§ 58-57-25. Insurance to be evidenced by individual policy; notice of proposed insurance or certificate; required and prohibited provisions; when debtor to receive copy.
§58‑57‑25. Insurance to be evidenced by individual policy; noticeof proposed insurance or certificate; required and prohibited provisions; whendebtor to receive copy.
(a) All individualcredit insurance sold shall be evidenced by an individual policy. All groupinsurance sold where any part of the premium is paid by the debtors or by thecreditors from identifiable charges collected from the insured debtors shall beevidenced by a certificate of insurance.
(b) Each individualpolicy or certificate of credit insurance shall set forth the name and home‑officeaddress of the insurer, the identity of the insured debtor by name orotherwise, the premium or amount of payment, if any, by the debtor separatelyfor each type of credit insurance if not disclosed in other documents furnishedto the debtor, a description of the coverage including the amount and termthereof, and any exceptions, limitations or restrictions, and shall state thatthe benefits shall be paid to the creditor to reduce or extinguish the unpaidindebtedness, and wherever the amount of insurance may exceed the unpaidindebtedness, that any such excess shall be payable to a beneficiary other thanthe creditor named by the debtor, or to his estate. For open‑end credit,the premium shall be disclosed as the monthly amount charged for each onehundred dollars ($100.00) or one thousand dollars ($1,000) of outstandingindebtedness.
(c) No individualpolicy of credit insurance and no group policy of credit insurance shall bedelivered or issued for delivery in this State unless each contains insubstance all of the following provisions:
(1) In each policy thereshall be a provision that the policy, or the policy and application therefor,if any, or if a copy of the application is endorsed upon or attached to thepolicy when issued, shall constitute the entire insurance contract between theparties, and that all statements made by the creditor or by the individualdebtors shall, in the absence of fraud, be deemed representations and notwarranties.
(2) In each such policythere shall be a provision that the validity of the policy shall not becontested, except for nonpayment of premiums, after it has been in force fortwo years from its date of issue; and that no statement made by any personinsured under the policy relating to his insurability shall be used incontesting the validity of the insurance with respect to which such statementwas made after such insurance has been in force on such insured for a period oftwo years during such person's lifetime, and prior to the date on which theclaim thereunder arose. Provided, however, that unless the insured writes hisown age on the form and signs a statement that he has done so, there shall beno denial of claims grounded on the debtor's age. Provided further, if theindebtedness is paid by renewal or refinancing prior to the scheduled maturitydate, the effective date of the coverage with respect to any policy provisionshall be deemed to be the first date on which the debtor became insured underthe policy covering the original prior indebtedness that was renewed orrefinanced, at least to the extent of the amount and term of the coverageoutstanding at the time of renewal and refinancing of the debt.
(3) In each such policythere shall be a provision that when a claim for the death, disability, orunemployment of the insured arises thereunder, settlement shall be made uponreceipt of due proof of such death, disability, or unemployment.
(4) On the face of eachsuch policy there shall be placed a title which shall briefly and accuratelydescribe the nature and form of the policy.
(5) Each such policy,including rider and endorsement, shall be identified by a form number in thelower left‑hand corner of the first page thereof, and no restriction,condition or provision in or endorsed on such policy shall be valid unless suchprovision or condition is printed in type as large as 10‑point type, one‑pointleaded.
(6) In each such policythere shall be a provision that the insured debtor shall have the right to rescindthe insurance policy or certificate of insurance upon giving written notice tothe insurer within 30 days from the date the insured debtor received suchpolicy or certificate.
(d) No individualpolicy of credit insurance and no group policy of credit insurance shall bedelivered or issued for delivery in this State if it contains any provision:
(1) Limiting the timewithin which any action at law or in equity may be commenced to less than threeyears after the cause of action accrues; or
(2) To the effect thatthe agent soliciting the insurance is the agent of the person insured under thepolicy, or making the acts or representations of such agent binding upon theperson so insured under the policy.
(e) If said individualpolicy or certificate of group insurance is not delivered to the debtor at thetime the debtor requests credit insurance or mailed to the debtor within 30days thereafter, a written notification must be furnished to the debtor withinthe 30‑day period, which notification shall set forth the following:
(1) The name and home‑officeaddress of the insurer;
(2) The identity of thedebtor, by name or otherwise;
(3) The premium oridentifiable charge to the debtor, if any, separately for each type of creditinsurance;
(4) The amount and termof the coverage provided, if possible, otherwise a clear description of themeans of determining the amount and time of expiry;
(5) A brief descriptionof the coverage provided;
(6) A statement that, ifthe insurance is declined by the insurer or otherwise does not becomeeffective, any premium or identifiable charge will be refunded or credited tothe debtor; and
(7) A statement that,upon acceptance by the insurer, the insurance coverage provided shall becomeeffective as specified in G.S. 58‑57‑20.
Any portion of the informationrequired in said notification may be furnished by other documents, if copies ofsuch documents are attached to said notification. If an insurance policy orcertificate of insurance is not delivered to the insured debtor at the time thedebtor requests credit insurance, the debtor shall be given the right torescind the insurance policy or certificate of insurance upon giving writtennotice to the insurer within 30 days from the date the insured debtor receivessuch policy or certificate. (1975, c. 660, s. 1; 1981, c.759, s. 3; 1993, c. 226, s. 5.)