0807)
During the last month of your compliance period, you may file a written request with Prometric for a 30-day extension to complete your CE requirements. There is a fee for this. Your license is valid until your request is approved or denied; then you have 30 days to complete the required credit hours.
16 PRODUCER APPOINTMENT AND TERMINATION
Obtaining your license does not give you the authority to sell insurance for a particular company. You must be appointed by that company to act as an agent on their behalf.
16 Who is Appointed? (58-33-40)
You are. It is illegal for you to submit applications and premiums to a company that has not appointed you. And likewise, it is illegal for that company to accept applications and premiums that you submit.
16 How Are You Appointed?
The insurance company wishing to appoint you will file a Notice of Appointment with the Department within 30 days of executing your agency contract or the submission of your first insurance application, whichever is first. The company can appoint you as a producer for any or all of its affiliated companies with a single request. The company does pay a fee for appointment, which must be renewed each year by April 1.
The appointment is good as long as you are properly licensed and the appointing company is authorized to do business in North Carolina, unless the appointment is cancelled.
16 Termination of Appointment (58-33-56)
Subject to the terms of your agency agreement, a company can terminate your appointment at any time. The company must notify the Commissioner of the circumstances of your termination within 30 days and must notify you within 15 days.
Suppose you are terminated because you are allegedly a bad guy or girl ... misrepresentation, fraud, embezzlement.
The company's notice to you must come certified mail or by overnight delivery with a recognized carrier. Now you will care. You have 30 days to file your side of the story with the Commissioner and with the company. And, of course, the Commissioner will care. If he believes your conduct warrants it, the Commissioner will file a complaint against you as discussed above. Once again, due process. Let's further assume that your company had it wrong; you're not a bad guy or girl, you're good. You will be hopping mad and ready to sue your old company... but you cannot. Absent true malice, neither the company nor the Commissioner is subject to any civil liability. The law is encouraging the company to act as a
whistleblower, and no company would act as an informant if they were sued every time they did. Gone are the days when companies simply terminated a bad agent and then allowed the agent to go to another company where he or she could continue to commit misdeeds.
16 UNFAIR TRADE PRACTICES
Purpose (58-63-10)
These laws define trade practices which are illegal in the business of insurance.
16 False or Misleading Advertising (58-63-15(1), (2))
You may not misrepresent the company, the competition, the policy, its benefits or dividends. You may not make false statements about any company in the insurance business with the intent to deceive the public. Suppose you know that a prospective client is considering a purchase from either your company of Cosmo Mutual. You know that Cosmo is an A+ rated company. You would be in violation of these sections if you said to a prospect, "I heard that Cosmo is on the verge of bankruptcy."
16 Defamation (58-63-15(3))
You may not make false, maliciously critical or derogatory statements about the financial condition of an insurance company or any other agent. "ABC Company can't even scrape together the funds to buy a postage stamp for a claims envelope" would definitely qualify as defamation.
16 Boycott, Coercion, Intimidation (58-63-15(4))
You may not enter into any agreement which would result in restraint of trade or monopoly in the insurance business. You may not use coercion or intimidation to sell insurance. "Buy this or you'll never see your cat again!" in not an acceptable sales presentation.
16 False Financial Statements (58-63-15(5))
Your company may not falsify its books with the intent to deceive an insurance examiner, an agent or the public.
16 Unfair Discrimination (58-63-15(7), 58-3-25, 120, 58-33-80, 58-58-25)
While insurance companies discriminate in the sale of insurance policies (it's called underwriting), it is illegal to discriminate unfairly. Insurance companies charge older people more than younger people for life insurance; they charge men higher rates for life insurance and women higher rates for health insurance.However they cannot charge higher rates for individuals with the same class and life expectancy based on such things as race, color, creed or national origin. And agents may not discriminate in favor of anyone.
North Carolina law specifically [58-58-25] prohibits an insurance company from refusing to issue a life insurance policy or rating up someone with sickle cell trait or hemoglobin C trait.
