NC INSURANCE EXAM
Debris Removal
Reasonable expense, 5% additional to coverage limit
North Carolina Insurance Underwriting Association
-adopted to promote growth of coastal area, issuance of property insurance for coastal risk areas -made up of admitted companies writing direct loss property of NC -does not have agents
NC Motor Vehicle Reinsurance Facility
-created to provide auto liability, med pay, and uninsured motorist/underinsured motorist coverage to "eligible risks" who are difficult to place in normal market -may transfer risk to facility -ceded premiums = much higher rates and reduced max coversge
After receiving notice of loss, the insured must provide claim forms within _____
15 days
How many days does an insured have to select a competent and disinterested appraiser?
20 days
An insurer's insolvency protection ensures uninsured motorist claims be paid within how many years of becoming insolvent?
3 years
How many years does an insured have to file a lawsuit against a homeowners insurer?
3 years
An insured's homeowner policy covers an antique dining set. After a water pipe bursts, the insured moves the set to a storage shed to protect from further damages. What is the longest period of time the homeowners policy will extend coverage to the dining set?
30 days
How long is the waiting period after the application has been accepted before flood coverage goes into effect?
30 days
An insured has purchased a used car. When does collision coverage for his car begin?
Immediately after insured acquired ownership/purchases
When may an insurer change a rate different from the one promulgated by the NC rate bureau?
Only when insured files the proposed deviation to the commissioner and bureau
Which of the following would be eligible for coverage under a dwelling policy
A house divided into 3 apartments
Which principle describes restoring the insured to his/her original financial status after loss?
Indemnity
If an insurer accepts premium payments by credit card, who is responsible for paying the fees charged by a credit card company?
Insurer accepting payment
If a policy owner wants to know whether or not a specific loss is covered by an insurance policy, policy owner should review
Insuring agreement
Insurer makes a statement misrepresenting or incompletely comparing the terms of any insurance policy to induce a policyholder to drop existing policy is guilty of
Twistinf
Landlord Furnishings
Up to $2,500 for insured's appliance, carpeting, and other furnishings (rented)
Your home is insured on an HO-3. Your neighbors tree fell into your house during a windstorm. How much will your policy pay toward the cost of removing the tree?
$500/tree with HO-3
Which of the following would NOT be covered under a dwelling property policy?
A farm used to raise and sell cattle
An insured has homeowners policy and requires her to be a member of the homeowners association. Community building has been damaged and she has to pay her part, how much will the homeowner's policy pay?
$1,000 per occurrence
An insured loses $2,500 worth of precious stones in a burglary. How much will the insurer's homeowners policy cover?
$1,500
An insured driver has a policy with a medical payments coverage limit of $20,000. If the driver sustains $20,000 in bodily injuries and a passenger sustains $25,000 how much will policy pay each injured person?
$20,000
Duties of the insured after a loss
- give immediate written notice -protect property from further damage -Provide proof of loss -submit to physical exams -authorize insurer access to medical records
Safe Driver Incentive Plan
-Bureau's responsibility -rates for at fault accidents or moving violation conviction -surcharges up to 3 years -convictions must be obtained annually from NCDMV
Glass or Safety Glazing Material
Will pay for breakage of glass if not vacant for 60 days prior; $100 per loss for HO-8
Which of the following is not considered a rebate?
Offering a prospective insured a multi-policy discount
Which of the following is an example of indirect loss?
An insured not being able to stay in home, stays in hotel because of fire damage to home
The North Carolina motor vehicle reinsurance facility is designed to provide auto insurance to a person who:
Are not able to obtain it through normal means
What is covered under DP-1?
Basic form not open. Fire, lightning, internal explosion.
For what reason may an insurer cancel a personal auto policy that has been in place for more than 60 days?
The insured fails to pay premium
Limits of Liability
The maximum amount co money the insurance company will pay for a particular loss, or loss during a period of time, is known as
Which of the following is a coverage part of a personal auto policy?
Uninsured motorist coverage (part C)
What is covered under DP-2?
Broad form not open. Fire, lightning, internal explosion, WHARVES, V &MM, BBBICEGOLF.
