North CaroliNa iNsuraNCe statutes,
regulatioNs, aNd ethiCal PraCtiCes
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SECTION 1: ORIGINAL QUESTIONS WITH IMPROVED ANSWERS AND RATIONALES
Question 1: Contract of Insurance Definition
Question: Under North Carolina insurance law, a contract of insurance is defined as an
agreement by which the insurer is bound to do which of the following?
A) Pay money or its equivalent, or do some act of value to the insured upon and as an
indemnity or reimbursement for the destruction, loss, or injury of something in which the party
has an interest
B) Pay a predetermined sum to the insured regardless of whether any loss or injury has
occurred to the insured property or person
C) Provide legal representation to the insured in all matters related to property disputes and
personal injury claims
D) Guarantee the insured a profit on any investment made through the insurance company
- answers 100% A
,Rationale: The definition of a contract of insurance in North Carolina specifically states that it is
an agreement by which the insurer is bound to pay money or its equivalent, or do some act of
value to the insured upon and as an indemnity or reimbursement for the destruction, loss, or
injury of something in which the party has an interest. Option B is incorrect because insurance is
not a predetermined sum paid regardless of loss. Option C is incorrect because legal
representation is not the defining characteristic of all insurance contracts. Option D is incorrect
because insurance is not an investment vehicle guaranteeing profits.
Question 2: Commissioner of Insurance Election and Term
Question: How is the North Carolina Commissioner of Insurance elected, and what is the length
of the term of office?
A) Appointed by the Governor; serves a 6-year term
B) Elected by the people; serves a 4-year term beginning January 1st after election
C) Elected by the General Assembly; serves a 2-year term beginning July 1st after election
D) Appointed by the NAIC; serves a 4-year term beginning January 1st after appointment
- answers 100% B
Rationale: The Commissioner of Insurance in North Carolina is elected by the people, with the
term beginning January 1st after they are elected and lasting 4 years or until someone else is
elected. The Governor fills any vacancy in an unexpired term. Option A is incorrect because the
Commissioner is elected, not appointed by the Governor. Option C is incorrect because the
Commissioner is not elected by the General Assembly. Option D is incorrect because the NAIC
does not appoint the Commissioner.
Question 3: Commissioner's Powers and Duties
Question: Which of the following is NOT a power or duty of the North Carolina Commissioner of
Insurance?
A) Prescribe necessary forms and financial statements to entities as described in Chapter 58
B) Report any violations of the law by insurance companies to the Attorney General
C) Set the premium rates for all insurance companies operating in North Carolina
D) Administer and enforce provisions of the Patient Protection and Affordable Care Act
,- answers 100% C
Rationale: The Commissioner of Insurance does not set premium rates for all insurance
companies. The Commissioner is responsible for fair ratemaking, but this does not mean setting
rates for all companies. The Commissioner's actual powers and duties include prescribing
necessary forms and financial statements, reporting violations to the Attorney General, giving
synopses of insurance contracts, administering oaths, compiling rate lists for residential real
property and private passenger motor vehicle insurance, and administering the Patient
Protection and Affordable Care Act. Options A, B, and D are all actual powers and duties of the
Commissioner.
Question 4: Examination, Hearings, and Investigations
Question: Regarding examinations, hearings, and investigations conducted by the
Commissioner, which statement is correct?
A) Only the Commissioner personally may conduct examinations, hearings, and investigations
B) The Commissioner may arrest with a warrant or have a person arrested if there is evidence of
criminal activity
C) All hearings must be held in the county where the licensee resides
D) Notice of a hearing does not need to state the subject of inquiry or any charges
- answers 100% B
Rationale: The Commissioner may arrest with a warrant or have a person arrested if there is
evidence of criminal activity. Option A is incorrect because examinations, hearings, and
investigations may be conducted by the Commissioner personally, but this does not mean only
the Commissioner can conduct them. Option C is incorrect because hearings must be held in
accordance with NC General Statutes at a time and place designated in a written notice by the
Commissioner, not necessarily in the licensee's county of residence. Option D is incorrect
because notice must state the subject of inquiry and any charges.
