NC CLAIMS ADJUSTER LATEST 2026 COMPREHENSIVE
EXAM QUESTIONS AND SOLUTIONS RATED A+
✔✔Misrepresentation or False Advertising Policies - ✔✔A. Misrepresentation of benefits
(twisted), B. Misrepresentation of dividends, C. Misrepresentation of the financial
condition or reserves of the insurer, D. Names or titles of insurance policies that
misrepresent the true nature of the contract.
✔✔Defamation - ✔✔Circulation, by either oral or written means, of a false or derogatory
statement intended to injure another party.
✔✔Insurance Information and Privacy Protection Act - ✔✔Outlines procedures to be
used to protect the confidential nature of the information processed in the insurance
industry. However, this act does not apply to information collected from public records of
a governmental authority, such as the NC Dept. of Motor Vehicles.
✔✔Adverse Underwriting Decision - ✔✔1. An application for insurance has been
rejected, 2. An existing policy has been terminated, 3. Coverage has been placed with a
residual market mechanism. Failure to place coverage with a company requested by the
applicant and charging of a higher rate based on information that differs from that
supplied by the insured. However, charging higher premium due to an increase in
hazard is not considered to be an adverse underwriting decision.
✔✔Pretext Interviews - ✔✔Conducted when an individual does not reveal their identity
or they pose as someone else in order to obtain information.
✔✔Notice of Information Practices - ✔✔Summarizes the applicant's rights under the act
including the right to know what information was gathered and from whom. Shall be
provided to the applicant no later than at the time of the delivery of the policy when
personal information is collected only from the applicant or from public records or at the
time of collection of personal information is initiated.
✔✔Disclosure Authorization Form - ✔✔Grants permission for the insurance company to
obtain and/or release specified non-public information. The maximum effective time
period for this authorization in property and casualty insurance is 12 months.
✔✔Responsibilities of Agents and Companies when an adverse decision has taken
place. These responsibilities include: - ✔✔1. Providing specific reasons for the adverse
underwriting decision or advising the applicant that the reasons are available upon
written request to the company. If the written request is submitted within 90 days, the
company has 21 business days to respond. 2. Provide a summary of the applicant's
right to know what information prompted the decision and their right to challenge the
decision if the information is felt to be inaccurate. Any disputed information must be
responded to within 30 business days. 3. An insurance institution or agent shall clearly
specify those questions designed to obtain information solely for marketing or research
,purposes from an individual in connection with an insurance transaction. 4. No adverse
underwriting decision may be based on a previous adverse underwriting decision.
✔✔Powers of the Commissioner of Privacy Act - ✔✔The Commissioner may investigate
alleged violations of the insurance information and Privacy Protection Act. If just cause
is found, the commissioner may hold a hearing after at least 10 days prior written notice
to all parties. The Commissioner may subpoena companies, agents and insurance
support organizations. The law also allows the applicant to be heard at this hearing and
they may be represented by legal counsel.
✔✔Specific Statutes Commonly Violated - ✔✔These actions are considered to be
felonies. 1. Any agent or broker who converts to their own use any money or property
received without instructions of or approval of the insurer shall be guilty of
embezzlement. 2. Any person who willfully submits false statements or proof of loss in
the filing of a claim to receive payment for such claim will be guilty of insurance fraud. 3.
Any person who knowingly places any insurance coverage with a non-admitted
insurance company.
✔✔Property Insurance - Direct Loss - ✔✔Actual monetary loss caused by the physical
damage to or destruction of tangible property.
✔✔Property Insurance - Indirect (Consequential) Loss - ✔✔Results as a consequence
of a direct loss. An indirect loss involves a loss of revenues or extra expenses that result
from physical damage to or destruction of property.
✔✔Named Peril - ✔✔Provides coverage only for those perils identified in the policy.
Unless a loss is caused by a covered (named) peril, there will be no insurance
company. Therefore, the burden of proof is on the named insured to prove that their
loss was caused by a covered peril (ex. Wind, hail).
✔✔Open peril (All Risk) - ✔✔Will insure against all perils unless they are specifically
excluded from the coverage. Therefore, the burden of proof lies with the insurer to
demonstrate that the loss was caused by an excluded peril. Special means Open peril.
✔✔Insurable Interest - ✔✔Financial interest in the property. This interest must exist at
the time of the loss, but not necessarily at the time of policy purchase.
✔✔Standard Fire Policy - SFP - ✔✔This policy was the first property insurance policy
that was standardized by law. Named Peril policy insuring against direct losses caused
by fire, lightning and removal of property to protect it from further damage and
Proximate Cause meaning an unbroken chain of events leading from "cause" to "effect".
