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North Carolina North Carolina “All Lines” Equivalent —
Standard Adjuster Covers P&C Lines Practice Exam
Questions And Correct Answers (Verified Answers) Plus
Rationales 2025
This covers standard Property & Casualty lines, as North Carolina issues a Standard Adjuster license (not “All Lines” wording but functionally the same). 1) Which of the following best describes an insurance adjuster’s primary responsibility in North Carolina? A. Represent the insurer by determining liability and settling claims fairly B. Represent the insured by maximizing claim payments C. Act only as an independent mediator between both parties D. Offer legal advice to policyholders Answer: A Rationale: In NC, an adjuster acts on behalf of the insurer to investigate, evaluate, and negotiate claims fairly within policy terms. 2) Which is required for a North Carolina adjuster to maintain their license? A. Renew annually with 12 hours of CE, including ethics B. Renew every 2 years with 24 hours of CE, including ethics C. Renew every 2 years with 18 hours of CE, no ethics required D. No CE requirement for adjusters
Answer: B Rationale: NC adjusters must complete 24 hours of continuing education every 2 years, with at least 3 hours in ethics. 3) In NC, when investigating a property claim, which standard is used to determine if damage is covered? A. Preponderance of the evidence B. Clear and convincing evidence C. Insurable interest and proximate cause D. Any damages reported are automatically covered Answer: C Rationale: Adjusters must confirm the insured had an insurable interest at the time of loss and that the loss resulted from a covered peril. 4) Which NC law prohibits unfair claims settlement practices? A. NC General Statute § 58- 63 - 15(11) B. NC Insurance Code § 75- 1 C. Unfair Trade Practices Act § 90- 1 D. Insurance Fraud Act § 105- 200 Answer: A Rationale: North Carolina General Statute § 58- 63 - 15(11) defines unfair claims settlement practices.
Answer: C Rationale: Misrepresenting policy provisions or facts is prohibited by NC’s Unfair Claims Settlement Practices Act. 8) When may an NC adjuster pay more than policy limits? A. If the insured insists B. If the damage is more severe than estimated C. Never — they must follow the limits in the contract D. Always, at the insurer’s discretion Answer: C Rationale: An adjuster cannot pay more than the policy’s maximum limits. 9) Which coverage would typically be excluded under a standard NC P&C policy? A. Fire damage B. Windstorm damage C. Wear and tear D. Vandalism Answer: C Rationale: Normal wear and tear is not a covered peril in standard property policies. 10) Which statement about insurable interest in NC is true? A. Must exist only at policy inception
B. Must exist only at claim settlement C. Must exist at the time of loss D. Is irrelevant in NC Answer: C Rationale: A valid insurable interest must exist at the time of the loss to be compensable. 11) An insured files a claim for theft but fails to provide a proof of loss. What should the adjuster do? A. Deny the claim immediately B. Extend the proof of loss deadline indefinitely C. Send a written request reminding the insured of the requirement D. Approve the claim without the proof Answer: C Rationale: NC adjusters must request missing documentation before denying a claim for lack of cooperation. 12) Which would be considered an insurable interest under NC law? A. Neighbor’s house B. Friend’s car C. Business partner’s inventory, with a financial stake D. Stranger’s rental property
15) What is the penalty for violating NC’s Unfair Claims Practices law? A. Automatic license revocation B. No penalties exist C. Possible fines and license suspension D. Jail time only Answer: C Rationale: Violations can result in civil penalties, license suspension, or revocation. 16) What is an adjuster’s role if a dispute arises about claim amount? A. Refer to appraisal or arbitration if policy allows B. Ignore the dispute C. Automatically pay maximum limits D. Cancel the policy Answer: A Rationale: Most policies include an appraisal clause for claim amount disputes. 17) Which document does an adjuster use to estimate repairs? A. Statement of Values (SOV) B. Proof of loss C. Scope of loss D. Loss run report Answer: C Rationale: A scope of loss details the damage and repairs needed.
18) In NC, when must a claim be acknowledged? A. 10 business days B. 30 days C. Promptly, no later than 30 calendar days D. Promptly, no later than 10 business days Answer: D Rationale: NC requires acknowledgment within 10 business days under claims handling rules. 19) When should a reservation of rights letter be issued? A. When coverage is certain B. When coverage may be denied due to policy terms C. When the claim is being paid in full D. Always at policy issuance Answer: B Rationale: It preserves the insurer’s right to deny coverage after investigating. 20) Which is NOT a duty of an NC adjuster? A. Investigate B. Negotiate C. Provide legal representation D. Report findings
C. Claim is reopened D. No payment is made Answer: B Rationale: A release form confirms final payment and settlement. 24) Which loss would be covered under NC standard P&C policy? A. Intentional fire set by insured B. Fire caused by lightning C. Gradual seepage over 10 years D. Routine wear on roof Answer: B Rationale: Fire due to lightning is a covered peril. 25) What is an adjuster’s first step when assigned a new claim? A. Deny it immediately B. Request file closure C. Verify coverage D. Pay full limits Answer: C Rationale: Coverage must be confirmed before proceeding. 26) If an insured requests to reopen a closed claim, what should the adjuster do?
