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What is the maximum amount that the North Carolina Insurance Guaranty Association will pay on a covered claim? $300,000 $500,000 $750,000 $1 million

$300,000 The association's obligation includes only that amount of each covered claim which is more than $50, but less than $300,000. The association is not obligated to a policyholder or claimant in an amount in excess of the face amount of the policy from which the claim arises.

An insurer must file a notice of appointment within how many days?

15

Terry is licensed in North Carolina as a property and casualty insurance agent. To maintain his license, how many hours of continuing education must he complete every two years?

24

What is the maximum amount that the North Carolina Insurance Guaranty Association will pay on a covered claim? A. $300,000 B. $500,000 C. $750,000 D. $1 million

300,000 smackers The association's obligation includes only that amount of each covered claim which is more than $50, but less than $300,000. The association is not obligated to a policyholder or claimant in an amount in excess of the face amount of the policy from which the claim arises.

An insurance company or agent may not knowingly issue a fire insurance policy on property located in North Carolina if the policy has a term longer than A. Two years B. Three years C. Five years D. Seven years

7 years An insurance company or agent may not knowingly issue a fire insurance policy on property located in North Carolina for a term longer than 7 years or for an amount which, together with any existing insurance on the property, is greater than the fair value of the property.

Even if the cause of loss is covered, an insurance policy can stipulate that to be eligible for claim settlement a loss must be reported to the insurer within 20 days of the date of loss, because insurance policies are: A. conditional contracts B. unilateral contracts C. aleatory contracts D. personal contracts

A. Conditional contracts An insurance contract is conditional. This means that its force and effect (and often, its continuation) depend on certain actions of the policyholder, such as making premium payments when due, reporting losses promptly, and cooperating with the insurer in settling any loss.

When meeting with a prospect to discuss insurance, Taylor makes disparaging comments about the financial stability and reputation of a competitor to dissuade the prospect from purchasing its policies. Which unfair trade practice has Taylor committed? A. Defamation B. Rebating C. Unfair discrimination D. Coercion

A. Defamation It is considered defamation to publish or circulate a false, deceptive, or misleading statement about-or a statement that is maliciously critical of or derogatory to-the financial condition of an insurer, when such a statement is designed to injure anyone in the insurance business.

If an insurer is authorized to transact property and casualty insurance in North Carolina, it must be a member of the A. North Carolina Insurance Guaranty Association B. North Carolina Life and Health Insurance Guaranty Association C. Insurance Federation of North Carolina D. North Carolina Department of Insurance

A. NC INS Guaranty Association

Statewide Insurers wants to obtain an investigative consumer report about an insurance applicant because of questions it has regarding his credit history. What must Statewide do before it can obtain the report? A. Notify the applicant that he has the right to be interviewed in connection with the report B. Obtain the applicant's signed consent before obtaining the report C. Notify the applicant that he has the right to prepare his own report D. Require the applicant to sign an affidavit attesting to the truth of the statements in the report

A. Notify the applicant that he has the right to be interviewed in connection with the report Insurers and agents may not prepare or request an investigative consumer report about an individual in connection with an insurance application unless the person is informed that he or she may request to be interviewed in connection with the report and is entitled to receive a copy.

When comparing her insurance company's policies to those of Zenith Insurance, Melanie makes a misleading statement to convince an insurance prospect to terminate a policy with Zenith and buy one from Melanie's company. What practice has Melanie engaged in? A. Twisting B. Rebating C. Unfair discrimination D. Defamation

A. Twisting A person cannot make a false or misleading statement or comparison about an insurance policy in order to induce someone to lapse, surrender, terminate, retain, or convert an insurance policy or buy a policy with another insurer. This is known as twisting.

An insurance policy may involve the exchange of unequal amounts, as when an insured submits a large claim after paying just one premium, which is possible because insurance policies are: A. unilateral contracts B. aleatory contracts C. personal contracts D. contracts of adhesion

B. Aleatory contracts Aleatory contracts involve an exchange of unequal amounts. Insurance contracts are aleatory. In an insurance contract, one party may receive a benefit that is entirely out of proportion to the consideration he or she is giving. Receiving the disproportionately large benefit, however, depends on whether a chance event occurs. That element of uncertainty is essential with an aleatory contract.

