NC ADJUSTER EXAM PRACTICE QUESTIONS AND ANSWERS

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NC ADJUSTER EXAM

PRACTICE QUESTIONS

AND ANSWERS

Question 1 Which of the following statements is true?

• Agents can bind coverage.
• Agents and brokers represent insurance companies.
• Brokers can bind coverage.
• Agents in the field of Property and Casualty insurance issue conditional

receipts.

Correct Answer: A) Agents can bind coverage.

Question 2 Which of the following losses is covered under a Standard Fire Policy with the Vandalism and Malicious Mischief (VMM) endorsement?

• Theft of a TV set by vandals.

II. Vandalism on February 1st of a property that has been vacant since January 1st.III. Damage caused by an individual spray-painting graffiti on the dwelling.

• I only.
• II only.
• I and II.

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• III only.

Correct Answer: D) Damage caused by an individual spray-painting graffiti on

the dwelling. (III only)

Question 3

All of the following are essential elements in an insurance contract EXCEPT:

• Agreement.
• Consideration.
• Competent parties.
• Counter-offer.

Correct Answer: D) Counter-offer.

Question 4

The Standard Fire policy insuring agreement covers:

• Lightning.

II. Removal of contents from endangered premises.III. Water damage caused by firemen putting out a fire at the insured premises.

• I only.
• II only.
• I and II.

D) I, II, III.

Correct Answer: D) I, II, III.

Question 5 Which of the following acts may an agent legally conduct?

• Depositing collected premiums into the agent's own bank account.

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• Conduct a pretext interview to verify information supplied on an application.
• Represent multiple insurance companies.
• Charge an application fee based upon a written notification posted in the

office.

Correct Answer: D) Charge an application fee based upon a written notification

posted in the office.

Question 6 The clause in the standard fire policy that specifies the amount of recovery

when more than one policy exists on the same property is called:

• Pro-rata liability.
• Co-insurance.
• Actual cash value.
• Pro-rata distribution.

Correct Answer: A) Pro-rata liability.

Question 7

All of the following are true about "insurable risk" EXCEPT:

• The law of large numbers should apply.
• The loss must not be definite and definable.
• The loss must not be catastrophic in nature.
• The loss must be large enough to create hardship.

Correct Answer: B) The loss must not be definite and definable.

Question 8

An insurance contract is a unilateral contract which means that:

• Only the insurer makes an enforceable promise.

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• Both parties must give up something of value.
• Contract provisions are not required.
• Both parties must perform with utmost good faith.

Correct Answer: A) Only the insurer makes an enforceable promise.

Question 9

The practice of twisting:

• Is perfectly legal in this state.
• Involves writing insurance that is unacceptable by the company an agent is

associated with.

• Involves inducing any policyholder to lapse a contract of insurance for the

purpose of replacing the policy with another to the detriment of the policyholder.

• Occurs when an agent gives directly or indirectly to an insurance buyer any

rebate of premiums as an inducement for the purchase of insurance.

Correct Answer: C) Involves inducing any policyholder to lapse a contract of

insurance for the purpose of replacing the policy with another to the detriment of the policyholder.

Question 10 When the Commissioner intends to hold a hearing concerning an agent's trade

practices, notice of the hearing must be given at least:

• 5 days in advance.
• 10 days in advance.
• 20 days in advance.
• 30 days in advance.

Correct Answer: B) 10 days in advance.