Question 5: Restraining Orders and Criminal Convictions
Question: When a licensee is convicted in court, what happens to their license?
A) The license is automatically revoked permanently
, B) The license is suspended until reinstated by the Commissioner
C) The license remains active until the appeal process is exhausted
D) The license is transferred to another licensed individual
- answers 100% B
Rationale: When a licensee is convicted in court, their license is suspended until reinstated by
the Commissioner. Conviction includes adjudication of guilt, plea of guilt, and plea of nolo
contendere. Option A is incorrect because the suspension is not necessarily permanent; the
Commissioner may reinstate the license. Option C is incorrect because the license is suspended
upon conviction, not after appeals are exhausted. Option D is incorrect because licenses are not
transferable to other individuals.
Question 6: License Surrender
Question: A licensee accused of any act, omission, or misconduct that would subject them to
suspension or revocation may do which of the following?
A) Surrender their license for a period of time established by the Commissioner
B) Continue to operate their business until the hearing is completed
C) Transfer their license to a family member temporarily
D) Request a jury trial instead of a Commissioner's hearing
- answers 100% A
Rationale: A licensee accused of any act, omission, or misconduct that would subject them to
suspension or revocation may surrender their license for a period of time established by the
Commissioner. Option B is incorrect because the licensee may surrender the license rather than
continue operating. Option C is incorrect because licenses cannot be transferred to family
members. Option D is incorrect because hearings are conducted by the Commissioner in
accordance with NC General Statutes, not by jury trial.
Question 7: Notification of Criminal Convictions and Change of Address
Question: How many business days does a licensee have to inform the Commissioner of a
change of address or email address?
A) 5 business days
regulatioNs, aNd ethiCal PraCtiCes
ComPreheNsive examiNatioN for life,
health, aNd ProPerty/Casualty ProduCer
liCeNsees latest all versioNs aCtual exam
ComPlete 200 QuestioNs aNd CorreCt
detailed aNsWers (verified aNsWers)
|already graded a+ 2024 With free
PraCtiCe test sets
SECTION 1: ORIGINAL QUESTIONS WITH IMPROVED ANSWERS AND RATIONALES
Question 1: Contract of Insurance Definition
Question: Under North Carolina insurance law, a contract of insurance is defined as an
agreement by which the insurer is bound to do which of the following?
A) Pay money or its equivalent, or do some act of value to the insured upon and as an
indemnity or reimbursement for the destruction, loss, or injury of something in which the party
has an interest
B) Pay a predetermined sum to the insured regardless of whether any loss or injury has
occurred to the insured property or person
C) Provide legal representation to the insured in all matters related to property disputes and
personal injury claims
D) Guarantee the insured a profit on any investment made through the insurance company
- answers 100% A
,Rationale: The definition of a contract of insurance in North Carolina specifically states that it is
an agreement by which the insurer is bound to pay money or its equivalent, or do some act of
value to the insured upon and as an indemnity or reimbursement for the destruction, loss, or
injury of something in which the party has an interest. Option B is incorrect because insurance is
not a predetermined sum paid regardless of loss. Option C is incorrect because legal
representation is not the defining characteristic of all insurance contracts. Option D is incorrect
because insurance is not an investment vehicle guaranteeing profits.
Question 2: Commissioner of Insurance Election and Term
Question: How is the North Carolina Commissioner of Insurance elected, and what is the length
of the term of office?
