NC Adjuster License Practice Exam

All of the following statements are TRUE of the terms used in the standard workers' compensation policy, EXCEPT:

"State" means any state of the United States, the District of Columbia, and all territories and possessions.

The basic limit for Coverage F -- Medical Payments of the standard Homeowners forms is:

$1,000 per person

The additional coverage of the Commercial Property cause of loss forms known as the "Limited Coverage for Fungus, Wet Rot, Dry Rot, and Bacteria" provides:

$15,000 coverage for all occurrences within a 12-month period

The insured has a $1,000,000 personal umbrella policy with a $5,000 retention limit. For a $7,000 liability loss not covered under the insured's personal auto policy, but covered under the umbrella policy, the insurance company would pay:

$2,000

Oliver Dogwood was in an auto accident which destroyed his car. While investigating the accident, Adjuster Doright found that Mr. Dogwood paid $1,000 for the vehicle. After checking with others he found the same vehicle with an asking price of $1,700, a retail price of $2,150 and a dealer price of $1,750. What amount will Mr. Dogwood receive?

$2,150

An insured has purchased a DP-3 policy to cover his dwelling that is valued at a replacement cost of $100,000. He insures it for $60,000 and later suffers a $30,000 fire loss. Which of the following amounts will be paid by the policy (if no deductible form is attached)?

$22,500

An insured carries property insurance with a limit of $25,000 and an 80% coinsurance requirement. The covered building, however, is worth $40,000. How much would she collect in the event of a total loss?

$25,000.

Mark is injured at work in a state that provides a TTD benefit at 66 2/3%, the state minimum is $40 and the state maximum is $540. The waiting period is 3 days and the retroactive period is 15 days. Which of the following is Mark's TTD benefit if he earns $20 per hour and usually works a 40-hour week. Mark is injured on July 14th and does not return to work until September 3rd. Which of the following is the amount of TTD benefit he would have received?

$3,809.50.

In North Carolina, the motor vehicle liability policy law requires owners of motor vehicles to carry limits of:

$30/60/25

The custom farming endorsement is usually attached to a farmowners policy when receipts exceed:

$5,000

Sharon's North Carolina home is covered under a Homeowner's policy with a "Refrigerated Property Coverage" endorsement attached. She stores large amounts of expensive meats in her freezer at any given time. One morning, she doesn't hear the low hum of her freezer motor. When she opens her freezer door, she finds that the freezer is no longer cold and all of her meat has spoiled. Sharon collects her receipts and finds that the price of the spoiled meat totals $658 and she submits a claim for this loss. How much will her insurer pay?

$500

Collin suffered a work-related injury on the morning of February 5th and was off work completely until he returned to work on full duty on February 19th. Collin had worked for his employer for four years and was paid $42,125 per year. Collin's state sets the TTD rate at 66 2/3rd percent of the average weekly wage. The state sets the maximum compensation rate at $420 per week and the waiting period at 3 days retroactive after 10 days. Collin was not paid for working on February 5th, so how many days of TTD compensation is Collin entitled to receive?

14

Under the North Carolina personal automobile policy, the number of days an insured has to report a newly acquired vehicle to the insurer is:

30 days

A leased vehicle is considered to be a covered auto under the personal auto policy (PAP) if it is a private passenger auto leased for at least:

6 consecutive months

How are death benefits calculated for an employee who has died as a result of a work related incident?

66 2/3% of the employee's average weekly wage for 500 weeks

The broad and special dwelling forms (DP-2 and DP-3) will provide replacement cost coverage for buildings if the amount of insurance written on the building is at least:

80% of the full replacement cost at the time of the loss

What is an administrator's bond?

A bond required by the court of the administrator of the estate of the deceased

Which of the following would be eligible for coverage under a Businessowners policy?

A small retail store

Violating a cease and desist order issued by the North Carolina Commissioner after finding a violation of the Unfair Practices will result in a a monetary fine of:

A sum of not less than $1,000 nor more than $5,000 for each violation

Any North Carolina lender in making or servicing real estate mortgage or deed of trust loans on one to four family residences must accept a binder as proof of insurance. The binder presented to the lender must include all of the following, EXCEPT

A sworn statement that the insurance will be kept in force.

Which of the following flood zones show a "flood depth" instead of a "base flood elevation" on a FIRM?

