A person who has never held a North Carolina insurance license regularly sells accident and health policies to consumers in the state. What is the criminal classification of this unlicensed activity?

Why C is correct

Under G.S. 58-33-120, any person who acts as a producer, adjuster, or appraiser without a valid license — or who violates any provision of Chapter 58 for which punishment is not elsewhere provided — is guilty of a Class 1 misdemeanor. G.S. 58-3-130 contains the same prohibition and penalty. Selling A&H policies without a license is therefore a criminal matter from the first transaction, regardless of any later refund of premiums.

Why the other options are wrong

• A) A Class I felony is the grade for willful false statements in sworn or subscribed statements under G.S. 58-2-180, not for unlicensed activity under G.S. 58-33-120.
• B) $2,000 to $10,000 is the court fine on an entity for willful false statements under G.S. 58-2-180; the unlicensed activity itself is a misdemeanor, not that fine.
• D) Refunding premiums does not erase the crime; G.S. 58-33-120 makes acting as a producer without a license a Class 1 misdemeanor regardless of restitution.

Memory hook

No license, no sale — first sale is a Class 1 misdemeanor.