A. Refuse automatically B. Reopen if new information justifies it C. Close the policy D. File a fraud report Answer: B Rationale: New evidence or additional damage may warrant reopening. 27) Which is an example of a first-party claim? A. Liability claim by third party B. Subrogation recovery C. Insured files for wind damage to own property D. Claim against another driver’s insurer Answer: C Rationale: First-party = insured claiming against own policy. 28) Which NC law addresses insurance fraud? A. G.S. § 58- 2 - 161 B. G.S. § 75- 1 C. G.S. § 90- 2 D. G.S. § 105- 163 Answer: A Rationale: NC G.S. § 58- 2 - 161 outlines insurance fraud offenses.
32) Which is true about salvage? A. Belongs to insured after payout B. Belongs to insurer after total loss payout C. Must be given to the adjuster personally D. Is illegal in NC Answer: B Rationale: After paying for total loss, salvage rights transfer to insurer. 33) Which standard must be met for a good faith claim denial? A. Arbitrary decision B. Reasonable investigation C. Insured’s oral statement only D. Insurer’s profit Answer: B Rationale: NC law requires reasonable investigation before denial. 34) A binder provides what? A. Permanent policy B. Temporary insurance coverage C. No coverage D. Refund of premium
Answer: B Rationale: Binders provide temporary coverage until a policy is issued. 35) When should depreciation be applied? A. For replacement cost policies B. For ACV policies C. For liability claims D. Never Answer: B Rationale: ACV = RC minus depreciation. 36) Which is NOT an unfair claims practice? A. Failing to respond B. Denying without reason C. Prompt investigation D. Misrepresenting coverage Answer: C Rationale: Prompt investigation is required by law. 37) Which best describes subrogation? A. Insured keeps salvage B. Insurer recovers from responsible third party
B. Only for bodily injury claims C. Only with insurer’s consent D. Always, no limits Answer: C Rationale: Most policies restrict assignment without insurer approval. 41) Who signs the proof of loss? A. Adjuster only B. Insured only C. Insurer only D. Insured and possibly adjuster Answer: D Rationale: Insured always signs; adjuster may verify. 42) Which is considered a third-party claim? A. Fire damage to insured home B. Liability claim for injury to neighbor C. Hail damage to insured roof D. Theft from insured garage Answer: B Rationale: Third-party = claim against insured by someone else.
43) What must the adjuster do if coverage is unclear? A. Deny immediately B. Send reservation of rights C. Close file D. Pay maximum limits Answer: B Rationale: Protects insurer’s rights while investigating. 44) What is the deductible? A. Premium refund B. Portion insured must pay before insurer pays C. Insurer’s total payment D. Claims adjuster fee Answer: B Rationale: Deductible = insured’s share of covered loss. 45) Which policy provision prevents double recovery? A. Indemnity B. Coinsurance C. Deductible D. Appraisal Answer: A Rationale: Indemnity restores insured to pre-loss condition, not better.
Answer: C Rationale: Proper claim records must be maintained for regulatory review. 49) When may an adjuster negotiate settlement? A. When authorized by insurer B. Only with public adjuster C. Only if insured requests D. Never Answer: A Rationale: Adjusters must act within the insurer’s authority. 50) Which of these is required for NC adjuster compliance? A. Fictitious name use B. License displayed at place of business C. Avoid CE credits D. Pay policyholders cash personally Answer: B Rationale: NC law requires adjusters to display their license. 51) What is the purpose of the declarations page in a policy? A. Lists exclusions B. Defines legal terms
C. Summarizes key coverage info D. Outlines claims procedures Answer: C Rationale: The declarations page includes the named insured, policy period, coverage limits, deductibles, and property details. 52) If an insured does not mitigate further damage after a covered loss, what can happen? A. Claim is paid in full anyway B. Adjuster is responsible for repairs C. Payment may be reduced D. Claim is voided automatically Answer: C Rationale: Policies require the insured to prevent further loss; failure to do so may reduce payment. 53) Which type of adjuster is hired directly by the policyholder? A. Staff adjuster B. Independent adjuster C. Public adjuster D. Company adjuster Answer: C Rationale: Public adjusters work for the insured to settle claims.
