State RegulationsNC specificDifficulty 1/5
An accident and health policy delivered in North Carolina contains a provision that conflicts with the North Carolina insurance statutes. How is the conflict resolved?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under G.S. 58-1-10, every contract of insurance delivered in this state is construed to conform to the laws of North Carolina. A policy term that conflicts with a Chapter 58 requirement is not enforced as written; the statutory standard governs instead. This protects insureds from being bound by contract language that the legislature has disallowed.
Why the other options are wrong
- A) Freedom of contract yields to Chapter 58; a conflicting negotiated term is not enforced under G.S. 58-1-10.
- B) The statute operates by conforming construction of the contract; it does not void the policy from inception.
- D) The Commissioner enforces the statutes through examinations and orders; G.S. 58-1-10 works through construction of the contract, not by the Commissioner rewriting it.
Memory hook
Policy says one thing, G.S. 58-1-10 says another; the statute wins.