NC Property and Casualty Insurance Exam with all Correct
& 100% Verified Answers |Actual Complete Update |
Already Graded A+
Standard Fire Policy (SFP) ✔Correct Answer-The SFP is the core and the basis upon which all
modern personal and commercial line policies are based.
SFP can be used to insure either commercial business risk or personal residence.
SFP Perils ✔Correct Answer-F L R
Fire Lightening Removal
Removal- Standard Fire Policy ✔Correct Answer-is the process of removing property to
protect it from the perils of fire and lightening at the insured premises or when fire or lightening
at neighboring premises endanger property located at the insured premises. SFP automatically
provides removal coverages for 5 days.
SFP Losses Covered ✔Correct Answer-Damage by the peril
Damage as a direct result of the peril
Water damage from putting out a fire
Water damage from rain, hole burnes in roof.
SFP Exclusions ✔Correct Answer-A- T-O-N-E-R
Acts of War
Orders of Civil Authority
Theft
Neglect
Explosion or Riot
SFP Conditional Exclusions ✔Correct Answer-Increase in hazard. ex. making fireworks in a
home
Vacancy or Unoccupancy for more than 60 days.
SFP Inception & Expiration ✔Correct Answer-starts 12:01 am
expires 12:01 am
4 limits on SFP policy ✔Correct Answer-Recovery may not exceed the lowest amount of:
Policy limit
ACV
Cost to repair or replace
,Interest of the insured
Pro Rata Liability condition ✔Correct Answer-when more than one policy covers the same
loss.
(Policy A limits of liab/ A+B) x Loss
(Policy B limits of liab/ A+B) x Loss
Equals the amount both policies will contribute.
Insurer's Option in Loss Settlement ✔Correct Answer-Take posession of all property and pay
the insured the appraised value
or
Repair, Rebuild or Replace damaged properties.
Either option, insured must be notified within 30 days.
Requirements for the insured in the event of a Loss ✔Correct Answer-Immediate written
notice
Protect property from further damage
Separate damage and undamaged property
Furnish inventory of damaged and undamaged
Submit signed proof of loss within 60 days
Produce books and records, exhibit remains of damaged property, Submit to examination under
oath.
Appraisal ✔Correct Answer-If insurer and insured don't agree on value. Both parties hires an
appraiser within 20 days. The two appraisers then chose an umpire. Who reviews both
appraisals and makes the ultimate decision.
Suits against the Company ✔Correct Answer-North Carolina allows 3 years for a suit to be
presented. All conditions must be met first.
Insurance ✔Correct Answer--A plan of spreading risk of possible loss over a large number of
people.
-Based on a mathematical principle called the law of large numbers.
-It protects against the uncertainty of risk of when a financial loss might occur.
Speculative Risk ✔Correct Answer-Chance of loss or gain. Buying stock or gambling is example
(cannot Insure)
Pure Risk ✔Correct Answer-Chance of loss only. Not all are insurance
,insurable risk ✔Correct Answer-A risk that an insurance company is willing to accept.
-low probability of loss occurring
-less than catastrophic results
-Loss must be measurable
-Loss must be significant
-Loss must be accidental and unintended
Probability ✔Correct Answer-Measures the chance of an event occurring. Measure of
uncertainty.
Law of Large Numbers ✔Correct Answer-A mathematical principle that makes it possible to
predict future losses based upon prior experience . The law states that as a large number of
events are included, the difference between actual and expected results becomes smaller.
Insurance relies upon the past results of a large population of similar people to predict future
loss experience.
Spread of risk/geographical dispersion ✔Correct Answer-Decreases probability of loss.
Spreading the companies exposures over a broad geographical area in order to avoid large
losses in the event of a catastrophic event (hurricane)
adverse selection ✔Correct Answer-Occurs when insureds with a high risk of loss attempt to
purchase insurance and are successful in obtaining insurance
Retention ✔Correct Answer-When liability for a loss is maintained by the individual by not
purchasing insurance. Another Example is a deductible, retaining a portion of a covered loss
Transfer ✔Correct Answer-Shift responsibility for a loss to an insurance company through the
purchase of insurance
Control/Reduction ✔Correct Answer-Attempt to prevent a loss or to reduce the amount of
the loss. **Example** (installation of a sprinkler system)
Perils ✔Correct Answer-Cause of loss
Such as fire, theft, wind, hail, etc.
