North Carolina Property & Casualty Insurance Practice Exam Free - 2026

• A. Proof of loss within 30 days after the loss unless extended in writing by the insurer; payment 30 days after proof of loss is received and the loss is ascertained
• B. Proof of loss within 180 days after the loss unless extended in writing by the insurer; payment immediately upon receipt of proof of loss and ascertainment of the loss
• C. Proof of loss within 90 days after the loss unless extended in writing by the insurer; payment 15 days after proof of loss is received and the loss is ascertained
• D. Proof of loss within 60 days after the loss unless extended in writing by the insurer; payment 60 days after proof of loss is received and the amount of loss is ascertained

Correct answer: D. Proof of loss within 60 days after the loss unless extended in writing by the insurer; payment 60 days after proof of loss is received and the amount of loss is ascertained

Explanation: The standard fire policy requires a signed and sworn proof of loss within 60 days after the loss unless the insurer extends that time in writing, and the amount for which the insurer may be liable is payable 60 days after proof of loss is received and the loss is ascertained by written agreement or by filing of an appraisal award. The 180-day figure is the individual accident and health proof of loss period, not the fire policy's. See N.C.G.S. 58-44-16.

• A. Immediately upon mailing the notice
• B. 15 days from the date the notice is mailed
• C. 30 days from the date the notice is mailed
• D. At least 60 days after the notice is mailed

Correct answer: B. 15 days from the date the notice is mailed

Explanation: For private passenger auto, a termination for nonpayment of premium may take effect 15 days from the date the notice is mailed by first class mail to the insured's last known address, while a termination for any other reason must take effect at least 60 days after mailing. Immediate termination is not permitted, and 30 days is not a statutory option. See N.C.G.S. 58-36-85.

• A. Cancel for any reason on 15 days' written notice, because the cancellation restrictions do not apply during the first 60 days
• B. Cancel for one of the enumerated statutory reasons on 30 days' written notice, because the cancellation restrictions apply from the day the policy takes effect
• C. Cancel immediately without written notice, because the cancellation restrictions and the notice requirement do not apply during the first 60 days
• D. Wait until the policy has been in effect 60 days and then cancel for any reason on 15 days' written notice, because early cancellation is barred

Correct answer: A. Cancel for any reason on 15 days' written notice, because the cancellation restrictions do not apply during the first 60 days

Explanation: The statutory limits on midterm cancellation do not apply to a policy that has been in effect fewer than 60 days and is not a renewal, so during that initial underwriting window the insurer may cancel for any reason, but it still owes written notice not less than 15 days before the effective date. Once 60 days pass the insurer is confined to enumerated grounds such as nonpayment, material misrepresentation, substantial increase in hazard, or loss of reinsurance, and notice is required in every case. See N.C.G.S. 58-41-15.

• A. A certificate issued by and bearing the date stamp of the United States Postal Service, or an official USPS tracking number or similar proof of mailing
• B. An affidavit from the agent of record stating the notice was mailed
• C. A copy of the notice retained in the underwriting file
• D. An entry in the insurer's electronic policy management system

Correct answer: A. A certificate issued by and bearing the date stamp of the United States Postal Service, or an official USPS tracking number or similar proof of mailing

Explanation: The Department defines "proof of mailing," as used in the auto termination statute, as a certificate issued by and bearing the date stamp of the United States Postal Service, or an official USPS tracking number or similar proof of mailing. This matters because the statute makes proof of mailing sufficient proof of notice, so insurers that cannot produce it risk an ineffective cancellation or nonrenewal. Options B, C, and D are internal records or statements that do not carry the independent postal-service date evidence the rule requires. See 11 NCAC 04 .0430; N.C.G.S. § 58-36-85.

• A. Coverage for employees injured on the job, regardless of fault
• B. Coverage for employees injured on the job when the employer is proven negligent
• C. Coverage for employers sued by employees for wrongful termination
• D. Coverage for lost wages when an employee is laid off or furloughed

Correct answer: A. Coverage for employees injured on the job, regardless of fault

Explanation: Workers compensation insurance provides benefits to employees who are injured or become ill as a result of their job. It covers medical expenses, lost wages, and rehabilitation costs regardless of fault.

• A. No, it's optional in every state unless the employer elects coverage
• B. Yes, it's mandatory in most states for employers with employees
• C. Yes, it's required in every state for employers with 50 or more employees
• D. Yes, it's required by federal law for every employer nationwide

Correct answer: B. Yes, it's mandatory in most states for employers with employees

Explanation: Workers compensation insurance is mandatory in most states for businesses with employees. Requirements vary by state regarding exemptions, coverage limits, and employer size thresholds.

• A. File a sworn proof of loss before any other action
• B. Obtain repair estimates from at least two contractors
• C. Promptly notify the insurance company of the loss
• D. Begin permanent repairs to restore the property

Correct answer: C. Promptly notify the insurance company of the loss

Explanation: The insured's first duty after a loss is to promptly notify the insurance company. Delay in notification can potentially affect the claim if it prejudices the insurer's ability to investigate.

• A. A report prepared by the adjuster estimating the amount of damage
• B. A written notice from the insurer acknowledging that a claim was filed
• C. A police or fire department report confirming the loss occurred
• D. A formal sworn statement from the insured documenting the loss

Correct answer: D. A formal sworn statement from the insured documenting the loss

Explanation: A proof of loss is a formal, sworn statement submitted by the insured to the insurance company documenting the facts of the loss, the amount claimed, and other relevant information.

• A. To investigate claims and determine the amount the insurer should pay
• B. To adjust premiums and coverage limits at each policy renewal
• C. To decide whether an applicant meets the insurer's underwriting standards
• D. To approve or deny claims on behalf of the state insurance department

Correct answer: A. To investigate claims and determine the amount the insurer should pay

Explanation: A claims adjuster investigates insurance claims to determine coverage, evaluate the extent of damage or loss, and recommend appropriate claim payment amounts based on policy terms.

• A. Damaged property the insured is required to keep and repair at their own expense after a partial claim payment
• B. Damaged property the insurer takes over after paying a loss, which it may sell to reduce the net cost
• C. The insurer's right to recover its claim payment from the third party who caused the loss
• D. The amount by which a claim payment is reduced for depreciation on damaged property

Correct answer: B. Damaged property the insurer takes over after paying a loss, which it may sell to reduce the net cost

Explanation: Salvage is damaged property the insurer takes over after paying a claim, and it may then sell to reduce the net cost of the loss. It is not limited to total losses; property forms let the insurer take all or part of damaged property at an agreed or appraised value. Salvage concerns the property itself, whereas subrogation concerns recovering money from the party responsible for the loss.

• A. The insured's right to sue the insurer for an unreasonable claim denial
• B. The insurer's right to take over damaged property after paying a total loss
• C. The insurer's right to pursue recovery from the party responsible for the loss
• D. The insurer's right to cancel the policy after paying a large claim

Correct answer: C. The insurer's right to pursue recovery from the party responsible for the loss

Explanation: Subrogation is the insurer's right, after paying a claim, to pursue recovery of the payment from the third party who caused the loss. This prevents the insured from collecting twice.

• A. Unintentional misstatement of a material fact on an application
• B. Failure to disclose a fact the applicant did not know was material
• C. Purchasing coverage from several insurers on the same property
• D. Intentional deception to obtain insurance benefits illegally

Correct answer: D. Intentional deception to obtain insurance benefits illegally

Explanation: Insurance fraud is intentional deception committed by an applicant, policyholder, or claimant for the purpose of obtaining insurance benefits to which they are not entitled.