State RegulationsNC specificDifficulty 2/5
Which statement best characterizes an insurance policy as a contract under North Carolina insurance law?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
North Carolina treats insurance policies as contracts of adhesion: the insurer drafts the terms and the applicant accepts or walks away, with no true negotiation of the printed language. North Carolina's insurance statutes — anchored by Article 1 of Chapter 58 (G.S. 58-1-10) — operate alongside settled contract principles, under which ambiguity in the insurer's drafting is generally construed against the drafter. This protects applicants who had no hand in writing the policy.
Why the other options are wrong
- A) Adhesion contracts are defined by the absence of equal negotiation over the printed terms.
- B) The insurer, not the insured, drafts the policy language.
- C) The insurer's obligations are fully enforceable once the contract is formed; they are not optional.
Memory hook
Take it or leave it — the drafter eats the ambiguity.