In the wake of President Trump’s recent Major Disaster Declaration for the State of North Carolina, the North Carolina Insurance Commissioner issued an Order on March 27, 2020 deferring insurance premium payments for 30 days to allow policyholders extra time to arrange for payment. The Order, as amended on March 30, 2020, requires insurers to give policyholders the option to defer payment for 30 days. Policyholders desiring to take advantage of the deferral must notify their insurer. For policyholders choosing to exercise the deferral option, insurers cannot process cancellations for any reason or impose late fees or penalties during the deferral period.
For claims that occur during the deferral period, insurers may elect to wait until the account is brought current before claims are paid. If premium payments remain unpaid after the deferral period, coverage lapses as of the date that coverage was paid up.
With regard to claims handling, the Order imposes an automatic stay of the time period within which insureds have to file a proof of loss. That time period is stayed during the 30-day deferral period, such that insurers are effectively prohibited from demanding proofs of loss on or before April 26, 2020. The Order also defers any other time limitations imposed on policyholders or insurers under the insurance policy or law to perform any act within the deferral period.
In these unique times, we are in uncharted waters with little guidance from case law and the potential for further interventions from the North Carolina Department of Insurance going forward. Additional information regarding the Amended Order and FAQ Bulletin associated with the Commissioner’s Order can be found here.