§ 58-2-164. Rate evasion fraud; prevention programs.
§ 58‑2‑164. Rateevasion fraud; prevention programs.
(a) The followingdefinitions apply in this section:
(1) "Applicant"means one or more persons applying for the issuance or renewal of an autoinsurance policy.
(2) "Autoinsurance" means nonfleet private passenger motor vehicle insurance.
(3) "Eligibleapplicant" means a person who is an eligible risk under G.S. 58‑37‑1(4a).
(4) "Insurer"means a member of the North Carolina Rate Bureau that is licensed to write andis writing auto insurance in this State.
(5) "Nonfleet"means a motor vehicle as defined in G.S. 58‑40‑10(2).
(6) "Privatepassenger motor vehicle" means a motor vehicle as defined in G.S. 58‑40‑10(1).
(b) It shall be a Class3 misdemeanor for any person who, with the intent to deceive an insurer, doesany of the following:
(1) Present or cause tobe presented a written or oral statement in support of an application for autoinsurance or for vehicle registration pursuant to G.S 20‑52(a)(4) and(a)(5), knowing that the application contains false or misleading informationthat states the applicant is an eligible risk when the applicant is not aneligible risk.
(2) Assist, abet,solicit, or conspire with another person to prepare or make any written or oralstatement that is intended to be presented to an insurer in connection with orin support of an application for auto insurance or for vehicle registrationpursuant to G.S. 20‑52(a)(4) and (a)(5), if the person knows that thestatement contains false or misleading information that states the applicant isan eligible risk when the applicant is not an eligible risk.
In addition to any otherpenalties authorized by law, a violation of this subsection may be punishableby a fine of not more than one thousand dollars ($1,000) for each violation.
(c) The insurer and itsagent shall also take reasonable steps to verify that the information providedby an applicant regarding the applicant's address and the place the motorvehicle is garaged is correct. The insurer may take its own reasonable steps toverify residency or eligible risk status or may rely upon the agentverification of residency or eligible risk status to meet the insurer'sverification obligations under this section. The agent shall retain copies ofany items obtained under this section as required under the record retentionrules adopted by the Commissioner and in accordance with G.S. 58‑2‑185.The agent may satisfy the requirements of this section by obtaining reliableproof of North Carolina residency from the applicant or the applicant's statusas an eligible risk. Reliable proof of residency or eligible risk includes butis not limited to:
(1) A pay stub with thepayee's address.
(2) A utility billshowing the address of the applicant‑payor.
(3) A lease for anapartment, house, modular unit, or manufactured home with a North Carolinaaddress signed by the applicant.
(4) A receipt forpersonal property taxes paid.
(5) A receipt for realproperty taxes paid to a North Carolina locality.
(6) A monthly orquarterly financial statement from a North Carolina regulated financialinstitution.
(7) A valid unexpiredNorth Carolina driver's license.
(8) A matricula consularor substantially similar document issued by the Mexican Consulate for NorthCarolina.
(9) A document similarto that described in subdivision (8) of this section, issued by the consulateor embassy of another country that would be accepted by the North CarolinaDivision of Motor Vehicles as set forth in G.S. 20‑7(b4)(9).
(10) A valid NorthCarolina vehicle registration.
(11) A valid military ID.
(12) A valid student IDfor a North Carolina school or university.
(d) In the absence ofactual malice, neither an insurer, the authorized representative of theinsurer, a producer, the Commissioner, an organization of which theCommissioner is a member, the North Carolina Reinsurance Facility, nor therespective employees and agents of such persons acting on behalf of suchpersons shall be subject to civil liability as a result of any statement orinformation provided or action taken pursuant to this section.
(e) In any actionbrought against a person that may have immunity under subsection (d) of thissection for making any statement required by this section or for providing anyinformation relating to any statement that may be requested by theCommissioner, the party bringing the action shall plead specifically in anyallegation that subsection (d) of this section does not apply because theperson making the statement or providing the information did so with actualmalice. Subsections (d) and (e) of this section do not abrogate or modify anyexisting statutory or common law privileges or immunities.
(f) Every insurershall maintain safeguards within its auto insurance business at the point ofsale, renewal, and claim to identify misrepresentations by applicants regardingtheir addresses and the places their motor vehicles are garaged. Identifiedmisrepresentations are subject to the requirements of Article 2 of thisChapter.
(g) If an applicantprovides false and misleading information as to the applicant's or any namedinsured's status as an eligible applicant and that fraudulent information makesthe applicant or any named insured appear to be an eligible applicant when thatperson is in fact not an eligible applicant, the insurer may do any or all ofthe following:
(1) Refuse to issue apolicy.
(2) Cancel or refuse torenew a policy that has been issued.
(3) Deny coverage forany claim arising out of bodily injury or property damage suffered by theapplicant. This subdivision does not apply to innocent third parties.
(h) In a civil cause ofaction for recovery based upon a claim for which a defendant has been convictedunder this section, the conviction may be entered into evidence against thedefendant and shall establish the liability of the defendant as a matter of lawfor such damages, fees, or costs as may be proven. The court may award theprevailing party compensatory damages including but not limited to any costs,losses, expenses, and attorneys' fees incurred in connection with any falsestatement of eligible risk status made in an application for insurance orincurred in connection with any claim submitted under a policy obtained as aresult of a false statement of status as an eligible risk, attorneys' fees,costs, and reasonable investigative costs. If the prevailing party candemonstrate that the defendant has engaged in a pattern of violations of thissection, the court may award treble damages. (2007‑443, s. 3.)