✔✔SFP Provisions - ✔✔1. Friendly fire, 2. Cancellation, 3. Mortgagee (Loss Payee)
Rights, 4. Pro-Rata Liability, 5. Concealment and Fraud, 6. Legal Action, 7. Sub
rotation, 8. Abandonment Clause, 9. Policy Inception and Expiration
,✔✔Friendly Fire - ✔✔SFP provision - no coverage for a fire if the damage was a result
of a friendly fire. A friendly fire was one that was intentionally lit and stayed within its
intended bounds.
✔✔Cancellation - ✔✔SFP provision - 1. If the named insured canceled, unearned
premium was refunded on a short-rate basis. The cancellation date had to e clearly
expressed, 2. The insurer could have canceled by written notice to the named insured
of 5 days. Any unearned premium was refunded on a pro-rata basis.
✔✔Mortgagee (Loss Payee) Rights - ✔✔SFP provision - established in the SFP
providing for payment to the mortgagee. In addition, the mortgagee had the right to
submit a proof of loss if the named insured failed to do so.
✔✔Pro-Rata Liability - ✔✔SFP provision - addressed the possibility of more than one
policy covering the same property. Concurrency means covering the same property
against the same perils.
✔✔Concealment and Fraud - ✔✔SFP Provision - Protected the insurer from willful
(material) representations by the insured. The insurer could have declared the entire
policy "null and void" if willful misrepresentations had been given. However, the
mortgagee's insurable interest was still protected until the required 10 day advance
cancellation was given.
✔✔Legal Action - ✔✔SPF provision - Legal Action against the company could be
initiated after 3 years from the date of loss.
✔✔Subrogation - ✔✔SFP Provision - Required the named insured to assign to the
insurer the right to recover claim payments from negligent third parties.
✔✔Abandonment Clause - ✔✔SFP provision - Prohibited the insured from abandoning
their partially damaged property to the insurance company in order to claim a total loss.
✔✔Inception/Expiration Date - ✔✔SFP provision - 12:01 a.m. where the property was
located.
✔✔Duties of the Insured in the event of loss were: - ✔✔1. Protect the property from
further damage. This included separating damaged from undamaged property. 2. Give
the insurer prompt notice of the loss. 3. Submit a signed statement of loss (proof of loss)
within 60 days from the date of the company's request unless the company extended
this time period in writing. Proof of loss included an inventory of damaged property, the
value of the damaged property, any other applicable insurance, tc. 4. Allow the
insurance company to inspect the property. 5. Cooperate in the investigation including
questioning under oath.
, ✔✔Actual Cash Value (ACV) Settlement - ✔✔This is loss payment based upon today's
replacement cost minus depreciation.
✔✔Repair, Rebuild or Replace Settlement - ✔✔The insurer could repair, rebuild or
replace the damaged property with material of like kind and quality. If this option was
chosen, the named insured had to be notified within 30 days of the proof of loss being
submitted.
✔✔Agreed Value/Salvage Value Settlement - ✔✔Insurer could have taken possession
of the property at an agreed value. The named insured had to be notified within 30 days
of the proof of loss being submitted if this settlement option was to be exercised.
✔✔Total Loss Settlement - ✔✔In the event of a total loss, settlement cannot exceed the
face value of the policy regardless of the actual amount of loss.
✔✔Modification to Claims Settlement - ✔✔1. The Appraisal Method was used when the
named insured and the company could not agree as to the actual cash value of
property. Each party hired and paid the cost of an appraiser. The appraisers selected an
umpire whose cost was shared equally by the named insured and insurer. Each
appraiser would determine an ACV for the disputed property. If the appraisers do not
agree, then the umpire would rule on the differences. Agreement of any two parties
established the actual cash value of the property. 2. Recovery for a loss cannot exceed
an individual's actual interest in the property. If an individual owns 25% of the
damaged/destroyed property, then they are entitled to only 25% of the claim payment.
✔✔Appraisal Method - ✔✔The Appraisal Method was used when the named insured
and the company could not agree as to the actual cash value of property. Each party
hired and paid the cost of an appraiser. The appraisers selected an umpire whose cost
was shared equally by the named insured and insurer. Each appraiser would determine
an ACV for the disputed property. If the appraisers do not agree, then the umpire would
rule on the differences. Agreement of any two parties established the actual cash value
of the property.
✔✔Exclusions in the SFP policy: - ✔✔1. Specifically excluded were money. 2. Acts of
war. 3. Losses caused by a failure of the insured to use reasonable means to protect
insured property from further damage. 4. Civil authority losses. 5. Any increase in
hazard may have restricted or suspended coverage. 6. When a building became vacant
or unoccupied, coverage was suspended 60 days later if such conditions continue
consecutively. A. An unoccupied building has contents but no tenants, B. A vacant
building has neither contents nor tenants (empty).
