NC Personal Lines Exam Questions And
Correct Answers
Example of Direct Loss - Answer Fire engulfs a building
Risk Sharing - Answer B and G decide that they will share the expense of replacing a
basketball goal when it is damaged. Risk management terms this is _________
Replacement Cost - Answer D has a property contract that agrees to pay her the full
value of damaged personal property at the current cost without depreciation. This type
of property loss valuation is known as:
Risk - Answer The chance of or uncertainty concerning a financial loss.
In a split limits policy 50/100/50, the second number represents - Answer the total limit
for two or more persons with bodily injury
Insurable Interest - Answer The ability to insure property due to ownership
Declarations Page - Answer Identifies the amount of premium to be paid, who or what is
insured, and the amount of insurance coverage.
Transferring Risk - Answer Obtaining Insurance is a method of this _______.
Insurers allow the insured to move the risk of loss from the insured to the insurance
company for a fee (aka premium)
, Example of Indirect Loss - Answer Fire destroys a shoe repair shop forcing the business
to close down. During the suspension of operations the shoe repair shop cannot earn
money. This loss of income is referred to as which of the following?
Economic Loss - Answer The destruction of property or a loss of income due to the
destruction of property.
Binder - Temporary evidence of insurances issued by an insurance producer. NC limits
the binder to 60 days for the date of insurance. Canceling a binder requires at least ten
days notice.
Risk Reduction - Actions reducing the possibility of a loss. Like locking doors, installing
alarm system, replacing surge protectors.
Negligence - Answer The critical element that needs to be in place before a person, or
an organization can be found liable over something. Liability demands this be in place.
Specific Coverage - Answer ___________ ___________ contracts are designed to cover the
one object of property listed and the amount of coverage provided. More than one item
of property could be listed on the Declarations, but the amount paid for each item would
be separate
125,000 - Answer J has a Homeowner's policy with a $100,000 liability limit. J dug a hole
in his front yard. Unfortunately, a delivery man falls into the hole and injures himself.
Later that day, another delivery man has the misfortune to fall in the same hole and
injures himself. Eventually, the claims for the injuries result in a $25,000 judgment for
the injuries of the first delivery man and $100,000 judgment for the injuries of the second
man. The Homeowner policy is a "single limit" contract. How much was paid by the
policy on the claims?
Misrepresentation - Answer An applicant's attempted deception of an insurance
company regarding a potential risk; usually occurs when proposed insured is applying
for the insurance and applicant is not truthful about some aspect of the risk
Correct Answers
Example of Direct Loss - Answer Fire engulfs a building
Risk Sharing - Answer B and G decide that they will share the expense of replacing a
basketball goal when it is damaged. Risk management terms this is _________
Replacement Cost - Answer D has a property contract that agrees to pay her the full
value of damaged personal property at the current cost without depreciation. This type
of property loss valuation is known as:
Risk - Answer The chance of or uncertainty concerning a financial loss.
In a split limits policy 50/100/50, the second number represents - Answer the total limit
for two or more persons with bodily injury
Insurable Interest - Answer The ability to insure property due to ownership
Declarations Page - Answer Identifies the amount of premium to be paid, who or what is
insured, and the amount of insurance coverage.
Transferring Risk - Answer Obtaining Insurance is a method of this _______.
Insurers allow the insured to move the risk of loss from the insured to the insurance
company for a fee (aka premium)
, Example of Indirect Loss - Answer Fire destroys a shoe repair shop forcing the business
to close down. During the suspension of operations the shoe repair shop cannot earn
money. This loss of income is referred to as which of the following?
Economic Loss - Answer The destruction of property or a loss of income due to the
destruction of property.
Binder - Temporary evidence of insurances issued by an insurance producer. NC limits
the binder to 60 days for the date of insurance. Canceling a binder requires at least ten
days notice.
Risk Reduction - Actions reducing the possibility of a loss. Like locking doors, installing
alarm system, replacing surge protectors.
Negligence - Answer The critical element that needs to be in place before a person, or
an organization can be found liable over something. Liability demands this be in place.
Specific Coverage - Answer ___________ ___________ contracts are designed to cover the
one object of property listed and the amount of coverage provided. More than one item
of property could be listed on the Declarations, but the amount paid for each item would
be separate
125,000 - Answer J has a Homeowner's policy with a $100,000 liability limit. J dug a hole
in his front yard. Unfortunately, a delivery man falls into the hole and injures himself.
Later that day, another delivery man has the misfortune to fall in the same hole and
injures himself. Eventually, the claims for the injuries result in a $25,000 judgment for
the injuries of the first delivery man and $100,000 judgment for the injuries of the second
man. The Homeowner policy is a "single limit" contract. How much was paid by the
policy on the claims?
Misrepresentation - Answer An applicant's attempted deception of an insurance
company regarding a potential risk; usually occurs when proposed insured is applying
for the insurance and applicant is not truthful about some aspect of the risk
