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Frequently Asked Questions
If you have questions about:
Automobile Insurance Q: Does the automobile policy
contain a grace period for paying the renewal
premium? A: No. There is no required
grace period for the payment of a renewal premium. The policy actually expires
at the end of the policy period, if premium is not received by that
date. Q: What kind of insurance and
limits are required for automobile
insurance? A: The North Carolina Financial
Responsibility Laws require that Automobile Liability coverage be maintained.
The minimum coverage requirements are $30,000 Bodily Injury for each person,
$60,000 total Bodily Injury for all persons in and accident and $25,000 for
Property Damage. Additionally, the law requires that uninsured motorist coverage
with the above minimum limits (or up to $1,000,000 as selected by the
policyholder) must be carried unless rejected by the motorist in
writing. Q: Must I use the repair
facility that the insurance company recommends or
suggests? A: No. The owner of a damaged
vehicle may use the repair facility of his/her choice. It must be noted though,
that if your vehicle can be repaired for less than what your selected shop
charges, you may be responsible for the additional
amount. Q: Can an insurance company use
salvage parts or parts not made by the original manufacturer in estimating the
amount of repairs?
A: Yes. A company does not have
to put new original manufacturer parts on a used vehicle. Insurance regulations,
however, do require that the use of after market parts be disclosed on the
policy or the estimate. Q: How can an insurance company
cancel the comprehensive and collision coverage on my policy if it is required
by law? A: Comprehensive and collision coverage is not required by law. If your vehicle is financed, your lien holder will require that you carry this type of coverage. Since this coverage is not mandated by law, the cancellation provisions of the policy apply. The cancellation provisions allow a company to cancel the coverage by giving 10 days advance notice.
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Page
Q: My home was damaged by the flood. Will my
homeowner's policy pay for the damages?
A: No. Most people who live in flood-hazard areas* know from
experience that homeowners policies do not cover loss due to flood. Water damage
due to flood is specifically excluded from coverage under the homeowner's
policy. In insurance terms, flood is an "excluded peril" from the homeowners’
policy. Therefore, flood insurance, which is a separate policy, must be
purchased through the federal government. *Keep in mind that flood insurance is not just for properties in a
floodplain. Nearly 30 percent of all flood insurance claims are for properties
outside the special flood-hazard areas. Q: How do I file a claim if I have purchased federal
flood insurance? A: Consumers who have purchased a flood insurance policy should
first contact their insurance agent. Q: I don't have federal flood insurance, but I added a
sewer backup endorsement to my homeowners’ policy. I had sewage backup into my
basement. Am I covered? A: Homeowners Policy - The standard homeowners’ policy
does not cover water damage due to the backup of sewer or sump pump. Many
companies will sell additional coverage for this by a separate "endorsement" or
addition to the basic policy. Commercial
Property Policy - Most commercial property
policies do not cover water damage due to the backup of sewer or sump pump.
Coverage can be added, like a homeowners’ policy, by
endorsement. National
Flood Policy
- The National Flood Insurance policy provides coverage for sewer backup even if
the flood water has not touched the house if there is a general condition of
flooding in the area, the flood was the proximate cause of the sewer backup,
damage occurs within 72 hours after the flood recedes, and the property is
insured to 80 percent of its value. The policy is silent about sump pump
coverage. Q: What coverage do I have if the flood water damages
my home or building and its contents?
A: Homeowner Policy - The standard homeowners’ policy
does not cover water damage due to flood. Mobile Home
Policy - Some mobile home
policies do provide flood coverage; check with your agent or
company. Commercial Property
Policy - The standard
commercial property policy does not cover water damage due to flood. However,
some carriers have added limited coverage to their deluxe policies or added it
to their other policies by "endorsement." National
Flood Policy
- The National Flood Insurance policy covers loss due to water damage resulting
directly from flood. Q: The power was shut off in my neighborhood and all
the food in my refrigerator and freezer spoiled. Is there any coverage?
A: Homeowner Policy - The standard homeowner policy does
not cover food spoilage as a result of power failure off premises. Some
comprehensive policies, however, have added a limited amount of coverage, i.e.,
$500, while other companies endorse the policy to cover food
spoilage. Commercial
Property Policy - Most commercial property
policies do not cover food spoilage due to power failure. Most companies offer
coverage through the use of an endorsement. National
Flood Policy
- The National Flood Insurance policy does cover loss of refrigerated products
but only if caused by flood and if the power and cooling equipment is situated
on the premises. Q: When the flood waters receded, it left a large
amount of debris on my property. Is their coverage for removal of this debris?
A: Homeowner Policy - The standard homeowner policy
provides a certain amount for debris removal, but only if covered peril causes
the loss. Since flood is not a covered peril, there would be no
coverage. Commercial
Property -
Most commercial property policies provide coverage for debris removal if a
covered peril causes the loss. National Flood Policy - The National Flood Insurance policy covers insured debris removal anywhere and non-insured debris only if it is on the insured property. Uninsured debris on the insured's lawn would not be covered.