Loss Assessment/Homeowners Association Fees
$1,000 per occurrence
General Property Exclusions
- ordinance or law - earth movement - water damage - power failure - neglect - war - nuclear hazard - intentional loss - government action
Commissioner must be given how many days written notice of all hearings?
10 days
In an auto policy, what does the first limit represent in split liability limits?
Bodily injury coverage to one person in a single accident
Grave Markers
Pay up to $5,000 if caused by peril insured against
What causes an adverse underwriting decision?
-decline of insurance coverage -termination -failure to apply by agent -charging higher rate based on differing information from applicant -agent placed co enrage with residual market, applicant didn't know
After receiving proof of loss from an insured, an insurer must notify the insured of its intent to repair or replace damaged or log property within
30 days
If a person holding a resident insurance license moves out of state, that person must surrender his or her license to the Commissioner within how many days of terminating their residence?
30 days
If required, advertisements must be filed for review at least how many days before the insurer can use them?
30 days
A policyowner has terminated an insurance policy. The insurer must maintain records for a least how long?
5 hesrd
The commissioner is required to examine books and records of all domestic insurers at least once every
5 years
Removal
Covered for 30 days
If an insurer cancels a dwelling policy that has been in place for 50 days, for reasons other than nonpayment of premium, how much advance notice must be provided to the insured?
10 days
Which of the following would be eligible for coverage under a dwelling policy?
A house divided into 3 apartments
Basic dwelling for DP1 provides all of the following coverages except
Additional living expenses
Regulation of Credit Insurance
Credit accident and health insurance may not be required of any borrower
Which of the following could be covered on a basic dwelling policy form if purchased?
Damage from vandalism to a property vacant for 45 days
Which policy part in property or casualty insurance policies will explain who the named insured is under the policy?
Declarations
Prior to insurance policy paying a claim, an insured must pay a certain dollar amount on the claim, referred to as
Deductible
Commingling
Depositing client funds in the broker's personal account or general business account
Financial Responsibility Law
Require motor vehicle operator must: -demonstrate ability to respond to BI or PD claims that arise out of their operation of vehicle -licensed as operator, licenses a vehicle -involved in any accident that causes $500 or more of property damage or death
All are grounds for license suspension, revocation, or refusal except:
Sharing commission with another agent
What is covered under DP-3?
Special form, open peril. Covers all but theft which needs endorsement.
Ordinance or Law
Up to 10% of limit liability for Coverage A
Credit Card
Will pay up to $500 for loss through counterfeit, forged check (no deductible)
In property or liability insurance, anything that modifies the original contract, either adding or removing coverage, is done through
endorsements
Blanket insurance
A single insurance policy that covers multiple class of property at a single location
Which of the following is covered by the NC POST ASSESSMENT GURANTY ASSOCIATION
Automobile policies
Loss
Awning, fence, patio, deck, pavement, pipes, pool, not included in collapse unless loss is result of collapse
Lawns, plants, shrubs, and trees
Caused by peril, limited to $500/tree or 5% of Coverage A. ($250 for HO-8)
Which of the following provides written evidence that an insurance policy has been issued?
Certificate of insurance
Reasonable repairs
Coverage provided to protect from further damage following an insured peril
If an insured is involved in an accident in another state where limits of liability are higher than those of the insureds home state, the insured's auto policy will pay ______
Limits set by the state in which accident occurs
The average territory of the PAP personal auto policy includes all expect
Mexico
All of the following are allowable reasons for terminating a policy through the NC motor vehicle reinsurance facility except
An at fault accident
In a hull policy the insured ship is referred to as the
Vessel
Under a personal auto liability coverage, damage to a vehicle may be covered if the person driving the insured vehicle is_______
a family member in the same household.
Dwelling Coverage Eligibility
- 1-4 unit dwellings with borders -vacation dwellings -rental dwellings -dwelling under construction (needs endorsement) -mobile homes (need endorsement) -up to 5 roomers/boarders DOES NOT COVER FARMS
In a homeowners policy, coverage for a loss by theft of firearms is
25% of coverage C, up to $10,000
Coverage E
Additional Living Expenses
Part E
Duties after an accident or loss
Coverage D
Fair Rental Value
Part F
General Provisions
Part A
Liability coverage
Part B
Medical Payments
Coverage F
Medical Payments to Others
Which of the following statements concerning a personal auto policy is true
Medical payments coverage applies per person, per accident.
