North Carolina Property and Casualty State
Exam Latest Update 2025-2026 200 Questions
and 100% Verified Correct Answers Guaranteed
A+
Additional Coverages Found in the Building and Personal Property Policy - CORRECT
ANSWERS: 1. Debris removal due to a covered peril; most insurer will pay is 25% of
the total payment plus the deductible; if actual debris removal expense exceeds the
25% imitation, or if the sum of the direct loss and debris removal expense exceeds the
limit of insurance, the insurer will pay up to an additional $10,000
**If paid limit of A out, $10,000; Have not reached Coverage A limit
2. Will pay removal coverage when removed property to protect it from further damage
for up to 30 days - PRESERVATION OF PROPERTY COVERAGE
Adhesion - CORRECT ANSWERS: - contract is purchased as it is worded and the
insured is "stuck" with that wording
- courts will interpret any ambiguity in favor of the insured (the party who did not write
the contract)
Adverse Selection - CORRECT ANSWERS: - occurs when insureds with a high risk of
loss attempt to purchase insurance and are successful in doing so
- insurers attempt to PREVENT THIS (bad risk)
- prevented by:
1. refusal to write
2. rating up
3. insurability standards
*** deductibles do not prevent this
,Adverse Underwriting Decision - CORRECT ANSWERS: - when an application for
insurance has been rejected, an existing policy has been terminated, or coverage has
been placed with a residual market mechanism
- failure to place coverage with a company requested by the applicant and the charging
of a higher rate based on information that differs from that supplied by the insured
***charging higher premium due to an increase in hazard is NOT considered an adverse
underwriting decision
Agents - CORRECT ANSWERS: - representatives of the insurance company
- requires a contract and appointment (something stating they can sell insurance)
- given binding authority (binder = temporary evidence insurance is in effect); must be
written or oral (says you ARE covered); cannot cancel binder - only the policyholder or
company can
Agents Duties to the Insurance Company - CORRECT ANSWERS: 1. Loyalty
2. Obedience
3. Use of Reasonable Care
4. Accurate Accounting
5. Communication of info held by the agent to the company
Application - CORRECT ANSWERS: The most important document when underwriting
is determining eligibility
Automobile Insurance - CORRECT ANSWERS: - classified as liability coverage
because the major coverage provided is the liability arising out the operation of an
automobile
Basic Form (DP-1) - CORRECT ANSWERS: - a named peril policy
- covers WHARVES, fire, lightning, VMM, volcanic eruption (air-born)
**not vehicles owned by named insured/household
,Broad Form (DP-2) - CORRECT ANSWERS: - property and contents
- named peril policy covering all DP-1's perils. plus damage done by burglars, fallen
objects, weight of ice, sleet, and snow, overflow of water from plumbing/appliances,
damage from power surges, freezing, tearing apart of hot water systems
Broad Form (HO2) - CORRECT ANSWERS: - provides named peril coverage on the
following perils: WHARVES, fire, lightning, VMM, theft, volcanic eruption (airborne only),
falling objects, weight of ice, snow, sleet, overflow of water, hot water heating damage,
power surges
**same perils as DP-2 + theft
Broker - CORRECT ANSWERS: - representatives of the insured
- shop the market for their customers and obtain coverage through an agent
- must have $15,000 bond
- CANNOT bind coverage
Building and Personal Property Form: Coverage A (building) - CORRECT ANSWERS: -
restricted to the building shown on the policy declarations
- no requirement that the insured purchase coverage A; therefore businesses not
owning the structure can still use this form to cover their contents
Building and Personal Property Form: Coverage B (business personal
property/contents) - CORRECT ANSWERS: - can include stock, machinery, furniture, or
any other property owned by the named insured and used I'm their business
- not restricted to only those item in the structure as coverage is provided within 100 feet
of the premises
Building and Personal Property Form: Coverage C (personal property of others) -
CORRECT ANSWERS: - relates to the property in the care, custody, and control of the
named insured (Bailee's Coverage)
, - again, extends to within 100 ft of the described premises
Capital Stock Companies - CORRECT ANSWERS: - in business to make a profit for
stockholders
- owned by stockholders; elect a board of directors
- profit is fully taxable to stockholder
Cause of Loss Forms Attached to the Building and Personal Property Coverage Form -
CORRECT ANSWERS: - identifies the perils insured against
- four cause of loss forms
1. Basic Form - SFP perils, EC perils, VMM, sprinkler leakage, sink hole collapse,
volcanic eruption, glass
2. Broad Form - basic form plus breakage of glass by vandalism ($100/plate, $500 per
occurrence)
3. Special Form - provides open peril coverage for physical loss
4. Earthquake Form - can be added with a previous cause of loss form; covers all
shocks or eruptions that occur WITHIN A 168 HOUR PERIOD (constitutes a single
occurrence) and volcanic eruption LAND BORNE DAMAGE (exclusions under
earthquake = fire, explosion, landslides, tidal waves, mudslides, power surges)
Claims Settlement for Dwelling Policies - CORRECT ANSWERS: 1. DP-1: based upon
actual cash value (ACV - replacement cost less depreciation)
2. DP-2&3: based upon replacement cost (no deduction for depreciation) IF THE
DWELLING IS INSURED WITHIN 80% OF ITS VALUE AT THE TIME OF THE LOSS
3. Personal property/contents loss settlement will be based upon ACV in the DP-1, DP-
2, and DP-3; but, on DP-2 and DP-3 customer may purchase Personal Property
Replacement Cost Coverage by endorsement which provides "new for old" or
"replacement cost" for all items except fine art, memorabilia, collector items, or any
other items that cannot be replaced to their unique quality
Classifications of Insurance Companies - CORRECT ANSWERS: 1. Domestic:
