NORTH CAROLINA PROPERTY AND
CASUALTY STATE PRACTICE SET
2026 TESTED QUESTIONS AND
VERIFIED SOLUTIONS
◉ Contracts must exhibit: Answer: Competent parties
Legal Purpose
Offer and Acceptance
Consideration
◉ Principle of indemnity Answer: When a loss occurs, an individual
should be restored to the approximate financial condition he was in
before the loss, no more or no less
◉ Aleatory Answer: A contract contingent on an uncertain event (A
loss) that provides for unequal transfer of value between two paries
◉ Adhesion (Contracts) Answer: One party has greater power over the
other party in drafting the contract
◉ Unilateral (Contracts) Answer: One Sided; Only the insurance
company is legally bound to perform its part of the agreement
,◉ Contract of utmost good faith (Contracts) Answer: The truthfulness
and integrity of the applicant when providing information that leads to
issuing a policy.
◉ Conditional (Contracts) Answer: A number of conditions that both the
insured and the insurer most follow by in order to keep the contract valid
◉ Five parts of an insurance contract Answer: Declarations
Insuring Agreements
Conditions
Exclusions
Definitions
◉ Declarations (Contain) Answer: Name of Insured
Address
Amount of Coverage
Description of Property
Perils covered
◉ Insuring Agreements (Contain) Answer: Losses for which the insured
will be indemnified
What is covered
What perils covered
, ◉ Conditions (Contain) Answer: Responsibilities and obligations for
both the insurance company and the insured
◉ Exclusions (Contain) Answer: Losses for which the insured is not
covered
◉ Definitions Answer: Meaning of certain terms used in the policy
◉ Stock Company (Types of Insurance Companies) Answer: Sells stock
to raise money to operate the business, profits are returned to stock
holders, not the insureds
◉ Mutual Company (Types of Insurance Companies) Answer: Insureds
are also owners of the company, profits are returned as dividends or
discounts off future payments
◉ Reciprocal Company (Types of Insurance Companies) Answer: A
unincorporated group forms together and agrees to share the insurance
responsibly with all other members. Each insurers each other and share
the losses with each other
◉ Attorney-at-fact Answer: Manager of a reciprocal company who is
empowered to handle all the business of said company
◉ Lloyd's Association Answer: Voluntary association of individuals, or
groups of individuals, who agree to share in insurance contracts. Each
CASUALTY STATE PRACTICE SET
2026 TESTED QUESTIONS AND
VERIFIED SOLUTIONS
◉ Contracts must exhibit: Answer: Competent parties
Legal Purpose
Offer and Acceptance
Consideration
◉ Principle of indemnity Answer: When a loss occurs, an individual
should be restored to the approximate financial condition he was in
before the loss, no more or no less
◉ Aleatory Answer: A contract contingent on an uncertain event (A
loss) that provides for unequal transfer of value between two paries
◉ Adhesion (Contracts) Answer: One party has greater power over the
other party in drafting the contract
◉ Unilateral (Contracts) Answer: One Sided; Only the insurance
company is legally bound to perform its part of the agreement
,◉ Contract of utmost good faith (Contracts) Answer: The truthfulness
and integrity of the applicant when providing information that leads to
issuing a policy.
◉ Conditional (Contracts) Answer: A number of conditions that both the
insured and the insurer most follow by in order to keep the contract valid
◉ Five parts of an insurance contract Answer: Declarations
Insuring Agreements
Conditions
Exclusions
Definitions
◉ Declarations (Contain) Answer: Name of Insured
Address
Amount of Coverage
Description of Property
Perils covered
◉ Insuring Agreements (Contain) Answer: Losses for which the insured
will be indemnified
What is covered
What perils covered
, ◉ Conditions (Contain) Answer: Responsibilities and obligations for
both the insurance company and the insured
◉ Exclusions (Contain) Answer: Losses for which the insured is not
covered
◉ Definitions Answer: Meaning of certain terms used in the policy
◉ Stock Company (Types of Insurance Companies) Answer: Sells stock
to raise money to operate the business, profits are returned to stock
holders, not the insureds
◉ Mutual Company (Types of Insurance Companies) Answer: Insureds
are also owners of the company, profits are returned as dividends or
discounts off future payments
◉ Reciprocal Company (Types of Insurance Companies) Answer: A
unincorporated group forms together and agrees to share the insurance
responsibly with all other members. Each insurers each other and share
the losses with each other
◉ Attorney-at-fact Answer: Manager of a reciprocal company who is
empowered to handle all the business of said company
◉ Lloyd's Association Answer: Voluntary association of individuals, or
groups of individuals, who agree to share in insurance contracts. Each
