NORTH CAROLINA EXCESS & SURPLUS (E&S) LINES
INSURANCE EXAM|QUESTIONS AND ANSWER WITH
RATIONALE|GRADED A+|2026 UPDATE|100%
CORRECT
1. Question: What is Excess & Surplus (E&S) Lines insurance?
A. Insurance placed with non-admitted carriers for risks that standard
admitted insurers will not cover
B. Standard coverage from admitted insurers
C. Payroll management service
D. Marketing service
Answer: A
Rationale: E&S carriers provide coverage for high-risk, unusual, or large
exposures that admitted insurers are unwilling or unable to insure.
2. Question: Who can legally place E&S coverage in NC?
A. Licensed E&S surplus lines brokers
B. Any insurance agent
C. Policyholders directly
D. Marketing firms only
Answer: A
Rationale: Only brokers licensed for E&S/surplus lines placement can
legally place coverage with non-admitted insurers.
3. Question: Why do businesses use E&S insurance?
A. Standard market cannot provide coverage for high-risk or unusual
exposures
B. To reduce payroll costs
C. Marketing purposes only
D. Social media coverage
Answer: A
Rationale: E&S provides essential coverage for risks that admitted insurers
consider too risky or complex.
4. Question: How does an E&S carrier differ from an admitted insurer?
A. E&S carriers are non-admitted but meet surplus lines requirements;
admitted insurers are fully licensed in NC
B. E&S carriers handle payroll only
, NORTH CAROLINA EXCESS & SURPLUS (E&S) LINES
INSURANCE EXAM|QUESTIONS AND ANSWER WITH
RATIONALE|GRADED A+|2026 UPDATE|100%
CORRECT
C. Admitted carriers handle marketing only
D. Both are identical
Answer: A
Rationale: Admitted insurers are subject to full state regulation and
guaranty fund protection; E&S carriers operate under limited oversight.
5. Question: What is a “diligent search” in E&S placement?
A. Documented effort to secure coverage from admitted insurers
before using E&S carriers
B. Payroll verification process
C. Marketing research
D. Social media assessment
Answer: A
Rationale: NC law requires brokers to show that coverage was
unavailable from admitted carriers before placing E&S business.
6. Question: What is the role of the NC Surplus Lines Association (NCSLA)?
A. Collects taxes, maintains records, and monitors E&S activity
B. Payroll only
C. Marketing only
D. Social media only
Answer: A
Rationale: NCSLA ensures compliance with reporting requirements, tax
remittance, and proper placement of E&S coverage.
7. Question: How are E&S premiums taxed in NC?
A. Subject to state surplus lines tax and reported through NCSLA
B. No taxes apply
C. Payroll only
D. Marketing only
Answer: A
Rationale: State law mandates taxation and reporting of premiums
placed with E&S carriers.
8. Question: Which types of risks are typically placed in the E&S market?
A. Large, high-risk, or unusual commercial exposures
, NORTH CAROLINA EXCESS & SURPLUS (E&S) LINES
INSURANCE EXAM|QUESTIONS AND ANSWER WITH
RATIONALE|GRADED A+|2026 UPDATE|100%
CORRECT
B. Standard homeowners insurance
C. Standard auto insurance
D. Marketing services only
, Answer: A
Rationale: E&S serves risks that admitted carriers are unwilling to cover.
9. Question: Can E&S brokers place coverage with any carrier?
A. Only with carriers approved by NC and meeting financial requirements
B. Any domestic or foreign carrier
C. Payroll only
D. Marketing only
Answer: A
Rationale: Ensures carriers are financially capable and legally eligible to
provide E&S coverage.
10. Question: What is an example of E&S coverage?
A. High-limit cyber liability, large commercial property, environmental
liability
B. Standard personal auto insurance
C. Standard homeowner policy
D. Payroll services only
Answer: A
Rationale: E&S often provides coverage for complex, high-risk, or unusual
exposures.
11. Question: How does E&S insurance protect policyholders?
A. Provides coverage for risks that would otherwise be uninsurable
B. Eliminates all risk
C. Payroll only
D. Marketing only
Answer: A
Rationale: Policyholders can obtain coverage for unique exposures not
available in the admitted market.
12. Question: What is a key legal requirement for E&S placement?
A. Document a diligent search for admitted market coverage
B. Payroll verification only
C. Marketing research only
D. Social media approval
Answer: A
Rationale: Compliance ensures brokers meet NC surplus lines law.
