,Q1 ANALYZE AND APPLY NORTH CAROLINA INSURANCE STATUTES AND REGULATIONS TO
CLAIMS SCENARIOS
An adjuster is handling a claim under a North Carolina homeowners policy. The
insured's dwelling was damaged by a tornado, and the roof is destroyed. The
insured also discovers that a tree fell on the neighbor's car. Which coverage under
the homeowners policy would respond to the neighbor's car damage?
A. Coverage E - Personal Liability CORRECT
B. Coverage F - Medical Payments to Others
C. Coverage A - Dwelling
D. Coverage B - Other Structures
RATIONALE: Damage to a neighbor's car caused by a tree falling from the insured's property is a
liability claim, covered under Coverage E (Personal Liability) if the insured is legally liable.
Coverage F is for medical expenses without regard to fault, and Coverages A and B are property
coverages for the insured's own structures.
Q2 ANALYZE AND APPLY NORTH CAROLINA INSURANCE STATUTES AND REGULATIONS TO
CLAIMS SCENARIOS
Under the North Carolina Rate Bureau's homeowners program, which of the
following endorsements would provide coverage for the increased cost of
construction due to ordinance or law enforcement?
A. Ordinance or Law Coverage CORRECT
B. Scheduled Personal Property Endorsement
C. Water Backup and Sump Discharge Endorsement
D. Home Day Care Endorsement
RATIONALE: The Ordinance or Law Coverage endorsement is specifically designed to cover the
additional costs to rebuild in compliance with current building codes. The other endorsements
address different risks: scheduled personal property for high-value items, water backup for
sewer/sump overflow, and home day care for business activities.
Page 2
,Q3 ANALYZE AND APPLY NORTH CAROLINA INSURANCE STATUTES AND REGULATIONS TO
CLAIMS SCENARIOS
In a North Carolina auto liability claim, the insured driver has a policy with limits of
30/60/25. The insured is found 80% at fault for an accident causing injuries to two
occupants in the other vehicle. The total damages are $100,000 for each occupant.
What is the maximum amount the insurer will pay for bodily injury liability?
A. $60,000 CORRECT
B. $80,000
C. $100,000
D. $120,000
RATIONALE: The policy limits are $30,000 per person and $60,000 per accident. Even though
damages exceed the per-person limit, the insurer's obligation is capped at the per-person and
per-accident limits. Thus, the maximum payout is $60,000 for the accident (two persons ×
$30,000 each), regardless of the percentage of fault.
Q4 ANALYZE AND APPLY NORTH CAROLINA INSURANCE STATUTES AND REGULATIONS TO
CLAIMS SCENARIOS
A commercial general liability (CGL) policy is written on an occurrence basis. An
insured is sued for property damage that occurred over a period of two years. The
policy was in effect for the first year, but the insured switched carriers for the
second year. Which policy triggers coverage?
A. The policy in effect when the damage first began CORRECT
B. The policy in effect when the damage was discovered
C. Both policies, on a pro-rata basis
D. Only the policy in effect when the claim was made
RATIONALE: For occurrence-based policies, coverage is triggered by the occurrence of the
injury or damage during the policy period. When damage is continuous, courts often apply the
'continuous trigger' theory, meaning all policies in effect during the damage period may be
triggered. However, the question asks which policy triggers coverage, and the correct answer is
the one in effect when the damage first began, as that is the initial occurrence.
Page 3
, Q5 ANALYZE AND APPLY NORTH CAROLINA INSURANCE STATUTES AND REGULATIONS TO
CLAIMS SCENARIOS
In North Carolina, which of the following is a requirement for a public adjuster's
contract with an insured?
A. The contract must be filed with the North Carolina Department of Insurance within 30 days of
signing.
B. The contract must contain a provision allowing the insured to cancel within 5 business days.
CORRECT
C. The contract must be approved by the insurer before it is effective.
D. The contract must be notarized and witnessed by two individuals.
RATIONALE: North Carolina law requires that public adjuster contracts include a three-day right
of rescission (cancellation) for the insured. The contract does not need to be filed with the DOI,
approved by the insurer, or notarized. Thus, the correct answer is the provision allowing
cancellation.
Q6 ANALYZE AND APPLY NORTH CAROLINA INSURANCE STATUTES AND REGULATIONS TO
CLAIMS SCENARIOS
An adjuster is evaluating a claim under a business income coverage form. The
insured's business was interrupted for 30 days due to a covered cause of loss.
The policy has a 72-hour waiting period. What is the maximum period for which
the insured can recover business income loss?
A. 30 days
B. 27 days CORRECT
C. 28 days
D. 33 days
RATIONALE: The waiting period is the deductible, so the insured cannot recover for the first 72
hours (3 days). Therefore, the maximum recovery period is 30 days minus 3 days, which equals
27 days. The other options incorrectly add or subtract days.