A) Appointed by the Governor; serves a 6-year term
B) Elected by the people; serves a 4-year term beginning January 1st after election
C) Elected by the General Assembly; serves a 2-year term beginning July 1st after election
D) Appointed by the NAIC; serves a 4-year term beginning January 1st after appointment
- answers 100% B
Rationale: The Commissioner of Insurance in North Carolina is elected by the people, with the
term beginning January 1st after they are elected and lasting 4 years or until someone else is
elected. The Governor fills any vacancy in an unexpired term. Option A is incorrect because the
Commissioner is elected, not appointed by the Governor. Option C is incorrect because the
Commissioner is not elected by the General Assembly. Option D is incorrect because the NAIC
does not appoint the Commissioner.
Question 3: Commissioner's Powers and Duties
Question: Which of the following is NOT a power or duty of the North Carolina Commissioner of
Insurance?
A) Prescribe necessary forms and financial statements to entities as described in Chapter 58
B) Report any violations of the law by insurance companies to the Attorney General
C) Set the premium rates for all insurance companies operating in North Carolina
D) Administer and enforce provisions of the Patient Protection and Affordable Care Act
,- answers 100% C
Rationale: The Commissioner of Insurance does not set premium rates for all insurance
companies. The Commissioner is responsible for fair ratemaking, but this does not mean setting
rates for all companies. The Commissioner's actual powers and duties include prescribing
necessary forms and financial statements, reporting violations to the Attorney General, giving
synopses of insurance contracts, administering oaths, compiling rate lists for residential real
property and private passenger motor vehicle insurance, and administering the Patient
Protection and Affordable Care Act. Options A, B, and D are all actual powers and duties of the
Commissioner.
Question 4: Examination, Hearings, and Investigations
Question: Regarding examinations, hearings, and investigations conducted by the
Commissioner, which statement is correct?
A) Only the Commissioner personally may conduct examinations, hearings, and investigations
B) The Commissioner may arrest with a warrant or have a person arrested if there is evidence of
criminal activity
C) All hearings must be held in the county where the licensee resides
D) Notice of a hearing does not need to state the subject of inquiry or any charges
- answers 100% B
Rationale: The Commissioner may arrest with a warrant or have a person arrested if there is
evidence of criminal activity. Option A is incorrect because examinations, hearings, and
investigations may be conducted by the Commissioner personally, but this does not mean only
the Commissioner can conduct them. Option C is incorrect because hearings must be held in
accordance with NC General Statutes at a time and place designated in a written notice by the
Commissioner, not necessarily in the licensee's county of residence. Option D is incorrect
because notice must state the subject of inquiry and any charges.
Question 5: Restraining Orders and Criminal Convictions
Question: When a licensee is convicted in court, what happens to their license?
A) The license is automatically revoked permanently
, B) The license is suspended until reinstated by the Commissioner
C) The license remains active until the appeal process is exhausted
D) The license is transferred to another licensed individual
- answers 100% B
Rationale: When a licensee is convicted in court, their license is suspended until reinstated by
the Commissioner. Conviction includes adjudication of guilt, plea of guilt, and plea of nolo
contendere. Option A is incorrect because the suspension is not necessarily permanent; the
Commissioner may reinstate the license. Option C is incorrect because the license is suspended
upon conviction, not after appeals are exhausted. Option D is incorrect because licenses are not
transferable to other individuals.
Question 6: License Surrender
Question: A licensee accused of any act, omission, or misconduct that would subject them to
suspension or revocation may do which of the following?
A) Surrender their license for a period of time established by the Commissioner
B) Continue to operate their business until the hearing is completed
C) Transfer their license to a family member temporarily
D) Request a jury trial instead of a Commissioner's hearing
- answers 100% A
Rationale: A licensee accused of any act, omission, or misconduct that would subject them to
suspension or revocation may surrender their license for a period of time established by the
Commissioner. Option B is incorrect because the licensee may surrender the license rather than
continue operating. Option C is incorrect because licenses cannot be transferred to family
members. Option D is incorrect because hearings are conducted by the Commissioner in
accordance with NC General Statutes, not by jury trial.
Question 7: Notification of Criminal Convictions and Change of Address
Question: How many business days does a licensee have to inform the Commissioner of a
change of address or email address?
A) 5 business days