✔✔Extended Coverage Endorsement (EC) - ✔✔A named peril endorsement to the SFP
providing direct loss coverage for the perils of WHARVES (wind, hail, aircraft, riot,
vehicle, explosion, smoke)
EXAM QUESTIONS AND SOLUTIONS RATED A+
✔✔Misrepresentation or False Advertising Policies - ✔✔A. Misrepresentation of benefits
(twisted), B. Misrepresentation of dividends, C. Misrepresentation of the financial
condition or reserves of the insurer, D. Names or titles of insurance policies that
misrepresent the true nature of the contract.
✔✔Defamation - ✔✔Circulation, by either oral or written means, of a false or derogatory
statement intended to injure another party.
✔✔Insurance Information and Privacy Protection Act - ✔✔Outlines procedures to be
used to protect the confidential nature of the information processed in the insurance
industry. However, this act does not apply to information collected from public records of
a governmental authority, such as the NC Dept. of Motor Vehicles.
✔✔Adverse Underwriting Decision - ✔✔1. An application for insurance has been
rejected, 2. An existing policy has been terminated, 3. Coverage has been placed with a
residual market mechanism. Failure to place coverage with a company requested by the
applicant and charging of a higher rate based on information that differs from that
supplied by the insured. However, charging higher premium due to an increase in
hazard is not considered to be an adverse underwriting decision.
✔✔Pretext Interviews - ✔✔Conducted when an individual does not reveal their identity
or they pose as someone else in order to obtain information.
✔✔Notice of Information Practices - ✔✔Summarizes the applicant's rights under the act
including the right to know what information was gathered and from whom. Shall be
provided to the applicant no later than at the time of the delivery of the policy when
personal information is collected only from the applicant or from public records or at the
time of collection of personal information is initiated.
✔✔Disclosure Authorization Form - ✔✔Grants permission for the insurance company to
obtain and/or release specified non-public information. The maximum effective time
period for this authorization in property and casualty insurance is 12 months.
✔✔Responsibilities of Agents and Companies when an adverse decision has taken
place. These responsibilities include: - ✔✔1. Providing specific reasons for the adverse
underwriting decision or advising the applicant that the reasons are available upon
written request to the company. If the written request is submitted within 90 days, the
company has 21 business days to respond. 2. Provide a summary of the applicant's
right to know what information prompted the decision and their right to challenge the
decision if the information is felt to be inaccurate. Any disputed information must be
responded to within 30 business days. 3. An insurance institution or agent shall clearly
specify those questions designed to obtain information solely for marketing or research
,purposes from an individual in connection with an insurance transaction. 4. No adverse
underwriting decision may be based on a previous adverse underwriting decision.
✔✔Powers of the Commissioner of Privacy Act - ✔✔The Commissioner may investigate
alleged violations of the insurance information and Privacy Protection Act. If just cause
is found, the commissioner may hold a hearing after at least 10 days prior written notice
to all parties. The Commissioner may subpoena companies, agents and insurance
support organizations. The law also allows the applicant to be heard at this hearing and
they may be represented by legal counsel.
✔✔Specific Statutes Commonly Violated - ✔✔These actions are considered to be
felonies. 1. Any agent or broker who converts to their own use any money or property
received without instructions of or approval of the insurer shall be guilty of
embezzlement. 2. Any person who willfully submits false statements or proof of loss in
the filing of a claim to receive payment for such claim will be guilty of insurance fraud. 3.
Any person who knowingly places any insurance coverage with a non-admitted
insurance company.
✔✔Property Insurance - Direct Loss - ✔✔Actual monetary loss caused by the physical
damage to or destruction of tangible property.
✔✔Property Insurance - Indirect (Consequential) Loss - ✔✔Results as a consequence
of a direct loss. An indirect loss involves a loss of revenues or extra expenses that result
from physical damage to or destruction of property.
✔✔Named Peril - ✔✔Provides coverage only for those perils identified in the policy.
Unless a loss is caused by a covered (named) peril, there will be no insurance
company. Therefore, the burden of proof is on the named insured to prove that their
loss was caused by a covered peril (ex. Wind, hail).
✔✔Open peril (All Risk) - ✔✔Will insure against all perils unless they are specifically
excluded from the coverage. Therefore, the burden of proof lies with the insurer to
demonstrate that the loss was caused by an excluded peril. Special means Open peril.
✔✔Insurable Interest - ✔✔Financial interest in the property. This interest must exist at
the time of the loss, but not necessarily at the time of policy purchase.
✔✔Standard Fire Policy - SFP - ✔✔This policy was the first property insurance policy
that was standardized by law. Named Peril policy insuring against direct losses caused
by fire, lightning and removal of property to protect it from further damage and
Proximate Cause meaning an unbroken chain of events leading from "cause" to "effect".