16 Rebating and Financial Inducements (58-63-15(8), 58-33-85, 58-33-90 and 58-58-20)
As an agent, you may not buy business. "Buy this policy and I'll give you half of my commission" is rebating. Basically, anything that is not part of the insurance policy and could persuade someone to buy a policy they really don't want is a rebate ... and it is illegal. Tickets to the North Carolina-Duke game would be a rebate; a cup of coffee is not. No one would buy an insurance policy to get a free cup of coffee. But offering stock in your company or agency in exchange for buying a policy would be considered a rebate.
It is NOT considered rebating if a company applies policy dividends to reduce premiums, or gives discounts for direct payment of premiums.
16 Premium Payments on Insurance Policies (58-3-145)
Premium payments made by credit card may be accepted as long as the
insurance company makes the option available to all insureds and does not limit the use to certain persons and the company pays the fees charged by the credit card companies.
16 Referring Business for Repair (58-33-76)
No insurance company employee will recommend the use of a particular service for the repair of property damage without clearly informing the claimant that there is no obligation to use the recommended repair service. No gratuity may be accepted from the repair service for a recommendation.
16 OTHER PROHIBITED ACTIONS
Twisting (58-3-115, 58-33-75 and 58-58-40)
Twisting is lying in order to replace insurance. Simply lying about a policy is misrepresentation, but lying about someone's existing policy in order to replace it or get them to surrender it is considered twisting. You are twisting their existing coverage in order to make it appear inadequate in comparison to the new policy or plan you want to offer.
16 Falsely Representing An Insurer (58-33-100)
If you pretend to be someone else in selling an insurance policy and take the premium for it, you are considered the agent for the company no matter what the policy says. You are also guilty of a Class 1 misdemeanor.
16 Misrepresentation on the App (58-33-105)
Neither you nor any other agent of the company (like the medical examiner) can lie (misrepresent) on an insurance application. Violations are considered a Class 1 misdemeanor in North Carolina.
16 Signing Blank Insurance Policies (58-33-110)
Any agent who signs a blank insurance policy in North Carolina commits a Class 3 misdemeanor. If found guilty, he or she can be fined from $1,000 to $5,000.
16 Embezzlement Equals Theft (58-2-162)
Monies you hold belonging to others are considered trust funds, and you hold them in a fiduciary capacity. To use these monies for your own benefit is
considered theft. If the value involved is $100,000 or more, it is considered a Class C felony; if less, it is a Class H felony.
16 Immunity From Prosecution (58-63-60)
Anyone called to testify in a hearing may be granted immunity from prosecution if he feels he would incriminate himself by his testimony. Such a witness could still be subject to prosecution for perjury.
16 ETHICAL STANDARDS (11 NCAC 4.0423)
The North Carolina code lists standards that apply to everyone in the insurance business. Whether you're an agent, a broker, an adjuster, an appraiser, whenever you interact with the public, you must:
• promptly identify yourself and your occupation;
• carry the license issued by the Department of Insurance while performing your duties and display it on request;
• conduct yourself in such a manner as to inspire confidence by fair and
honorable dealings.
Claims people have some additional responsibilities. They may not:
• accept any gratuity or other form of remuneration (kickback) from any
provider of services for recommending that provider to claimants;
• purchase salvage from a claimant;
• intimidate or discourage any claimant from seeking legal advice and
counsel. On the other hand, they may not advise a claimant to seek legal
counsel, or recommend any legal counsel under any circumstance;
• delay the settlement of a property damage claim because of the claimant's choice of an auto repair service.
• They may recommend a particular auto repair service, but only if they tell
the claimant that he is under no obligation to use the recommended repair
service and may use the service of his choice.
16 INSURANCE INFORMATION AND PRIVACY PROTECTION
ACT
Purpose and Scope (58-39-5, 10)
The purpose of this Article is to establish standards for the collection, use, and disclosure of information gathered in connection with insurance transactions by insurance companies and agents. There should be a balance between the insurance industry's need for information and the public's right to privacy, and consumers need a mechanism that will allow them to know the reasons for any adverse underwriting.
16 INSURANCE INFORMATION AND PRIVACY PROTECTION
ACT Notice of Information Practices (58-39-25, 26, 30)
You have to provide a notice of information practices to all applicants or
policyholders in connection with any insurance transaction. The notice must be provided when the policy is delivered if the personal information comes only from the applicant and public records. Otherwise the notice has to be given when the information is gathered.
