State RegulationsNC specificDifficulty 1/5
An insurer mails advertisements into North Carolina that materially misrepresent the benefits of its accident and health policies. How does North Carolina law treat this conduct?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under G.S. 58-63-20, making, publishing, or disseminating false or misleading information or advertisements about insurance is a prohibited practice, within the Commissioner's enforcement authority over unfair methods of competition and deceptive acts under Article 63 (G.S. 58-63-15). The insurer that prepares and disseminates the advertising is directly responsible, and the Commissioner can pursue cease-and-desist action and penalties.
Why the other options are wrong
- A) Home-office preparation is no defense; G.S. 58-63-20 prohibits the dissemination of false or misleading insurance advertising regardless of who drafted it.
- C) The insurer that publishes the misleading advertisements is liable under G.S. 58-63-20; liability is not limited to the producer.
- D) North Carolina's own statute governs insurance advertising in the state; G.S. 58-63-20 gives the Commissioner direct authority, so federal law is not the exclusive regulator.
Memory hook
False ads are unfair competition — Article 63 owns the mailbox.