Hazards ✔Correct Answer-Increase the probability of a peril occurring.
**example**. Bald tires on a car increase a wreck happening
Principle of Indemnity ✔Correct Answer-Pays to the insured only what has been lost without
a gain. (Restore) to the original financial position.
Reinsurance ✔Correct Answer-Insurers sell portions of their individual contracts of insurance
to other companies. This helps with the spread of risk
, social insurance ✔Correct Answer-government policy aimed at protecting people against the
risk of adverse events. **examples are reinsurance, workers comp, flood insurance
Private or voluntary insurance ✔Correct Answer-Individuals seek coverage to meet recognized
needs. Example is: if you pay something off, it's your choice to get insurance on it. (Not
required)
mutual insurance company ✔Correct Answer-A type of insurance company owned by its
policyholders. Each policyholder owns a part of the company equal to their proportionate share
of the company's total insurance in force . Elect a board of directors who appoint officers to be
in charge of a company's daily operations . Return of premiums (company charged too much)
Reciprocal (assessment) companies ✔Correct Answer-Subscribers who engage in cooperative
insurance. Managed by attorney in fact and can access the policyholders for additional
premiums if underwriting losses jeopardize financial solvency
Domestic Company ✔Correct Answer-Insurance company doing business in the state in which
it is incorporated
Foreign Company ✔Correct Answer-Refers to an insurance company operating in a state other
than its home state.
Alien Company ✔Correct Answer-An insurance company incorporated in a country other than
the United States.
Certificate of authority ✔Correct Answer-Companies authorized by the state and known as
admitted or authorized receive this
Producers of insurance ✔Correct Answer-Are the Actual people who solicit insurance on
behalf of insurance companies.
Agent ✔Correct Answer-Representatives of the insurer. Must be licensed with the state. They
can BIND coverage
Binder ✔Correct Answer-Temporary insurance contract later replaced. Can be written or oral
Brokers ✔Correct Answer-Representatives of the insured. They must post a bond of not less
than $15,000 in favor of NC. They shop the market to get their clients the best deals
fiduciary ✔Correct Answer-held in trust; confidential
Underwriting ✔Correct Answer-Guards against adverse selection(high risk). Quality control
department
& 100% Verified Answers |Actual Complete Update |
Already Graded A+
Standard Fire Policy (SFP) ✔Correct Answer-The SFP is the core and the basis upon which all
modern personal and commercial line policies are based.
SFP can be used to insure either commercial business risk or personal residence.
SFP Perils ✔Correct Answer-F L R
Fire Lightening Removal
Removal- Standard Fire Policy ✔Correct Answer-is the process of removing property to
protect it from the perils of fire and lightening at the insured premises or when fire or lightening
at neighboring premises endanger property located at the insured premises. SFP automatically
provides removal coverages for 5 days.
SFP Losses Covered ✔Correct Answer-Damage by the peril
Damage as a direct result of the peril
Water damage from putting out a fire
Water damage from rain, hole burnes in roof.
SFP Exclusions ✔Correct Answer-A- T-O-N-E-R
Acts of War
Orders of Civil Authority
Theft
Neglect
Explosion or Riot
SFP Conditional Exclusions ✔Correct Answer-Increase in hazard. ex. making fireworks in a
home
Vacancy or Unoccupancy for more than 60 days.
SFP Inception & Expiration ✔Correct Answer-starts 12:01 am
expires 12:01 am
4 limits on SFP policy ✔Correct Answer-Recovery may not exceed the lowest amount of:
Policy limit
ACV
Cost to repair or replace
,Interest of the insured
Pro Rata Liability condition ✔Correct Answer-when more than one policy covers the same
loss.
(Policy A limits of liab/ A+B) x Loss
(Policy B limits of liab/ A+B) x Loss
Equals the amount both policies will contribute.
Insurer's Option in Loss Settlement ✔Correct Answer-Take posession of all property and pay
the insured the appraised value
or
Repair, Rebuild or Replace damaged properties.
Either option, insured must be notified within 30 days.
Requirements for the insured in the event of a Loss ✔Correct Answer-Immediate written
notice
Protect property from further damage
Separate damage and undamaged property
Furnish inventory of damaged and undamaged
Submit signed proof of loss within 60 days
Produce books and records, exhibit remains of damaged property, Submit to examination under
oath.
