§ 58-51-15. Accident and health policy provisions.
§ 58‑51‑15. Accident and health policy provisions.
(a) RequiredProvisions. Except as provided in subsection (c) of this section each suchpolicy delivered or issued for delivery to any person in this State shallcontain the provisions specified in this subsection in the substance of thewords that appear in this section. Such provisions shall be precededindividually by the caption appearing in this subsection or, at the option ofthe insurer, by such appropriate individual or group captions or subcaptions asthe Commissioner may approve.
(1) A provision in thesubstance of the following language:
ENTIRECONTRACT; CHANGES: This policy, including the endorsements and the attachedpapers, if any, constitutes the entire contract of insurance. No change in thispolicy shall be valid until approved by an executive officer of the insurer andunless such approval be endorsed hereon or attached hereto. No agent hasauthority to change this policy or waive any of its provisions.
(2) A provision in thesubstance of the following language:
TIMELIMIT ON CERTAIN DEFENSES:
a. After two years fromthe date of issue or reinstatement of this policy no misstatements exceptfraudulent misstatements made by the applicant in the application for suchpolicy shall be used to void the policy or deny a claim for loss incurred ordisability (as defined in the policy) commencing after the expiration of suchtwo‑year period.
Theforegoing policy provision may be used in its entirety only in major orcatastrophe hospitalization policies and major medical policies each affordingbenefits of five thousand dollars ($5,000) or more for any one sickness orinjury; disability income policies affording benefits of one hundred dollars($100.00) or more per month for not less than 12 months; and franchisepolicies. Other policies to which this section applies must delete the words"except fraudulent misstatements."
(Theforegoing policy provision shall not be so construed as to affect any legalrequirement for avoidance of a policy or denial of a claim during such initialtwo‑year period, nor to limit the application of G.S. 58‑51‑15(b),(1), (2), (3), (4) and (5) in the event of misstatement with respect to age oroccupation or other insurance.)
(Apolicy which the insured has the right to continue in force subject to itsterms by the timely payment of premium:
1. Until at least age50 or,
2. In the case of apolicy issued after age 44, for at least five years from its date of issue, maycontain in lieu of the foregoing the following provisions (from which theclause in parentheses may be omitted at the insurer's option) under the caption"INCONTESTABLE."
Afterthis policy has been in force for a period of two years during the lifetime ofthe insured (excluding any period during which the insured is disabled), itshall become incontestable as to the statements contained in the application.)
b. This policy containsa provision limiting coverage for preexisting conditions. Preexistingconditions are covered under this policy ____ (insert number of months or days,not to exceed one year) after the effective date of coverage. Preexistingconditions mean "those conditions for which medical advice, diagnosis,care, or treatment was received or recommended within the one‑year periodimmediately preceding the effective date of the person's coverage." Creditfor having satisfied some or all of the preexisting condition waiting periodsunder previous health benefits coverage shall be given in accordance with G.S.58‑51‑17. The excepted benefits described in G.S. 58‑68‑25(b)are not subject to this requirement for giving credit.
(3) A provision in thesubstance of the following language:
GRACEPERIOD: A grace period of ______ (insert a number not less than "7"for weekly premium policies, "10" for monthly premium policies and"31" for all other policies) days will be granted for the payment ofeach premium falling due after the first premium, during which grace period thepolicy shall continue in force.
(Apolicy which contains a cancellation provision may add, at the end of the aboveprovision, subject to the right of the insurer to cancel in accordance with thecancellation provision hereof.
Apolicy in which the insurer reserves the right to refuse any renewal shallhave, at the beginning of the above provision,
Unlessnot less than five days prior to the premium due date the insurer has deliveredto the insured or has mailed to his last address as shown by the record of theinsurer written notice of its intention not to renew this policy beyond theperiod for which the premium has been accepted.)
(4) A provision in thesubstance of the following language:
REINSTATEMENT:If any renewal premium be not paid within the time granted the insured forpayment, a subsequent acceptance of premium by the insurer or by any agent dulyauthorized by the insurer to accept such premium, without requiring inconnection therewith an application for reinstatement, shall reinstate thepolicy; provided, however, that if the insurer or such agent requires anapplication for reinstatement and issues a conditional receipt for the premiumtendered, the policy will be reinstated upon approval of such application bythe insurer, or, lacking such approval, upon the forty‑fifth dayfollowing the date of such conditional receipt unless the insurer haspreviously notified the insured in writing of its disapproval of suchapplication. The reinstated policy shall cover only loss resulting from suchaccidental injury as may be sustained after the date of reinstatement and lossdue to such sickness as may begin more than 10 days after such date. In allother respects the insured and insurer shall have the same rights thereunder asthey had under the policy immediately before the due date of the defaultedpremium, subject to any provisions endorsed hereon or attached hereto inconnection with the reinstatement. Any premium accepted in connection with areinstatement shall be applied to a period for which premium has not beenpreviously paid, but not to any period more than 60 days prior to the date of reinstatement.
