ExamFX NC Study Questions
Insurance companies are required to provide proof of loss forms to the claimant within how many days after receipt of notice of loss? a. 15 b. 30 c. 31 d. 45
a. 15
The appraisal clause of the standard fire policy allows for the process of settling disputes over the ACV of the property of the amount of loss. When disputes arise, each party (insurer and the insured) must select an impartial appraisal within a. 20 days b. 30 days c. 45 days d. 10 days
a. 20 days
The standard fire policy limits legal action against the insurance company to how many years? a. 3 b. 5 c. 1 d. 2
a. 3
How long is the waiting period after the application has been accepted before flood coverage goes into effect? a. 30 days b. 6 months c. 12:01 am the next day d. 5 days
a. 30 days
the initial binding period for new workers compensation coverage issued by the North Carolina Rate Bureau is a. 30 days b. 60 days c. 90days d. 14 days
a. 30 days
Coverage F (medical payments ) under a homeowners policy would cover a. A residence employee who is injured on the job. b. A tenant who is injured while on the premises c. A family member who is injured while residing in the insured premises. d. The insured for injuries sustained while working at home.
a. A residence employee who is injured on the job.
Which of the following would modify the original insurance contract by either adding or removing coverage? a. Endorsement b. Additional coverage form c. Conditions d. Flexible policy
a. Endorsement
In commercial policies who has control of the policy? a. First Named Insured b. Additional Insured c. Insured d. Named Insured
a. First Named Insured
All of the following are conditions commonly found in the insurance policy EXCEPT a. Insuring agreement b. Cancellation and nonrenewal c. Subrogation d. Appraisal
a. Insuring agreement
Under the dwelling policy, Coverage C-Personal Property is a. Limited to covering a servant's property while at the insured location b. Automatically provided as 50% of Coverage A c. A prohibited coverage in the dwelling form d. Limited to 50% of the amount of insurance that is written as Coverage A
a. Limited to covering a servant's property while at the insured location
The process of determining the premium charged and how much insurance is required for a particular loss is called a. Loss Valuation b. Agreed value c. Loss payment d. Coinsurance
a. Loss Valuation
The regulation of the insurance primarily rests with a. The State b. The NAIC c. Private insurers d. The federal government
a. The State
When an umbrella policy is broader than underlying insurance and it pays a loss that is not covered by the underlying policy, it usually only pays a. The excess over the self-insured retention b. The amount specified in the policy under the additional coverage provisions c. The amount in excess of the policy's limits of liability d. A percentage of the loss as described on the declarations.
a. The excess over the self-insured retention
All of the following are supplemental payments included in the liability section of a personal auto policy EXCEPT a. Up to $100 for the cost to secure the release of a vehicle from an impoundment lot following a covered accident b. Up to $200 a day for loss of earning due to attendance at hearing or trials c. Premiums on appeal bonds in any suit the insurers defends d. Up to $250 for bail bonds required because of a covered accident
a. Up to $100 for the cost to secure the release of a vehicle from an impoundment lot following a covered accident
Before the Commissioner will issue a broker's license, the licensee must obtain a bond for at least a. $10,000 b. $15, 000 c. $20, 000 d. $50, 000
b. $15, 000
What is the amount of coverage that would be available for a detached garage under the Coverage B-Other structures of a homeowners policy? a. No coverage b. 10% of Coverage A c. 20% Coverage A d. A flat amount listed in the policy Declarations
b. 10% of Coverage A
If the ownership of an insured vessel changes involuntarily, within how many days of the ownership transfer will the hull policy terminate a. 7 b. 15 c. 30 d. 60
b. 15
After an insurance contract ends, the insurer must maintain records regarding the transaction for at least a. 2 years b. 3 years c. 5 years d. 7 years
b. 3 years
Under Coverage C of a homeowners policy, the amount of insurance provided to cover personal property of the insured is a. 50% of the amount provided as Coverage B b. 50% of the amount provided as Coverage A c. Equal to the amount provided as Coverage B d. Equal to the amount provided as Coverage A.
b. 50% of the amount provided as Coverage A
An uninsured motor vehicle includes all of the following EXCEPT a. A vehicle that has no liability bond in force b. A vehicle owned and operated by a self-insurer. c. A vehicle which flees a hit-and-run accident d. A vehicle not covered by an auto insurance policy.
b. A vehicle owned and operated by a self-insurer.