Health Insurance Q: Why does my health insurance
premium go up? I haven’t been sick or presented any claims to my insurance
company. A: Even though you have not
presented any claims, others that are insured by the same type policy apparently
have presented claims. Rates are directly affected by the claims experience of
the group insured under a given plan or policy.
Rate increases by licensed insurance companies in this state are
filed with this department. The filings are reviewed very carefully to make sure
that the claims experience and expenses warrant the
increase. Q: What is the Consolidated
Omnibus Budget Reconciliation Act
(COBRA)? A: COBRA is a federal law that
applies to most employer health benefit plans with 20 or more employees. COBRA
gives you the right to continue group health care coverage for a limited period
for yourself, your spouse and any dependent children if
you:
COBRA also enables a spouse and dependent children to continue
coverage when an employee becomes entitled to Medicare, divorces or dies. An
employee’s children qualify for continued coverage under COBRA if they lose
"dependent child" status under the rules of your health benefit plan. You have
60 days after qualifying for COBRA coverage to decide whether you want it. If
you accept it, you pay the premium, plus a two percent administrative fee, out
of your own pocket. Depending on the situation, coverage may continue for 18 to
36 months. Q: If I change employers, can I
expect to get continuation of my group coverage with a new employer?
A: New employees are generally eligible to be covered under their new employer’s group health plan. Pre-existing conditions limitations will not apply if there has not been a lapse of coverage of more than 63 days.
Homeowners' Insurance Q: Can an insurance company not
renew my homeowners’ insurance policy? A: Yes. Since homeowners
insurance is not required by Q: Can credit history be used as
a reason to not renew my homeowners’ policy?
A: Yes.
Q: My homeowners’ policy is not
being renewed because of the frequency of claims. I've only had three small
claims, all under $1,000. Can they do that? A: Yes. While the dollar amount
of a claim is usually irrelevant, each insurance company establishes its own
underwriting guidelines. That is, the criteria it uses to determine when a
homeowner is or becomes a greater risk than it wants to insure. Consequently,
some underwriting guidelines may identify an amount, but most companies simply
specify a number of claims within a given period of time.
Each
carrier's underwriting guidelines differ, so what one insurance company may not
want to insure, another company may. Q: If the insurance company and
I can not agree on the amount that it will take to repair my home, do I have to
file suit? A: No, your first step should be to utilize the appraisal provision of your policy. You will find it under "Section I—Conditions" of your policy contract.
Life Insurance Q: What does "free look"
mean? A: You are allowed no less than
10 days from the date a life insurance policy is delivered, to review and
evaluate the policy. A policy sold by mail order must provide for a 30-day
review period. Should you elect to return the policy, the insurance company must
refund to you any premium paid, including policy fees or charges.
Q: If I pay my life insurance
premium and then decide to cancel my policy, will I receive a pro rata refund of
my premium? A: An insurer is not required
under law to refund any portion of your premium if you choose to cancel your
policy during the policy term. Q: Does a life insurance policy
contain a grace period for paying the premium?
A: Yes. A life insurance policy will provide for a 31 day grace period within which you can still make your premium payment. Your policy will remain in force during this time.
North Carolina's Workers' Compensation Q: Who is required to
provide workers' compensation coverage? A: Any employer who employs
three or more employees. Note: Every executive officer selected or appointed and
empowered in accordance with the charter and bylaws of a corporation is
considered an employee of such corporation. For example, a corporation with two
officers and one employee would be required to provide workers' compensation
coverage. Any employer in which one or more employees are employed in activities
that involve the use of or presence of radiation is required to have coverage.
Q: What must an employee do
when an injury occurs?
A:
Report the injury
to the employer, in writing, immediately and in any event within 30 days.
Q: Who provides and directs
medical treatment?
A: The employer or its
insurance company, subject to any Commission orders, provides and directs
medical treatment. The Commission may permit the employee to change physicians
or approve a physician of employee's selection when good grounds are shown.
However, payment by the employer or carrier is not guaranteed unless written
permission to change physicians is obtained from the employer, carrier, or
Commission before the treatment is rendered. Q: What are the rules
for chiropractic treatment? A: If the employer grants
permission to seek medical treatment from a chiropractor, the employee is
entitled to 20 visits if medically necessary. If additional visits are needed,
the chiropractor should request this authorization from the employer.
Q: What happens if, in an
emergency, the employer fails or refuses to provide medical
treatment?
A: The employee may obtain the
necessary treatment from a physician or hospital of his own choice, but must
promptly request the Commission's approval. Q: When do
I become eligible for lost wage compensation? A: No compensation is due for
the first seven (7) days of lost time unless the disability exceeds 21 days.
Therefore, the first check will not include payment for days 1-7. Payment for
those days will be made should the disability continue beyond 21 days.