In which of the following claims settlement practices may an insurance company in North Carolina engage? A. Failing to promptly acknowledge communications about claims B. Failing to promptly settle a claim for which liability is uncertain C. Offering to settle claims for less than due to encourage litigation D. Raising policy defenses to reduce a claim

B. Failing to promptly settle a claim for which liability is uncertain An insurer is not obligated to settle a claim for which it is not clearly liable.

In which of the following claims settlement practices may an insurance company in North Carolina engage? A. Failing to promptly acknowledge communications about claims B. Failing to promptly settle a claim for which liability is uncertain C. Offering to settle claims for less than due to encourage litigation C. Raising policy defenses to reduce a claim

B. Failing to promptly settle a claim for which liability is uncertain An insurer is not obligated to settle a claim for which it is not clearly liable.

Emil, an agent licensed in North Carolina, moves to a new home on April 30. He is required to notify the North Carolina Department of Insurance by what date? A. May 7 B. May 10 C. May 30 D. October 31

B. May 10th An agent who changes his or her residential or e-mail address must notify the Insurance Department within ten days of the change.

It is an unfair method of competition for a producer to portray the terms and benefits of an insurance policy inaccurately to a prospective purchaser. This deceptive practice is called A. Rebating B. Misrepresentation C. Defamation D. Boycott

B. Misrepresentation It is an unfair method of competition for a producer to misrepresent the terms and benefits of any policy. Misrepresentation is a deceptive practice.

Mr. Jones is furious that his insurance company won't pay his claim. You explain that the reason for this is that he didn't report the claim within the timeframe specified in the policy, which is a valid reason because the insurance policy is a(n): A. aleatory contract B. unilateral contract C. conditional contract D. contract of adhesion

C. Conditional A conditional contract is only enforceable if the parties to the contract comply with certain conditions contained in the contract.

Alex sold an insurance policy before his license lapsed and earned a commission on the sale. Is he entitled to a commission if the policy is renewed? A. He is not entitled because only one commission can be paid on a policy sale. B. He is not entitled because he is no longer licensed. C. He is entitled because he was licensed when the policy was sold. D. He is entitled because his license was not revoked or suspended.

C. He is entitled because he was licensed when the policy was sold. Commission earned on the renewal of a policy can be paid to a person for selling, soliciting, or negotiating the policy if the person was licensed to transact insurance at the time of the sale, solicitation, or negotiation of the policy.

Jack is selling his home to Sue and wants to transfer his homeowners policy to her. Can Jack transfer his policy? A. Yes, insurance policies have a certain portability to them which makes this possible. B. No, this cannot be done under any circumstances. C. No, unless the insurer gives written consent to do so. D. Yes, if Jack and Sue became joint insureds.

C. No, unless the insurer gives written consent to do so. A contract for property or casualty insurance is a personal contract. The insurer must know the identity of the person or risk it insures for evaluation before providing insurance. Because the agreement between these two parties is personal, a property and casualty insurance policy cannot be transferred to a third party without the insurer's written consent.

The North Carolina Rate Bureau establishes property insurance rates for A. Farm real property B. Farm personal property C. Residential real property with up to 4 housing units D. Residential real property with more than 4 housing units

C. Residential real property with up to 4 housing units The North Carolina Rate Bureau defines "property insurance" as insurance against loss to residential real property in North Carolina as long as the property has no more than four housing units. It does not include any type of farm real or personal property.

In what type of contract is only one party required to make an enforceable promise? A. conditional contract B. bilateral contract C. unilateral contract D. aleatory contract

C. Unilateral In a unilateral contract, only one party makes an enforceable promise. Insurance contracts are unilateral. With an insurance policy, only the insurer makes a promise that can be enforced. After the premium is paid and the policy is in force, the policyholder has no further promises to keep.

Which of the following is NOT a power or duty of the North Carolina Insurance Commissioner? A. Examining the books and records of insurers whenever the Commissioner considers it necessary B. Holding hearings C. Writing insurance code provisions D. Administer oaths

C. Writing provisions

Randy goes to Main Street Insurance Company to buy a homeowners policy. He observes that he cannot negotiate the terms with the insurer, which presented the policy to him on a take-it-or-leave-it basis. This type of contract is considered a(n): A. conditional contract B. aleatory contract C. contract of adhesion D. unilateral contract

C. contract of adhesion this is drafted by one party and offered on a take-it-or-leave-it basis. The other party has no opportunity to negotiate its terms, price, or other elements. The party must adhere to its provisions as presented.