Leila's insurer has made all the decisions regarding the provisions included in her policy. She finds an objectionable provision and wants to negotiate it with her insurer but is not allowed to do so. Her only options are to reject the policy because of all the provision or accept the policy anyway. Which contract element does this describe? a. Dictatorial b. Adhesion c. Unilateral d. Conditional
b. Adhesion
All of the following would be considered rebating EXCEPT a. An agent offers tickets to a baseball game as an inducement to buy insurance b. An agent misrepresents policy benefits to convince a policyowner to replace policies c. An agent offers the use of his lake house to a client as an inducement to buy an insurance policy from him d. An agent offers to share his commission with a policyholder
b. An agent misrepresents policy benefits to convince a policyowner to replace policies
Which of the following statement is true concerning the special form dwelling policy? a. Coverage A is for all-risk, and Coverage C is for basic perils only. b. Coverage A is for all risk perils, and Coverage C is for the broad form perils. c. Both Coverage A and Coverage C are provided on all- risk basis d. Both Coverage A and Coverage C are provided for the broad form perils
b. Coverage A is for all risk perils, and Coverage C is for the broad form perils.
An insured's house is damaged by a fire and is uninhabitable. As a result, the insured has to rent an apartment until repairs are made. A dwelling insurance policy will pay for the expense of renting the apartment. Which type of broad or special form coverage does the insured have? a. Coverage D- Fair Rental Value b. Coverage E- Additional living expense c. Coverage A- Dwelling d. Coverage B - Other Structures
b. Coverage E- Additional living expense
All of the following are other coverages under the dwelling policy EXCEPT a. Improvements, alterations, and additions b. Earth movement c. Other structures d. Debris removal
b. Earth movement
All of the following are exclusions that apply in the three types of Dwellings Policies EXCEPT a. Earth Movement b. Fire and Lightning c. Government action d. Water damage
b. Fire and Lightning
All of the following are major coverages included in the homeowners policy EXCEPT a. Loss of use b. Loss of income c. Personal property d. Dwelling
b. Loss of income
an insurer may be exempt from coverage under the North Carolina Motor Vehicle Reinsurance Facility by direct authority of a. Board of Governors b. NAIC c. No exemptions are allowed d. Commissioner of the Department of Insurance
b. NAIC
What is the purpose pf the North Carolina FAIR plan? a. Provide coverage for properties located in the beach geographic area b. Provide property coverage to person outside the standard markets c. Provide insurance to all resident drives d. Assure that all property owners are charged fair premiums
b. Provide property coverage to person outside the standard markets
Under the personal auto policy, liability for bodily injury resulting from the insured's use of a nonowned automobile is a. Provided by the insured's policy on a primary basis b. Provided by the insured's policy on an excess basis c. Not covered d. Shared on a pro rata basis.
b. Provided by the insured's policy on an excess basis
What type of information would be found in a policy's insuring agreement? a. Insurer's address b. Renewal dates c. Location of premises d. Policy limits
b. Renewal dates
All of the following are duties of the insured following a loss in a standard fire policy EXCEPT a. Protect the property from further damage. b. Submit a signed proof of loss within 30 days c. Furnish a complete, detailed inventory including values d. Notify the insurer in writing immediately following the loss.
b. Submit a signed proof of loss within 30 days
Which of the following is NOT the consideration in a policy? a. The promise to pay covered losses b. The application given to a prospective insured c. Something of value exchanged between parties d. The premium amount paid at the time of application
b. The application given to a prospective insured
The policy conditions define a. How parties to the contract must act following a loss b. The basic underwriting information c. The excluded perils d. The amount of coverage
b. The basic underwriting information
When an umbrella policy is broader than underlying insurance and it pays a loss that is not covered by the underlying policy, it usually only pays a. percentage of the loss as described on the declarations b. The excess over the self-insured retention c. The amount specified in the policy under the additional coverage provisions d. The amount in excess of the policy's limits of liability
b. The excess over the self-insured retention
All of the following perils covered under the broad form dwelling policy EXCEPT a. Collapse b. Theft c. Fire d. Lightning
b. Theft
Which of the following losses would most likely NOT be covered under Coverage A in the dwelling policy? a. Supplies used for repair of the dwelling b. Theft of a renter's lawnmower used to service the premises c. Fire damage to building material on the premises d. Outdoor personal property of the insured
b. Theft of a renter's lawnmower used to service the premises
The regular National Flood Insurance Program would insure an eligible single-family dwelling for up to a. $150,000 b. $200,00 c. $250,000 d. $100,000
c. $250,000
Records related to terminated auto policies must be kept for at least how many years? a. 1 year b. 2 years c. 3 years d. 5 years
c. 3 years
records related to terminated auto policies must be kept for at least how many years? a. 1 year b. 2 years c. 3 years d. 5 years
c. 3 years
A licensee who ceases to maintain residency in North Carolina is required to deliver any insurance licenses to the Commissioners by mail or in person within how many days after terminating residency? a. 10 days b. 21 days c. 30 days d. 90 days
c. 30 days
If an insured is in the process of moving a new location, his personal property coverage under the dwelling policy will apply on a pro rata basis at both location for a. 90 days b. 5 days c. 30 days d. 60 days
c. 30 days
The removal coverage included in the broad form dwelling policy will cover property temporarily removed from the premises to protect it from damage for how long? a. 5 days b. 15 days c. 30 days d. 60 days
c. 30 days
The removal coverage that is included in the broad form dwelling policy will cover property temporarily removed from the premises to protect it from damage for how long? a. 5 days b. 15 days c. 30 days d 60 days
c. 30 days
After an insurance contract ends, the insurer must maintain records regarding the transactions for at least a. 2 year b. 3 years c. 5 years d. 7 years
c. 5 years
An insurer may be exempt from coverage under the North Carolina Motor Vehicle Reinsurance Facility by the direct authority of a. No exemptions are allowed b. Commissioner of the Department of Insurance c. Board of Governors d. NAIC
c. Board of Governors
The difference in the contents coverage on an HO-3 and HO-5 is which of the following? a. Contents are covered for replacement cost on HO-5, and ACV on HO-3 b. Contents are covered for replacement cost on HO-3, and ACV on HO-5. c. Contents are covered open peril on HO-5, and named peril on HO-3 d. Contents are covered open peril on HO-3, and named peril on HO-5.