The notice must be in writing, and must tell the prospect or client that:
• Personal information may be collected from persons other than the
individual or individuals proposed for coverage;
• Any personal information collected may be disclosed to third parties
without authorization;
• The individual has the right to see and correct all personal information
collected; and
• A more complete notice will be furnished to the applicant or policyholder
upon request.
You also have to provide the company's standard Privacy Policy leaflet when you deliver the policy.
You have to clearly identify any questions designed to obtain information solely for marketing or research purposes.
16 INSURANCE INFORMATION AND PRIVACY PROTECTION
ACT Investigative Consumer Reports (58-39-40)
If you (or the company) request an investigative consumer report about an
individual in connection with an application for insurance, a policy renewal, a policy reinstatement, or a change in insurance benefits, you have to inform the individual:
• that he or she may request to be interviewed in connection with the
preparation of the investigative consumer report; and
• that he or she is entitled to receive a copy of the investigative consumer
report.
16 INSURANCE INFORMATION AND PRIVACY PROTECTION
ACT Individual's Right To See What You've Got On Him or Her (58-39-45, 75)
If your prospect or policyholder makes a written request to see what personal information has been recorded, the company has to provide the information within 30 days. The individual has a right to:
• receive a copy of his or her file,
• know the source of the information,
• find out who else has seen the personal information, and
• be told how to correct or dispute any misinformation in the file.
16 INSURANCE INFORMATION AND PRIVACY PROTECTION
ACT Adverse Underwriting Decisions (58-39-55)
Sometimes it happens — your prospect or client is rated, declined, or
coverage is cancelled. You either have to tell the person why, or tell him or
her how to get the information from the company. If they want to, they have
90 days to make a written request to the company; the company has to respond within 21 days.
The company can't base its current underwriting decision upon an individual's past negative underwriting history without learning the reasons for the adverse decision.
16 INSURANCE INFORMATION AND PRIVACY PROTECTION
ACT Hearings, Penalties (58-39-80, 95)
If the Commissioner has good reason to suspect that agents or companies have violated this Privacy Protection Act, he or she can call a hearing on the charges.
If the findings confirm a violation of the Act, the Commissioner can issue a cease and- desist order immediately. If the violations still continue, the Commissioner can go to court to order a fine of up to $10,000 for each violation, and up to $50,000 if the violations seem to be regular business practice. The Commissioner can also suspend the company's or agent's license.
17 Representations in the Application (58-3-10)
All statements or descriptions in an application for insurance are considered representations and not warranties. But if a representation is material or fraudulent, the company may not have to pay a claim.
17 Claim Forms (58-3-40)
The company must provide the insured with claim forms within 15 days after notice of loss, or accept whatever written proof of loss the insured provides.
17 Insurance From Lenders (58-3-135, 140)
A bank or loan organization cannot force you to buy insurance from them as a condition for getting the loan. When mortgage companies ask a homeowner for proof that he or she has insurance covering the real estate, they may accept a binder as proof of coverage.
17 UNAUTHORIZED INSURERS (58-28)
The General Assembly considers the prevalence of unauthorized insurers to be a problem in North Carolina. A company is unauthorized if it does not have a license to sell insurance issued by the Commissioner. The following does not apply to surplus lines brokers, reinsurance, or group policies written out of state but protecting state residents.
Agents need to be aware of the risks involved if you represent an unauthorized insurer. As you were reminded in Lesson One, if you violate this law, theCommissioner can revoke or suspend your license, fine you up to $10,000 per day for repeat offenses, order you to pay restitution, and recommend civil or criminal charges. If the unauthorized insurer you represent welches on a claim or goes bankrupt, you can be held personally liable for the claim. How do you know whether a company is authorized or not? Call the Department of Insurance.
17 NORTH CAROLINA RATE BUREAU (58-36-15, 20, 25, 30, 45,55)
North Carolina has its own Rate Bureau to set and approve rates for homeowners, personal auto, workers compensation and employer's liability insurance. The Bureau in turn files all rates with the Commissioner, who has 50 days to give written notice to the Bureau if the filing fails to comply with the requirements of the state. The notice must contain the reasons for the objection and schedule a date for a hearing not less than 30 days from the date of the notice. If no notice of hearing is issued, the filing will be considered approved. Each rate will become effective on the date specified in the filing, but not earlier than 210 days from the date the filing is received by the Commissioner. A filing may become effective earlier if theCommissioner and the Bureau agree.

