N.C. Claims Adjuster Exam License questions and answers A+ Grade
2026\2027
Inception/Expiration Date
- correct answer an insurance policy covers the insured starting at 12:01am on the day on which
coverage begins and expires at 12:01am on the expiration day of the policy.
Occurrence Date
- correct answer Date of which the loss occurred
Identification of parties involved
- correct answer The loss report should include the names and addresses of the parties involved in the
loss, the names and addresses of any injured person(s) and the names and addresses of any witness(s).
Policy Form/Number
- correct answer Identifies the type of coverage purchased (policy form) and the policy number for the
particular policy purchased by the insured.
Description of the Loss
- correct answer Information concerning how, when and where the accident or loss happened is an
essential element in any loss report.
Coverage
- correct answer Shows the type of coverage(s) purchased as well as the limits of coverage purchased.
Damages - Special Compensatory damages
- correct answer Are amounts paid to compensate the plaintiff for direct expenses such as medical
treatment, lost wages (both past and future), funeral expenses and rehabilitation expenses required
because of bodily injury. Special damages are paid for losses that can be determined and documented.
They are often referred to as "out-of-pocket" expenses.
,Damages - General Compensatory Damages
- correct answer Are paid for losses that cannot be specifically measured and itemized in order to
compensate the plaintiff for things such as pain and suffering, loss of the use of an arm or leg, loss of
vision, physical disfigurement and/or loss of consortium.
Damages - Punitive Damages
- correct answer Are typically awarded to the plaintiff in addition to compensatory damages when the
defendants conduct has been especially malicious. Punitive damages are awarded to punish the
defendant and to deter others from engaging in similar actions.
Unfair Claims Settlement Practices
- correct answer 1. Knowingly misrepresenting relevant facts or policy provisions relating to the
coverage at issue. 2. Failing to acknowledge with reasonable promptness communications pertaining to
claims. 3. Failing to adopt and implement reasonable standards for the prompt investigation of claims. 4.
Arbitrary and unreasonable refusal to pay claims. 5. Failing to affirm or deny coverage of claims within a
reasonable time after proof of loss has been completed. 6. Not attempting in good faith to make
prompt, fair and equitable claims settlement when the insurer's liability has become reasonably clear. 7.
Compelling insureds to institute suits to recover amounts due under a policy by offering substantially
less to settle immediately. 8. Attempting to settle claims for less than the amount for which a
reasonable person would believe one was entitled based on written or printed advertising material
accompanying or made a part of an application. I. Attempting settlement of claims on the basis of
applications that were altered without notice to knowledge of or consent of insureds.
Total Losses on Motor Vehicles/Miscellaneous Provisions
- correct answer 1. If the insurer and the claimant are unable to reach an agreement as to the value of
the vehicle, the insurer shall base any further settlement offer not only on the published regional
average value of similar vehicles, but also on the value of the vehicle in the local market. 2. Local market
value shall be determined by using either the local price of a comparable vehicle or if no comparable
vehicle can be found, quotations from at least two qualified dealers within the local market area.
Additionally, if the claimant represents that the vehicle was in better than average condition, the insurer
shall give due consideration to the condition of the claimant's vehicle prior to the accident. 3. When a
motor vehicle is damaged in an amount which equals or exceeds 75 percent of the preaccident actual
cash value, an insurer shall "total loss" the vehicle by paying the claimant the preaccident value and in
return, receiving possession of the legal title for salvage purposes. 4. The insurer will be responsible for
all reasonable towing and storage charges until three days after the owner and the storage facility are
notified in writing that the insurer will no longer reimburse the owner or storage facility for storage
charges. 5. Loss and claims payments shall be mailed or otherwise delivered within 10 business days
after the claim is settled.
,After Market Parts
- correct answer An after market part is any part made by a non original manufacturer.
Speculative Risk
- correct answer When there is a chance of gain as well as a chance of loss. Insurance is not intended to
protect against this type of risk.
Pure Risk
- correct answer When there is a chance of loss only.
Insurable Risk
- correct answer One that an insurance company is willing to accept.
Characteristics of Insurable Risk
- correct answer 1. Low probability of loss occurring, 2. Less than catastrophic results, 3. The loss must
be measurable, 4. The loss must be significant, 5. The loss must be accidental and unintended.
