§ 58-35-85. Procedure for cancellation of insurance contract upon default; return of unearned premiums; collection of cash surrender value.
§ 58‑35‑85. Procedure for cancellation of insurance contract upon default; return ofunearned premiums; collection of cash surrender value.
When an insurance premiumfinance agreement contains a power of attorney or other authority enabling theinsurance premium finance company to cancel any insurance contract or contractslisted in the agreement, the insurance contract or contracts shall not becancelled unless the cancellation is effectuated in accordance with thefollowing provisions:
(1) Not less than 10days' written notice is sent by personal delivery, first‑class mail,electronic mail, or facsimile transmission to the last known address of theinsured or insureds shown on the insurance premium finance agreement of theintent of the insurance premium finance company to cancel his or theirinsurance contract or contracts unless the defaulted installment payment isreceived. Notification thereof shall also be provided to the insurance agent.
(2) After expiration ofthe 10‑day period, the insurance premium finance company shall send theinsurer a request for cancellation and shall send notice of the requestedcancellation to the insured by personal delivery, first‑class mail,electronic mail, electronic transmission, or facsimile transmission at his lastknown address as shown on the records of the insurance premium finance companyand to the agent. Upon written request of the insurance company, the premiumfinance company shall furnish a copy of the power of attorney to the insurancecompany. The written request shall be sent by mail, personal delivery,electronic mail, or facsimile transmission.
(3) Upon receipt of acopy of the request for cancellation notice by the insurer, the insurancecontract shall be cancelled with the same force and effect as if the requestfor cancellation had been submitted by the insured, without requiring thereturn of the insurance contract or contracts.
(4) All statutory,regulatory, and contractual restrictions providing that the insured may notcancel the insurance contract unless the insurer first satisfies therestrictions by giving a prescribed notice to a governmental agency, theinsurance carrier, an individual, or a person designated to receive the noticefor said governmental agency, insurance carrier, or individual shall applywhere cancellation is effected under the provisions of this section.
(4a) If an insurerreceives notification from an insurance agent or premium finance company thatthe initial down payment for the premium being financed has been dishonored bya financial institution, or otherwise unpaid, there is no valid contract forinsurance and the policy will be voided.
(5) When an insurancecontract is cancelled in accordance with this section, the insurer shallpromptly return the gross unearned premiums that are due under the contract tothe insurance premium finance company effecting the cancellation, for thebenefit of the insured or insureds, no later than 30 days after the effectivedate of cancellation. When the return premium is more than the amount theinsured owes the insurance premium finance company under the agreement, theexcess shall be promptly remitted to the order of the insured, as provided insubdivision (8) of this section, subject to the minimum service charge providedfor in this Article. If a premium is subject to an audit to determine the finalpremium amount, the amount to be refunded to the premium finance company shallbe calculated upon the deposit premium, and the insurer shall return thatamount to the premium finance company no later than 90 days after the effectivedate of cancellation. This subdivision does not limit any other remedies theinsurer may have against the insured for additional premiums.
(6) The provisions ofthis section relating to request for cancellation by the insurance premiumfinance company of an insurance contract and the return by an insurer ofunearned premiums to the insurance premium finance company, also apply to thesurrender by the insurance premium finance company of an insurance contractproviding life insurance and the payment by the insurer of the cash value ofthe contract to the insurance premium finance company, except that the insurermay require the surrender of the insurance contract.
(7) The insurer shallnot deduct from any return premiums any amount owed to the insurer for anyother indebtedness owed to the insurer by the insured on any policy or policiesother than those being financed under the premium finance agreement.
(8) In the event thatthe crediting of return premiums to the account of the insured results in asurplus over the amount due from the insured, the premium finance company shallrefund the excess to the insured as soon as possible, but in no event laterthan 30 days of receipt of the return premium, provided that no refund shall berequired if it is in an amount less than one dollar ($1.00). This subdivisiondoes not relieve the premium finance company of its duty to report and deliverthese unrefunded monies to the State Treasurer in accordance with G.S. 116B‑29(b).
(9) In the event that abalance due the premium finance company remains on the account after thecancellation of the agreement, the outstanding balance may earn interest at therate stated in the agreement until paid in full.
(10) If a mortgagee orother loss payee is shown on the insurance contract, the insurer shall notifythe mortgagee or loss payee of the cancellation. The written notice shall besent by mail, personal delivery, electronic mail, or facsimile transmission tothe designated mortgagee's or loss payee's last known address. Proof of mailingis sufficient proof of notice. Failure to send this notice to any designatedmortgagee or loss payee shall not give rise to any claim on the part of theinsured. (1963,c. 1118; 1967, c. 825; 1969, c. 941; 1987, c. 864, s. 22; 1995, c. 121, s. 1;1999‑157, s. 6; 2002‑187, s. 6.)