North Carolina Insurance Practice Test (Free)

Question 1

In auto insurance, what does collision coverage typically pay for?

Accepted Answer

Damage to the insured's own vehicle from a collision with another vehicle or object, regardless of fault

Answer

Medical bills for the other driver only

Answer

Theft of the vehicle

Answer

Damage from a hailstorm

Question 2

What does a homeowners insurance policy's liability coverage generally protect against?

Accepted Answer

Claims and lawsuits from third parties injured or harmed due to the insured's negligence

Answer

Loss of rental income only

Answer

Damage to the insured's own dwelling from fire

Answer

The insured's own medical bills after a car accident

Question 3

What does the principle of utmost good faith require of both the applicant and the insurer in an insurance contract?

Accepted Answer

Full and honest disclosure of material facts by both parties

Answer

Only the insurer must disclose information

Answer

Only the applicant must disclose information

Answer

Neither party has a disclosure duty once the policy is issued

Question 4

What is the free look period in a life or health insurance policy?

Accepted Answer

A window after delivery when the policyholder can review the policy and cancel for a full refund

Answer

A period when premiums are waived entirely

Answer

The time it takes to process a claim

Answer

A grace period for late premium payments

Question 5

In North Carolina, what is the difference between actual cash value (ACV) and replacement cost coverage in a property policy?

Accepted Answer

ACV pays the depreciated value of a damaged item, while replacement cost pays to repair or replace it with new materials of similar kind and quality

Answer

They are two names for the exact same calculation

Answer

ACV only applies to liability claims

Answer

ACV pays to replace the item new, while replacement cost pays only its depreciated value

Question 6

What is a contestability period in a life insurance policy?

Accepted Answer

A set period, commonly 2 years, during which the insurer can investigate and contest a claim for misrepresentation

Answer

The period during which the insured can change beneficiaries freely

Answer

The grace period for a lapsed policy

Answer

The time allowed to pay the first premium

Question 7

What is the general purpose of an umbrella liability policy?

Accepted Answer

To provide extra liability coverage above the limits of underlying policies

Answer

To cover only medical payments

Answer

To lower the premium on the underlying policy

Answer

To replace the need for any underlying auto or homeowners policy

Question 8

In a term life insurance policy, what happens if the insured outlives the policy term?

Accepted Answer

Coverage simply ends unless the policy is renewed or converted

Answer

The policy converts to a mortgage automatically

Answer

The insurer pays out the full death benefit anyway

Answer

The premium is automatically refunded with interest

Question 9

What is the general purpose of state unfair claims settlement practices regulations?

Accepted Answer

To require insurers to handle and pay claims fairly, promptly, and in good faith

Answer

To set the minimum commission producers must be paid

Answer

To require every claim to be denied at least once before payment

Answer

To eliminate the need for policy exclusions

Question 10

In health insurance, what is the general purpose of a coinsurance provision?

Accepted Answer

To split covered costs between the insurer and insured by a set percentage after the deductible is met

Answer

To eliminate the need for a deductible

Answer

To guarantee acceptance regardless of health history

Answer

To determine the policy's free look period

North Carolina Insurance Practice Test

Question 1

In auto insurance, what does collision coverage typically pay for?

Question 2

What does a homeowners insurance policy's liability coverage generally protect against?

Question 3

What does the principle of utmost good faith require of both the applicant and the insurer in an insurance contract?

Question 4

What is the free look period in a life or health insurance policy?

Question 5

In North Carolina, what is the difference between actual cash value (ACV) and replacement cost coverage in a property policy?

Question 6

What is a contestability period in a life insurance policy?

Question 7

What is the general purpose of an umbrella liability policy?

Question 8

In a term life insurance policy, what happens if the insured outlives the policy term?

Question 9

What is the general purpose of state unfair claims settlement practices regulations?

Question 10

In health insurance, what is the general purpose of a coinsurance provision?

Question 11

What is the purpose of a coinsurance clause found in many commercial property insurance policies?

Question 12

What is the general purpose of an insurable interest requirement in insurance contracts?

Question 13

What is the main feature that distinguishes whole life insurance from term life insurance?