✔✔SFP Provisions - ✔✔1. Friendly fire, 2. Cancellation, 3. Mortgagee (Loss Payee)
Rights, 4. Pro-Rata Liability, 5. Concealment and Fraud, 6. Legal Action, 7. Sub
rotation, 8. Abandonment Clause, 9. Policy Inception and Expiration
,✔✔Friendly Fire - ✔✔SFP provision - no coverage for a fire if the damage was a result
of a friendly fire. A friendly fire was one that was intentionally lit and stayed within its
intended bounds.
✔✔Cancellation - ✔✔SFP provision - 1. If the named insured canceled, unearned
premium was refunded on a short-rate basis. The cancellation date had to e clearly
expressed, 2. The insurer could have canceled by written notice to the named insured
of 5 days. Any unearned premium was refunded on a pro-rata basis.
✔✔Mortgagee (Loss Payee) Rights - ✔✔SFP provision - established in the SFP
providing for payment to the mortgagee. In addition, the mortgagee had the right to
submit a proof of loss if the named insured failed to do so.
✔✔Pro-Rata Liability - ✔✔SFP provision - addressed the possibility of more than one
policy covering the same property. Concurrency means covering the same property
against the same perils.
✔✔Concealment and Fraud - ✔✔SFP Provision - Protected the insurer from willful
(material) representations by the insured. The insurer could have declared the entire
policy "null and void" if willful misrepresentations had been given. However, the
mortgagee's insurable interest was still protected until the required 10 day advance
cancellation was given.
✔✔Legal Action - ✔✔SPF provision - Legal Action against the company could be
initiated after 3 years from the date of loss.
✔✔Subrogation - ✔✔SFP Provision - Required the named insured to assign to the
insurer the right to recover claim payments from negligent third parties.
✔✔Abandonment Clause - ✔✔SFP provision - Prohibited the insured from abandoning
their partially damaged property to the insurance company in order to claim a total loss.
✔✔Inception/Expiration Date - ✔✔SFP provision - 12:01 a.m. where the property was
located.
✔✔Duties of the Insured in the event of loss were: - ✔✔1. Protect the property from
further damage. This included separating damaged from undamaged property. 2. Give
the insurer prompt notice of the loss. 3. Submit a signed statement of loss (proof of loss)
within 60 days from the date of the company's request unless the company extended
this time period in writing. Proof of loss included an inventory of damaged property, the
value of the damaged property, any other applicable insurance, tc. 4. Allow the
insurance company to inspect the property. 5. Cooperate in the investigation including
questioning under oath.
, ✔✔Actual Cash Value (ACV) Settlement - ✔✔This is loss payment based upon today's
replacement cost minus depreciation.
✔✔Repair, Rebuild or Replace Settlement - ✔✔The insurer could repair, rebuild or
replace the damaged property with material of like kind and quality. If this option was
chosen, the named insured had to be notified within 30 days of the proof of loss being
submitted.
✔✔Agreed Value/Salvage Value Settlement - ✔✔Insurer could have taken possession
of the property at an agreed value. The named insured had to be notified within 30 days
of the proof of loss being submitted if this settlement option was to be exercised.
✔✔Total Loss Settlement - ✔✔In the event of a total loss, settlement cannot exceed the
face value of the policy regardless of the actual amount of loss.
✔✔Modification to Claims Settlement - ✔✔1. The Appraisal Method was used when the
named insured and the company could not agree as to the actual cash value of
property. Each party hired and paid the cost of an appraiser. The appraisers selected an
umpire whose cost was shared equally by the named insured and insurer. Each
appraiser would determine an ACV for the disputed property. If the appraisers do not
agree, then the umpire would rule on the differences. Agreement of any two parties
established the actual cash value of the property. 2. Recovery for a loss cannot exceed
an individual's actual interest in the property. If an individual owns 25% of the
damaged/destroyed property, then they are entitled to only 25% of the claim payment.
✔✔Appraisal Method - ✔✔The Appraisal Method was used when the named insured
and the company could not agree as to the actual cash value of property. Each party
hired and paid the cost of an appraiser. The appraisers selected an umpire whose cost
was shared equally by the named insured and insurer. Each appraiser would determine
an ACV for the disputed property. If the appraisers do not agree, then the umpire would
rule on the differences. Agreement of any two parties established the actual cash value
of the property.
✔✔Exclusions in the SFP policy: - ✔✔1. Specifically excluded were money. 2. Acts of
war. 3. Losses caused by a failure of the insured to use reasonable means to protect
insured property from further damage. 4. Civil authority losses. 5. Any increase in
hazard may have restricted or suspended coverage. 6. When a building became vacant
or unoccupied, coverage was suspended 60 days later if such conditions continue
consecutively. A. An unoccupied building has contents but no tenants, B. A vacant
building has neither contents nor tenants (empty).
✔✔Extended Coverage Endorsement (EC) - ✔✔A named peril endorsement to the SFP
providing direct loss coverage for the perils of WHARVES (wind, hail, aircraft, riot,
vehicle, explosion, smoke)