Appraisal ✔Correct Answer-If insurer and insured don't agree on value. Both parties hires an
appraiser within 20 days. The two appraisers then chose an umpire. Who reviews both
appraisals and makes the ultimate decision.
Suits against the Company ✔Correct Answer-North Carolina allows 3 years for a suit to be
presented. All conditions must be met first.
Insurance ✔Correct Answer--A plan of spreading risk of possible loss over a large number of
people.
-Based on a mathematical principle called the law of large numbers.
-It protects against the uncertainty of risk of when a financial loss might occur.
Speculative Risk ✔Correct Answer-Chance of loss or gain. Buying stock or gambling is example
(cannot Insure)
Pure Risk ✔Correct Answer-Chance of loss only. Not all are insurance
,insurable risk ✔Correct Answer-A risk that an insurance company is willing to accept.
-low probability of loss occurring
-less than catastrophic results
-Loss must be measurable
-Loss must be significant
-Loss must be accidental and unintended
Probability ✔Correct Answer-Measures the chance of an event occurring. Measure of
uncertainty.
Law of Large Numbers ✔Correct Answer-A mathematical principle that makes it possible to
predict future losses based upon prior experience . The law states that as a large number of
events are included, the difference between actual and expected results becomes smaller.
Insurance relies upon the past results of a large population of similar people to predict future
loss experience.
Spread of risk/geographical dispersion ✔Correct Answer-Decreases probability of loss.
Spreading the companies exposures over a broad geographical area in order to avoid large
losses in the event of a catastrophic event (hurricane)
adverse selection ✔Correct Answer-Occurs when insureds with a high risk of loss attempt to
purchase insurance and are successful in obtaining insurance
Retention ✔Correct Answer-When liability for a loss is maintained by the individual by not
purchasing insurance. Another Example is a deductible, retaining a portion of a covered loss
Transfer ✔Correct Answer-Shift responsibility for a loss to an insurance company through the
purchase of insurance
Control/Reduction ✔Correct Answer-Attempt to prevent a loss or to reduce the amount of
the loss. **Example** (installation of a sprinkler system)
Perils ✔Correct Answer-Cause of loss
Such as fire, theft, wind, hail, etc.
Hazards ✔Correct Answer-Increase the probability of a peril occurring.
**example**. Bald tires on a car increase a wreck happening
Principle of Indemnity ✔Correct Answer-Pays to the insured only what has been lost without
a gain. (Restore) to the original financial position.
Reinsurance ✔Correct Answer-Insurers sell portions of their individual contracts of insurance
to other companies. This helps with the spread of risk
, social insurance ✔Correct Answer-government policy aimed at protecting people against the
risk of adverse events. **examples are reinsurance, workers comp, flood insurance
Private or voluntary insurance ✔Correct Answer-Individuals seek coverage to meet recognized
needs. Example is: if you pay something off, it's your choice to get insurance on it. (Not
required)
mutual insurance company ✔Correct Answer-A type of insurance company owned by its
policyholders. Each policyholder owns a part of the company equal to their proportionate share
of the company's total insurance in force . Elect a board of directors who appoint officers to be
in charge of a company's daily operations . Return of premiums (company charged too much)
Reciprocal (assessment) companies ✔Correct Answer-Subscribers who engage in cooperative
insurance. Managed by attorney in fact and can access the policyholders for additional
premiums if underwriting losses jeopardize financial solvency
Domestic Company ✔Correct Answer-Insurance company doing business in the state in which
it is incorporated
Foreign Company ✔Correct Answer-Refers to an insurance company operating in a state other
than its home state.
Alien Company ✔Correct Answer-An insurance company incorporated in a country other than
the United States.
Certificate of authority ✔Correct Answer-Companies authorized by the state and known as
admitted or authorized receive this
Producers of insurance ✔Correct Answer-Are the Actual people who solicit insurance on
behalf of insurance companies.
Agent ✔Correct Answer-Representatives of the insurer. Must be licensed with the state. They
can BIND coverage
Binder ✔Correct Answer-Temporary insurance contract later replaced. Can be written or oral
Brokers ✔Correct Answer-Representatives of the insured. They must post a bond of not less
than $15,000 in favor of NC. They shop the market to get their clients the best deals
fiduciary ✔Correct Answer-held in trust; confidential
Underwriting ✔Correct Answer-Guards against adverse selection(high risk). Quality control
department
