NC CLAIMS ADJUSTER LATEST 2026 PRACTICE EXAM
QUESTIONS AND SOLUTIONS RATED A+
✔✔Pro-Rata Liability - ✔✔When more than one policy insures the same property.
✔✔Basic Form (DP-1) - ✔✔Covers fire, lightning, wind, hail, damage done by aircraft,
riot, vehicles (unless owned or operated by named insured, resident of household),
explosion, smoke, VMM and volcanic eruption (airborne damages only).
✔✔Broad Form (DP-2) - ✔✔Covering all DP-1 perils, including damage done by
vehicles owned or operated by the named insured or a resident of household) plus
damage done by burglars, falling objects, weight of ice, sleet or snow; sudden and
accidental discharge or overflow of water from a plumbing, heating or air conditioning
unit or from within household appliances, damage from artificially generated electrical
current; freezing, and and the sudden and accidental tearing apart, cracking, burning or
bulging of a steam or hot water heating system or an appliance for heating water.
✔✔Special Form (DP-3) - ✔✔Open Peril Coverage on the dwelling and other structures;
however, content losses are not covered on an open peril basis.
✔✔Coverage Parts (Insuring Agreements) of dwelling policies: - ✔✔1. Coverage A =
Dwelling. Available on all coverage forms. 2. Coverage B = Other Structures (10% of A).
Available on all coverage forms. 3. Coverage C = Personal Property/Contents. Limit
purchased separately. Available on all coverage forms. 4. Coverage D = Fair Rental
Value (10% of A). Available on all coverage forms. 5. Coverage E = Additional Living
Expenses (10% of A). Available on the DP-2 & DP-3. The coverage is added by an
endorsement on the DP-1.
✔✔Coverage A - Dwelling Policy - ✔✔Provides protection for the structure and
equipment/fixtures that are permanently affixed pertaining to the service of the building.
This includes TV aerials, awnings, and outdoor equipment, although loss to these items
by wind, hail, or weight of ice, sleet or snow will be excluded. Also covered are materials
and supplies on the premises intended for use in the construction, alteration or repair of
the dwelling or other structures, however, theft losses for such property are excluded.
Both the DP-2 and DP-3 cover the freezing of a plumbing, heating, air conditioner
system or a household appliance.
✔✔Coverage B - Dwelling Policy - Other Structures - ✔✔Include garages and other
detached outbuildings that are separated from the dwelling by a clear space or they are
only connected to the dwelling by a non-combustible material, such as a fence, utility
line or other similar connection. An amount equal to 10% of the Coverage A limit is
automatically extended for such other structures. Payment under Coverage B reduces
Coverage A limit by the amount paid for the same loss (single limit) in the DP-1 only. On
the DP-2 and DP-3, Coverage B is considered to be additional insurance and a
,payment does not reduce the coverage on the dwelling (Coverage A). Structures used
for commercial, manufacturing or farm purposes are not covered.
✔✔Coverage C - Dwelling Policy - Contents - ✔✔Includes household and personal
property that is common to the occupancy of the premises and belongs to the named
insured and family members. Property of others in the care, custody and control of an
insured is also covered. Property of guests or servants may be covered after a loss at
the named insured's operation. The named insured purchases an amount of Coverage
C appropriate to their loss exposure that is separate from the coverage on the dwelling
structure. Excluded from coverage are pets, aircraft, motor vehicles other than
equipment used for maintenance of the premises (riding lawn mowers) and boats, other
than rowboats and canoes.
✔✔Coverage D - Dwelling Policy - Fair Rental Value - ✔✔An indirect loss coverage for
loss of rental income and payment of ongoing expenses (i.e. certain necessary utilities)
when a rental dwelling or outbuilding, such as a garage apartment is untenable due to a
covered peril. An amount equal to 10% of the Coverage A limit is automatically
extended for this coverage. Payment under this coverage reduces the Coverage A limit
by the amount paid for the same loss in the DP-1 only. Also, the loss payment under
Coverage D may not exceed 1/12th of the 10% of Coverage A for each month the
structure is untenable in the DP-1 only. Payment under this coverage is limited only by
the policy limit on the DP-2 and DP-3. Rental value is payable even if the dwelling is not
rented at the time of loss.