c. Contents are covered open peril on HO-5, and named peril on HO-3
An insured is applying for a casualty insurance policy. One of the conditions of the policy allows the insurance company to inspect the insured's books at the end of the policy term to make sure sufficient premium has been collected for the exposure she plans to insure. Which condition is part of the insured's policy? a. Contract Bond b. Errors and Omissions insurance c. Deposit premium audit d. Excess liability coverage
c. Deposit premium audit
Another person has alleged that you are responsible for damage to their property. You notify your homeowner insurer. The insurer will a. Proceed according to your request b. Defend with the hopes of not paying damages c. Either pay or defend as it decides d. Pay the alleged damages.
c. Either pay or defend as it decides
In North Carolina, Statues, rules, and regulations that govern insurance companies, insurance transactions, and insurance agents are known as the a. State Administrative Rule b. Code of conduct c. Insurance Code d. State Constitution
c. Insurance Code
Which of the following would NOT be covered by HO liability insurance? a. First aid expenses b. Property damages c. Intentional tort d. Bodily injury
c. Intentional tort
A house insured under a dwelling policy has been vacant for 70 consecutive days. Which of the following statements is true? a. Damage to glass building blocks is not covered b. Loss by theft is covered c. Loss by vandalism and malicious mischief is excluded d. Glass breakage as a result of vandalism is covered
c. Loss by vandalism and malicious mischief is excluded
on its advertisement, a company claims that it has funds in it possession that are, in fact, not available for the payment of losses or claims, The company is guilty of a. Unfair claim practice b. Rebating c. Misrepresentation d. Concealment
c. Misrepresentation
Rental reimbursement is only available if the policy includes which coverage a. Towing and Labor Costs b. Names Nonowner Coverage c. Other than Collision Coverage d. Extended Nonowned Coverage for Named Insured
c. Other than Collision Coverage
If a person is using an auto with the belief that he is entitled to do so, subrogation rights under a personal auto policy would apply to all coverages EXCEPT a. No-fault medical payments b. Liability c. Physical damage d. Uninsured motorist
c. Physical damage
A Certificate of Insurance is written document that a. Names the insured's beneficiary b. Allows the insurer to inspect the insured's books c. Shows the types and amounts of insurance issued to the insured, d. Obligates the insurer to the person to whom the insurance was issued,
c. Shows the types and amounts of insurance issued to the insured,
Which of the following statements best describes the abandonment clause of the standard fire policy? a. If the property is sold, the policy may not be abandoned to the new owner, except with the written consent of the company b. The abandonment clause prohibits abandoning the property (vacant or unoccupied) for more than 60 days c. The abandonment clause prohibits abandoning the property to the insurer in order to claim a total loss d. Any loss occurring while a described building intended for occupancy is vacant or unoccupied for more than 60 days is not covered
c. The abandonment clause prohibits abandoning the property to the insurer in order to claim a total loss
The medical payments coverage in a personal auto policy will pay reasonable medical expenses for all of the following EXCEPT a. The insured's child sustains injuries when the car she is in accidentally rolls down a hill. b. A friend is injured while driving the insured's vehicle with permission. c. The insured is injured while exiting a friend's mobile home. d. The insured is injured by a motor vehicle while crossing the street.
c. The insured is injured while exiting a friend's mobile home.
