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PROPERTY EXAM QUESTIONS
1. A building contractor constructs a rental property home using "straw-blue" construction that does not conform to standard building codes. The contractor, who is also the owner, does not want insurance on the building but wants coverage on as many other things as he can get. What coverage plan should be a producer recommend? A: HO- B: HO- C: HO- D: Coverage cannot be extended on this structure Answer: D 2. What organization is responsible for administering the plan that ensures access to property insurance for beach properties? A: Division of Insurance B: Post-Assessment Guaranty Association C: North Carolina Insurance Underwriting Association D: FAIR Plan Answer: C 3. Which type of losses are covered by the standard policy? A: Indirect Losses B: Direct Losses
C: Both D: Neither Answer: B
4. If a licensee is convicted in any court for any offense, other than a traffic violation, the licensee must notify the Commissioner within how many days of the conviction date? A: 10 days B: 30 days C: 20 days D: 15 days Answer: A 5. Which of the following commercial property causes of loss forms explicitly covers damages from falling objects? A: General Form B: Basic form C: Broad form D: Special Form Answer: C 6. In order for a dwelling to be covered on a replacement cost basis, the dwelling must be insured up to at least? A: 20% of the replacement cost B: 40% of the replacement cost
D: HO-4 does not cover additional living expenses Answer: C
10. The most the insurer will pay for a loss under a business policy is? A: The amount of the loss minus the deductible B: 80% of the loss C: 20% of the loss D: The limit of insurance after the deductible is paid Answer: D 11. An individuals construction company leaves mobile equipment and construction machinery on the job site until the project is completed. What could this individual use to insure it? A: Bailee's customers form B: Builders Risk form C: General property form D: Contractors equipment floater Answer: D 12. The appraisal clause of the standard fire policy allows for the process of setting disputes over the ACV of the property or the property or the amount of loss. When disputes arise, each party (insurer and the insured) must select an impartial appraisal within? A: 20 days B: 30 days
C: 45 days D: 10 days Answer: A
13. All of the following help determine flood insurance rates EXCEPT? A: zone classifications B: Simple flood definitions C: Pre-FIRM rates D: Post-FIRM rates Answer: B 14. All of the following are exclusions that apply in all three types of Dwelling Policies EXCEPT? A: Earth movement B: Fire or lightening C: Government action D: water damage Answer: B 15. All of the following are other coverages under the dwelling policy EXCEPT? A: Improvements, altercations, and additions B: Earth Movement C: Other structures D: Debris removal
Answer: A
19. Which of the following other coverages is NOT included in the basic form dwelling policy? A: Breakage of glass B: Removal Coverage C: Personal property temporarily away from the insured premises D: Tenant's improvements, altercations, and additions Answer: A 20. Replacement cost coverage is provided in both the broad and special form dwelling policies when? A: The amount of insurance on the dwelling is at least 90% of its replacement cost when the policy is written B: The dwelling is insured for 100% of its replacement cost at the time of a loss C: The amount of insurance on the dwelling is at least 80% of its replacement cost at the time of loss D: The amount of insurance on both the dwelling and personal property is at least 80% of its replacement cost when the policy is written Answer: C 21. When a mortgagee is named in a mortgagee clause attached to a fire or other direct damage policy? A: The loss reimbursement is paid to the insured B: The loss reimbursement is not awarded if damages arose from the insureds negligence C: The loss reimbursement is paid to the mortgagee
D: The mortgagee is prohibited from bringing a suit against the insurer Answer: C
22. An installation floater is used to insure? A: Dams, power plants, water plants, and other such installations B: Appliances intended to become a permanent part of the building C: Buildings under construction D: All types of for-sale merchandise Answer: B 23. The term "essential insurance coverage" as defined by the North Carolina Insurance Association refers to? A: Insurance against direct loss to property as defined in the standard statutory fire policy and extended coverage, vandalism and malicious mischief endorsements B: All risk coverage to include business owners policies, commercial general liability policies, and business income policies C: Catastrophic losses, as determined by the Association and approved by the Commissioner, that are covered under the windstorm and hail coverage in the beach and coastal area D: Policies of windstorm and hail insurance that are available only for risks in the beach and coastal areas Answer: A 24. On behalf and on request of an insurer by which an agent or limited representative is appointed, the agent or limited representative may from time to time act as an adjuster and investigate and report upon claims: however he may do so? A: Only on an emergency basis while in a nonresident status
A: 2 years from a loss B: 6 years From a Loss C: 5 years from the initial application D: 10 years from the initial application Answer: C
