North Carolina Insurance Statutes and Regulations Practice Test 2026 - Free Insurance Regulation Practice Questions and Study Guide

An insurer cannot cancel a motor policy based on factors such as sex, gender, age, or race due to discrimination laws and regulations designed to protect consumers. Insurance underwriting must be based on risk-related factors rather than personal characteristics that do not correlate with driving behavior or safety records.

In contrast, cancellation due to failure to pay premiums is legitimate as insurers have the right to terminate coverage when payment obligations are not met. Similarly, driving under the influence is a serious traffic violation that can significantly raise the risk of insuring a driver, providing valid grounds for an insurer to cancel a policy. A change of address can also sometimes serve as a reason for cancellation, particularly if the new location affects the risk profile or coverage needs. Thus, focusing on non-discriminatory, objective criteria is crucial in insurance practice, making the choice regarding sex, gender, age, or race the correct indicator of an illegitimate reason for policy cancellation.