INSURANCE EXAM|QUESTIONS AND ANSWER WITH
RATIONALE|GRADED A+|2026 UPDATE|100%
CORRECT
1. Question: What is Excess & Surplus (E&S) Lines insurance?
A. Insurance placed with non-admitted carriers for risks that standard
admitted insurers will not cover
B. Standard coverage from admitted insurers
C. Payroll management service
D. Marketing service
Answer: A
Rationale: E&S carriers provide coverage for high-risk, unusual, or large
exposures that admitted insurers are unwilling or unable to insure.
2. Question: Who can legally place E&S coverage in NC?
A. Licensed E&S surplus lines brokers
B. Any insurance agent
C. Policyholders directly
D. Marketing firms only
Answer: A
Rationale: Only brokers licensed for E&S/surplus lines placement can
legally place coverage with non-admitted insurers.
3. Question: Why do businesses use E&S insurance?
A. Standard market cannot provide coverage for high-risk or unusual
exposures
B. To reduce payroll costs
C. Marketing purposes only
D. Social media coverage
Answer: A
Rationale: E&S provides essential coverage for risks that admitted insurers
consider too risky or complex.
4. Question: How does an E&S carrier differ from an admitted insurer?
A. E&S carriers are non-admitted but meet surplus lines requirements;
admitted insurers are fully licensed in NC
B. E&S carriers handle payroll only
, NORTH CAROLINA EXCESS & SURPLUS (E&S) LINES
INSURANCE EXAM|QUESTIONS AND ANSWER WITH
RATIONALE|GRADED A+|2026 UPDATE|100%
CORRECT
C. Admitted carriers handle marketing only
D. Both are identical
Answer: A
Rationale: Admitted insurers are subject to full state regulation and
guaranty fund protection; E&S carriers operate under limited oversight.
5. Question: What is a “diligent search” in E&S placement?
A. Documented effort to secure coverage from admitted insurers
before using E&S carriers
B. Payroll verification process
C. Marketing research
D. Social media assessment
Answer: A
Rationale: NC law requires brokers to show that coverage was
unavailable from admitted carriers before placing E&S business.
6. Question: What is the role of the NC Surplus Lines Association (NCSLA)?
A. Collects taxes, maintains records, and monitors E&S activity
B. Payroll only
C. Marketing only
D. Social media only
Answer: A
Rationale: NCSLA ensures compliance with reporting requirements, tax
remittance, and proper placement of E&S coverage.
7. Question: How are E&S premiums taxed in NC?
A. Subject to state surplus lines tax and reported through NCSLA
B. No taxes apply
C. Payroll only
D. Marketing only
Answer: A
Rationale: State law mandates taxation and reporting of premiums
placed with E&S carriers.
8. Question: Which types of risks are typically placed in the E&S market?
A. Large, high-risk, or unusual commercial exposures
, NORTH CAROLINA EXCESS & SURPLUS (E&S) LINES
INSURANCE EXAM|QUESTIONS AND ANSWER WITH
RATIONALE|GRADED A+|2026 UPDATE|100%
CORRECT
B. Standard homeowners insurance
C. Standard auto insurance
D. Marketing services only
, Answer: A
Rationale: E&S serves risks that admitted carriers are unwilling to cover.
9. Question: Can E&S brokers place coverage with any carrier?
A. Only with carriers approved by NC and meeting financial requirements
B. Any domestic or foreign carrier
C. Payroll only
D. Marketing only
Answer: A
Rationale: Ensures carriers are financially capable and legally eligible to
provide E&S coverage.
10. Question: What is an example of E&S coverage?
A. High-limit cyber liability, large commercial property, environmental
liability
B. Standard personal auto insurance
C. Standard homeowner policy
D. Payroll services only
Answer: A
Rationale: E&S often provides coverage for complex, high-risk, or unusual
exposures.
11. Question: How does E&S insurance protect policyholders?
A. Provides coverage for risks that would otherwise be uninsurable
B. Eliminates all risk
C. Payroll only
D. Marketing only
Answer: A
Rationale: Policyholders can obtain coverage for unique exposures not
available in the admitted market.
12. Question: What is a key legal requirement for E&S placement?
A. Document a diligent search for admitted market coverage
B. Payroll verification only
C. Marketing research only
D. Social media approval
Answer: A
Rationale: Compliance ensures brokers meet NC surplus lines law.