✔✔Coverage E - Dwelling Policy - Additional Living Expenses - ✔✔Provided in the DP-
2 and DP-3 (added by endorsement on the DP-1). Payment is in the same manner as
Coverage D, but this coverage is designed for when the dwelling is occupied by the
named insured instead of when it is rental property. This indirect loss coverage pays the
extra living expenses incurred when the dwelling becomes untenable so that the name
insured and family members may maintain a normal standard of living.
✔✔Date of initial property damage - ✔✔Obligates the insurer, and payments under
Coverage D and Coverage E are not limited by the policy expiration. Payment will be
made for the shortest time required to either repair or replace the damaged property or
until the date the named insured permanently settles in a new residence fo ran
Additional living expense Loss (Coverage E).
✔✔Prohibited Use Coverage - ✔✔If a civil authority prohibits use of the insured property
because a peril named against has damaged a neighboring location, dwelling forms
limit payments under Coverage D and E to a maximum period of two weeks.
✔✔Personal Liability and Theft Coverages - ✔✔Added by endorsement.
✔✔Broad Theft Coverage - ✔✔Used for owner-occupied dwellings and covers both on
premises and off premises theft.
, ✔✔Limited Theft Coverage - ✔✔Used for non-owner-occupied dwellings and only
covers on premises theft.
✔✔Personal Liability Coverage - ✔✔Can be added by endorsement for owner-occupied
property only. The minimum limit of liability is $100,000 per occurrence and $1,000 per
person medical payments coverage to others. The liability coverage provided by this
endorsement is essentially the same as provided by the North Carolina Homeowners
Program.
✔✔Eligibility for the Dwelling Program is restricted to: - ✔✔1. All dwellings (except farm
dwellings) containing no more than four apartments or families and dwellings containing
five or fewer roomers or boarders. 2. Certain incidental business occupancies are
permitted if they are (1) operated by an insured and (2) they provide a service rather
than sales. Ex. Beauty shop, in-home office.
✔✔Persons Insured - ✔✔The named insured as well as all members of the named
insured's family living at the described location.
✔✔Deductibles for dwelling policies - ✔✔Apply on a per occurrence basis for each
incident causing a loss. Deductibles do not apply to Coverage D and E. The standard
deductible is $250 although changes are allowed.
✔✔Coverage extensions (additional coverage): - ✔✔1. Coverage for removed property
(open peril) at another location of 5 days on DP-1 and 30 days on the DP-2 and DP-3.
2. Debris removal is provided, but not as an additional amount of insurance. Therefore,
debris removal coverage will be provided only if the Coverage A loss does not equal the
Coverage A limit. 3. Personal property of an insured is covered worldwide up to 10% of
the amount payable under Coverage C. 4. The cost of reasonable temporary repairs to
protect the property is covered, but this is not an additional amount of insurance. 5.
Coverage for trees, shrubs and plants is provided in the DP-2 and DP-3 only. The limit
is $500 per tree, shrub or plant up to 5% of the Coverage A limit. Perils insured against
include: fire, lightning, explosion, riot, aircraft, vehicles not owned or operated by an
insured or VMM. Wind, hail and the weight of ice, sleet and snow losses are not
covered. 6. Collapse of a building is provided in the DP-2 and DP-3. This is a peril
extension for collapse caused by any broad form peril, decay, hidden insect damage,
weight of contents, use of defective building materials or the weight of water collecting
on the roof. 7. Breakage of glass provided in the DP-2 and DP-3. 8. $500 is provided for
Fire Department Services Charges.
✔✔Claims Settlement for partial structural losses - ✔✔Will be based upon actual cash
value (ACV) in the DP-1. Claims are settled on the basis of replacement cost (no
deduction for depreciation) in the DP-2 and DP-3 if the dwelling or an "other" structure is
insured within 80% of its value at the time of the loss. As long as the named insured
carries insurance equal to or greater than the 80%, the insurance company will pay all
QUESTIONS AND SOLUTIONS RATED A+
✔✔Pro-Rata Liability - ✔✔When more than one policy insures the same property.
