NC Property Insurance Practice Exam Questions and Answers 2023/2024 Exam Update(100% Corre, Exams of Community Corrections

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NC Property Insurance Practice Exam Questions and Answers

2023/2024 Exam Update(100% Correct Answers)

Stanley owns a dairy farm, he stores milk in refrigerated silos. One day a sudden hail storm caused him to leave some milk in the open, it spoiled. He filed a claim with his insurer, his farm policy will ____. - correct answer >> NOT cover his claim even if the special causes of loss form applies. Explanation: the special causes of loss form specifically excludes coverage for windstorm or hail damage to dairy products left in the open. Essential property insurance policies are typically written for a term of: - correct answer >> 1 or 3 years Explanation: Essential property policies are typically written for a term of 1 or 3 years. Short term policies may also be issued. Which of the following statements BEST describes the transfer of risk via an insurance contract? - correct answer >> Not all risks are transferable via insurance contracts Explanation: not all risks are insurable; before an insurer agrees to accept an application, it must determine if the risk is eligible. Abby lives in Maryland, where she is a licensed insurance agent. She wants to apply for a nonresident license in NC. Which of the following conditions must she satisfy? - correct answer >> She must show her license is in good standing in Maryland

Explanation: a person who is not an NC resident may be licensed as an agent in NC if the person is a licensed agent in good standing in their home state. Which of the following is NOT a power granted to the NC insurance commissioner? - correct answer >> Prosecuting individuals for violating insurance laws Explanation: the commissioner may examine financial statements of insurers, issues insurance regulations, & enforce insurance laws, but the state Attorney General or other law officials prosecute criminal acts. Sanborn Supplies has a commercial property policy with a causes of loss broad form. In a hurry to deliver an order, a company driver strikes a corner of the warehouse, causing damage to it. Will the company's commercial property policy cover the damage to the building? - correct answer >> No; although vehicle damage is a covered cause of loss, coverage is excluded when the insured is at fault. Explanation: the vehicle peril involves damage to insured property caused by direct physical impact between the insured property & a vehicle however it cannot be a vehicle owned or operated by the insured. A standard homeowners policy does NOT cover ________ - correct answer >> personal injury Explanation: a standard homeowner policy covers bodily injury & property damage, not personal injury. The personal injury (HO 32 82) endorsement adds liability coverage for personal injury.

The Gramm-Leach-Billey Act, the Federal Trade Commission Act & the Health Insurance Portability & Accountability Act were enacted to _______ - correct answer >> protect the privacy of consumers' information Explanation: these federal laws have privacy provisions to protect consumers' information, increased collection & use of personal information by businesses have resulted in the need for more laws regulating the use of the information given. T's Real Estate submitted a vandalism claim under its BOP. If the insurer reduced the claim payment by 15% because the insured building was vacant at the time of loss, which of peril caused the loss? - correct answer >> fire Explanation: If the building is vacant for more than 60 days at the time of loss, the BOP excludes coverage for the perils of vandalism, theft and attempted theft, building glass breakage & sprinkler leakage. Recovery for losses caused by all other perils is reduced by 15% if the building is vacant at the time of loss. Which of the following would not be included in the meaning of "insured" in a homeowners policy? - correct answer >> neighbor who mows the insured's lawn Explanation: family members residing at home, children away at college, and an individual who cares for a pet while the owner is away are all insureds under the policy. A neighbor who assists the insured out of generosity is not an insured under the policy. Which dwelling form does NOT include Coverage E Additional Living Expense? - correct answer >> DP-1 Basic Form

Explanation: the DP-1 form does not include coverage E; however it can be added to the DP-1 through endorsement. Smith & Thomas are licensed producers. Smith knows Thomas is embezzling money from clients, however he does not notify the commissioner. What is the result? - correct answer >> Smith's licensed will be revoked Explanation: Anyone who believes that insurance fraud, embezzlement, or a violation of insurance laws is being/has been committed is required to notify the commissioner. A person's license will be revoked or not renewed if they willingly fail to comply. Arie is sued & tells his insurer the lawsuit is without merit. Even if Arie is telling the truth, the insurer stills owes him a duty to _________ - correct answer >> defend Explanation: the insurer has a duty to defend the insured, at the insurer's expense, & attempt to prove the insured is NOT legally responsible for the loss and NOT legally required to pay damages. Santucci Brothers Grocery employs a high school student to deliver groceries on the weekends. When the employee accidentally runs over a customers dog when pulling into the driveway, which of the following terms BEST describes SBG's legal responsibility for the employee's action? - correct answer >> vicarious liability Explanation: vicarious liability results when one party is legally responsible for the acts of another. Examples include parents who are liable for their minor aged children, & employers who are liable for their employees.