(Thelast sentence of the above provision may be omitted from any policy which theinsured has the right to continue in force subject to its terms by the timelypayment of premiums:
a. Until at least age50 or,
b. In the case of apolicy issued after age 44, for at least five years from its date of issue.)
(5) A provision in thesubstance of the following language:
NOTICEOF CLAIM: Written notice of claim must be given to the insurer within 20 daysafter the occurrence or commencement of any loss covered by the policy, or assoon thereafter as is reasonably possible. Notice given by or on behalf of theinsured or the beneficiary to the insurer at ______ (insert the location ofsuch office as the insurer may designate for the purpose), or to any authorizedagent of the insurer, with information sufficient to identify the insured,shall be deemed notice to the insurer.
(In apolicy providing a loss‑of‑time benefit which may be payable for atleast two years, an insurer may at its option insert the following between thefirst and second sentences of the above provision:
Subjectto the qualifications set forth below, if the insured suffers loss of time onaccount of disability for which indemnity may be payable for at least twoyears, he shall, at least once in every six months after having given notice ofclaim, give to the insurer notice of continuance of said disability, except inthe event of legal incapacity. The period of six months following any filing ofproof by the insured or any payment by the insurer on account of such claim orany denial of liability in whole or in part by the insurer shall be excluded inapplying this provision. Delay in the giving of such notice shall not impairthe insured's right to any indemnity which would otherwise have accrued duringthe period of six months preceding the date on which such notice is actuallygiven.)
(6) A provision in thesubstance of the following language:
CLAIMFORMS: The insurer, upon receipt of a notice of claim, will furnish to theclaimant such forms as are usually furnished by it for filing proofs of loss.If such forms are not furnished within 15 days after the giving of such noticethe claimant shall be deemed to have complied with the requirements of thispolicy as to proof of loss upon submitting, within the time fixed in the policyfor filing proofs of loss, written proof covering the occurrence, the characterand the extent of the loss for which claim is made.
(7) A provision in thesubstance of the following language:
PROOFSOF LOSS: Written proof of loss must be furnished to the insurer at its saidoffice in the case of a claim for loss for which this policy provides anyperiodic payment contingent upon continuing loss within 180 days after thetermination of the period for which the insurer is liable and in case of aclaim for any other loss within 180 days after the date of such loss. Failureto furnish such proof within the time required shall not invalidate nor reduceany claim if it was not reasonably possible to give proof within such time,provided such proof is furnished as soon as reasonably possible and in noevent, except in the absence of legal capacity of the insured, later than oneyear from the time proof is otherwise required.
(8) A provision in thesubstance of the following language:
TIMEOF PAYMENT OF CLAIMS: Indemnities payable under this policy for any loss otherthan loss for which this policy provides any period payment will be paidimmediately upon receipt of due written proof of such loss. Subject to duewritten proof of loss, all accrued indemnities for loss for which this policyprovides periodic payment will be paid ______ (insert period for payment whichmust not be less frequently than monthly) and any balance remaining unpaid uponthe termination of liability will be paid immediately upon receipt of duewritten proof.
(9) A provision in thesubstance of the following language:
PAYMENTOF CLAIMS: Indemnity for loss of life will be payable in accordance with thebeneficiary designation and the provisions respecting such payment which may beprescribed herein and effective at the time of payment. If no such designationor provision is then effective, such indemnity shall be payable to the estateof the insured. Any other accrued indemnities unpaid at the insured's deathmay, at the option of the insurer, be paid either to such beneficiary or tosuch estate. All other indemnities will be payable to the insured.
(Thefollowing provisions, or either of them, may be included with the foregoingprovision at the option of the insurer:
Ifany indemnity of this policy shall be payable to the estate of the insured, orto an insured or beneficiary who is a minor or otherwise not competent to givea valid release, the insurer may pay such indemnity, up to an amount not exceeding$ ______ (insert an amount which shall not exceed three thousand dollars($3,000)), to any relative by blood or connection by marriage of the insured orbeneficiary who is deemed by the insurer to be equitably entitled thereto. Anypayment made by the insurer in good faith pursuant to this provision shallfully discharge the insurer to the extent of such payment.