✔✔Basic Form (DP-1) - ✔✔Covers fire, lightning, wind, hail, damage done by aircraft,
riot, vehicles (unless owned or operated by named insured, resident of household),
explosion, smoke, VMM and volcanic eruption (airborne damages only).
✔✔Broad Form (DP-2) - ✔✔Covering all DP-1 perils, including damage done by
vehicles owned or operated by the named insured or a resident of household) plus
damage done by burglars, falling objects, weight of ice, sleet or snow; sudden and
accidental discharge or overflow of water from a plumbing, heating or air conditioning
unit or from within household appliances, damage from artificially generated electrical
current; freezing, and and the sudden and accidental tearing apart, cracking, burning or
bulging of a steam or hot water heating system or an appliance for heating water.
✔✔Special Form (DP-3) - ✔✔Open Peril Coverage on the dwelling and other structures;
however, content losses are not covered on an open peril basis.
✔✔Coverage Parts (Insuring Agreements) of dwelling policies: - ✔✔1. Coverage A =
Dwelling. Available on all coverage forms. 2. Coverage B = Other Structures (10% of A).
Available on all coverage forms. 3. Coverage C = Personal Property/Contents. Limit
purchased separately. Available on all coverage forms. 4. Coverage D = Fair Rental
Value (10% of A). Available on all coverage forms. 5. Coverage E = Additional Living
Expenses (10% of A). Available on the DP-2 & DP-3. The coverage is added by an
endorsement on the DP-1.
✔✔Coverage A - Dwelling Policy - ✔✔Provides protection for the structure and
equipment/fixtures that are permanently affixed pertaining to the service of the building.
This includes TV aerials, awnings, and outdoor equipment, although loss to these items
by wind, hail, or weight of ice, sleet or snow will be excluded. Also covered are materials
and supplies on the premises intended for use in the construction, alteration or repair of
the dwelling or other structures, however, theft losses for such property are excluded.
Both the DP-2 and DP-3 cover the freezing of a plumbing, heating, air conditioner
system or a household appliance.
✔✔Coverage B - Dwelling Policy - Other Structures - ✔✔Include garages and other
detached outbuildings that are separated from the dwelling by a clear space or they are
only connected to the dwelling by a non-combustible material, such as a fence, utility
line or other similar connection. An amount equal to 10% of the Coverage A limit is
automatically extended for such other structures. Payment under Coverage B reduces
Coverage A limit by the amount paid for the same loss (single limit) in the DP-1 only. On
the DP-2 and DP-3, Coverage B is considered to be additional insurance and a
,payment does not reduce the coverage on the dwelling (Coverage A). Structures used
for commercial, manufacturing or farm purposes are not covered.
✔✔Coverage C - Dwelling Policy - Contents - ✔✔Includes household and personal
property that is common to the occupancy of the premises and belongs to the named
insured and family members. Property of others in the care, custody and control of an
insured is also covered. Property of guests or servants may be covered after a loss at
the named insured's operation. The named insured purchases an amount of Coverage
C appropriate to their loss exposure that is separate from the coverage on the dwelling
structure. Excluded from coverage are pets, aircraft, motor vehicles other than
equipment used for maintenance of the premises (riding lawn mowers) and boats, other
than rowboats and canoes.
✔✔Coverage D - Dwelling Policy - Fair Rental Value - ✔✔An indirect loss coverage for
loss of rental income and payment of ongoing expenses (i.e. certain necessary utilities)
when a rental dwelling or outbuilding, such as a garage apartment is untenable due to a
covered peril. An amount equal to 10% of the Coverage A limit is automatically
extended for this coverage. Payment under this coverage reduces the Coverage A limit
by the amount paid for the same loss in the DP-1 only. Also, the loss payment under
Coverage D may not exceed 1/12th of the 10% of Coverage A for each month the
structure is untenable in the DP-1 only. Payment under this coverage is limited only by
the policy limit on the DP-2 and DP-3. Rental value is payable even if the dwelling is not
rented at the time of loss.