Any order or decision of the Commissioner will be subject to judicial review. An insurance company may deviate from the rates filed with the Commissioner if the deviation is based on sound actuarial principles, and if the proposed deviation is approved by the Commissioner. Amendments to deviations are subject to the same requirements as initial filings. A company may terminate a deviation only if the deviation has been in effect for six months before the effective date of the termination and the company notifies the Commissioner of the termination no later than 15 days before the effective date of the termination. The Bureau also must report all loss experience of its members to the Commissioner once each year by September 1.
A filing will be open to public inspection immediately upon submission to the Commissioner.
If a company wants to change its coverages or rates, it must give policyholders and their agents notice of the change at least 15 days in advance of the effective
date of the change.
No policy form may be issued unless it has been filed with the Commissioner by the Bureau and it has either been approved or 90 days have elapsed and it has not been disapproved.
17 Safe Driver Plan (58-36-65, 75, 80; 11 NCAC 4.0415)
The Bureau must file a Safe Driver Incentive Plan (SDIP) that distinguishes among various classes of drivers that have safe driving records and those that have
a record of at-fault accidents, and/or convictions of major or minor moving traffic violations. The plan must allow for premium differentials among those classes of drivers. That can mean lower premiums for safe drivers, higher premiums for drivers with bad records.
And yes, questions do come up. The Department of Insurance has issued these rules for SDIP to help clarify a few common situations:
• If someone's license has been revoked because he or she refused to take a breatholater test, that's not considered being convicted of a moving
traffic violation. If it's been revoked or suspended because of accumulating
too many motor vehicle points, that's not considered a conviction.
• Conviction for driving the wrong way on a one-way street is not the same
as conviction for driving on the wrong side of the road.
• When new operators are added to an auto policy, their SDIP points may
be added to the policy at the same time they receive coverage.
• SDIP points for someone whose license has been suspended or revoked
may be added only at the date that he or she again becomes eligible to
drive.
• If someone leaves the insured's household permanently, or dies, his or her SDIP points are then taken off the policy.
17 THE NORTH CAROLINA INSURANCE GUARANTY ASSOCIATION (58-48-5, 10, 25, 35)
Just as in the life and health insurance industry, North Carolina has a Guaranty Association to protect property and casualty policyholders in case a company becomes insolvent. All admitted insurance companies must be members of the association.
The association is split into three separate accounts:
• Automobile insurance
• Workers Compensation
• Everything else
Members can be assessed to pay claims from policyholders of an insolvent company. Claims and expenses are tracked separately for the three accounts and members assessed accordingly. The association does not have to pay claims of less than $50, and no more than $300,000. Any workers compensation claim can be paid in full.
17 CONSUMER SERVICES DIVISION
Charging Service Fees (11 NCAC 4.0120)
If you want to charge your clients a service fee or policy fee, you must let your clients know about it in advance by posting a large sign in your office giving the amount of the fee. Then you have to get their consent in writing on a "Policy or Service Fee Consent" form, and give them a receipt that clearly identifies the fee as separate from the premium.
17 CONSUMER SERVICES DIVISION Premium Receipts (11 NCAC 4.0121)
Premium receipts must be dated, contain the printed name and address of the agent and the name of the insurance company, and must be signed by the person who accepted the premium.
17 CONSUMER SERVICES DIVISION Power-of Attorney (11 NCAC 4.0122)
You can't ask a client to give you power-of-attorney to sign insurance forms for him or her.
17 CONSUMER SERVICES DIVISION Commingling of Accounts (11 NCAC 4.0429)
Your accounting records and funds cannot be mixed in with other business records or funds; you have to keep them separate.
17 CONSUMER SERVICES DIVISION Credit Insurance — Consumer's Choice (58-57-65)
This law refers to debts like credit cards, department store cards and installment loans, not home mortgages. Creditors may not require any borrower to buy life insurance or credit accident and health insurance. When credit property insurance is required for any indebtedness, the consumer has to be notified in writing of the option of furnishing the required amount of insurance through existing policies or furnishing the required coverage through any insurer authorized in North
Carolina.
