Summary of Recently Enacted Laws Affecting Insurance

Posted on Wednesday June, 2010
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The first two new laws have more importance to insurance agency practices and operations than the other laws listed.

  • Senate Bill 740 (Session Law 2009-561) affects the 2008 Mandate for Uninsured and Underinsured Motorists Coverage. It revises one aspect of the previous law and clarifies another. In 2008, a law was passed mandating UM/UIM coverage for certain non-commercial vehicles. (Click here to see a summary explanation of the 2008 changes.) SB 740 revises the previous law to allow policyholders to select UM limits lower than their Bodily Injury and Property Damage Liability limits but no lower than the Financial Responsibility limits of $30k/$60k BI and $25k PD. It also allows policyholders to select lower UIM limits than their Bodily Injury and Property Damage Limits but must be greater than the Financial Responsibility Limits. The UIM limits must be selected at a level higher than the 30/60/25 financial responsibility minimum since there could be no underinsured motorists for a policyholder with minimum bodily injury and property damage limits. Since the previous law exempted certain fleet vehicles, the law was unclear as to when the count to determine fleet eligibility should be taken. In other words, if the policy had five or more vehicles at policy inception but was reduced to four vehicles during the term of the policy, did the policy lose its exemption from the UM/UIM mandate? SB 740 clarifies that the count for fleet eligibility will be made at policy inception or renewal date. Once eligibility is established, it remains in place for the balance of the policy period. (Effective for policy issued or renewed on or after February 1, 2010) o The Selection/Rejection form was not reinstated.
  • Senate Bill 660 (Session Law 2009-440) required that diminished value become a part of the property damage liability claims settlement process. If the insurer has admitted liability for the claimed property damage and yet the insurer and claimant cannot agree on the fair market value of the damaged vehicle immediately after the accident, this bill establishes a resolution process available to the dispute. If the difference in the insurer’s and claimant’s estimate of the diminished fair market value is greater than $2,000 or 25% of the fair market retail value of the damaged auto prior to the loss as determined by the lesser of the latest edition of the NADA Pricing Guide Book or other publication approved by the Commissioner of Insurance, either party upon written demand can request arbitration. (Effective for policy issued or renewed on or after October 1, 2009) o Each party will within 20 days of written demand select a “competent and disinterested appraiser”.
    • If the appraisers cannot agree as to the fair market value of the loss within 15 days, they shall select an umpire within 15 days.
    • If the appraiser cannot agree on an umpire, either party can request a magistrate of the county where the damaged auto is registered or the county where the accident occurred to select an umpire. The umpire shall prepare a report of the amount of loss and file with the insurer and claimant.
    • Agreement of the two appraisers or the report of the umpire shall establish the value of the damage. The umpire’s report of loss shall not be higher or lower than the appraisals made by the appraisers.
    • The insurer and claimant shall have 15 days after the filing of the report to reject the report and notify the other party. After 15 days, the report is binding. (The law does not specify what happens after rejection of the report.)
    • The claimant and insurer shall each bear the cost of their respective appraiser and the cost of the umpire equally.
    • The law does describe the qualifications for an “appraiser” and an “umpire”.
  • House Bill 1185 (Session Law 2009-369) deals with the conditions under which a driver’s license can be restored after revocation for habitual impaired driving. (Effective December 1, 2009)
  • House Bill 9 (Session Law 2009-135) sets out a prohibition for the sending and receiving of text messages and emails while operating a motor vehicle on public streets or roadways. Violation of the law is a Class 2 misdemeanor and a fine of not less than $100. Further infractions will be subject to additional fines of $100 and cost of court. (Effective December 1, 2009) o Such conviction or convictions shall not be subject to driver’s license points or insurance points.
    • Failure to comply with the law shall not constitute negligence per se or contributory negligence per se by the operator in civil actions for damages arising out of the operation, ownership, or maintenance of a vehicle.
  • House Bill 1165 (Session Law 2009-171) reaffirms the Standard Fire Policy as the foundation of all property insurance policies issued in North Carolina except for automobile physical damage coverages and marine or inland marine coverages. (Effective for fire insurance policies issued or renewed on or after January 1, 2010)
  • House Bill 1159 (Session Law 2009-383) provides for the electronic filing of licensing documents and fees at the discretion of the Commissioner of Insurance. Additionally, it clarifies that any business entity selling, soliciting, or negotiating insurance shall be licensed. (Effective October 1, 2009)
  • House Bill 1161 (Session Law 2009-172) is a Department of Insurance bill clarifying its authority over the matters listed below. (Effective October 1, 2009) o Reinsurance intermediaries for the production of non-privileged documents with respect to reinsurance transactions
    • Clarification of authority for rehabilitators and liquidators
    • A TPA or any related parts may not serve as a trustee of a self-insurer nor may they make contributions to the surplus of a self-insurer
    • Clarifies the requirements for audits and auditors of domestic, foreign and alien insurers
    • Clarifies licensure requirements for foreign or alien insurers
  • House Bill 1313 (Session Law 2009-565) establishes the requirements for licensure and regulation of public adjusters. (Effective July 1, 2010)
  • E. Stuart Powell, Jr., CPCU, CIC, CLU, ChFC, ARM, AMIM, AAI, ARe, CRIS Vice President of Insurance Operations and Technical Affairs