North Carolina Insurance FREE Sample Exam — Fixed Set

Why should an ideally insurable risk not be catastrophic for the insurer?

An insurer should only insure losses that affect every policyholder at once, so that all of its insureds share each event equally

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Catastrophic losses are always accidental and therefore easy to predict

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A single event should not be able to produce losses so widespread and large that they overwhelm the insurer's ability to pay

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A catastrophic event eliminates the need for a large number of units

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A general average sacrifice saves interests with these values at the end of the voyage: vessel 600,000 dollars, cargo 300,000 dollars, and freight 100,000 dollars. The general average loss to be shared is 50,000 dollars. How much does the cargo interest contribute?

5,000 dollars

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15,000 dollars

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30,000 dollars

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50,000 dollars

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Under Risk Rating 2.0, two homes in the same neighborhood receive different premiums. One home’s lowest floor is several feet higher than the other’s. Which explanation is best?

The higher home must be in a different state rating territory

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The lower home automatically has no building coverage

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The higher home no longer needs flood insurance at all

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The higher home generally presents lower expected flood damage, which property-specific rating can reflect

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A restaurant owner and the insurer agree a kitchen fire loss occurred but disagree only on the amount of loss, and the owner properly demands appraisal. How is the amount decided under the appraisal clause?

The first named insured chooses a judge to set the amount

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The insurer chooses both appraisers to set the amount

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Each party chooses an adjuster and the adjusters choose counsel

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Each party chooses an appraiser and the appraisers choose an umpire

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A tenant’s insurer has asked the tenant not to settle with the contractor whose faulty work caused a covered loss until the claim is resolved. The tenant settles anyway, signing away all claims against the contractor for a payment far below the loss. What condition of the policy has the tenant most likely violated?

The condition requiring the tenant to protect property from further damage

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The condition prohibiting settlement that impairs the insurer's recovery rights

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The condition setting the policy territory

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The condition requiring a sworn proof of loss

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An endorsement deletes an exclusion, but the claimed loss never fit the insuring agreement in the first place. What is the effect of deleting the exclusion?

The claim is covered because every removed exclusion adds coverage

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The claim still fails, because removing a carve-out cannot create a grant that never applied to the loss

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The claim is covered if the definitions mention the type of loss

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The claim converts to the nearest coverage part that was purchased

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A flood causes $240,000 of building damage and no contents damage to a home insured with a $200,000 building limit and a $100,000 contents limit. The unused contents limit

Converts to building coverage at renewal only

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Pays the extra $40,000 because the total of both limits is enough

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Automatically raises the building limit to $300,000

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Cannot be shifted over to pay the building damage above the building limit

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A landlord’s main income concern is losing rent while a rented house is repaired after a fire. Which dwelling-form feature speaks directly to that landlord concern?

Medical payments for guests of the tenant

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A guarantee that a new tenant will be found after repairs

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Coverage for fair rental value when a covered loss makes the rented dwelling unfit to live in

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Personal liability coverage for the tenant's injuries

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An insured finds hail damage in April, says nothing, completes cosmetic repairs in August, and first notifies the insurer in September expecting full reimbursement. What is the most likely problem with this claim?

The only problem is that hail is never a covered peril

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The months-long delay breaches the prompt notice duty and hampers inspection of the original damage

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The claim fails solely because the insured chose the repair contractor

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There is no problem because notice can always wait until repairs end

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An applicant lives just across the state line in a county that borders this State. Can they qualify as a resident licensee here?

Only applicants living within ten miles of the border qualify, with no county condition

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Border residents must take both states' exams

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Residents of a bordering out-of-state county may qualify as residents for licensing

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Any out-of-state applicant may elect resident status

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If a licensee fails to comply with the North Carolina requirements on discipline for violating insurance laws or orders, which of the following may result?

Mandatory community service instead of license action

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Probation, suspension, revocation, or refusal to renew the license

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A verbal caution that cannot be recorded

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Loss of one insurer appointment only

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A producer violates the North Carolina rule on claims failing to affirm or deny coverage promptly. Which of the following is a possible consequence?

The policy is extended free for a year

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As a general business practice it is an unfair claim settlement practice the Commissioner can charge

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The claim is deemed denied with no further rights

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The claimant must start the claim over

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North Carolina Insurance FREE Sample Exam — Fixed Set

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