18 EXCESSIVE PROPERTY INSURANCE (58-43-5, 10)
You or your company may not issue a fire insurance policy for more than the fair value of the insured property, or for more than 7 years. However, as you learned in your basic text, the insurance coverage can still provide for replacement value coverage or functional replacement coverage, at the policyowner's choice.
18 FIRE INSURANCE POLICIES (58-44-1, 5, 30)
All the insurance conditions must be spelled out in full in a fire insurance
policy. The rules and bylaws of a company are not part of the contract unless they are contained in the policy. If the policyowner asks for it, all rates and charges have to be published in full on the policy. If, before any covered loss or damage, the insured or his agent notifies the company in writing of a change in the risk or coverage, this has the force of a written agreement regarding the company's liability.
18 BEACH AREA PROPERTY INSURANCE (58-45-1, 5, 10, 15,35)
North Carolina has some special requirements for beach property. To assure an adequate market for this type of property, the law requires every company in the state that writes essential property insurance to participate in a mandatory
program called the North Carolina Insurance Underwriting Association. The Association has the power to issue essential property insurance to those who apply, to assume from and cede reinsurance to its members, and to buy reinsurance for its members.
The "beach area" is defined as "All of that area of the State of North Carolina south and east of the inland waterway from the South Carolina line to Fort Macon (Beaufort Inlet); thence south and east of Core, Pamlico, Roanoke and Currituck sounds to the Virginia line, being those portions of land generally known as the Outer Banks."
Each application will contain a statement as to whether or not there are any unpaid premiums due from the applicant for prior insurance on the property.
Once the property is found to be insurable, there are no past-due premiums from prior coverage and premium has been submitted with the application, a policy will be issued.

If the Association, for any reason, denies an application and refuses to issue a policy on insurable property, or takes no action within a prescribed time on an application, an appeal may be made to the Commissioner. The Commissioner may request information from the Association and the Association must provide it. After review, the Commissioner may direct the Association to issue the policy.
As a licensed agent, even though you are not considered an agent of the
Association, you can issue binders for coverage. Any unearned premium on the temporary binder will be returned to the policyholder if the Association refuses to issue a policy.
18 FAIR ACCESS TO INSURANCE REQUIREMENTS (FAIR
PLAN) (58-46-1, 5, 10, 15)
The FAIR Plan is another market of last resort established by North Carolina law.
The Plan provides basic property insurance and is designed to encourage
improvement of properties in the state. It applies to all property in the state,
including farm property, except that covered by the Beach Area defined above.
The Plan offers basic insurance property coverage. The Plan also offers
additional extended coverage, optional perils endorsement and crime insurance coverage. Every company that writes property insurance in the state must be a member of the plan and as such must be prepared to issue insurance to property owners anywhere in the state, even in high-risk areas.
The Commissioner may review the Plan at any time but not less than once each year. After review of the Plan, the Commissioner may amend the Plan after consultation with and certification to the directors of the Plan.
19 NORTH CAROLINA MOTOR VEHICLE REINSURANCE
FACILITY
Eligible Risks (58-37-1, 5, 55)
Every insurance company admitted in North Carolina that writes motor
vehicle insurance of any type must be a member of this Facility, unless
exempted by the Facility's Board of Governors. Auto insurers often receive
applications from high-risk drivers they would rather not cover. They may
cede this kind of liability to the Motor Vehicle Reinsurance Facility, where
the risk is shared by the members.
People who are considered eligible risks for this Facility are:
• Residents or non-residents of North Carolina who own a motor vehicle
registered or usually kept in the state
• Residents with a valid North Carolina driver's license
• Those who are required to file proof of financial responsibility to register
their car or get a driver's license
• Non-residents who are stationed in the Military (or their spouses) and
intend to return home
• Out-of-state students who intend to return to their home state when school is over
• All state and municipal agencies.
19 Business Ceded to the Facility (58-37-25)
Insurance companies must insure an applicant they might otherwise reject if the coverage and limits are permitted by the Facility. Since the premium for this ceded liability insurance is likely to be higher, the Facility must notify the policyholder that he or she has the right to try to get coverage from another
company that might be willing to accept the risk. If within 45 days the
policyholder finds coverage from another company that chooses not to cede the insurance to the Facility, they have the right to cancel the Facility policy and to receive a pro-rate refund of premium.
