NORTH CAROLINA PEARSON VUE ALL LINES ADJUSTER
PRACTICE 2025 EXAM QUESTIONS AND CORRECT
ANSWERS (VERIFIED ANSWERS)
What is the purpose of insurance?
Answer: To transfer financial risk from an individual to an insurer
Rationale: Insurance protects policyholders from the financial impact of
unexpected losses.
What does “premium” refer to?
Answer: The amount a policyholder pays for coverage
Rationale: Premiums are the consideration paid in exchange for
insurance protection.
What is a deductible?
Answer: The amount the insured must pay before insurance coverage
applies
Rationale: Deductibles reduce small claims and lower premiums.
Which type of risk can be insured?
Answer: Pure risk
Rationale: Pure risk involves only loss or no loss, unlike speculative risk
which includes gain.
What is indemnity in insurance?
Answer: Compensation to restore the insured to their pre-loss position
Rationale: Ensures the insured does not profit from a loss.
, What is the principle of utmost good faith?
Answer: Both parties must disclose all material facts
Rationale: Insurance contracts rely on honesty to assess risk accurately.
Which term describes the spread of risk among many insureds?
Answer: Risk pooling
Rationale: Losses are shared, reducing financial impact for individuals.
What is an insurable interest?
Answer: A financial or other interest that would be lost if the insured
event occurs
Rationale: Required for a valid insurance contract to prevent gambling
on losses.
Which coverage pays for damage to someone else’s property for
which you are legally liable?
Answer: Liability coverage
Rationale: Protects the insured from financial responsibility for third-
party damage.
1 What is subrogation?
Answer: Insurer’s right to recover from a third party who caused the
loss
Rationale: Prevents the insured from collecting twice and recovers
funds from the responsible party.
II. Property & Casualty Insurance (11–20)
1 Which policy covers fire, wind, and theft for buildings and
personal property?
Answer: Homeowners policy
PRACTICE 2025 EXAM QUESTIONS AND CORRECT
ANSWERS (VERIFIED ANSWERS)
What is the purpose of insurance?
Answer: To transfer financial risk from an individual to an insurer
Rationale: Insurance protects policyholders from the financial impact of
unexpected losses.
What does “premium” refer to?
Answer: The amount a policyholder pays for coverage
Rationale: Premiums are the consideration paid in exchange for
insurance protection.
What is a deductible?
Answer: The amount the insured must pay before insurance coverage
applies
Rationale: Deductibles reduce small claims and lower premiums.
Which type of risk can be insured?
Answer: Pure risk
Rationale: Pure risk involves only loss or no loss, unlike speculative risk
which includes gain.
What is indemnity in insurance?
Answer: Compensation to restore the insured to their pre-loss position
Rationale: Ensures the insured does not profit from a loss.
, What is the principle of utmost good faith?
Answer: Both parties must disclose all material facts
Rationale: Insurance contracts rely on honesty to assess risk accurately.
Which term describes the spread of risk among many insureds?
Answer: Risk pooling
Rationale: Losses are shared, reducing financial impact for individuals.
What is an insurable interest?
Answer: A financial or other interest that would be lost if the insured
event occurs
Rationale: Required for a valid insurance contract to prevent gambling
on losses.
Which coverage pays for damage to someone else’s property for
which you are legally liable?
Answer: Liability coverage
Rationale: Protects the insured from financial responsibility for third-
party damage.
1 What is subrogation?
Answer: Insurer’s right to recover from a third party who caused the
loss
Rationale: Prevents the insured from collecting twice and recovers
funds from the responsible party.
II. Property & Casualty Insurance (11–20)
1 Which policy covers fire, wind, and theft for buildings and
personal property?
Answer: Homeowners policy
