NC Adjuster License Practice
Exam Combined Set Questions
With Reviewed Correct Answers
What type of insurance operation is used to insure unusual risks?
ANSWER Lloyds of London
An insurance company that has its headquarters in New York state
doing business in North Carolina would be considered which of the
following under North Carolina insurance regulations?
ANSWER Foreign Insurer
A __________ is a contract type in which the insurer agrees to pay a
specific sum of money no matter what the amount of loss may be.
ANSWER Valued Contract
A business that develops monetary reserves so that the company can
pay claims rather paying premiums to an insurer is known as a ____.
ANSWER Self-Insurer
________ is a form of reinsurance that is negotiated separately for each
insurance contract. The reinsuring company decides whether to insure
or reject individual risks from a ceding company.
ANSWER Facultative Reinsurance
_________ in the contract of insurance means that the insurance
company must return any advanced unused premium paid by the
,policyowner if the insurance company terminates the contract before
the policy period ends.
ANSWER Pro-Rata
__________ is a form of reinsurance in which a ceding company is
contractually bound to cede a percentage of the risk, and a reinsurer is
bound by contract to accept a portion of the of risk.
ANSWER Reinsurance
Which of the following insurance operations makes use of an Attorney-
in-fact as an administrator?
ANSWER Reciprocal Exchange
A key element is creating an insurance policy is that a loss from a
covered risk must be ________ in nature.
ANSWER Accidental
___________ are organized under the laws of the same state in which
they are domiciled.
ANSWER Domestic Insurer
To create a viable insurance contract, an insurance company must
determine if the risk is insurable. Insurable risks meet the following
criteria EXCEPT ____.
ANSWER Small number of similar exposures
Which of the following would NOT be a factor in insuring a risk?
ANSWER Potential losses must be catasrophic
___________is a legal impediment to one party denying the
consequences of its own actions.
,ANSWER Estoppel
Which of the following refer to an insurer incorporated or organized in
another country?
ANSWER Alien
________ in an insurance policy is a legal statement of fact that is "true
to the best of one's knowledge.
ANSWER Representation
_________ is the term used to indicate that the selection of such a risk
has a greater than average chance of producing a loss.
ANSWER Adverse Selection
A(n) __________ Contract is a contract type that promises to pay an
amount equal to the property covered under the policy if a loss occurs.
ANSWER Indemenity
Which of the following statements about the insurance contract is
TRUE?
ANSWER The insurance contract is considered a unilateral contract.
What type of insurance is used between insurers to provide insurance
on the same risk?
ANSWER Reinsurance
A fire in a fire place would be considered which of the following?
ANSWER Friendly Fire
, Insurance policies will typically cover all of the following risks EXCEPT
____.
ANSWER Slander
K guaranteed that she has a working burglar alarm system in her
business when she applied for a Business Owners policy. K never
installed the system. In contract terms, what would this failure be
defined as?
Breach of Contract
K inherited a house from her grandmother that was around seventy-
five (75) years old. The house featured plaster walls instead of
sheetrock. Unfortunately a fire damaged part of the living room and
repairs were required to the walls. The insurance company replaced the
damaged plaster walls with sheetrock. Under what provision in the
insurance policy is the insurance company allowed to "substitute"
sheetrock for plaster?
Functional Replacement
Which of the following terms means that the original policy has been
changed?
Endorsement
Which is an example of a pure risk?
Threat of fire damage to property.
_______ are circumstances that increase a risk due to a person's
indifferent attitude that causes a loss.
Morale Hazard
________ is a legal impediment to one party denying the consequences
of its own actions.
Exam Combined Set Questions
With Reviewed Correct Answers
What type of insurance operation is used to insure unusual risks?
ANSWER Lloyds of London
An insurance company that has its headquarters in New York state
doing business in North Carolina would be considered which of the
following under North Carolina insurance regulations?
ANSWER Foreign Insurer
A __________ is a contract type in which the insurer agrees to pay a
specific sum of money no matter what the amount of loss may be.
ANSWER Valued Contract
A business that develops monetary reserves so that the company can
pay claims rather paying premiums to an insurer is known as a ____.
ANSWER Self-Insurer
________ is a form of reinsurance that is negotiated separately for each
insurance contract. The reinsuring company decides whether to insure
or reject individual risks from a ceding company.
ANSWER Facultative Reinsurance
_________ in the contract of insurance means that the insurance
company must return any advanced unused premium paid by the
,policyowner if the insurance company terminates the contract before
the policy period ends.
ANSWER Pro-Rata
__________ is a form of reinsurance in which a ceding company is
contractually bound to cede a percentage of the risk, and a reinsurer is
bound by contract to accept a portion of the of risk.
ANSWER Reinsurance
Which of the following insurance operations makes use of an Attorney-
in-fact as an administrator?
ANSWER Reciprocal Exchange
A key element is creating an insurance policy is that a loss from a
covered risk must be ________ in nature.
ANSWER Accidental
___________ are organized under the laws of the same state in which
they are domiciled.
ANSWER Domestic Insurer
To create a viable insurance contract, an insurance company must
determine if the risk is insurable. Insurable risks meet the following
criteria EXCEPT ____.
ANSWER Small number of similar exposures
Which of the following would NOT be a factor in insuring a risk?
ANSWER Potential losses must be catasrophic
___________is a legal impediment to one party denying the
consequences of its own actions.
,ANSWER Estoppel
Which of the following refer to an insurer incorporated or organized in
another country?
ANSWER Alien
________ in an insurance policy is a legal statement of fact that is "true
to the best of one's knowledge.
ANSWER Representation
_________ is the term used to indicate that the selection of such a risk
has a greater than average chance of producing a loss.
ANSWER Adverse Selection
A(n) __________ Contract is a contract type that promises to pay an
amount equal to the property covered under the policy if a loss occurs.
ANSWER Indemenity
Which of the following statements about the insurance contract is
TRUE?
ANSWER The insurance contract is considered a unilateral contract.
What type of insurance is used between insurers to provide insurance
on the same risk?
ANSWER Reinsurance
A fire in a fire place would be considered which of the following?
ANSWER Friendly Fire
, Insurance policies will typically cover all of the following risks EXCEPT
____.
ANSWER Slander
K guaranteed that she has a working burglar alarm system in her
business when she applied for a Business Owners policy. K never
installed the system. In contract terms, what would this failure be
defined as?
Breach of Contract
K inherited a house from her grandmother that was around seventy-
five (75) years old. The house featured plaster walls instead of
sheetrock. Unfortunately a fire damaged part of the living room and
repairs were required to the walls. The insurance company replaced the
damaged plaster walls with sheetrock. Under what provision in the
insurance policy is the insurance company allowed to "substitute"
sheetrock for plaster?
Functional Replacement
Which of the following terms means that the original policy has been
changed?
Endorsement
Which is an example of a pure risk?
Threat of fire damage to property.
_______ are circumstances that increase a risk due to a person's
indifferent attitude that causes a loss.
Morale Hazard
________ is a legal impediment to one party denying the consequences
of its own actions.