Smith and Thomas are licensed producers. Smith knows that Thomas is embezzling money from clients. However, Smith does not notify the Commissioner in order to protect his friend. What is the result? A. Smith's license may be suspended for up to two years. B. Smith can be sanctioned but not disciplined. C. Smith's license will be revoked. D. Smith will not be punished because he does not have a fiduciary duty to report the crime.

C. his License will be revoked

To boost her sales at the end of the year, Trudy offers potential clients a $250 cash gift card in exchange for purchasing an insurance policy. Which unethical sales practice has Trudy committed? A. Twisting B. False Advertising C. Rebating D. Coercion

C. rebating Agents cannot offer anything of value to induce someone to buy insurance, including a rebate of the premium, dividends, stocks or bonds, or paid employment. They also cannot pay or offer to pay anything of value that is not specified in the insurance contract. This unfair trade practice is known as rebating.

Abby lives in Maryland, where she is licensed as an insurance agent. She wants to apply for a nonresident license in North Carolina. Which of the following conditions must she satisfy? A. She must move to North Carolina. B. She must surrender her Maryland license. C. She must be sponsored by an agent licensed in North Carolina. D. She must show her license to be in good standing in Maryland.

C. she must be in good standing in her state

Emily solicits policies and accepts premiums from the public but is not licensed as an agent. She then turns over the applications and premiums to her husband, who is licensed. Which statement is correct? A. Emily has committed a felony. B. Emily is not required to be licensed to solicit policies and accept premiums. C. Emily has not committed any type of unlawful act. D. Emily has committed a Class 1 misdemeanor.

D. Emily has committed a Class 1 misdemeanor. It is unlawful for a person to solicit insurance, accept premiums, or otherwise act as an agent, broker, limited representative, adjuster, or appraiser without a license. A violation of this requirement is considered a Class 1 misdemeanor.

Jim sold his car to Bill and would like to also transfer his auto policy to Bill. His agent tells Jim that is not possible without the insurer's consent (which is unlikely to be given) because property and casualty insurance policies are: A. contracts of adhesion B. aleatory contracts C. conditional contracts D. personal contracts

D. Personal contracts Property and casualty policies are personal contracts between the insurer and a particular policyholder. They are the only parties who can fulfill the contract's terms. Because the agreement between these parties is personal, a property and casualty insurance policy cannot be transferred to a third party without the insurer's consent, which is unlikely.

When collecting personal financial or health information, an insurance company is required to do all of the following EXCEPT: A. Notify individuals about the company's privacy practices. B. Describe conditions under which the company may disclose the information to other parties. C. Provide methods for individuals to prevent disclosure of the information. D. Provide individuals with copies of documents disclosed to other parties.

D. Provide individuals with copies of documents disclosed to other parties. When collecting or using nonpublic personal financial or health information, an insurer must notify individuals about the insurer's privacy policies and practices, describe conditions under which the insurer may disclose this information to other parties, and provide methods for individuals to prevent this disclosure. ughhhh I know this one but for some reason I get it wrong every time it pops up on a test

If a producer is unable to comply with continuing education requirements due to military service, the Commissioner may grant an exemption for up to 6 months One year 18 months Two years

One year which seems short if someone is off fighting for our country.

For how long is an insurance producer's license valid?

Two years

Which of the following is an example of adverse selection? A. an applicant who just bought a new car and wants to buy the least expensive auto policy B. a homeowner who wants to meet with her agent to discuss her current coverages following some recent home improvements C. an applicant whose business was recently burglarized deciding he had better buy some commercial crime insurance coverage D. a business owner who decides to cancel his business-owner's policy because he believes he can financially handle any losses that might occur

an applicant whose business was recently burglarized deciding he had better buy some commercial crime insurance coverage Adverse selection is the tendency of persons or businesses more likely to have a claim to buy and keep insurance. These people are selecting against the insurance company. For example, a person with a high-performance car and a bad driving record is especially likely to recognize the need for auto insurance, but an insurer might be reluctant to provide it.