§ 66-373. Insurance policy requirements.
§ 66‑373. Insurancepolicy requirements.
(a) Each company orperson subject to this section shall maintain contractual liability insuranceor service agreement reimbursement insurance with an authorized insurer for onehundred percent (100%) of claims exposure, including reported and incurred butnot reported claims and claims expenses, on business written in this Stateunless the company or person:
(1) Maintains an auditednet worth of one hundred million dollars ($100,000,000);
(2) Has offered serviceagreement contracts or warranties, as applicable to the respective company, itsparent company, or person, for at least the preceding 10 years; and
(3) Either is requiredto file and has filed an SEC Form 10K or Form 20‑F with the Securitiesand Exchange Commission (SEC) within the last calendar year or, if the companydoes not file with the SEC, can produce, upon request, a copy of the company'saudited financial statements, which show a net worth of the company or personof at least one hundred million dollars ($100,000,000). A company or person mayutilize its parent company's Form 10‑K, Form 20‑F, or auditedfinancial statements to satisfy this requirement if the parent company agreesto guarantee the obligations of the company or person relating to serviceagreement contracts or warranties, as applicable to the respective company orperson, sold by the company or person in this State.
(b) All forms relatingto insurance policies written by authorized insurers under this section shallbe filed with and approved by the Commissioner of Insurance before they may beused for any purpose in this State, irrespective of whether the insurers arelicensed insurers.
(c) Each policy shallcontain the following provisions:
(1) If the company orperson does not fulfill its obligations under service agreements or warrantiesissued in this State for any reason, including federal bankruptcy or statereceivership proceedings, the insurer will pay losses and unearned premiumrefunds directly to any person making the claim under the service agreement.
(2) The insurer shallassume full responsibility for the administration of claims if the company orperson is unable to do so.
(3) The policy issubject to the cancellation, nonrenewal, and renewal provisions of G.S. 58‑41‑15,58‑41‑20, 58‑41‑25, and 58‑41‑40.
(4) The policy shallinsure all service agreements and warranties that were issued while the policywas in effect, regardless of whether the premium was remitted to the insurer.
(5) If the insurer isfulfilling any service agreement covered by the policy and if the serviceagreement holder cancels the service agreement, the insurer shall make a fullrefund of the unearned premium to the consumer pursuant to G.S. 66‑372(e)(3).This subdivision applies only to service agreement companies.
(d) The Commissioner ofInsurance may adopt rules, in addition to the requirements of this section,governing the terms and conditions of policy forms for the insurance requiredby this section.
(e) Persons andcompanies subject to G.S. 58‑1‑15, 58‑1‑20, 66‑370,66‑371, and 66‑374 are subject to and shall comply with thissection. (1993(Reg. Sess., 1994), c. 730, s. 1; 2003‑290, s. 1(c); 2007‑95, ss.5, 12.)