Subjectto any written direction of the insured in the application or otherwise all ora portion of any indemnities provided by this policy on account of hospital,nursing, medical, or surgical services, may at the insurer's option and unlessthe insured requests otherwise in writing not later than the time of filingproofs of such loss, be paid directly to the hospital or person rendering such services;but it is not required that the service be rendered by a particular hospital orperson.)
(10) A provision in thesubstance of the following language:
PHYSICALEXAMINATIONS AND AUTOPSY: The insurer at its own expense shall have the rightand opportunity to examine the person of the insured when and as often as itmay reasonably require during the pendency of a claim hereunder and to make anautopsy in case of death where it is not forbidden by law.
(11) A provision in thesubstance of the following language:
LEGALACTIONS: No action at law or in equity shall be brought to recover on thispolicy prior to the expiration of 60 days after written proof of loss has beenfurnished in accordance with the requirements of this policy. No such actionshall be brought after the expiration of three years after the time writtenproof of loss is required to be furnished.
(12) A provision in thesubstance of the following language:
CHANGEOF BENEFICIARY: Unless the insured makes an irrevocable designation of beneficiary,the right to change of beneficiary is reserved to the insured and the consentof the beneficiary or beneficiaries shall not be requisite to surrender orassignment of this policy or to any change of beneficiary or beneficiaries, orto any other changes in this policy.
(Thefirst clause of this provision, relating to the irrevocable designation ofbeneficiary, may be omitted at the insurer's option.)
(b) Other Provisions. Except as provided in subsection (c) of this section, no such policy deliveredor issued for delivery to any person in this State shall contain provisionsrespecting the matters set forth below unless such provisions are in thesubstance of the words that appear in this section. Any such provisioncontained in the policy shall be preceded individually by the appropriatecaption appearing in this subsection or, at the option of the insurer, by suchappropriate individual or group captions or subcaptions as the Commissioner mayapprove.
(1) A provision in thesubstance of the following language:
CHANGEOF OCCUPATION: If the insured be injured or contract sickness after havingchanged his occupation to one classified by the insurer as more hazardous thanthat stated in this policy or while doing for compensation anything pertainingto an occupation so classified, the insurer will pay only such portion of theindemnities provided in this policy as the premium paid would have purchased atthe rates and within the limits fixed by the insurer for such more hazardousoccupation. If the insured changes his occupation to one classified by theinsurer as less hazardous than that stated in this policy, the insurer, uponreceipt of proof of such change of occupation, will reduce the premium rateaccordingly, and will return the excess pro rata unearned premium from the dateof change of occupation or from the policy anniversary date immediatelypreceding receipt of such proof, whichever is the more recent. In applying thisprovision, the classification of occupational risk and the premium rates shallbe such as have been last filed by the insurer prior to the occurrence of theloss for which the insurer is liable or prior to date of proof of change inoccupation with the state official having supervision of insurance in the statewhere the insured resided at the time this policy was issued; but if suchfiling was not required, then the classification of occupational risk and thepremium rates shall be those last made effective by the insurer in such stateprior to the occurrence of the loss or prior to the date of proof of change inoccupation.
(2) A provision in thesubstance of the following language:
MISSTATEMENTOF AGE: If the age of the insured has been misstated, all amounts payable underthis policy shall be such as the premium paid would have purchased at thecorrect age.
(3) A provision in thesubstance of the following language:
OTHERINSURANCE IN THIS INSURER: If an accident or health or accident and healthpolicy or policies previously issued by the insurer to the insured be in forceconcurrently herewith, making the aggregate indemnity for ____ (insert type ofcoverage or coverages) in excess of $ ______ (insert maximum limit of indemnityor indemnities) the excess insurance shall be void and all premiums paid forsuch excess shall be returned to the insured or to his estate.
Or,in lieu thereof:
Insuranceeffective at any one time on the insured under a like policy or policies inthis insurer is limited to the one such policy elected by the insured, hisbeneficiary or his estate, as the case may be, and the insurer will return allpremiums paid for all other such policies.
(4) A provision in thesubstance of the following language:
INSURANCEWITH OTHER INSURERS: If there be other valid coverage, not with this insurer,providing benefits for the same loss on a provision of service basis or on anexpense incurred basis and of which this insurer has not been given writtennotice prior to the occurrence or commencement of loss, the only liabilityunder any expense incurred coverage of this policy shall be for such proportionof the loss as the amount which would otherwise have been payable hereunderplus the total of the like amounts under all such other valid coverages for thesame loss of which this insurer had notice bears to the total like amountsunder all valid coverages for such loss, and for the return of such portion ofthe premiums paid as shall exceed the pro rata portion for the amount sodetermined. For the purpose of applying this provision when other coverage ison a provision of service basis, the "like amount" of such othercoverage shall be taken as the amount which the services rendered would havecost in the absence of such coverage.