Probability
- correct answer Measures the chance of an event occurring, it is the measure of uncertainty (risk).
Law of Large Numbers (Law of Averages)
- correct answer Mathematical principle that makes it possible to predict future losses based upon prior
experience.
Spread of Risk (Geographic Dispersion)
- correct answer Also used to decrease loss probability. This process involves spreading the company's
policies (exposures) over a broad geographical area in order to avoid large losses in the vent of a
catastrophic event. An example is a hurricane.
Adverse Selection
- correct answer Adverse selection occurs when insureds with a high risk of loss attempt to purchase
insurance and are successful in obtaining insurance.
, Perils
- correct answer Are the actual cause of loss such as a fire, theft, wind, hail, etc.
Hazards
- correct answer Increase the probability of a peril occurring. Bald tires on an automobile increase the
chance of a wreck happening. The tires are the hazard, the wreck is the peril.
Property Insurance
- correct answer Indemnified (repays) a person or business with an interest in the physical integrity of
tangible property for its loss or the loss of income produced by that property.
Casualty Insurance
- correct answer Provides protection to meet the unexpected costs imposed by law due to acts that have
caused bodily injury or property damage to another individual. Included isn't he field of casualty
(liability) insurance are automobile, crime and surety bonds.
Private or Voluntary Insurance
- correct answer Portion of the insurance industry where individuals seek coverage to meet recognized
needs. These coverages are neither required nor made available by government. An example would be
collision insurance in a personal automobile insurance policy.
Social Insurance
- correct answer Programs either required or made available by government.
Reinsurance
- correct answer Filed of the industry where insurers sell portions of their individual contracts of
insurance to other companies. This activity helps with the spread of risk and/or improves cash positions
by lowering reserve requirements for these contracts. Insurance companies also purchase reinsurance
to protect themselves in case of catastrophic losses.
Capital Stock Companies
- correct answer Proprietary companies that are in business to make a profit for their stockholders.
These companies are owned by stockholders who retain management responsibility through the
selection of a Board of Directors. Profits are paid to the stockholders in the form of a commercial stock
dividend that is fully taxable to the stockholder.
2026\2027
Inception/Expiration Date
- correct answer an insurance policy covers the insured starting at 12:01am on the day on which
coverage begins and expires at 12:01am on the expiration day of the policy.
Occurrence Date
- correct answer Date of which the loss occurred
Identification of parties involved
- correct answer The loss report should include the names and addresses of the parties involved in the
loss, the names and addresses of any injured person(s) and the names and addresses of any witness(s).
Policy Form/Number
- correct answer Identifies the type of coverage purchased (policy form) and the policy number for the
particular policy purchased by the insured.
Description of the Loss
- correct answer Information concerning how, when and where the accident or loss happened is an
essential element in any loss report.
Coverage
- correct answer Shows the type of coverage(s) purchased as well as the limits of coverage purchased.
Damages - Special Compensatory damages
- correct answer Are amounts paid to compensate the plaintiff for direct expenses such as medical
treatment, lost wages (both past and future), funeral expenses and rehabilitation expenses required
because of bodily injury. Special damages are paid for losses that can be determined and documented.
They are often referred to as "out-of-pocket" expenses.
,Damages - General Compensatory Damages
- correct answer Are paid for losses that cannot be specifically measured and itemized in order to
compensate the plaintiff for things such as pain and suffering, loss of the use of an arm or leg, loss of
vision, physical disfigurement and/or loss of consortium.
Damages - Punitive Damages
- correct answer Are typically awarded to the plaintiff in addition to compensatory damages when the
defendants conduct has been especially malicious. Punitive damages are awarded to punish the
defendant and to deter others from engaging in similar actions.
Unfair Claims Settlement Practices
- correct answer 1. Knowingly misrepresenting relevant facts or policy provisions relating to the
coverage at issue. 2. Failing to acknowledge with reasonable promptness communications pertaining to
claims. 3. Failing to adopt and implement reasonable standards for the prompt investigation of claims. 4.
Arbitrary and unreasonable refusal to pay claims. 5. Failing to affirm or deny coverage of claims within a
reasonable time after proof of loss has been completed. 6. Not attempting in good faith to make
prompt, fair and equitable claims settlement when the insurer's liability has become reasonably clear. 7.