19 Agents' Acceptance of Eligible Risks (58-37-30)
Agents must take applications and issue binders for coverage as long as the risk falls within the permitted limits of the Facility. You have the responsibility to write the coverage at what you believe is the appropriate rate level.
19 Reinsurance Facility Operation (58-37-35)
The Facility must reinsure the risks up to these limits:
• Bodily injury liability $30,000 each person, $60,000 each accident...
• Property damage liability $25,000.......30/60/25
• Medical payment $1,000 each person (not available for motorcycles)
• Uninsured Motorist: $30,000 each person, $60,000 each accident for
bodily injury; $25,000 each accident for property damage, with $100
deductible
19 Reinsurance Facility Operation (58-37-35)
For people who must maintain higher limits in order to keep their personal umbrella coverage, the Board can allow these higher limits:
• Bodily injury liability $250,000 each person, $500,000 each accident
• Property damage liability $100,000 each accident
• Medical payment $5,000 each person (not available for motorcycles)
• Uninsured Motorist: $100,000 each accident for property damage, with
$100 deductible
19 Reinsurance Facility Operation (58-37-35)
The Board of Governors of the Facility may allow reinsurance up to these limits:
• Bodily injury liability $100,000 each person, $300,000 each accident
• Property damage liability $50,000 each accident
• Medical payment $2,000 each person (not available for motorcycles)
• Underinsured Motorist: $1,000,000 each person and each accident for
bodily injury liability
• Uninsured Motorist: $1,000,000 each person and each accident for bodily
injury; $50,000 each accident for property damage, with $100 deductible
19 Termination of Insurance (58-37-50)
Members may only terminate the Facility insurance under certain conditions, such as nonpayment of premiums, the insured moving out of state, or not qualifying as an eligible risk.
19 Physical Damage Coverage (58-37-60)
Companies may not refuse to make physical damage coverage available to any applicant, or apply a surcharge or higher rate just because the applicant has auto liability insurance through the Facility plan.
19 AUTO LIABILITY POLICY (20-279.21)
Financial Responsibility Law
North Carolina requires these minimum amounts of liability coverage for every licensed driver:
• Bodily injury liability $30,000 each person, $60,000 each accident
• Property damage liability $25,000
• 30/60/25
19 Uninsured and Underinsured Motorists Protection
An "uninsured motorist" is a driver with no liability coverage, or with less than the financial responsibility law requires. It could also be an insured driver whose insurance company denies coverage, or is insolvent.

You have to offer policy-owners protection against loss from uninsured motorists and for bodily injury from a hit-and-run accident. In North Carolina, policy-owners may purchase coverage up to a limit of $1,000,000 per person and per accident for bodily injury and a limit up to the highest amount of property damage liability coverage they carry on any one auto, subject to a $100 deductible.

If the insured person is injured in a car accident with an unknown driver, as in a hit-and-run, he or she must report the accident to the police within 24 hours, and to the insurance company within a reasonable time.

Auto insurance companies must also offer under-insured motorist coverage to policy-owners who carry more liability insurance than the minimum 30/60/25 above. The limit for this coverage is $1,000,000 for each person and for each accident.
You have to offer the coverage, but your applicant doesn't have to accept it.
Here's the notice that companies must provide to their applicants and policyholders:
NOTICE: YOU MAY PURCHASE UNINSURED MOTORIST BODILY
INJURY COVERAGE AND, IF APPLICABLE, UNDERINSURED
MOTORIST COVERAGE WITH LIMITS UP TO ONE MILLION DOLLARS
($1,000,000) PER PERSON AND ONE MILLION DOLLARS ($1,000,000)
PER ACCIDENT. THIS INSURANCE PROTECTS YOU AND YOUR FAMILY AGAINST INJURIES CAUSED BY THE NEGLIGENCE OF OTHER
DRIVERS WHO MAY HAVE LIMITED OR ONLY MINIMUM COVERAGE
OR EVEN NO LIABILITY INSURANCE. YOU SHOULD CONTACT YOUR
INSURANCE COMPANY OR AGENT TO DISCUSS YOUR OPTIONS FOR OBTAINING THIS ADDITIONAL COVERAGE. YOU SHOULD ALSO
READ YOUR ENTIRE POLICY TO UNDERSTAND WHAT IS COVERED
UNDER UNINSURED AND UNDERINSURED MOTORIST COVERAGES.
