FREQUENTLY ASKED QUESTIONS
Q: What is a “mutual” insurance company?
A: A mutual insurance company is “owned” by its policyholders. There are no stockholders or shareholders. Policyholders have voting rights. Lincoln Mutual Insurance Company was originally organized in the 1800s as a mutual benefit fire insurance company for farmers, as a cooperative group. Many mutual insurance companies throughout the United States are as old as, or even older than, Lincoln Mutual.
Q: What is an assessment?
A: An assessment is a charge by a mutual insurance company to each of its policyholders for the purpose of raising money. Lincoln Mutual is a limited assessable mutual insurance company (as shown on your policy jacket and declaration page), which means it may only assess its policyholders once per policy year, if necessary. This allows a mutual company to keep premiums as low as possible, as long as adequate funds to pay claims are available.
Q: Why am I being sent an assessment?
A: You are being assessed because Lincoln Mutual has experienced a sharp decrease in its statutorily required surplus.
The company is required by law to keep a surplus of $700,000 at all times. As a result of the recent severe storm activity and the numerous claims Lincoln Mutual has paid in a short period of time, the company surplus has dropped below the required $700,000.
Q: Is every policyholder charged the same assessment?
A: Yes and no. Each policyholder will be charged an assessment equal to 50 percent of the amount of that policyholder’s premium, so the percentage charge is the same for everyone. But the amount will differ according to each policyholder’s premium.
Q: Has Lincoln Mutual ever assessed its policyholders previously?
A: To the best of our knowledge, there has never been an assessment before.
Q: When is the deadline to pay the assessment?
A: October 24, 2011. You must have either paid your assessment in person by this time, or have sent it in by mail postmarked by this date.
Q: What happens if I do not pay my assessment by the deadline?
A: If you do not pay your assessment by the deadline, any policy you have with the company will be canceled, and there will be no refund of any unearned premium. In addition, the company has the right to take legal action if necessary, for payment of the assessment, against you in civil court.
Q: What is “unearned premium”?
A: Unearned premium is that part of your premium which you paid for the entire policy year but which has not yet been “earned” this year. For example, if you paid a premium of $120 for a policy in January, in September $30 (approximately three months) of your premium is still “unearned” or unused, because the policy period is not yet complete. This unearned premium is what you will forfeit if you fail to pay your assessment.
Q: What happens if I pay my assessment on time?
A: In that event, your insurance policy or policies will stay in full force and effect.
Q: I have a claim currently with Lincoln Mutual Insurance Company. What happens to my claim if I do not pay my assessment?
A: Pursuant to the Company’s bylaws, you will lose all rights to your claim and your rights to payment of the claim will be forfeited. To maintain your rights to a pending claim, you must pay your assessment.
Q: Why was my claim not paid before an assessment was made?
A: Claims are being processed in the order they were received and due to the high volume of claims from the spring storms, it is taking a longer period of time to process all of the claims.
Q: I pay my insurance premium every year in installment payments. Can I make installment payments on the assessment?
A: Unfortunately, no.
Q: Was this action approved by the Company’s Board of Directors?
A: Yes. If you would like to see a copy of the Order of Assessment approved by the Board of Directors, please click here.
Q: Was this assessment approved by the North Carolina Department of Insurance?
A: Yes. Both the Order of Assessment and the Assessment Notice mailed to you were approved by the North Carolina Department of Insurance prior to being sent out.
Q: Where can I review the company’s bylaws?
A: Please click here to view the company’s bylaws.
Q: Where can I see copies of the General Statutes quoted in my Assessment Notice?
A: Please click here.
Q: Is the Board of Directors made up of policyholders?
A: Yes. Pursuant to the bylaws, a person can only be a director of Lincoln Mutual if he or she is also a policyholder. The directors made a vote for an assessment that is also applicable to them, and they are being assessed just like you are.
Q: I want to set up a meeting with the President of the company. When can I do that?
A: Lincoln Mutual has approximately 3400 policyholders. It is understandable that you and all other policyholders will have questions about this assessment. If you have additional questions, please either call 704-735-2604 ext. 102, or email your questions to questions@lmicnc.com. Staff will do their best to respond to your emails or phone calls in 72 hours. Unfortunately, due to the high volume of calls at this time, we cannot schedule in-person meetings or accept walk-in customers with questions.