28. A company has a business owners policy on a building with an estimated replacement cost of $300,000. The company carries $150,000 of insurance. If a loss occurs, how much will the insured company be paid? A: Up to $300,000 for the loss B: Up to $150,000 for the loss C: The coinsurance formula would apply D: Nothing because the company failed to carry the required insurance amount Answer: C 29. The law of large numbers is best defined as a large numbers of people with similar exposures to loss resulting in actual losses being? A: Less predictable B: Smaller C: Larger D: More Predictable Answer: D
30. The basic dwelling (DP-1) provides all of the following coverages without endorsement EXCEPT? A: Additional Living Expenses B: Fair Rental Value C: Dwelling D: Other structures Answer: A 31. Which of the following dwelling policies insures a structure on an actual cash value basis? A: DP- B: DP- C: DP- D: DP- Answer: A 32. All of the following are characteristics of the dwelling policy EXECPT? A: Coverage includes the dwelling only, contents only, or both B: Incidental occupancy of limited service-type exposure is permitted C: Dwellings up to four family units are eligible D: The dwelling must be owner-occupied Answer: D
B: Allowed under state law C: Considered unfair discrimination D: Considered a category D felony Answer: C
37. Which of the following is not consider a rebate? a. Offering a client a multi-policy discount b. Returning part of your premium to your client c. Any inducement to buy that is not stated in the policy d. Giving clients who buy policies from you $100 gift cards Answer: A 38. Which of the following would NOT be covered under a dwelling property policy? A: Residence occupied by both an owner and a tenant B: Residences undergoing construction C: A farm used to raise and sell cattle D: A vacation rental that is unoccupied for 3 or more months a year Answer: C 39. To be eligible for coverage under a BOP, an office building cannot exceed how much in square footage? A: 3, B: 50, C: 100, D: 300,
Answer: C
40. After receiving proof of loss from an insured, an insurer must notify the insured of its intent to repair or replace damaged or lost property within? A: 10 days B: 20 Days C: 30 days D: 60 days Answer: D 41. Which of the following entities is eligible for a business owners policy? A: Amusement parks b: Automobile sales and servicing operations C: Manufacturing operations D: Convince stores Answer: D 42. The Fair Access to Insurance Requirements (FAIR) plan is designed to? A: allow insurers to participate, at their option, in doing the right thing for consumers B: Create shared market to provide fire and extended coverage insurance to individuals unable to obtain this coverage through the standard marketplace C: Insure beach and coastal properties D: Help persons who cannot afford property coverage such coverage Answer: D
46. An earthquake does $5,00 in damage to a property covered under as dwelling policy. In addition to the initial earthquake damage, the tremors cause a gas main explosion, causing an additional $2,500 in damage to the insured Property. How much will the insurer pay? A: Nothing B: $2, C: $5, D: $7, Answer: A 47. Which of the following would be eligible for coverage under a dwelling property policy? A: The acreage on which an apartment complex is built B: A house divided into 3 apartments C: A single-family house with 7 boarders D: A mobile home divided into 2 rental units Answer: B 48. How are premiums handled on a prepackage business owners policy? A: Property premiums are set at a fixed rate, while liability premiums increase over time B: There is one premium for property and liability coverage C: Only property coverage requires premium payments D: Premiums may very between property and liability coverage Answer: B 49. All of the following actions are prohibited in the sale of life insurance EXCEPT?
A: Sharing commissions from the sale of a life policy with another life agent B: Paying anything of value to the insured that is not specified in the contract C: Offering shares of stock in the insurer as an inducement to buy insurance D: Giving a special advantage as an inducement to buy insurance Answer: A
50. A basic dwelling policy automatically provides coverage against fire, lightening, and? A: Windstorm B: Internal Explosion C: Riot D: Smoke Answer: B 51. A sudden, unplanned and unexpected event, not under the control of the insured, resulting in injury or damage that is neither expected nor intended is known as? A: Peril B: Loss Valuation C: Liability D: Accident Answer: D 52. Which of the following business owners policy (BOP) endorsements provides coverage for the inability to collect monies due from customers as the result of a covered cause of loss?
C: Mortgage insurance D: Surety bonds Answer: A
56. If a licensee is convicted in any court for any offense, other than a traffic violation, the licensee must notify the Commissioner within how many days of the conviction date? A: 10 days B: 15 days C: 30 days D: 31 days Answer: A 57. How soon after a direct physical loss would the period of restoration begin under the extra expense coverage form of a CPP? A: Immediately B: 24 Hours C: 48 Hours D: 72 Hours Answer: D 58. In property and casualty terms, continues or repeated exposure to conditions resulting in damage to property is called? A: Occurrence B: Hazard
C: Indirect Loss D: Accident Answer: A
59. All insurers must keep records of each complaint received and the insurers response for? A: 1 year B: 2 years C: 3 years D: 5 years Answer: D 60. If a person holding a resident insurance license moves out of state, that person must surrender his or her license to the Commissioner within how many days of terminating their residence? A: 30 days B: 60 days C: 90 days D: 180 days Answer: A 61. Which of the following is NOT a coverage part of a commercial package policy? A: Personal article floated B: Inland marine C: Commercial auto