19 WORKERS COMPENSATION LAW [N.C. INDUSTRIAL
COMMISSION BULLETIN]
This is a policy almost all employers have to buy to cover their employees who are injured on the job or who become sick as a result of their job. Employers can buy the policy from their local agent. While this is a federal law, like most insurance it is regulated by the states. Even though the benefits are mostly in the health area, it is considered a Commercial Casualty policy because it covers employers' liability. We've covered the important elements of the plan in your basic text. Here are the specific North Carolina requirements.
19 Who Has To Buy Workers Comp Insurance?
Every North Carolina business with 3 or more regular employees
• Businesses with even one employee whose work involves the use of or
presence of radiation Corporate officers, partners and owners who work in the business don't have to be covered, but they must be counted to determine whether the business has 3 or more employees. For example, a company with just a President, Vice President and an Executive Assistant must buy Workers Comp. Sole proprietors and partners with 3 or more employees may include themselves in the coverage.
19 What Businesses Are Exempt?
Agricultural businesses with 10 or fewer employees
• Certain sawmill and logging operations
• All domestic workers
19 Types of Workers Comp Coverage
There are three ways for a business to get coverage:
• An insurance agent can write coverage solely for the business.
• The employer can become a member of or contributor to a Self-Insured
Fund. A Self-Insured Fund is a "blanket coverage" of workers
compensation insurance. A business pays into a large fund which provides the coverage for that business and all those who pay into that fund. The contribution to the fund is based on the number of employees, the rate assigned to them by the North Carolina Rate Bureau, and the payroll.
• The employer can become Self-Insured. This is not the same as belonging to a Self-Insured Fund. To become self-insured, the employer must go to the Department of Insurance and post bond showing that he has the financial means to provide coverage for his employees.
19 What Does Workers Compensation Cover?
The policy covers both occupational injuries and occupational diseases. If the employee is working, and
• is injured in an accident
• is injured in a "specific traumatic incident" resulting in a hernia or back
injury (a hernia that had developed gradually over a period of time would
not qualify) or
• suffers from a disease to which the job contributed significantly, or if the
job was a significant factor in causing the disease's development. The job
has to expose the worker to a greater risk of contracting the disease than
the public generally.
19 Receiving the Benefit
Injured employees generally do not have to file a claim directly with the
insurance company to get their benefits. They must notify their employer
within 30 days of the injury, or within 30 days after they receive a diagnosis
of an illness caused by the job. The written notice should be a completed Form 18, with copies given to the employer and to the Industrial Commission. For the most part, an injured employee loses the right to file for benefits 2 years after the injury or diagnosis. If the employee has other health insurance, Workers Comp always takes precedence.
The employer has to notify his insurance company of the claim, and if the injury results in more than $2,000 in medical expenses or one day's lost work, the insurance company must notify the Commission.
19 Wage Replacement (Disability Income)
Temporary Total Disability
All agreements to pay compensation must be approved by the Commission. Here are the rules:
Temporary Total Disability (can't work at all, right now): If the employee
remains unable to earn wages after the first 7 days of disability, he or she is entitled to weekly benefits equal to two-thirds of his or her average weekly wage up to the maximum compensation rate. After disability has continued for more than 21 days, the employee is entitled to receive compensation for the first 7 days of disability. The days counted do not have to be consecutive. Weekend days, holidays, and any workday in which the injured employee does not earn a full day's wages because of the injury are counted as a day of disability, even though the employee may earn some wages.
19 Wage Replacement (Disability Income)
Temporary Partial Disability
Temporary Partial Disability (can only work part-time right now): If the
employee is still able to work after the injury, but at lower wages than before the injury, he or she is entitled to receive two-thirds of the difference between their average weekly wage now and what they earned before the injury, up to the
statutory maximum weekly benefit. Temporary partial disability benefits are
limited to 300 weeks.
