§ 58-8-55. Manner of making assessments; rights and liabilities of policyholders. - North Carolina Statutes

§58‑8‑55.  Manner of making assessments; rights and liabilities ofpolicyholders.

When a mutual insurancecompany is not possessed of cash funds above its reserve sufficient for thepayment of insured losses and expenses, it must make an assessment for theamount needed to pay such losses and expenses upon its members liable toassessment therefor in proportion to their several liabilities. The companyshall cause to be recorded in a book kept for that purpose the order for theassessment, together with a statement which must set forth the condition of thecompany at the date of the order, the amount of its cash assets and deposits,notes, or other contingent funds liable to the assessment, the amount theassessment calls for, and the particular losses or liabilities it is made toprovide for. This record must be made and signed by the directors who voted forthe order before any part of the assessment is collected, and any person liableto the assessment may inspect and take a copy of the same. When, by reason ofdepreciation or loss of its funds or otherwise, the cash assets of suchcompany, after providing for its other debts, are less than the requiredpremium reserve upon its policies, it must make good the deficiency byassessment in the manner above provided. If the directors are of the opinionthat the company is liable to become insolvent they may, instead of suchassessment, make two assessments, the first determining what each policyholdermust equitably pay or receive in case of withdrawal from the company and havinghis policy canceled; the second, what further sum each must pay in order toreinsure the unexpired term of his policy at the same rate as the whole wasinsured at first. Each policyholder must pay or receive according to the firstassessment, and his policy shall be cancelled unless he pays the sum furtherdetermined by the second assessment, in which case his policy continues inforce; but in neither case may a policyholder receive or have credited to himmore than he would have received on having his policy canceled by a vote of thedirectors under the bylaws. (1899, c. 54, ss. 36, 37;Rev., s. 4742; C.S., s. 6353; 1945, c. 386.)