State Exam Modules 11 and 12 Questions and
Verified Answers
Contract of Insurance Correct Answer: An insurance contract is a legal agreement in which the insurer
is obligated to pay money, its equivalent or perform some act of value for the insured as indemnity or
reimbursement for either the destruction or loss of property or the injury or death of a person in whom
the insured has an insurable interest.
Examinations, hearings, and investigations Correct Answer: All examinations, hearings, and
investigations may be conducted by the Commissioner personally or by one or more deputies,
investigators, actuaries, examiners or employees designated for the purpose. If the Commissioner or any
investigator appointed to conduct the investigations is of the opinion that there is evidence to charge any
person or persons with a criminal violation of any provision of the Insurance Code, the Commissioner
may arrest with warrant or cause the person or persons to be arrested.
Restraining Orders and Criminal Convictions Correct Answer: Whenever it appears to the Commissioner
that an individual has violated or threatens to violate any insurance law, the Commissioner may apply to
the appropriate court for a restraining order and injunction. A conviction or a plea of "Nolo Contendre"
(no contest) for any criminal violation of these statutes automatically suspends that person's license until
the Commissioner reinstates the license.
License Surrender Correct Answer: With the consent of the Commissioner, any licensee who is accused
of any omission, misconduct or an act that would subject the licensee to suspension or revocation may
surrender his or her license for a period of time established by the Commissioner.
Notification of criminal convictions and changes of address Correct Answer: If a licensee is convicted for
any crime other than a motor vehicle infraction, the licensee must notify the Commissioner within ten
(10) days after the conviction. Each licensee must inform the Commissioner of the licensee's residential
address and provide a valid e-mail address. Each licensee must also give written notification to the
NCDOI of any change to their residential address or e-mail address within ten (10) days of the change.
Failure to provide the information may result in the licensee having to pay a $50.00 administrative fee to
the NCDOI.
Civil Penalties/Restitution for Violations Correct Answer: If the Commissioner has reason to believe that
a person has violated provisions of the insurance regulations and the violation subjects the person's
license or certification to suspension or revocation, the Commissioner may proceed after notice and
opportunity for a hearing. This includes suspension or revocation of the license and payment of a
monetary penalty of $100 to $1,000.
False Statements to Procure Benefit of Insurance Policy or Certificate Correct Answer: A person who
willfully and knowingly commits any of the following actions will be punished as a Class H Felon for
insurance fraud if he or she: (a) makes a false insurance claim or presents any proof in support of a false
insurance claim, (b) prepares or makes a false account, certificate, affidavit, proof of loss or other
, documents or writings to an insurer with the intent that it may be presented or used in support of a
claim.
Embezzlement by Insurance Producers or Administrators Correct Answer: Embezzlement of money
received is punishable as a felony. If the amount embezzled is $100,000 or more it is a Class C felony. If
the amount is under $100,000 it is a Class H felony. The Commissioner may immediately suspend the
license of the insurance producer and initiate prosecution because the insurance producer may be guilty
of larceny. Embezzlement does not have to have taken place; however, the intent must be proven
Making False Statements Correct Answer: Anyone who willfully misstates information in a financial
statement required by law is guilty of perjury. The person or entity that made the misstatement is subject
to a fine of between $2,000 and $10,000.
Records of Business Kept by Companies and Insurance Producers Correct Answer: - Commissioner May
Inspect- All insurance companies and insurance producers in North Carolina must create and maintain
complete and accurate records of insurance-related business. The original records and information from
these records must be furnished for the Commissioner to examine. The refusal to submit to examination
is grounds for the revocation or refusal of a license. A license may be suspended for a period of one to six
(6) months for a first offense and one (1) year for any further offenses.
COMPLAINT RECORDS Correct Answer: Each insurer or its insurance producers must maintain a
register of every written complaint listing the NCDOI file number, the name of the insured, the nature
of the complaint, the insurer's department subject to the complaint, the policy or claim number of the
insured, and the final disposition of the complaint. These records must be retained for at least five (5)
years after the final disposition of the complaint or, for companies, until the Commissioner has adopted a
final report of a general examination that contains a review of these records for that calendar year,
whichever is later
Proof of loss forms required to be furnished Correct Answer: When an insurer requires a written proof of
loss, the proof of loss form must be furnished by the insurer to the insured within fifteen (15) days after
the receipt from the insured having given notice of a pending claim. If the proof of loss form is not
provided, the insured may submit the proof of loss in writing on his or her paper.
Twisting with respect to insurance policies; penalties Correct Answer: Insurers may not make any
statement that willfully misrepresents the terms, conditions or benefits in any policy of insurance for the
purpose of inducing or attempting to induce a policyholder in any way to terminate or surrender or
exchange or convert any insurance policy. The term used in connection with this illegal activity is
known as "twisting." If determined by the Commissioner that the licensee is guilty of twisting the
penalty may be suspension or revocation of the license and a fine of up to $1,000.
An insurer or Insurance producer may accept payment of an insurance premium by credit card if the
insurer accepting payment by credit card meets the following conditions Correct Answer: 1. The insurer
makes payment by credit card available to all existing and prospective insured parties and does not limit
the use of credit card payments to certain persons. 2. The insurer pays the fees charged by the credit card
company for the payment of premiums by credit card.