19 Wage Replacement (Disability Income)
Permanent Partial Disability
Permanent Partial Disability (can only work part-time ... forever): If, at the
end of the healing period, there is a permanent damage to one of the parts of the body listed below, the employee may receive a set period of benefits without regard to his ability to earn wages. Total loss of use of the part entitles the employee to two-thirds of his average weekly wage, times the number of weeks shown following the body part below. Benefits for less than total loss are figured on a percentage basis. For example, twenty percent (20%) of 45 weeks' compensation is nine (9) weeks.
Thumb 75 weeks Arm 240 weeks
First or index finger 45 weeks Foot 144 weeks
Second or
middle finger 40 weeks Leg 200 weeks
Third or ring finger 25 weeks Eye 120 weeks
Fourth or Hearing
little finger 20 weeks (one ear) 70 weeks
Great toe 35 weeks Hearing
(both ears) 150 weeks
Any other toe 10 weeks Back 300 weeks
Hand 200 weeks
Alternatively, in cases where the employee has a permanent impairment to one of the parts of the body listed and is unable to earn wages as great as before the injury, the employee may choose the greater benefit of
(a) benefits for two-thirds of the wage difference for a period not to exceed 300 weeks from the date of injury or (b) benefits for a set period based on the permanent impairment. The 300-week period, however, will be reduced by the number of weeks Temporary Total Disability compensation was paid.
19 Wage Replacement (Disability Income)
Total and Permanent Disability
Total and Permanent Disability (can't work at all ... forever): The loss of both hands, both arms, both feet, both legs, or both eyes, or any two of these, constitutes total and permanent disability, and entitles the worker to weekly benefits and medical compensation during his or her lifetime.
19 Wage Replacement (Disability Income)
Disfigurement and Damage to Other Organs:
Disfigurement and Damage to Other Organs: If the injury leaves facial or head scars that seriously disfigure the person, or causes the loss or permanent injury to an important organ of the body, the employee may be awarded additional compensation not to exceed $20,000.00. The maximum payable for serious bodily disfigurement is $10,000.00. No compensation is allowed for scars where the employee is paid for loss or partial loss of use of the same member. The employee is also entitled to payment for disfigurement due to the loss or crowning of permanent teeth.
19 Wage Replacement (Disability Income)
Figuring the Compensation Rate:
Figuring the Compensation Rate: The weekly rate of compensation cannot
be less than $30.00 nor more than $816.00 for injuries. (2009) The maximum weekly benefit is adjusted annually to equal approximately 110% of the
average North Carolina wage. If the employee is under 18 years of age, a
different rate may apply.
19 Wage Replacement (Disability Income)
Medical Benefits
Medical Benefits
In addition to any disability benefits, the employer of an injured worker or its
insurance company must pay for:
• All required medical and surgical treatment
• All medically required devices such as crutches and artificial prostheses
• Any required rehabilitation services
The employee may petition the Commission to change physicians or to approve a physician of employee's choice when good grounds are shown. However, payment by the employer or carrier is not guaranteed unless written permission to change physicians is obtained from the employer, carrier, or Commission before the treatment is rendered.
If the employer denies liability or fails to provide treatment, or in the case of an emergency, the employee may select the physician or hospital but must promptly request Industrial Commission approval.
19 Wage Replacement (Disability Income)
Death Benefits
Death Benefits
If an employee dies within 6 years of a job-related injury or illness, or within 2 years of a final determination of disability, whichever is later, death benefits are payable. The claim must be filed within 2 years of the employee's death. It must be filed by dependents or next-of-kin of the deceased employee, not by the estate executor or a personal representative. The benefits are:
• payment of two-thirds of the deceased employee's average weekly wage, or the maximum compensation rate, for 400 weeks (a minor child or disabled spouse may receive payments for a longer time)
• $3,500 for actual funeral expenses and related medical expenses
19 Wage Replacement (Disability Income)
Minors
If injured, an employee under the age of 18 is entitled to receive the same benefits as other employees.
Denial of Claims
Denial of Claims
In a case where an employer denies a claim after the worker has submitted a written claim form, the worker is entitled to a detailed statement from the employer or insurance carrier within 14 days, giving the grounds for denying the claim. The employee may then request a hearing on the claim before the Industrial Commission. To preserve the employee's right to pursue the claim, the statement making a claim or requesting a hearing must be on the Commission's written forms. And it must be received by the Commission within 2 years of the date of injury.