A: Since you have reached the
medical improvement expected following your injury, we would refer you to the
N.C. Division of Vocational Rehabilitation for reemployment, counseling, and
guidance. Q: I am getting ready to
open my own business. Am I required by law to carry workers’ compensation
insurance? A: In order to determine if you
are required by law to carry workers’ compensation insurance, you must first
determine your business entity, i.e., sole proprietorship, partnership, limited
liability company (LLC), corporation, agricultural operation, business with
radiation, estate, trust, etc. If you are a sole
proprietorship, partnership, LLC, estate, or trust, you are required by law to
carry coverage once you have three (3) employees who are regularly
employed, in addition to the sole proprietor, partners,
formulators of the LLC, executor of the estate, and bearer of the trust.
It does not matter if these employees are full time, part time, regular
seasonal or family members. If you are incorporated,
including all forms of corporations and those which have non-profit status, you
are required by law to carry coverage once you have a total of three (3)
people in the corporation. Everyone is included in the
headcount, including corporate
officers. Businesses with radiation are
required by law to carry coverage when they have one (1) employee. An
agricultural operation must carry coverage when there are ten (10) or more
regular, non-seasonal employees. Any other business entity not mentioned above
would use the three (3) or more employees rule. Q: Do I have to be covered
under my own policy? A: As a corporate officer, sole
proprietor or partner, you may choose to exempt yourself from coverage under
your policy or elect to have yourself covered. In some situations, general
contractors may make it a condition of employment for subcontractors to be
covered. Subcontractors should discuss this with general contractors upon being
hired. Q: If I am a corporate
officer, owner of a business, or partner, and I want to be covered under my
workers’ compensation insurance policy, is my entire payroll taken into
consideration for premium? A: No. There are maximum
amounts of payroll which can be taken into consideration for the setting of
premium for sole proprietors, partners, formulators of an LLC and corporate
officers. Contact your insurance agent for these amounts or the N.C.
Rate Bureau at (919)
582-1056. See the three (3) or more
employees rule. Q: As a general contractor,
am I responsible for covering my
subcontractors? A: If the subcontractor has one
or two employees, there is liability on the part of the principal contractor for
those employees but not that of the subcontractor. Waivers are no longer
necessary since N.C. Gen. Stat. §97-19 declared
that principal contractors are not responsible for subcontractors, only their
one or two employees. Any principal contractor,
intermediate contractor, or subcontractor who sublets any contract to a
subcontractor without first obtaining documentation that the subcontractor is in
compliance with the N.C. Workers’ Compensation Act is
liable for payment of compensation and other benefits if any employee of the
subcontractor is injured or dies due to an accident arising out of and in the
course of the performance of the work covered by such subcontract. If the
principal contractor, intermediate contractor, or subcontractor obtains proper
documentation at the time of subletting the contract to a subcontractor, he will
not be held liable to any of the subcontractor’s employees for compensation or
other benefits. The principal contractor, intermediate contractor, or
subcontractor may require documentation of workers’ compensation coverage
regardless of whether the subcontractor regularly employs fewer than three
employees. Q: I am a
subcontractor. Do I have to carry coverage if I have no
employees? A: Not if the general
contractor who hires you does not require coverage as a condition of employment
of affording you the opportunity to work. If so, you would either need to
produce a certificate of insurance for the general contractor or allow the
general contractor to deduct workers’ compensation from what he pays you to do
the work. Q: Are there waivers
of workers’ compensation coverage in A: No. Waivers are no longer
valid in Q: I am an employer
and file "1099’s" on a lot of people who work for me. What does this mean for
workers’ compensation? A: Just because you "1099" for
IRS purposes does not mean that those people would be considered independent
contractors under the N.C. Workers’ Compensation Act. If
you as the employer exercise "right to control" over those individuals by
governing the manner and method in the way in which they do their job, then they
may be considered employees under the N.C. Workers’ Compensation Act. (See
N.C. Gen. Stat. §97-2
Case Notes - Independent Contractors.) Q: What are the penalties
for not carrying workers’ compensation insurance
coverage? A: Pursuant to N.C. Gen. Stat. §97-94(b), employers not in compliance with the Act may be subject to penalties
between $50.00 to $100.00 for each day of non-compliance until proper coverage
is obtained. Q: I am an employer
and have a question about my experience modification for my
business. A: Contact your agent first or
contact N.C. Rate Bureau at (919)
582-1056. Q: I am an employer. What do
I do if I think someone is trying to commit
fraud? A: Contact the N.C.
Industrial Commission’s Fraud Investigation Unit toll
free at (888) 891-4895, in
NoticeThis document is not intended to answer all questions regarding workers' compensation or all problems arising under the Workers' Compensation Act. For more information about workers' compensation, see the N.C. Industrial Commission's Annual Bulletin. See also Questions for Business and Industry and Questions for Insurers. For further information, contact:
Main Phone: (919) 807-2500 Fax: (919) 715-0282 Ombudsmen: (800) 688-8349, (919) 807-2501 Fraud Investigations: (888) 891-4895
(in N.C. Industrial
Commission · 4340
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