✔✔Coverage E - Dwelling Policy - Additional Living Expenses - ✔✔Provided in the DP-
2 and DP-3 (added by endorsement on the DP-1). Payment is in the same manner as
Coverage D, but this coverage is designed for when the dwelling is occupied by the
named insured instead of when it is rental property. This indirect loss coverage pays the
extra living expenses incurred when the dwelling becomes untenable so that the name
insured and family members may maintain a normal standard of living.
✔✔Date of initial property damage - ✔✔Obligates the insurer, and payments under
Coverage D and Coverage E are not limited by the policy expiration. Payment will be
made for the shortest time required to either repair or replace the damaged property or
until the date the named insured permanently settles in a new residence fo ran
Additional living expense Loss (Coverage E).
✔✔Prohibited Use Coverage - ✔✔If a civil authority prohibits use of the insured property
because a peril named against has damaged a neighboring location, dwelling forms
limit payments under Coverage D and E to a maximum period of two weeks.
✔✔Personal Liability and Theft Coverages - ✔✔Added by endorsement.
✔✔Broad Theft Coverage - ✔✔Used for owner-occupied dwellings and covers both on
premises and off premises theft.
, ✔✔Limited Theft Coverage - ✔✔Used for non-owner-occupied dwellings and only
covers on premises theft.
✔✔Personal Liability Coverage - ✔✔Can be added by endorsement for owner-occupied
property only. The minimum limit of liability is $100,000 per occurrence and $1,000 per
person medical payments coverage to others. The liability coverage provided by this
endorsement is essentially the same as provided by the North Carolina Homeowners
Program.
✔✔Eligibility for the Dwelling Program is restricted to: - ✔✔1. All dwellings (except farm
dwellings) containing no more than four apartments or families and dwellings containing
five or fewer roomers or boarders. 2. Certain incidental business occupancies are
permitted if they are (1) operated by an insured and (2) they provide a service rather
than sales. Ex. Beauty shop, in-home office.
✔✔Persons Insured - ✔✔The named insured as well as all members of the named
insured's family living at the described location.
✔✔Deductibles for dwelling policies - ✔✔Apply on a per occurrence basis for each
incident causing a loss. Deductibles do not apply to Coverage D and E. The standard
deductible is $250 although changes are allowed.
✔✔Coverage extensions (additional coverage): - ✔✔1. Coverage for removed property
(open peril) at another location of 5 days on DP-1 and 30 days on the DP-2 and DP-3.
2. Debris removal is provided, but not as an additional amount of insurance. Therefore,
debris removal coverage will be provided only if the Coverage A loss does not equal the
Coverage A limit. 3. Personal property of an insured is covered worldwide up to 10% of
the amount payable under Coverage C. 4. The cost of reasonable temporary repairs to
protect the property is covered, but this is not an additional amount of insurance. 5.
Coverage for trees, shrubs and plants is provided in the DP-2 and DP-3 only. The limit
is $500 per tree, shrub or plant up to 5% of the Coverage A limit. Perils insured against
include: fire, lightning, explosion, riot, aircraft, vehicles not owned or operated by an
insured or VMM. Wind, hail and the weight of ice, sleet and snow losses are not
covered. 6. Collapse of a building is provided in the DP-2 and DP-3. This is a peril
extension for collapse caused by any broad form peril, decay, hidden insect damage,
weight of contents, use of defective building materials or the weight of water collecting
on the roof. 7. Breakage of glass provided in the DP-2 and DP-3. 8. $500 is provided for
Fire Department Services Charges.
✔✔Claims Settlement for partial structural losses - ✔✔Will be based upon actual cash
value (ACV) in the DP-1. Claims are settled on the basis of replacement cost (no
deduction for depreciation) in the DP-2 and DP-3 if the dwelling or an "other" structure is
insured within 80% of its value at the time of the loss. As long as the named insured
carries insurance equal to or greater than the 80%, the insurance company will pay all
