§ 58-41-15. Certain policy cancellations prohibited.
§58‑41‑15. Certain policy cancellations prohibited.
(a) No insurance policyor renewal thereof may be cancelled by the insurer prior to the expiration ofthe term or anniversary date stated in the policy and without the prior writtenconsent of the insured, except for any one of the following reasons:
(1) Nonpayment ofpremium in accordance with the policy terms;
(2) An act or omissionby the insured or his representative that constitutes materialmisrepresentation or nondisclosure of a material fact in obtaining the policy,continuing the policy, or presenting a claim under the policy;
(3) Increased hazard ormaterial change in the risk assumed that could not have been reasonablycontemplated by the parties at the time of assumption of the risk;
(4) Substantial breachof contractual duties, conditions, or warranties that materially affects theinsurability of the risk;
(5) A fraudulent actagainst the company by the insured or his representative that materiallyaffects the insurability of the risk;
(6) Willful failure bythe insured or his representative to institute reasonable loss control measuresthat materially affect the insurability of the risk after written notice by theinsurer;
(7) Loss of facultativereinsurance, or loss of or substantial changes in applicable reinsurance asprovided in G.S. 58‑41‑30;
(8) Conviction of theinsured of a crime arising out of acts that materially affect the insurabilityof the risk; or
(9) A determination bythe Commissioner that the continuation of the policy would place the insurer inviolation of the laws of this State;
(10) The named insuredfails to meet the requirements contained in the corporate charter, articles ofincorporation, or bylaws of the insurer, when the insurer is a companyorganized for the sole purpose of providing members of an organization withinsurance coverage in this State.
(b) Any cancellationpermitted by subsection (a) of this section is not effective unless writtennotice of cancellation has been delivered or mailed to the insured, not lessthan 15 days before the proposed effective date of cancellation. The noticemust be given or mailed to the insured, and any designated mortgagee or losspayee at their addresses shown in the policy or, if not indicated in thepolicy, at their last known addresses. The notice must state the precisereason for cancellation. Proof of mailing is sufficient proof of notice. Failure to send this notice to any designated mortgagee or loss payeeinvalidates the cancellation only as to the mortgagee's or loss payee'sinterest.
(c) This section doesnot apply to any insurance policy that has been in effect for less than 60 daysand is not a renewal of a policy. That policy may be cancelled for any reasonby furnishing to the insured at least 15 days prior written notice of andreasons for cancellation.
(d) Cancellation fornonpayment of premium is not effective if the amount due is paid before theeffective date set forth in the notice of cancellation.
(e) Copies of thenotice required by this section shall also be sent to the agent or broker ofrecord; however, failure to send copies of the notice to such persons shall notinvalidate the cancellation. (1985 (Reg. Sess., 1986), c.1027, s. 14.)