organized in state
Exam Latest Update 2025-2026 200 Questions
and 100% Verified Correct Answers Guaranteed
A+
Additional Coverages Found in the Building and Personal Property Policy - CORRECT
ANSWERS: 1. Debris removal due to a covered peril; most insurer will pay is 25% of
the total payment plus the deductible; if actual debris removal expense exceeds the
25% imitation, or if the sum of the direct loss and debris removal expense exceeds the
limit of insurance, the insurer will pay up to an additional $10,000
**If paid limit of A out, $10,000; Have not reached Coverage A limit
2. Will pay removal coverage when removed property to protect it from further damage
for up to 30 days - PRESERVATION OF PROPERTY COVERAGE
Adhesion - CORRECT ANSWERS: - contract is purchased as it is worded and the
insured is "stuck" with that wording
- courts will interpret any ambiguity in favor of the insured (the party who did not write
the contract)
Adverse Selection - CORRECT ANSWERS: - occurs when insureds with a high risk of
loss attempt to purchase insurance and are successful in doing so
- insurers attempt to PREVENT THIS (bad risk)
- prevented by:
1. refusal to write
2. rating up
3. insurability standards
*** deductibles do not prevent this
,Adverse Underwriting Decision - CORRECT ANSWERS: - when an application for
insurance has been rejected, an existing policy has been terminated, or coverage has
been placed with a residual market mechanism
- failure to place coverage with a company requested by the applicant and the charging
of a higher rate based on information that differs from that supplied by the insured
***charging higher premium due to an increase in hazard is NOT considered an adverse
underwriting decision
Agents - CORRECT ANSWERS: - representatives of the insurance company
- requires a contract and appointment (something stating they can sell insurance)
- given binding authority (binder = temporary evidence insurance is in effect); must be
written or oral (says you ARE covered); cannot cancel binder - only the policyholder or
company can
Agents Duties to the Insurance Company - CORRECT ANSWERS: 1. Loyalty
2. Obedience
3. Use of Reasonable Care
4. Accurate Accounting
5. Communication of info held by the agent to the company
Application - CORRECT ANSWERS: The most important document when underwriting
is determining eligibility
Automobile Insurance - CORRECT ANSWERS: - classified as liability coverage
because the major coverage provided is the liability arising out the operation of an
automobile
Basic Form (DP-1) - CORRECT ANSWERS: - a named peril policy
- covers WHARVES, fire, lightning, VMM, volcanic eruption (air-born)
**not vehicles owned by named insured/household
,Broad Form (DP-2) - CORRECT ANSWERS: - property and contents
- named peril policy covering all DP-1's perils. plus damage done by burglars, fallen
objects, weight of ice, sleet, and snow, overflow of water from plumbing/appliances,
damage from power surges, freezing, tearing apart of hot water systems
Broad Form (HO2) - CORRECT ANSWERS: - provides named peril coverage on the
following perils: WHARVES, fire, lightning, VMM, theft, volcanic eruption (airborne only),
falling objects, weight of ice, snow, sleet, overflow of water, hot water heating damage,
power surges
**same perils as DP-2 + theft
Broker - CORRECT ANSWERS: - representatives of the insured
- shop the market for their customers and obtain coverage through an agent
- must have $15,000 bond
- CANNOT bind coverage
Building and Personal Property Form: Coverage A (building) - CORRECT ANSWERS: -
restricted to the building shown on the policy declarations
- no requirement that the insured purchase coverage A; therefore businesses not
owning the structure can still use this form to cover their contents
Building and Personal Property Form: Coverage B (business personal
property/contents) - CORRECT ANSWERS: - can include stock, machinery, furniture, or
any other property owned by the named insured and used I'm their business
- not restricted to only those item in the structure as coverage is provided within 100 feet
of the premises
Building and Personal Property Form: Coverage C (personal property of others) -
CORRECT ANSWERS: - relates to the property in the care, custody, and control of the
named insured (Bailee's Coverage)
, - again, extends to within 100 ft of the described premises
Capital Stock Companies - CORRECT ANSWERS: - in business to make a profit for
stockholders
- owned by stockholders; elect a board of directors
- profit is fully taxable to stockholder
Cause of Loss Forms Attached to the Building and Personal Property Coverage Form -
CORRECT ANSWERS: - identifies the perils insured against
- four cause of loss forms
1. Basic Form - SFP perils, EC perils, VMM, sprinkler leakage, sink hole collapse,
volcanic eruption, glass
2. Broad Form - basic form plus breakage of glass by vandalism ($100/plate, $500 per
occurrence)
3. Special Form - provides open peril coverage for physical loss
4. Earthquake Form - can be added with a previous cause of loss form; covers all
shocks or eruptions that occur WITHIN A 168 HOUR PERIOD (constitutes a single
occurrence) and volcanic eruption LAND BORNE DAMAGE (exclusions under
earthquake = fire, explosion, landslides, tidal waves, mudslides, power surges)
Claims Settlement for Dwelling Policies - CORRECT ANSWERS: 1. DP-1: based upon
actual cash value (ACV - replacement cost less depreciation)
2. DP-2&3: based upon replacement cost (no deduction for depreciation) IF THE
DWELLING IS INSURED WITHIN 80% OF ITS VALUE AT THE TIME OF THE LOSS
3. Personal property/contents loss settlement will be based upon ACV in the DP-1, DP-
2, and DP-3; but, on DP-2 and DP-3 customer may purchase Personal Property
Replacement Cost Coverage by endorsement which provides "new for old" or
"replacement cost" for all items except fine art, memorabilia, collector items, or any
other items that cannot be replaced to their unique quality
Classifications of Insurance Companies - CORRECT ANSWERS: 1. Domestic:
organized in state