Page 4
CLAIMS SCENARIOS
An adjuster is handling a claim under a North Carolina homeowners policy. The
insured's dwelling was damaged by a tornado, and the roof is destroyed. The
insured also discovers that a tree fell on the neighbor's car. Which coverage under
the homeowners policy would respond to the neighbor's car damage?
A. Coverage E - Personal Liability CORRECT
B. Coverage F - Medical Payments to Others
C. Coverage A - Dwelling
D. Coverage B - Other Structures
RATIONALE: Damage to a neighbor's car caused by a tree falling from the insured's property is a
liability claim, covered under Coverage E (Personal Liability) if the insured is legally liable.
Coverage F is for medical expenses without regard to fault, and Coverages A and B are property
coverages for the insured's own structures.
Q2 ANALYZE AND APPLY NORTH CAROLINA INSURANCE STATUTES AND REGULATIONS TO
CLAIMS SCENARIOS
Under the North Carolina Rate Bureau's homeowners program, which of the
following endorsements would provide coverage for the increased cost of
construction due to ordinance or law enforcement?
A. Ordinance or Law Coverage CORRECT
B. Scheduled Personal Property Endorsement
C. Water Backup and Sump Discharge Endorsement
D. Home Day Care Endorsement
RATIONALE: The Ordinance or Law Coverage endorsement is specifically designed to cover the
additional costs to rebuild in compliance with current building codes. The other endorsements
address different risks: scheduled personal property for high-value items, water backup for
sewer/sump overflow, and home day care for business activities.
Page 2
,Q3 ANALYZE AND APPLY NORTH CAROLINA INSURANCE STATUTES AND REGULATIONS TO
CLAIMS SCENARIOS
In a North Carolina auto liability claim, the insured driver has a policy with limits of
30/60/25. The insured is found 80% at fault for an accident causing injuries to two
occupants in the other vehicle. The total damages are $100,000 for each occupant.
What is the maximum amount the insurer will pay for bodily injury liability?
A. $60,000 CORRECT
B. $80,000
C. $100,000
D. $120,000
RATIONALE: The policy limits are $30,000 per person and $60,000 per accident. Even though
damages exceed the per-person limit, the insurer's obligation is capped at the per-person and
per-accident limits. Thus, the maximum payout is $60,000 for the accident (two persons ×
$30,000 each), regardless of the percentage of fault.
Q4 ANALYZE AND APPLY NORTH CAROLINA INSURANCE STATUTES AND REGULATIONS TO
CLAIMS SCENARIOS
A commercial general liability (CGL) policy is written on an occurrence basis. An
insured is sued for property damage that occurred over a period of two years. The
policy was in effect for the first year, but the insured switched carriers for the
second year. Which policy triggers coverage?
A. The policy in effect when the damage first began CORRECT
B. The policy in effect when the damage was discovered
C. Both policies, on a pro-rata basis
D. Only the policy in effect when the claim was made
RATIONALE: For occurrence-based policies, coverage is triggered by the occurrence of the
injury or damage during the policy period. When damage is continuous, courts often apply the
'continuous trigger' theory, meaning all policies in effect during the damage period may be
triggered. However, the question asks which policy triggers coverage, and the correct answer is
the one in effect when the damage first began, as that is the initial occurrence.
Page 3
, Q5 ANALYZE AND APPLY NORTH CAROLINA INSURANCE STATUTES AND REGULATIONS TO
CLAIMS SCENARIOS
In North Carolina, which of the following is a requirement for a public adjuster's
contract with an insured?
A. The contract must be filed with the North Carolina Department of Insurance within 30 days of
signing.
B. The contract must contain a provision allowing the insured to cancel within 5 business days.
CORRECT
C. The contract must be approved by the insurer before it is effective.
D. The contract must be notarized and witnessed by two individuals.
RATIONALE: North Carolina law requires that public adjuster contracts include a three-day right
of rescission (cancellation) for the insured. The contract does not need to be filed with the DOI,
approved by the insurer, or notarized. Thus, the correct answer is the provision allowing
cancellation.
Q6 ANALYZE AND APPLY NORTH CAROLINA INSURANCE STATUTES AND REGULATIONS TO
CLAIMS SCENARIOS
An adjuster is evaluating a claim under a business income coverage form. The
insured's business was interrupted for 30 days due to a covered cause of loss.
The policy has a 72-hour waiting period. What is the maximum period for which
the insured can recover business income loss?
A. 30 days
B. 27 days CORRECT
C. 28 days
D. 33 days
RATIONALE: The waiting period is the deductible, so the insured cannot recover for the first 72
hours (3 days). Therefore, the maximum recovery period is 30 days minus 3 days, which equals
27 days. The other options incorrectly add or subtract days.
Page 4