Coverage B
Other Structures
A homeowner lives in a 150 year adobe building that is on the national register for historic places. Has HO-8 coverage and part of roof is destroyed by fire. Which describes the insurer's responsibility
Particle roof replacement to current code specifications
Part D
Physical Damage - pays for damage to your car
Part C
Uninsured Motorists Coverage
Coverage A
dwelling
Coverage C
personal property
Which of the following perils is excluded in all dwelling policy forms
Government actuin
Collapse
Hidden decay, insect or vermin damage, weight of contents, equipment, weight of rain
James has an auto liability policy with limits of 15/30/5. He is involved in an accident caused by his negligence and is held legally liable for bodily injuries of 3 people in the other auto as follows: Person A $20,000, Person B $50,000, and Person C $10,000. How much will James's insured pay in total for injuries?
$30,000
An uninsured motor vehicle includes all of the following except
A vehicle being used for public livery
Section 1 of the homeowners insurance policy covers?
Personal property
Which of the following describes twisting?
Policy replacement that is to the detriment of the policy owner.
An agent who offers a cash reward to a prospect for buying a policy is guilty of:
Rebating
Fire Department Service Charge
Will pay up to $500 no deductible
Privacy Protection Act
Purpose is to establish standards for the collection and use of information gathered in connection with insurance transactions
Which of the following is not required of an insured after a loss in an homeowner's policy?
Replace property that's lost within 30 days (because you have 60 days)
FAIR PLAN
-facilitate issuance of basic property insurance to encourage improvement and arrest decline -for when insured is unable to to obtain coverage in the voluntary marketplace
A building contractor constructs a rental property home using straw bale construction that does not conform to standard building codes. The contractor is the owner and does not want insurance on the building but wants coverage on as many things as he can get. What coverages plan should a producer recommend?
Coverage cannot be extended on this structure.
FAIR is designed to
Crate a shared market to provide fire and extended coverage insurance to individuals unable to obtain this coverage through a standard marketplace
NC Rate Bureau
-tweak and recommend policy forms and rates to Commissioner -residential property w/ no more than 4 units -rates proposed to be adequate, not excessive and discriminatory
If a lincensee is convicted in any court or any offenses other than a traffic violation, the licensee must notify the commissioner within how many days of conviction?
10 days
If a PAP is terminated for nonpayment of the premium the effective date may be hoe many days from the date of notice mailed
15 days
Once the insurer has determined they owe the insured money for a loss covered by a homeowners policy the loss must be paid within how many days
60 days
Under which of the following circumstance would a loss be covered under the HO-2 policy form?
A hail storm pokes a hole in a roof and a bedroom has hail damage
Accident
A sudden, unforeseen, unintended, and unplanned event from which loss or damage results
Which of the following is covered under a dwelling policy
Freezing of plumbing systems
Which of the following homeowners forms would be best for a person renting half a duplex?
HO-4 (renters broad form)
Which of the following is not insured's dirty after accident or loss?
Hire an appraiser to evaluate damages
An insured has an HO-8 modified coverage form. While the insured is on vacation, his $1,500 laptop is stolen. How much coverage is provided under the HO-8 for this loss?
Nothing; HO-8 forms do not cover theft of personal property off oermises
What are general property exclusions?
Ordinance or law (requires tearing down), earth movement (earthquake, mudslide, sinkhole), water damage (flood, overflow, sewer backup), power failure, neglect, war, nuclear hazard, intentional loss, government action
In auto insurance, eligible vehicle titles by the insured during the policy are considered
Owned autos
In a personal auto policy which of the following covers medical payments
Part B
In insurance contracts, consideration on the part of the insured is
Payment of premiums and representation made in the applications
Which of the following refers to the upper limit a liability policy will pay out for all claims that arise from a single accident
Per occurrence
All of the following practices would be prohibited except
Projecting a dividend on a participating policy