AO

How are household personal property claims settled under the farm policy?

Actual cash value

Public adjusters:

Adjust first-party property loss claims.

When someone dies without a will, their assets will be handled by a court appointed:

Administrator.

Under the comprehensive coverage of a Business Auto policy, which of the following would not be a covered loss?

After sliding on an icy pavement, a driver hits a guard rail.

With respects to insurers writing auto coverage in the North Carolina, which of the following is true regarding the North Carolina Motor Vehicle Reinsurance Facility?

All insurance companies writing auto coverage must participate in this program

In most states, which of the following most accurately describes an "admitted insurer"?

An insurer that can transact insurance in the state under a certificate of authority

The duties of the insured after a loss are included in insurance policy language to:

Assist in the adjuster's investigation of the claim

Sarah is shopping at a grocery store and wants to purchase a bottle of juice. The aisle is marked off with a rope awaiting the clerk to clean up a previously broken bottle and spill on the floor. Sarah moves the rope to get the item and slips and falls on the floor, cutting her face on the scattered glass. Which of the following would be the defense that the insurance company would most likely use in this situation?

Assumption of risk and contributory negligence on the part of the customer

Which of the following coverage endorsements under commercial crime and bonding would cover an ATM machine?

Automated Teller Machine Coverage

The wording of the Standard Fire policy is so vague that many insurers have to rely on __________ to take a position on the acceptance or denial of a claim.

Case law

The condition "Legal Action Against Us" in a CGL policy requires the insured to:

Comply with all of the terms of the policy

Which part of an insurance policy sets the rules of conduct, duties, and obligations of the insured and insurer under the terms of the insurance contract?

Conditions

Which policy would be best for a prospective insured who wants coverage against liability assumed by him under specific written agreements?

Contractual Liability provided under a CGL policy

Which of the following is NOT excluded by Section II - Liability of the Business Automobile policy?

Cost to defend the insured

A blanket employee dishonesty bond will:

Does not name the individuals.

Which of the following endorsements can be attached to the Business Auto policy to extend coverage to individuals such as the owner of the business who does not carry personal auto insurance?

Drive Other Car endorsement

Fidelity bonds are used to cover:

Employee dishonesty

The insuring agreements of an Equipment Breakdown policy, provides coverage for:

First party coverages and property damage to property of others

All of the following are excluded under the Commercial Building and Personal Property form, EXCEPT:

Furniture and fixtures

The Insurance Information & Privacy Protection Act (IIPPA) requires insurers to conform to all of the following standards, EXCEPT:

Give reasonable notice for policy renewal and other policy changes..

A guest on vacation deposits cash and traveler's checks in the hotel safe deposit box located behind the front desk. When the guest attempts to retrieve them, the box is empty. What coverage is required to cover this loss for the hotel?

Guests property

A licensee, for the second time, does not maintain records of insurance transactions as prescribed by the North Carolina Commissioner. He/she will:

Have their license suspended or revoked for a one year period

Gavin operates a small manufacturing plant and is covered under a Commercial Property Business Income form. Under which of the following scenarios will Gavin be covered?

His loss of profit while out of business as a result of a fire loss

Which of the following statements about the Standard Fire Policy is correct? I. A covered fire must be hostile, not friendly. II. Lightning includes artificially generated electrical current.

I only

All of the following statements are TRUE of North Carolina automobile liability policies, EXCEPT

If the insured carries limits greater than the minimum financial responsibility limits required by state law, they are not required to carry Uninsured/Underinsured Motorists coverage.

The Business Auto uses Symbol 7 to cover "specifically described autos" identified in the declarations. An auto acquired during the policy period will only be covered:

If the insured insures all of their vehicles with the company or it replaces a covered auto..

All of the following are true regarding the "Write Your Own" program of the NFIP, EXCEPT:

Insurers are required to participate in the program

The perils insured against by a Homeowners policy are contained within the:

Insuring Agreements

Torts that can be covered by insurance policies include all of the following, EXCEPT:

Intentional torts purposely committed to cause harm to another.

North Carolina law stipulates that buildings located within the state that are covered under a Fire policy and suffer a total loss, the insurance company:

Is not liable to pay amounts beyond the actual cash value of the insured property at the time of the loss or damage

Under a standard HO-3, the limit for Coverage C -- Personal Property for a one or two-family dwelling:

Is set at 50% of Coverage A

Which of the following statements is correct regarding pollution coverage under the special cause of loss form of a Commercial Property policy?