(Ifthe foregoing policy provision is included in a policy which also contains thenext following policy provision there shall be added to the caption of theforegoing provision the phrase "____ EXPENSE INCURRED BENEFITS." Theinsurer may, at its option, include in this provision a definition of"other valid coverage," approved as to form by the Commissioner,which definition shall be limited in subject matter to coverage provided byorganizations subject to regulation by insurance law or by insuranceauthorities of this or any other state of the United States or any province ofCanada, and by hospital or medical service organizations, and to any othercoverage the inclusion of which may be approved by the Commissioner. In theabsence of such definition such term shall not include group insurance,automobile medical payments insurance, or coverage provided by hospital ormedical service organizations or by union welfare plans or employer or employeebenefit organizations. For the purpose of applying the foregoing policyprovision with respect to any insured, any amount of benefit provided for suchinsured pursuant to any compulsory benefit statute (including any workers'compensation or employer's liability statute) whether provided by agovernmental agency or otherwise shall in all cases be deemed to be "othervalid coverage" of which the insurer has had notice. In applying theforegoing policy provisions no third‑party liability coverage shall beincluded as "other valid coverage.")
(5) A provision in thesubstance of the following language:
INSURANCEWITH OTHER INSURERS: If there be other valid coverage, not with this insurer,providing benefits for the same loss on other than an expense incurred basisand of which this insurer has not been given written notice prior to theoccurrence or commencement of loss, the only liability for such benefits underthis policy shall be for such proportion of the indemnities otherwise providedhereunder for such loss as the like indemnities of which the insurer had notice(including the indemnities under this policy) bear to the total amount of alllike indemnities for such loss, and for the return of such portion of thepremium paid as shall exceed the pro rata portion for the indemnities thusdetermined.
(Ifthe foregoing policy provision is included in a policy which also contains thenext preceding policy provision there shall be added to the caption of theforegoing provision the phrase "____ OTHER BENEFITS." The insurermay, at its option, include in this provision a definition of "other validcoverage," approved as to form by the Commissioner, which definition shallbe limited in subject matter to coverage provided by organizations subject toregulation by insurance law or by insurance authorities of this or any otherstate of the United States or any province of Canada, and to any other coveragethe inclusion of which may be approved by the Commissioner. In the absence ofsuch definition such term shall not include group insurance, or benefitsprovided by union welfare plans or by employer or employee benefitorganizations. For the purpose of applying the foregoing policy provision withrespect to any insured, any amount of benefit provided for such insuredpursuant to any compulsory benefit statute (including any workers' compensationor employer's liability statute) whether provided by a governmental agency orotherwise shall in all cases be deemed to be "other valid coverage"of which the insurer has had notice. In applying the foregoing policy provisionno third‑party liability coverage shall be included as "other validcoverage.")
(6) A provision in thesubstance of the following language:
RELATIONOF EARNINGS TO INSURANCE: If the total monthly amount of loss of time benefitspromised for the same loss under all valid loss of time coverage upon theinsured, whether payable on a weekly or monthly basis, shall exceed the monthlyearnings of the insured at the time disability commenced or his average monthlyearnings for the period of two years immediately preceding a disability forwhich claim is made, whichever is the greater, the insurer will be liable onlyfor such proportionate amount of such benefits under this policy as the amountof such monthly earnings or such average monthly earnings of the insured bearsto the total amount of monthly benefits for the same loss under all suchcoverage upon the insured at the time such disability commences and for thereturn of such part of the premiums paid during such two years as shall exceedthe pro rata amount of the premiums for the benefits actually paid hereunder;but this shall not operate to reduce the total monthly amount of benefitspayable under all such coverage upon the insured below the sum of two hundreddollars ($200.00) or the sum of the monthly benefits specified in suchcoverages, whichever is the lesser, nor shall it operate to reduce benefitsother than those payable for loss of time.
(Theforegoing policy provision may be inserted only in a policy which the insuredhas the right to continue in force subject to its terms by the timely paymentof premiums:
a. Until at least age50 or,
b. In the case of apolicy issued after age 44, for at least five years from its date of issue.
