NC ADJUSTER ACTUAL EXAM PAPER
2026 QUESTIONS WITH ANSWERS
GRADED A+
◍ Risk.
Answer: The chance of loss; only pure risks (no possibility of gain) are
insurable; speculative risks (e.g., gambling/investing) are not. [NC ADJ |
Word]
◍ What are the four elements of a legal insurance contract?.
Answer: Agreement consideration competent parties legal purpose, Why:
All four elements must be present or the contract is void or voidable
◍ Peril.
Answer: The cause of loss (fire, windstorm, theft, collision, flood,
explosion). [NC ADJ | Word]
◍ Who makes the offer in an insurance contract?.
Answer: The applicant, Why: Submitting an application with premium
constitutes an offer
◍ Hazard.
Answer: A condition that increases the frequency/severity of a peril; types:
moral, morale, physical (some insurers also recognize legal hazards). [NC
ADJ | Word]
◍ What is acceptance in insurance?.
Answer: The insurer issuing the policy, Why: Acceptance occurs when the
insurer agrees to cover the risk
◍ Loss.
Answer: An unplanned reduction in economic value; can be direct
, (immediate result of peril) or indirect (consequential). [NC ADJ | Word]
◍ What is consideration in an insurance contract?.
Answer: Premium and promise to pay claims, Why: Both parties must
exchange something of value
◍ Exposure / Exposure units.
Answer: Being subject to possible loss; measured with exposure units that
influence premium. Also refers to an insurer's total risk with an insured. [NC
ADJ | Word]
◍ Occurrence.
Answer: An accident (including continuous/repeated exposure) causing
BI/PD during the policy period. [NC ADJ | Word]
◍ Accident.
Answer: Sudden, unplanned, unexpected event. [NC ADJ | Word]
◍ Indemnity (Principle of).
Answer: Restore the insured to the same financial position as before the
covered loss (no better/no worse). [NC ADJ | Word]
◍ What makes insurance a contract of adhesion?.
Answer: Insurer drafts the contract, Why: Any ambiguity is interpreted in
favor of the insured
◍ Why are ambiguities resolved in favor of the insured?.
Answer: Insurer wrote the policy, Why: Courts protect the weaker party
◍ Adverse Selection.
Answer: Tendency of higher‑than‑average risks to seek/keep insurance;
guarded against via underwriting. [NC ADJ | Word]
◍ Law of Large Numbers.
Answer: What's unpredictable individually becomes predictable in large,
homogeneous groups; foundation of insurance pricing. [NC ADJ | Word]
◍ Elements of a valid contract.
Answer: Offer, acceptance, consideration, competent parties, legal purpose.
, [NC ADJ | Word]
◍ What is an aleatory contract?.
Answer: Performance depends on chance, Why: Unequal exchange may
occur based on loss
◍ What makes insurance a unilateral contract?.
Answer: Only insurer promises performance, Why: Insured performs by
paying premium
◍ Contract of Adhesion.
Answer: Drafted by insurer; "take‑it‑or‑leave‑it"; ambiguities construed in
the policyholder's favor. [NC ADJ | Word]
◍ What is a conditional contract?.
Answer: Requires conditions to be met, Why: Claims are paid only if policy
conditions are satisfied
◍ Aleatory Contract.
Answer: Exchange of potentially unequal values dependent on chance (small
premium, potentially large claim). [NC ADJ | Word]
◍ What does personal contract mean?.
Answer: Coverage applies to the individual not property, Why: Insurer
evaluates the person's risk
◍ Personal Contract.
Answer: Between insurer and policyowner (cannot be assigned without
consent). [NC ADJ | Word]
◍ Unilateral Contract.
Answer: Only insurer makes an enforceable promise (to pay covered
claims). [NC ADJ | Word]
◍ Conditional Contract.
Answer: Insurer's promise is conditional on events/duties (pay premiums,
report losses, cooperate). [NC ADJ | Word]
◍ Reimbursement (Indemnity) vs. Valued Contracts.
, Answer: Most Property& Casually are indemnity; life insurance is valued;
some property policies can be "agreed value." [NC ADJ | Word]
◍ What is indemnity?.
Answer: Restore insured to financial position before loss, Why: Insurance
cannot create profit
◍ Which contract pays a stated amount regardless of loss?.
Answer: Valued contract, Why: Life insurance pays face value
◍ Utmost Good Faith (uberrimae fidei).
Answer: Both parties must be fully honest; failure to disclose material facts
can void the policy. [NC ADJ | Word]
◍ Property insurance is what type of contract?.
Answer: Contract of indemnity, Why: Payment is based on actual loss
◍ Representation.
Answer: Statement made at formation, believed true to the best of
knowledge (not a warranty). [NC ADJ | Word]
◍ What is a representation?.
Answer: Statement believed true to best knowledge, Why: Misstatements
may void policy if material
◍ What is a warranty?.
Answer: Statement guaranteed to be true, Why: Breach can void policy
regardless of materiality
◍ Misrepresentation.
Answer: False statement of material fact; grounds to void the contract. [NC
ADJ | Word]
◍ Concealment.
Answer: Deliberate withholding of material facts; may void the policy. [NC
ADJ | Word]
◍ Fraud.
