A BILL TO BE ENTITLED
AN ACT TO REQUIRE REAL PROPERTY WARRANTY COMPANIES TO CARRY CONTRACTUAL LIABILITY POLICIES; REQUIRE MOTOR VEHICLE AND HOME APPLIANCE SERVICE AGREEMENT COMPANIES TO USE A SPECIFIC FORMAT ON ALL WRITTEN MATERIALS SUBMITTED; mandate ALL REQUIRED SUBMISSIONS TO THE DEPARTMENT OF INSURANCE to BE IN A SPECIFIC FORMAT IF IN WRITING; REQUIRE WARRANTY COMPANIES TO COMPLY WITH ARTICLE 1 OF CHAPTER 58 OF THE GENERAL STATUTES; DEFINE MECHANICAL BREAKDOWN SERVICE AGREEMENTS AND REQUIRE ALL MECHANICAL BREAKDOWN SERVICE AGREEMENT COMPANIES TO COMPLY WITH ARTICLE 1 of chapter 58 of the general Statutes AND WITH THE RULES REGARDING MOTOR VEHICLE AND HOME APPLIANCE SERVICE AGREEMENT COMPANIES; AND PROVIDE THAT A BAD CHECK CONSTITUTES NONPAYMENT OF PREMIUM OF A MOTOR VEHICLE LIABILITY INSURANCE POLICY.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 58-1-20 is amended by adding a new subsection to read:
"(c)	 Real property warranty companies shall comply with the requirements of G.S. 58-1-36."
SECTION 2.  G.S. 58-1-36 is amended by adding a new subsection to read:
"(e)	Warranty companies, as defined in G.S. 58-1-15, 58-1-20, 58-1-25, and 58-1-30, shall comply with this section. The Commissioner may enforce compliance with this section using the provisions of Article 2 of this Chapter."
SECTION 3.   G.S. 58-1-35 is amended by adding a new subsection to read:
"(m)	If not submitted electronically, all contracts, literature, advertising materials, letters, and other documents submitted to the Department to comply with the filing requirements of this Chapter or an administrative rule adopted pursuant to this Chapter shall be submitted on paper eight and one-half inches by eleven inches. Brochures and pamphlets shall not be stapled or bound."
SECTION 4.  G.S. 58-3-150 is amended by adding a new subsection to read:
"(c)	If not submitted electronically, all contracts, literature, advertising materials, letters, and other documents submitted to the Department to comply with the filing requirements of this Chapter or an administrative rule adopted pursuant to this Chapter shall be submitted on paper eight and one-half inches by eleven inches. Brochures and pamphlets shall not be stapled or bound."
SECTION 5.  Article 1 of Chapter 58 of the General Statutes is amended by adding a new section to read:
"§ 58-1-40.  Mechanical breakdown service agreements.
(a)	Except as provided in subsection (c) of this section, all mechanical breakdown service agreement companies soliciting business in this State shall comply with G.S. 58-1-35 and G.S. 58-1-36. 
(b)	As used in this section, "mechanical breakdown service agreement companies" include any person that issues mechanical breakdown service agreements and is not a licensed insurer, and "mechanical breakdown service agreements" are applicable to mechanized equipment, including automobiles, riding mowers, scooters, generators, farm implements, logging equipment, road grazers, bulldozers, and power equipment not licensed for road use, whether mobile or not.
(c)	This section does not apply to performance guarantees, warranties, mechanical breakdown service agreements, or motor vehicle service agreements made by:
(1)	A manufacturer.
(2)	A distributor.
(3)	A subsidiary of a manufacturer or distributor."
SECTION 6.  G.S. 58-37-50 reads as rewritten:
"§ 58‑37‑50.  Termination of insurance.
No member may terminate insurance to the extent that cession of a particular type of coverage and limits is available under the provisions of this Article except for the following reasons:
(1)	Nonpayment of premium when due to the insurer or producing agent. A check tendered in payment of premium that is dishonored by the bank because the account on which the check is drawn contains insufficient funds or is a closed or nonexistent account constitutes nonpayment of premium.
(2)	The named insured has become a nonresident of this State and would not otherwise be entitled to insurance on submission of new application under this Article.
(3)	A member company has terminated an agency contract for reasons other than the quality of the agent's insureds or the agent has terminated the contract and such agent represented the company in taking the original application for insurance.
(4)	When the insurance contract has been cancelled pursuant to a power of attorney given a company licensed pursuant to the provisions of G.S. 58-35-5.
(5)	The named insured, at the time of renewal, fails to meet the requirements contained in the corporate charter, articles of incorporation, and/or bylaws of the insurer, when the insurer is a company organized for the sole purpose of providing members of an organization with insurance policies in North Carolina."
SECTION 7.  Sections 1 through 5 of this act become effective October 1, 2003.  The remainder of this act is effective when it becomes law.