Theinsurer may, at its option, include in this provision a definition of"valid loss of time coverage," approved as to form by theCommissioner, which definition shall be limited in subject matter to coverageprovided by governmental agencies or by organizations subject to regulation byinsurance law or by insurance authorities of this or any other state of theUnited States or any province of Canada, or to any other coverage the inclusionof which may be approved by the Commissioner or any combination of suchcoverages. In the absence of such definition such term shall not include anycoverage provided for such insured pursuant to any compulsory benefit statute(including any workers' compensation or employer's liability statute), orbenefits provided by union welfare plans or by employer or employee benefitorganizations.)
(7) A provision in thesubstance of the following language:
UNPAIDPREMIUM: Upon the payment of a claim under this policy, any premium then dueand unpaid or covered by any note or written order may be deducted therefrom.
(8) Repealed by SessionLaws 1955, c. 886, s. 1.
(9) A provision in thesubstance of the following language:
CONFORMITYWITH STATE STATUTES: Any provision of this policy which, on its effective date,is in conflict with the statutes of the state in which the insured resides onsuch date is hereby amended to conform to the minimum requirements of suchstatutes.
(10) A provision in thesubstance of the following language:
ILLEGALOCCUPATION: The insurer shall not be liable for any loss to which acontributing cause was the insured's commission of or attempt to commit afelony or to which a contributing cause was the insured's being engaged in anillegal occupation.
(11) Repealed by SessionLaws 2001‑334, s. 4.1, effective October 1, 2001.
(c) Inapplicable orInconsistent Provisions. If any provision of this section is in whole or inpart inapplicable to or inconsistent with the coverage provided by a particularform of policy the insurer, with the approval of the Commissioner, shall omitfrom such policy any inapplicable provision or part of a provision, and shallmodify any inconsistent provision or part of the provision in such manner as tomake the provision as contained in the policy consistent with the coverageprovided by the policy.
(d) Order of CertainPolicy Provisions. The provisions which are the subject of subsections (a)and (b) of this section, or any corresponding provisions which are used in lieuthereof in accordance with such subsections, shall be printed in theconsecutive order of the provisions in such subsections or, at the option ofthe insurer, any such provision may appear as a unit in any part of the policy,with other provisions to which it may be logically related, provided theresulting policy shall not be in whole or in part unintelligible, uncertain,ambiguous, abstruse, or likely to mislead a person to whom the policy isoffered, delivered or issued.
(e) Third‑PartyOwnership. The word "insured," as used in Articles 50 through 55 ofthis Chapter shall not be construed as preventing a person other than theinsured with a proper insurable interest from making application for and owninga policy covering the insured or from being entitled under such a policy to anyindemnities, benefits and rights provided therein.
(f) Requirements ofOther Jurisdictions.
(1) Any policy of aforeign or alien insurer, when delivered or issued for delivery to any personin this State, may contain any provision which is not less favorable to theinsured or the beneficiary than the provisions of Articles 50 through 55 ofthis Chapter and which is prescribed or required by the law of the state underwhich the insurer is organized.
(2) Any policy of adomestic insurer may, when issued for delivery in any other state or country,contain any provision permitted or required by the laws of such other state orcountry.
(g) Filing Procedure. The Commissioner may make such reasonable rules and regulations concerning theprocedure for the filing or submission of policies subject to Articles 50through 55 of this Chapter as are necessary, proper or advisable to theadministration of Articles 50 through 55 of this Chapter. This provision shallnot abridge any other authority granted the Commissioner by law.
(h) PreexistingCondition Exclusion Clarification. Sub‑subdivision (a)(2)b. of thissection does not apply to policies issued to eligible individuals under G.S. 58‑68‑60.
(i) Applicability. Thissection applies to all accident and health insurance policies delivered orissued for delivery in this State, including certificates issued under grouppolicies that are delivered or issued for delivery in this State. This sectionalso applies to certificates issued under a policy issued and delivered to atrust or association outside this State and covering persons residing in thisState. (1953,c. 1095, s. 2; 1955, c. 850, s. 8; c. 886, s. 1; 1961, c. 432; 1979, c. 755,ss. 9‑12; 1983 (Reg. Sess., 1984), c. 1110, s. 13; 1987, c. 864, s. 42;1987 (Reg. Sess., 1988), c. 975, s. 2; 1991, c. 636, s. 3; c. 720, s. 35; 1993,c. 506, s. 4; c. 553, s. 17; 1995, c. 507, s. 23A.1(g); 1995 (Reg. Sess.,1996), c. 742, s. 27; 1997‑259, ss. 7, 7.1; 1999‑351, s. 1; 2000‑162,s. 4(d); 2001‑334, s. 4.1; 2002‑187, s. 5.2; 2005‑223, ss.4(a), 4(b); 2007‑298, s. 2.1; 2009‑382, s. 8.)