NC P&C Exam Flashcards

Q: What is the North Carolina P&C exam format and passing score?

North Carolina splits Property & Casualty into two separate Pearson VUE exams: Property code 830 and Casualty code 920. Each exam has 55 scored questions (plus 5 pretest) and a 75-minute time limit. You must score 70% on each part independently — a strong Property score cannot rescue a failing Casualty score, and only the failed part must be retaken.

Q: How much does the North Carolina P&C exam cost?

Each NC P&C exam attempt costs $45, so taking both Property (830) and Casualty (920) in one appointment costs $90. Retakes require a new $45 fee per part. A separate $38 fingerprint background check fee applies during resident producer licensing. Prelicensing education is no longer required as of October 1, 2025.

Q: Does North Carolina require prelicensing education for P&C producers?

No. House Bill 737 (Session Law 2024-55) repealed mandatory prelicensing education effective October 1, 2025 for Property, Casualty, Personal Lines, and Life/A&H licenses. Candidates may still take prep courses voluntarily, but must still pass the state exam and complete the resident producer application through NCDOI/NIPR.

Q: What are the North Carolina auto liability minimums tested on the exam?

For policies issued or renewed on or after July 1, 2025, North Carolina minimum liability limits are 50/100/50 — $50,000 per person, $100,000 per accident bodily injury, and $50,000 property damage — under SB 452 / Session Law 2023-133. The prior floor was 30/60/25. UM cannot be rejected; UIM applies when the at-fault driver carries less than the injured party's limits.

Q: What is the retake policy if I fail a North Carolina P&C exam?

Retakes are scheduled directly through Pearson VUE and each attempt requires a new $45 exam fee per part. There is no statutory cap on attempts, and you only retake the part you failed — not both. NCDOI does not publish an official first-time pass rate.

Q: How long should I study for the North Carolina P&C exam?

Most candidates need 60-100 hours over 4-8 weeks. Prioritize personal lines (homeowners, dwelling, personal auto) which is the largest scored share, then commercial lines (CGL, workers comp, BOP), then NC-specific law close to exam day so figures like 50/100/50 and 24-hour CE stay fresh.

Question 1

Insurable Interest

Accepted Answer

A financial stake in the continued existence of the insured property or person — required at policy inception for property and at the time of loss for life. Without it, a contract is unenforceable because it would create a wagering contract.

Question 2

Principle of Indemnity

Accepted Answer

Insurance restores the insured to the approximate financial position held before a loss — no profit, no betterment. Actual cash value (replacement cost minus depreciation) is the standard indemnity measure; replacement cost coverage is an exception that must be explicitly endorsed.

Question 3

Subrogation

Accepted Answer

The insurer's right, after paying a claim, to step into the insured's shoes and recover from the at-fault third party. Prevents the insured from collecting twice and holds the responsible party accountable. The insured cannot impair this right by settling early.

Question 4

Utmost Good Faith (Uberrimae Fidei)

Accepted Answer

Both parties to an insurance contract must deal honestly with full disclosure — the insured must reveal material facts, the insurer must be clear about terms. Misrepresentation or concealment of a material fact can void coverage from inception.

Question 5

Actual Cash Value (ACV)

Accepted Answer

Replacement cost minus depreciation — the default valuation for most property losses absent a replacement-cost endorsement. Formula: ACV = Replacement Cost − Depreciation. HO policies default to ACV for dwellings unless RCV is scheduled.

Question 6

Declarations Page

Accepted Answer

The front portion of a policy that personalizes the contract: named insured, property address, policy period, coverage limits, deductibles, and premium. Any item not in the declarations is governed by the form's general language.

Question 7

Insuring Agreement

Accepted Answer

The heart of the policy — the insurer's promise to pay for covered losses. May be written as 'all risks' (open perils) listing only exclusions, or 'named perils' listing only covered causes. Determines what triggers coverage.

Question 8

Conditions

Accepted Answer

Policy clauses that define the duties the insured must satisfy for coverage to remain in force — notice of loss, proof of loss, protecting property after a loss, cooperation with the insurer. Breaching a condition can void coverage for that loss.

Question 9

Endorsement

Accepted Answer

A written modification to the standard policy form that adds, deletes, or changes coverage. Endorsements take precedence over the underlying policy language and can be added at inception or mid-term.

Question 10

DP-1 (Basic Form)

Accepted Answer

A dwelling fire policy covering a limited set of named perils (fire, lightning, internal explosion, and optional wind/hail, smoke, etc.) on an actual cash value basis. Used for rental dwellings and structures not owner-occupied.

Question 11

DP-2 (Broad Form)

Accepted Answer

A named-perils dwelling form covering a broader list (fire, wind/hail, smoke, theft, vandalism, falling objects, weight of ice/snow, burst pipes, etc.) on a replacement-cost basis when owner-occupied. Adds broader coverage than DP-1.

Question 12

DP-3 (Special Form)

Accepted Answer

An open-perils (all-risks) dwelling form covering the dwelling for direct physical loss from any cause except the listed exclusions — the broadest dwelling form. Personal property is named-perils only. Typically replacement cost on the dwelling.