It is excluded unless it was caused by a covered peril

The insured carries a yacht policy. One of the crew members is injured while performing a work related task. What coverage must be added under the policy that would respond to cover the crew member's injuries?

Jones Act

All of the following is considered an "insured" under a CGL policy, EXCEPT:

Lawyers of the named insured

North Carolina law prohibits any Fire insurance policy covering property within the state of North Carolina to be issued for a term:

Longer than seven years

Which of the following would be considered "economic losses" that could result in compensatory damages being awarded in a negligence case?

Medical expense and lost wages

What coverage under the BOP automatically applies if a customer slips and falls on the named insured's premises, regardless of legal liability?

Medical expense coverage

Coverage D - Loss of Use on the Homeowners forms provides coverage for "Civil Authority Prohibits Use" for:

No more than two weeks

When an insurer is called upon to defend a suit under a CGL policy, the amount that can be paid for the defense costs is:

Not limited

Spencer is covered under a standard Personal Automobile policy with a policy inception date of October 15th. Additionally, the policy will expire on October 15th of the current year. Spencer contacts his agent on October 7th and asks to have an new endorsement added to his policy. The agent agrees, adds the coverage the same day, and informs Spencer that there will be an additional premium of $20 per month charged. When will the adjustment of premium be effective for Spencer?

October 7th

Sam and Dan are working to clean out the gutters around the roof on Sam's house. Sam and Dan are standing at the top of separate ladders that are propped against the side of Sam's house, when Dan's ladder begins to wobble and ultimately falls into Sam's ladder. Both men and their ladders crash to the ground. Whose injuries will be covered by Sam's Homeowners policy under Coverage E - Personal Liability?

Only Dan's injuries would be covered

Many states amend property insurance coverage additions and extensions by statute due to insufficient coverage amounts or time limits. All of the following are property insurance additions or extensions that are frequently amended by state statute, EXCEPT:

Other Structures

What specific type of liability policy gives an owner protection against liability claims arising out of the acts of its independent contractors?

Owners and Contractors Protective Liability Policy.

If the insured, covered under a Homeowners policy, suffers the loss of an article that is part of a pair or set. All of the following are options for the insurer to settle the loss, EXCEPT:

Pay for the replacement cost of the entire pair or set

Underground gasoline tanks on an insured's property leak damaging the property next door. Which policy would pay for clean up?

Pollution Liability endorsement

A customer has eaten seafood in a restaurant and became very ill while still in the restaurant. What type of CGL claim is this?

Products Liability

Farm liability coverages include each of the following, EXCEPT:

Professional liability

Which of the following is NOT one of the three main (general) coverages of the Building & Personal Property coverage form?

Property damage liability coverage

The Coverage C - Uninsured Motorists coverage of a standard, unendorsed Personal Automobile policy applies to all of the following, EXCEPT:

Property damage sustained by the insured vehicle by an uninsured vehicle

The insured and her 18-year-old son, who lives in the insured's household, are crossing the street when both of them are struck by a drunk driver. The Part B - Medical Payments coverage of the insured's personal auto policy will:

Provide coverage for both the insured and her son

The traditional definition of actual cash value (ACV) is:

Replacement cost minus depreciation

George went out for target practice one day with his handgun. He has practiced many times with the same target located in the woods behind his house. Unbeknownst to George, a neighbor was walking in the woods behind the target one day and was shot in the leg by George. Intentional acts are never covered by insurance, however, the claim filed by the injured neighbor may be covered under George's liability coverage. Which of the following is the most likely reason why?

Shooting the gun was an intentional act committed by George, but the consequences of act (his neighbor being shot) were not intended

Which of the following statements defines a "bailee"?

Someone, other than the insured, to whom the insured property is entrusted temporarily.

All of the following are types of rehabilitative services provided under a workers' compensation policy, EXCEPT:

Substance abuse

Under the "Money Orders and Counterfeit Money" insuring agreement of a standard Commercial Crime form, all would be covered, EXCEPT:

Taking a forged check from a customer in exchange for merchandise..

Which of the following terms does NOT apply to workers compensation coverage in North Carolina?

