NC state Adjusters Exam Correct
Questions & Answers(GRADED A)
Company A has 5,000 policyholders. Company B has 25,000 policyholders. Company B
is able to make more accurate predictions concerning the number of claims it will have
to pay than Company A because: - ANSWER As the number of risks increases, the
ability to make accurate predictions increases also. The law of large numbers.
Which of the following terms means that the purchaser of insurance must be in a
position to lose money or something of value if the contingency insured against should
happen? - ANSWER Insurable interest
The ________________ permits an insurer to transact insurance in North Carolina. -
ANSWER Certificate of Authority
Agents can Bind coverage - ANSWER true
Define Risk - ANSWER The uncertainty of loss.
A property insurance policy that provides open peril coverage will: - ANSWER Pay for
any loss except those caused by perils that have been specifically excluded in the
insuring agreement.
what parts of an insurance contract would identify the nature of the coverage provided
by the insurer? - ANSWER Insuring agreements.
All statements given by applicants on an insurance application are considered: -
ANSWER representations
The practice of twisting: - ANSWER Involves inducing any policyholder to lapse a
contract of insurance for the purpose of replacing the policy with another to the
detriment of the policyholder.
Rebating is: - ANSWER Offering any special inducements or valuable consideration,
whatever, not specified in the contract.
adverse underwriting decision under the "Insurance Information and Privacy Protection
Act" - ANSWER Canceling a policy.
Declining an application for insurance coverage.
Placing coverage in a residual market mechanism.
unfairly discriminatory - ANSWER Adding a surcharge on automobile liability insurance
due to the age of the operator.
, The standard fire policy without endorsements provides coverage for: - ANSWER Fire,
lightning and removal of endangered property.
When the extended coverage endorsement is attached to a standard fire policy: -
ANSWER It must apply to all items covered by the fire policy.
methods of handling risk - ANSWER Risk transfer.
Risk retention.
Risk reduction.
Something that increases the chance of a peril occurring is a: - ANSWER Hazard
A mutual insurance company is: - ANSWER Owned by policyholders.
Controlled by trustees and officers.
reciprocal insurance company - ANSWER -If funds are insufficient to pay claims, the
subscribers can be assessed for additional revenue.
-It is managed by an attorney-in-fact.
-Each subscriber assumes part of the risk of all other subscribers.
nsurance companies incorporated under the laws of foreign countries are called: -
ANSWER Alien companies
Insurable risk - ANSWER The law of large numbers should apply.
The loss must not be catastrophic in nature.
The loss must be large enough to create hardship.
A peril can be defined as: - ANSWER the cause of a loss
a valid insurable interest - ANSWER A person who owns a home.
A bank holding a mortgage on someone's home.
A condominium unit owner.
essential elements in an insurance contract - ANSWER Agreement.
Consideration.
Legal object
Competent parties.
An insurance contract is a unilateral contract which means that: - ANSWER Only the
insurer makes an enforceable promise.
when a contract is prepared by one party and submitted to the other party on a take-it or
leave-it basis and where there is no bargaining power on the wording of the contract -
ANSWER adhesion
Questions & Answers(GRADED A)
Company A has 5,000 policyholders. Company B has 25,000 policyholders. Company B
is able to make more accurate predictions concerning the number of claims it will have
to pay than Company A because: - ANSWER As the number of risks increases, the
ability to make accurate predictions increases also. The law of large numbers.
Which of the following terms means that the purchaser of insurance must be in a
position to lose money or something of value if the contingency insured against should
happen? - ANSWER Insurable interest
The ________________ permits an insurer to transact insurance in North Carolina. -
ANSWER Certificate of Authority
Agents can Bind coverage - ANSWER true
Define Risk - ANSWER The uncertainty of loss.
A property insurance policy that provides open peril coverage will: - ANSWER Pay for
any loss except those caused by perils that have been specifically excluded in the
insuring agreement.
what parts of an insurance contract would identify the nature of the coverage provided
by the insurer? - ANSWER Insuring agreements.
All statements given by applicants on an insurance application are considered: -
ANSWER representations
The practice of twisting: - ANSWER Involves inducing any policyholder to lapse a
contract of insurance for the purpose of replacing the policy with another to the
detriment of the policyholder.
Rebating is: - ANSWER Offering any special inducements or valuable consideration,
whatever, not specified in the contract.
adverse underwriting decision under the "Insurance Information and Privacy Protection
Act" - ANSWER Canceling a policy.
Declining an application for insurance coverage.
Placing coverage in a residual market mechanism.
unfairly discriminatory - ANSWER Adding a surcharge on automobile liability insurance
due to the age of the operator.
, The standard fire policy without endorsements provides coverage for: - ANSWER Fire,
lightning and removal of endangered property.
When the extended coverage endorsement is attached to a standard fire policy: -
ANSWER It must apply to all items covered by the fire policy.
methods of handling risk - ANSWER Risk transfer.
Risk retention.
Risk reduction.
Something that increases the chance of a peril occurring is a: - ANSWER Hazard
A mutual insurance company is: - ANSWER Owned by policyholders.
Controlled by trustees and officers.
reciprocal insurance company - ANSWER -If funds are insufficient to pay claims, the
subscribers can be assessed for additional revenue.
-It is managed by an attorney-in-fact.
-Each subscriber assumes part of the risk of all other subscribers.
nsurance companies incorporated under the laws of foreign countries are called: -
ANSWER Alien companies
Insurable risk - ANSWER The law of large numbers should apply.
The loss must not be catastrophic in nature.
The loss must be large enough to create hardship.
A peril can be defined as: - ANSWER the cause of a loss
a valid insurable interest - ANSWER A person who owns a home.
A bank holding a mortgage on someone's home.
A condominium unit owner.
essential elements in an insurance contract - ANSWER Agreement.
Consideration.
Legal object
Competent parties.
An insurance contract is a unilateral contract which means that: - ANSWER Only the
insurer makes an enforceable promise.
when a contract is prepared by one party and submitted to the other party on a take-it or
leave-it basis and where there is no bargaining power on the wording of the contract -
ANSWER adhesion