Answer: Deliberate deception for gain; grounds to void coverage. [NC ADJ |
2026 QUESTIONS WITH ANSWERS
GRADED A+
◍ Risk.
Answer: The chance of loss; only pure risks (no possibility of gain) are
insurable; speculative risks (e.g., gambling/investing) are not. [NC ADJ |
Word]
◍ What are the four elements of a legal insurance contract?.
Answer: Agreement consideration competent parties legal purpose, Why:
All four elements must be present or the contract is void or voidable
◍ Peril.
Answer: The cause of loss (fire, windstorm, theft, collision, flood,
explosion). [NC ADJ | Word]
◍ Who makes the offer in an insurance contract?.
Answer: The applicant, Why: Submitting an application with premium
constitutes an offer
◍ Hazard.
Answer: A condition that increases the frequency/severity of a peril; types:
moral, morale, physical (some insurers also recognize legal hazards). [NC
ADJ | Word]
◍ What is acceptance in insurance?.
Answer: The insurer issuing the policy, Why: Acceptance occurs when the
insurer agrees to cover the risk
◍ Loss.
Answer: An unplanned reduction in economic value; can be direct
, (immediate result of peril) or indirect (consequential). [NC ADJ | Word]
◍ What is consideration in an insurance contract?.
Answer: Premium and promise to pay claims, Why: Both parties must
exchange something of value
◍ Exposure / Exposure units.
Answer: Being subject to possible loss; measured with exposure units that
influence premium. Also refers to an insurer's total risk with an insured. [NC
ADJ | Word]
◍ Occurrence.
Answer: An accident (including continuous/repeated exposure) causing
BI/PD during the policy period. [NC ADJ | Word]
◍ Accident.
Answer: Sudden, unplanned, unexpected event. [NC ADJ | Word]
◍ Indemnity (Principle of).
Answer: Restore the insured to the same financial position as before the
covered loss (no better/no worse). [NC ADJ | Word]
◍ What makes insurance a contract of adhesion?.
Answer: Insurer drafts the contract, Why: Any ambiguity is interpreted in
favor of the insured
◍ Why are ambiguities resolved in favor of the insured?.
Answer: Insurer wrote the policy, Why: Courts protect the weaker party
◍ Adverse Selection.
Answer: Tendency of higher‑than‑average risks to seek/keep insurance;
guarded against via underwriting. [NC ADJ | Word]
◍ Law of Large Numbers.
Answer: What's unpredictable individually becomes predictable in large,
homogeneous groups; foundation of insurance pricing. [NC ADJ | Word]
◍ Elements of a valid contract.
Answer: Offer, acceptance, consideration, competent parties, legal purpose.
, [NC ADJ | Word]
◍ What is an aleatory contract?.
Answer: Performance depends on chance, Why: Unequal exchange may
occur based on loss
◍ What makes insurance a unilateral contract?.
Answer: Only insurer promises performance, Why: Insured performs by
paying premium
◍ Contract of Adhesion.
Answer: Drafted by insurer; "take‑it‑or‑leave‑it"; ambiguities construed in
the policyholder's favor. [NC ADJ | Word]
◍ What is a conditional contract?.
Answer: Requires conditions to be met, Why: Claims are paid only if policy
conditions are satisfied
◍ Aleatory Contract.
Answer: Exchange of potentially unequal values dependent on chance (small
premium, potentially large claim). [NC ADJ | Word]
◍ What does personal contract mean?.
Answer: Coverage applies to the individual not property, Why: Insurer
evaluates the person's risk
◍ Personal Contract.
Answer: Between insurer and policyowner (cannot be assigned without
consent). [NC ADJ | Word]
◍ Unilateral Contract.
Answer: Only insurer makes an enforceable promise (to pay covered
claims). [NC ADJ | Word]
◍ Conditional Contract.
Answer: Insurer's promise is conditional on events/duties (pay premiums,
report losses, cooperate). [NC ADJ | Word]
◍ Reimbursement (Indemnity) vs. Valued Contracts.
, Answer: Most Property& Casually are indemnity; life insurance is valued;
some property policies can be "agreed value." [NC ADJ | Word]
◍ What is indemnity?.
Answer: Restore insured to financial position before loss, Why: Insurance
cannot create profit
◍ Which contract pays a stated amount regardless of loss?.
Answer: Valued contract, Why: Life insurance pays face value
◍ Utmost Good Faith (uberrimae fidei).
Answer: Both parties must be fully honest; failure to disclose material facts
can void the policy. [NC ADJ | Word]
◍ Property insurance is what type of contract?.
Answer: Contract of indemnity, Why: Payment is based on actual loss
◍ Representation.
Answer: Statement made at formation, believed true to the best of
knowledge (not a warranty). [NC ADJ | Word]
◍ What is a representation?.
Answer: Statement believed true to best knowledge, Why: Misstatements
may void policy if material
◍ What is a warranty?.
Answer: Statement guaranteed to be true, Why: Breach can void policy
regardless of materiality
◍ Misrepresentation.
Answer: False statement of material fact; grounds to void the contract. [NC
ADJ | Word]
◍ Concealment.
Answer: Deliberate withholding of material facts; may void the policy. [NC
ADJ | Word]
◍ Fraud.
Answer: Deliberate deception for gain; grounds to void coverage. [NC ADJ |