Temporary sick leave with benefits

The retroactive date on a claims-made CGL form specifies:

That losses occurring before the date will not be covered by the policy.

Section II of the Business Auto policy provides the details of the insurer's "duty to defend" the insured in a lawsuit. This duty is more broad than the insurer's responsibility to pay any damages for which the insured is liable. Which of the following describes this broadened duty on the BAP?

The BAP "duty to defend" extends to providing a defense against fraudulent claims. .

Which of the following is NOT a reason to purchase a Dwelling policy instead of a Homeowners policy?

The Dwelling policy provides higher limits of liability than the Homeowners policy..

Mr. Vickers lives close to a river that has, on occasion, flooded. On Friday morning he is watching the weather station and notes that there is a flood warning in his area. He calls his agent and asks the agent to bind flood coverage immediately. Which of the following is true?

The application for coverage requires a 30-day waiting period before coverage applies. .

Which of the following statements is TRUE regarding nonwaiver agreements and reservation of rights letters?

The are used only with first-party claimants to protect the rights of insureds and insurers.

Which of the following is NOT a correct statement in determining the cost of a "comparable automobile" when a physical damage loss has a occurred?

The cost of a comparable automobile as determined by a computerized automobile valuation service that produces statistically valid fair market values within the United States market

Which of the following statements is TRUE concerning Part A - Liability coverage on a standard Personal Automobile policy?

The coverage is provided only for accidents caused by those who are "insureds" under the policy..

All of the following are examples of insurable interest in property, EXCEPT:

The interest an individual has in the property her parents will someday leave to her.

Which of the following is generally not considered to be a legal defense against claims of negligence?

The loss to the plaintiff was caused intentionally by the defendant. .

Manny is purchasing a Commercial Property policy with a Business Income form included. Manny can select from any of the following as a method to provide coverage, while avoiding the coinsurance requirement, EXCEPT:

The maximum monthly limit of indemnity optional coverage

When a claims representative is collecting information from a third-party claimant, which of the following is the information that should be obtained first?

The nature and extent of the injuries or property damage claimed.

Which of the following statements is NOT TRUE regarding the "period of restoration" for Business Income and Extra Expense coverage?

The period of restoration ends when the policy period ends

All of the following statements are true regarding a Personal Umbrella policy, EXCEPT:

The policy can be written as a monoline policy

The insured is liable for $500,000 in damages for a personal injury claim that is covered under the insured's primary liability policy. The primary liability policy has a $300,000 limit per occurrence. The insured also has a $1 million Umbrella policy with a $3,000 self-insured retention limit. How would this claim likely be settled?

The primary policy would pay $300,000 and the Umbrella policy would pay $200,000

All of the following are excluded under the 1943 Standard Fire policy, EXCEPT:

The theft of property after it had been removed from the insured premises to protect it from further loss..

The Section I Additional Coverage of the standard Businessowners policy provides coverage for "Debris Removal". Which of the following statements best describes the limit for this coverage?

The total limit may be up to 25% of the policy limit for the loss payable with the deductible included, plus up to an additional $25,000 if the policy limits are exhausted

All of the following are reasons that an adjuster should keep very detailed log notes, EXCEPT:

To produce notes that will support a fraudulent denial of claims.

An insured's boat is struck by another boat. He and his family are injured. His boat sinks because of the damage. An investigation determines that the party that caused the accident is not insured. If the insured carries a watercraft policy, what coverages would apply?

Uninsured boater's coverage and hull insurance

Emily owns a home that she has covered under a Homeowners policy. Because Emily lives alone, she had to leave her home and stay with her parents for the past six months while she recovers from major surgery. Except for the day-to-day items that Emily needs while she stays at her parents' home, all of her other belongings are still located in her home. Which of the following best describes the condition of Emily's home?

Unoccupied

Under a Businessowners policy, the "Hired and Nonowned Auto Liability" endorsement would cover:

Vehicles borrowed by the insured

Under what circumstances does an insurer allow the transfer of an insured's rights and duties under a Commercial Package Policy without the permission of the insurer?

When the named insured dies

When would the Personal Auto policy respond to a loss with an all-terrain three-wheeled vehicle?

When used in an emergency situation

A typical boatowners policy includes all of the following coverages EXCEPT:

When used to carry cargo for others for a fee