Martin's Music Shoppe submitted a claim to the insurance company that provides insurance on its building. If the insurer denies the claim, what is the peril that caused the loss? - correct answer >> Flood Explanation: flood is an excluded peril on most property insurance policies. It is an unfair method of competition for a producer to portray the terms & benefits of an insurance policy inaccurately to a potential client. This deceptive practice is called __________ - correct answer >> misrepresentation Explanation: it is an unfair method of competition for a producer to misrepresent the terms & benefits of any policy just to make a sale. Marilyn & Dan live in an apartment, they want to buy insurance to cover their personal property & protect them against liability claims from third parties. Which homeowners form is appropriate for them? - correct answer >> HO 4 Contents Broad Form Explanation: the HO 4 contents broad form is designed for apartment tenants. It insures the tenants personal property on a named perils basis & provides loss of use, personal liability & medical payments coverage. Coverage for dwelling and other structures is not provided except for building additions and alterations paid for by the insured. The chief accountant for Ironworks asks their agent which causes of loss form under the commercial property policy is best. the agent explains that the special form provides the broadest coverage, in addition it _________ - correct answer >> covers most types of theft and is less subject to a denial of coverage

Explanation: the special form covers most types of theft while only theft coverage provided on basic and broad causes of loss forms is for looting in connection with a riot/civil commotion. How many sections does an ISO business owners coverage form contain? - correct answer >> three Explanation: the ISO business owners coverage form has 3 sections: section I - property, section II - liability, section III - common policy conditions Madeline's 3 family dwelling was damaged in a fire, several claims were submitted to the insurer of her dwelling policy that live in the dwelling. A claim for which of the following items of personal property was NOT paid by Madeline's insurer? - correct answer >> clothing of Madeline's second floor tenant Explanation: personal property coverage on the dwelling forma is only provided for personal property owned or used by the names insured & resident family members. Shelby's property insurance policy excludes expected losses, her insurance agent refers to them as maintenance or wear & tear exclusions. Which of the following would NOT be found in that category? - correct answer >> lightning Explanation: in addition to wear & tear, the causes of loss typically excluded in this category include: deterioration, rust, smoke from industrial operations, damage by animals owned by the insured, and damage from birds, vermin, rodents, or insects.

What type of property are buildings, land, and structures attached to them? - correct answer >> real property Explanation: real property includes buildings, land, and structures attached to land The insurance manager at Mohawk Roofing Company is concerned about its exposure to weight of ice & snow & collapse losses. Which causes of loss form(s) under the CPP would the agent recommend to cover these exposures? - correct answer >> either the broad form or special causes of loss form Explanation: Losses caused by weight of ice or snow & collapse are covered under the causes of loss broad & special forms. In general, special causes of loss form (open) covers every peril that is named in the causes of loss broad form (named) and also covers additional perils. The valuation condition of the ISO commercial inland marine policy states property will be values at the smallest of 3 amounts. Which of the following is NOT one of those amounts? - correct answer >> the market value of covered property Explanation: the ISO commercial inland marine policy values covered property at the smallest (cheapest) of these 3 amounts:

1. actual cash value
2. reasonable cost to repair
3. cost to replace property with similar property

Exclusions limit the broad coverage granted in property & liability insuring agreements. Which of the following is NOT a purpose of exclusions in insurance policies? - correct answer >> providing coverage for uninsurable risk Explanation: exclusions remove coverage for uninsurable risks. When meeting with a potential client, Taylor makes disparaging comments about the financial stability & reputation of his competitor to dissuade the client from that company. Which unfair trade practice has Taylor committed? - correct answer

defamation Explanation: It is considered defamation to publish or circulate false, deceptive or misleading statement about or in of an insurer. Which of the following is NOT a disciplinary measure that the commissioner can take against a person who violates the insurance laws or regulations? - correct answer >> imprisonment Explanation: It is not within the commissioners power to impose a prison term or jail sentence. While driving a truck through a field at Valley Farm, an employee accidentally collides with one of the farm's combines. Both the truck and the combine are damaged, is either damage to either machine covered under the farm's liability policy? - correct answer >> there is no coverage for property damage to property the insured owns, rents, or occupies Explanation: under the farm liability coverage, there is no coverage for property damage to property the insured owns, rents or occupies.

Anthony becomes an agent for Acme Insurance Company, Acme has not filed the notice of appointment with the commissioner, it must be done within how many days? - correct answer >> 15 days Explanation: an insurer must file notice of appointment with the commissioner within 15 days of receiving the first insurance applicant from the agent. Janice inherited her mother's diamond earrings, valued at $25,000. Why do you recommend that Janice insures the earrings on Personal Articles Floater rather than under coverage C - personal property on her HO policy? - correct answer >> a special limit of $1,500 applies to loss by theft of jewelry on the HO policy Explanation: the HO policy contains a coverage C special limit of liability of $1, for loss by theft of jewelry, the personal property floater allows the insured to choose an appropriate limit of liability.