Compelling insureds to institute suits to recover amounts due under a policy by offering substantially
less to settle immediately. 8. Attempting to settle claims for less than the amount for which a
reasonable person would believe one was entitled based on written or printed advertising material
accompanying or made a part of an application. I. Attempting settlement of claims on the basis of
applications that were altered without notice to knowledge of or consent of insureds.
Total Losses on Motor Vehicles/Miscellaneous Provisions
- correct answer 1. If the insurer and the claimant are unable to reach an agreement as to the value of
the vehicle, the insurer shall base any further settlement offer not only on the published regional
average value of similar vehicles, but also on the value of the vehicle in the local market. 2. Local market
value shall be determined by using either the local price of a comparable vehicle or if no comparable
vehicle can be found, quotations from at least two qualified dealers within the local market area.
Additionally, if the claimant represents that the vehicle was in better than average condition, the insurer
shall give due consideration to the condition of the claimant's vehicle prior to the accident. 3. When a
motor vehicle is damaged in an amount which equals or exceeds 75 percent of the preaccident actual
cash value, an insurer shall "total loss" the vehicle by paying the claimant the preaccident value and in
return, receiving possession of the legal title for salvage purposes. 4. The insurer will be responsible for
all reasonable towing and storage charges until three days after the owner and the storage facility are
notified in writing that the insurer will no longer reimburse the owner or storage facility for storage
charges. 5. Loss and claims payments shall be mailed or otherwise delivered within 10 business days
after the claim is settled.
,After Market Parts
- correct answer An after market part is any part made by a non original manufacturer.
Speculative Risk
- correct answer When there is a chance of gain as well as a chance of loss. Insurance is not intended to
protect against this type of risk.
Pure Risk
- correct answer When there is a chance of loss only.
Insurable Risk
- correct answer One that an insurance company is willing to accept.
Characteristics of Insurable Risk
- correct answer 1. Low probability of loss occurring, 2. Less than catastrophic results, 3. The loss must
be measurable, 4. The loss must be significant, 5. The loss must be accidental and unintended.
Probability
- correct answer Measures the chance of an event occurring, it is the measure of uncertainty (risk).
Law of Large Numbers (Law of Averages)
- correct answer Mathematical principle that makes it possible to predict future losses based upon prior
experience.
Spread of Risk (Geographic Dispersion)
- correct answer Also used to decrease loss probability. This process involves spreading the company's
policies (exposures) over a broad geographical area in order to avoid large losses in the vent of a
catastrophic event. An example is a hurricane.
Adverse Selection
- correct answer Adverse selection occurs when insureds with a high risk of loss attempt to purchase
insurance and are successful in obtaining insurance.
, Perils
- correct answer Are the actual cause of loss such as a fire, theft, wind, hail, etc.
Hazards
- correct answer Increase the probability of a peril occurring. Bald tires on an automobile increase the
chance of a wreck happening. The tires are the hazard, the wreck is the peril.
Property Insurance
- correct answer Indemnified (repays) a person or business with an interest in the physical integrity of
tangible property for its loss or the loss of income produced by that property.
Casualty Insurance
- correct answer Provides protection to meet the unexpected costs imposed by law due to acts that have
caused bodily injury or property damage to another individual. Included isn't he field of casualty
(liability) insurance are automobile, crime and surety bonds.
Private or Voluntary Insurance
- correct answer Portion of the insurance industry where individuals seek coverage to meet recognized
needs. These coverages are neither required nor made available by government. An example would be
collision insurance in a personal automobile insurance policy.
Social Insurance
- correct answer Programs either required or made available by government.
Reinsurance
- correct answer Filed of the industry where insurers sell portions of their individual contracts of
insurance to other companies. This activity helps with the spread of risk and/or improves cash positions
by lowering reserve requirements for these contracts. Insurance companies also purchase reinsurance
to protect themselves in case of catastrophic losses.
Capital Stock Companies
- correct answer Proprietary companies that are in business to make a profit for their stockholders.
These companies are owned by stockholders who retain management responsibility through the
selection of a Board of Directors. Profits are paid to the stockholders in the form of a commercial stock
dividend that is fully taxable to the stockholder.
