State RegulationsNC specificDifficulty 2/5
Which of the following practices by a North Carolina producer constitutes an unlawful rebate under G.S. 58-33-85?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under G.S. 58-33-85(a),(b), no insurer or producer may give any rebate, discount, premium reduction, special favor, or valuable consideration not specified in the policy as an inducement to purchase, and the insured may not knowingly accept one. The statute carves out express exceptions for producer compensation, participating-policy dividends and unearned premiums, and trade practices otherwise permitted; a service fee above the premium additionally requires the applicant's written consent before services are rendered.
Why the other options are wrong
- A) Commissions and compensation paid to licensed producers are an express exception to the rebate prohibition.
- B) Dividends, savings, and unearned premiums returned by participating insurers are specifically permitted.
- C) A service fee exceeding the premium is lawful when the applicant consents in writing before the services are rendered.
Memory hook
A rebate is anything not in the policy - commissions and dividends are the exceptions.