Verified Answers
Contract of Insurance Correct Answer: An insurance contract is a legal agreement in which the insurer
is obligated to pay money, its equivalent or perform some act of value for the insured as indemnity or
reimbursement for either the destruction or loss of property or the injury or death of a person in whom
the insured has an insurable interest.
Examinations, hearings, and investigations Correct Answer: All examinations, hearings, and
investigations may be conducted by the Commissioner personally or by one or more deputies,
investigators, actuaries, examiners or employees designated for the purpose. If the Commissioner or any
investigator appointed to conduct the investigations is of the opinion that there is evidence to charge any
person or persons with a criminal violation of any provision of the Insurance Code, the Commissioner
may arrest with warrant or cause the person or persons to be arrested.
Restraining Orders and Criminal Convictions Correct Answer: Whenever it appears to the Commissioner
that an individual has violated or threatens to violate any insurance law, the Commissioner may apply to
the appropriate court for a restraining order and injunction. A conviction or a plea of "Nolo Contendre"
(no contest) for any criminal violation of these statutes automatically suspends that person's license until
the Commissioner reinstates the license.
License Surrender Correct Answer: With the consent of the Commissioner, any licensee who is accused
of any omission, misconduct or an act that would subject the licensee to suspension or revocation may
surrender his or her license for a period of time established by the Commissioner.
Notification of criminal convictions and changes of address Correct Answer: If a licensee is convicted for
any crime other than a motor vehicle infraction, the licensee must notify the Commissioner within ten
(10) days after the conviction. Each licensee must inform the Commissioner of the licensee's residential
address and provide a valid e-mail address. Each licensee must also give written notification to the
NCDOI of any change to their residential address or e-mail address within ten (10) days of the change.
Failure to provide the information may result in the licensee having to pay a $50.00 administrative fee to
the NCDOI.
Civil Penalties/Restitution for Violations Correct Answer: If the Commissioner has reason to believe that
a person has violated provisions of the insurance regulations and the violation subjects the person's
license or certification to suspension or revocation, the Commissioner may proceed after notice and
opportunity for a hearing. This includes suspension or revocation of the license and payment of a
monetary penalty of $100 to $1,000.
False Statements to Procure Benefit of Insurance Policy or Certificate Correct Answer: A person who
willfully and knowingly commits any of the following actions will be punished as a Class H Felon for
insurance fraud if he or she: (a) makes a false insurance claim or presents any proof in support of a false
insurance claim, (b) prepares or makes a false account, certificate, affidavit, proof of loss or other
, documents or writings to an insurer with the intent that it may be presented or used in support of a
claim.
Embezzlement by Insurance Producers or Administrators Correct Answer: Embezzlement of money
received is punishable as a felony. If the amount embezzled is $100,000 or more it is a Class C felony. If
the amount is under $100,000 it is a Class H felony. The Commissioner may immediately suspend the
license of the insurance producer and initiate prosecution because the insurance producer may be guilty
of larceny. Embezzlement does not have to have taken place; however, the intent must be proven
Making False Statements Correct Answer: Anyone who willfully misstates information in a financial
statement required by law is guilty of perjury. The person or entity that made the misstatement is subject
to a fine of between $2,000 and $10,000.
Records of Business Kept by Companies and Insurance Producers Correct Answer: - Commissioner May
Inspect- All insurance companies and insurance producers in North Carolina must create and maintain
complete and accurate records of insurance-related business. The original records and information from
these records must be furnished for the Commissioner to examine. The refusal to submit to examination
is grounds for the revocation or refusal of a license. A license may be suspended for a period of one to six
(6) months for a first offense and one (1) year for any further offenses.
COMPLAINT RECORDS Correct Answer: Each insurer or its insurance producers must maintain a
register of every written complaint listing the NCDOI file number, the name of the insured, the nature
of the complaint, the insurer's department subject to the complaint, the policy or claim number of the
insured, and the final disposition of the complaint. These records must be retained for at least five (5)
years after the final disposition of the complaint or, for companies, until the Commissioner has adopted a
final report of a general examination that contains a review of these records for that calendar year,
whichever is later
Proof of loss forms required to be furnished Correct Answer: When an insurer requires a written proof of
loss, the proof of loss form must be furnished by the insurer to the insured within fifteen (15) days after
the receipt from the insured having given notice of a pending claim. If the proof of loss form is not
provided, the insured may submit the proof of loss in writing on his or her paper.
Twisting with respect to insurance policies; penalties Correct Answer: Insurers may not make any
statement that willfully misrepresents the terms, conditions or benefits in any policy of insurance for the
purpose of inducing or attempting to induce a policyholder in any way to terminate or surrender or
exchange or convert any insurance policy. The term used in connection with this illegal activity is
known as "twisting." If determined by the Commissioner that the licensee is guilty of twisting the
penalty may be suspension or revocation of the license and a fine of up to $1,000.
An insurer or Insurance producer may accept payment of an insurance premium by credit card if the
insurer accepting payment by credit card meets the following conditions Correct Answer: 1. The insurer
makes payment by credit card available to all existing and prospective insured parties and does not limit
the use of credit card payments to certain persons. 2. The insurer pays the fees charged by the credit card
company for the payment of premiums by credit card.