According to the Insured Duties after a Loss provision in homeowner policies, if the insurer requires a signed, sworn proof of loss, the insured must provide within how many days? a. 10 days b. 20 days c. 30 days d. 60 days
d. 60 days
According to the Insured Duties after a Loss provision in homeowners policies, if the insurer requires a signed, sworn proof of loss, the insured must provide within how many days? a. 10 day b. 20 days c. 30 days d. 60 days
d. 60 days
Which of the following coverages is NOT included in the basic form dwelling policy? a. Dwelling coverage b. Other structures c. Loss of fair rental value d. Additional living expense
d. Additional living expense
All of the following statements are true regarding the relationships among the amounts of insurance EXCEPT a. The recovery may not excess the ACV at the time of loss or the policy limits, whichever is smaller b. The recovery may not exceed the ACV at the time of loss or the amount necessary to replace the property, whichever is smaller c. The recovery may not excess the ACV of the property of the time of loss d. All property losses under the basic form are settled on a replacement cost basis
d. All property losses under the basic form are settled on a replacement cost basis
Every insurer who writes essential property insurance in the state must be a member of the North Carolina Insurance Underwriting Association a. Until the 5th Anniversary of appointment as an approved insurer by the Commissioner b. Until the 3rd anniversary of appointment as an approved insurer by the commissioner c. At the pleasure of the commissioner or until the 5th anniversary of appointment as an approved insurer d. As a condition of its authority to continue to transact the business of insurance in North Carolina .
d. As a condition of its authority to continue to transact the business of insurance in North Carolina .
If an insurer meets the state's financial requirements and is approved to transact business in the state it is considered to be a. Certified b. Qualified c. Approved d. Authorized
d. Authorized
An insurer may be exempt from coverage under the North Carolina Motor Vehicle Reinsurance Facility by the direct authority of a. NAIC b. No exemptions are allowed c. Commissioner of the Department of Insurance d. Board of Governors
d. Board of Governors
Under the HO-4 homeowner policy form, property is insured against a. Basic form perils b. Broad and special forms perils c. Comprehensive form peris d. Broad form perils only
d. Broad form perils only
Which of the following losses would be covered by an unendorsed homeowner policy? a. Faulty or defective zoning b. Theft in a structure under construction c. Collapse caused by earthquake d. Fire or lightning
d. Fire or lightning
An insured has a personal property replacement cost endorsement under her homeowners policy. If an expensive painting and an antique chair are stolen from the insured's home, what will the insured receive on the claim under that endorsement? a. 70% of the replacement cost b. 80% of the replacement cost c. 100% of the actual cash value d. Nothing
d. Nothing
Which of the following would be covered under personal injury liability? a. Broken arm' b. A concussion c. Death d. Slander
d. Slander
An insured owns several buildings, each at a different location and insured on a separate policy. What type of coverage does the insured have? a. Schedule b. Blanket c. Special d. Specific
d. Specific
An insurance company cannot pay a commission to a person for selling, soliciting, or negotiating insurance in North Carolina if a. the agent is indebted to the insurer for sums in excess of the premiums collect b. That person is being compensated by another insurer for similar transactions c. The insurer is an appointed insurer is an appointed insurer in the State of North Carolina. d. That person does not hold a required license
d. That person does not hold a required license
Under a dwelling policy, which of the following is NOT a factor in determining a loss? a. The policy limit b. The amount reflecting the insured's interest in the property at the time of loss c. The amount necessary to repair or replace the property d. The amount negotiated by the insured
d. The amount negotiated by the insured
All of the following are true regarding physical damage coverage EXCEPT a. Losses to nonowned autos will be covered the same as the broadest coverage available for any covered auto, except nonowned trailers are limited to $1,500. b. The policy will pay up to $20 per day up to a maximum of $600 for rental transportation. c. The insurer will pay for direct and accidental loss to a covered auto minus any applicable deductible. d. The limit of liability is the greater of the actual cash value of the vehicle at the time of loss or the amount necessary to repair the vehicle.
d. The limit of liability is the greater of the actual cash value of the vehicle at the time of loss or the amount necessary to repair the vehicle.
In terms of parties to a contract, which of the following does NOT describe a competent party? a. The person must not be under the influence of drugs or alcohol b. The person must be of legal age c. The person must be mentally competent to understand the contract. d. The person must have at least completed secondary education.
d. The person must have at least completed secondary education.
Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? a. Concealment b. Indemnity c. Representation d. Warranty
d. Warranty
In forming an insurance contract, when does acceptance usually occur? a. When an insurer delivers the policy b. When an insurer receives an application c. When an insured submits an application d. When an insurer's underwriter approves coverage
d. When an insurer's underwriter approves coverage
An insurer or authorized representative of the insurer that terminates the appointment, employment, contract, or other insurance business relationships with an agent shall notify the Commissioner a. Within 60 days after the effective date of the termination b. Within 45 days after the effective date of the termination c. 30days prior to the effective date of the termination d. Within 30 days after the effective date of the termination
d. Within 30 days after the effective date of the termination
