CHAPTER 58.

Insurance.

ARTICLE 36.
North Carolina Rate Bureau.

Section

§58-36-105. Certain workers' compensation insurance policy cancellations prohibited.

(a) No policy of workers' compensation insurance or employers' liability insurance written in connection with a policy of workers' compensation insurance shall be cancelled by the insurer before the expiration of the term or anniversary date stated in the policy and without the prior written consent of the insured, except for any one of the following reasons:

1. Nonpayment of premium in accordance with the policy terms.
    
2. An act or omission by the insured or the insured's representative that constitutes material misrepresentation or nondisclosure of a material fact in obtaining the policy, continuing the policy, or presenting a claim under the policy.
    
3. Increased hazard or material change in the risk assumed that could not have been reasonably contemplated by the parties at the time of assumption of the risk.
    
4. Substantial breach of contractual duties, conditions, or warranties that materially affects the insurability of the risk.
    
5. A fraudulent act against the company by the insured or the insured's representative that materially affects the insurability of the risk.
    
6. Willful failure by the insured or the insured's representative to institute reasonable loss control measures that materially affect the insurability of the risk after written notice by the insurer.
    
7. Loss of facultative reinsurance or loss of or substantial changes in applicable reinsurance as provided in G.S. §58-41-30.
    
8. Conviction of the insured of a crime arising out of acts that materially affect the insurability of the risk.
    
9. A determination by the Commissioner that the continuation of the policy would place the insurer in violation of the laws of this State.
    
10. The named insured fails to meet the requirements contained in the corporate charter, articles of incorporation, or bylaws of the insurer, when the insurer is a company organized for the sole purpose of providing members of an organization with insurance coverage in this State.

(b) Any cancellation permitted by subsection (a) of this section is not effective unless written notice of cancellation has been given by registered or certified mail, return receipt requested, to the insured not less than 15 days before the proposed effective date of cancellation. The notice shall be given by registered or certified mail, return receipt requested, to the insured and any other person designated in the policy to receive notice of cancellation at their addresses shown in the policy or, if not indicated in the policy, at their last known addresses. The notice shall state the precise reason for cancellation. Whenever notice of intention to cancel is required to be given by registered or certified mail, no cancellation by the insurer shall be effective unless and until such method is employed and completed. Failure to send this notice, as provided in this section, to any other person designated in the policy to receive notice of cancellation invalidates the cancellation only as to that other person's interest.

(c) This section does not apply to any policy that has been in effect for fewer than 60 days and is not a renewal of a policy. That policy may be cancelled for any reason by giving at least 30 days' prior written notice of and reasons for cancellation to the insured by registered or certified mail, return receipt requested.

(d) Cancellation for nonpayment of premium is not effective if the amount due is paid before the effective date set forth in the notice of cancellation.

(e) Copies of the notice required by this section shall also be sent to the agent or broker of record though failure to send copies of the notice to those persons shall not invalidate the cancellation. Mailing copies of the notice by regular first- class mail to the agent or broker of record satisfies the requirements of this subsection. (2001.)

Return to Table of Contents page for Chapter 97. Workers' Compensation Act.

Display Complete Text of Chapter 97. Workers' Compensation Act.