Question 13

Dwelling Policy vs. Homeowners Policy

Accepted Answer

Dwelling (DP) forms are designed for non-owner-occupied or rental property and exclude theft of personal property and personal liability by default. Homeowners (HO) forms bundle dwelling, contents, and personal liability and require owner occupancy.

Question 14

HO-2 (Broad Form)

Accepted Answer

A named-perils homeowners policy covering both dwelling and personal property against the 16 broad named perils. Less common than HO-3; often a cheaper alternative for owner-occupied homes.

Question 15

HO-3 (Special Form)

Accepted Answer

The most common homeowners form — open perils (all risks) on the dwelling and named perils on personal property. Covers any direct physical loss to the dwelling unless excluded, while contents are covered only for the listed perils.

Question 16

HO-4 (Contents Broad Form / Tenants)

Accepted Answer

Renters insurance — covers personal property on a named-perils basis, additional living expenses, and personal liability. No dwelling coverage because the tenant does not own the structure.

Question 17

HO-5 (Comprehensive Form)

Accepted Answer

The broadest homeowners form — open perils on BOTH dwelling and personal property, with higher coverage limits for valuables. Typically for newer, higher-value homes; fewer exclusions than HO-3.

Question 18

HO-6 (Condominium Unit Owners)

Accepted Answer

Covers the unit owner's personal property, betterments, improvements, and additions to the unit, loss assessment, and personal liability. The condo association master policy covers the building and common areas.

Question 19

HO-8 (Modified Coverage Form)

Accepted Answer

Designed for older homes where replacement cost would exceed market value. Covers named perils on an actual cash value basis and may use functional replacement cost — used when RC is economically impractical.

Question 20

Coverage A (Dwelling) on an HO Policy

Accepted Answer

Pays for direct physical damage to the dwelling itself and any attached structures. The limit must equal the dwelling's replacement cost to avoid a coinsurance penalty.

Question 21

Coverage C (Personal Property)

Accepted Answer

Covers the insured's personal belongings anywhere in the world (subject to off-premises limits and special limits on items like cash, jewelry, firearms). Default limit is typically 50-70% of Coverage A.

Question 22

Coverage D (Loss of Use)

Accepted Answer

Pays additional living expenses and fair rental value when the dwelling becomes uninhabitable due to a covered loss. Typical limit is 20-30% of Coverage A. No coinsurance applies to Coverage D.

Question 23

Personal Auto Policy (PAP) — Part A: Liability

Accepted Answer

Covers bodily injury and property damage the insured becomes legally obligated to pay due to an auto accident. Split limits appear as three numbers (per person / per accident BI / per accident PD). Mandatory in NC.

Question 24

PAP — Part B: Medical Payments

Accepted Answer

Covers reasonable medical and funeral expenses for the insured and passengers injured in a covered auto accident, regardless of fault. Typically applies within 1-3 years of the accident. No fault determination required.

Question 25

PAP — Part C: Uninsured Motorist (UM)

Accepted Answer

Covers the insured for bodily injury caused by a driver with no liability coverage or a hit-and-run. In North Carolina UM cannot be rejected and must equal the liability limits. Pays what the at-fault driver's liability would have paid.

Question 26

PAP — Part D: Physical Damage

Accepted Answer

Two coverages: Collision (upset or impact with another object) and Other Than Collision (comprehensive — fire, theft, glass, vandalism, hail, flood, animals). OTC is broader than collision and is not limited to a closed list.

Question 27

NC Auto Minimum Liability Limits (50/100/50)

Accepted Answer

For NC policies issued or renewed on or after July 1, 2025, minimum liability limits are $50,000 per person, $100,000 per accident bodily injury, and $50,000 property damage under SB 452 / Session Law 2023-133. The prior floor was 30/60/25.

Question 28

NC UM Cannot Be Rejected

Accepted Answer

North Carolina law requires Uninsured Motorist coverage on every auto policy and it cannot be rejected by the insured. UM limits must equal the liability limits. UIM applies when the at-fault driver carries less than the injured party's limits.

Question 29

Pure Contributory Negligence (NC)

Accepted Answer

North Carolina is one of only four states plus DC (AL, MD, VA, DC) following pure contributory negligence — if the plaintiff is even 1% at fault, they recover nothing. Adjusters scrutinize even minor claimant fault because any fault bars recovery.

Question 30

NC Reinsurance Facility

Accepted Answer

The residual market for North Carolina auto insurance — every licensed auto insurer must participate. High-risk drivers who cannot obtain coverage in the voluntary market are ceded to the Facility while 'clean risk' business stays with the carrier. Guarantees all drivers can obtain minimum-limits coverage.

Question 31

NC Financial Responsibility Act (G.S. 20-279.21)

Accepted Answer

North Carolina statute requiring all drivers to maintain minimum liability limits or post financial proof. Drives the 50/100/50 minimum and the UM requirement. Failure to maintain coverage can suspend registration and license plates.

Question 32

Commercial Package Policy (CPP)

Accepted Answer

A modular commercial policy combining separate coverage parts (property, general liability, auto, crime) under one declarations page. Allows businesses to tailor coverage; each part has its own insuring agreement and exclusions.

Question 33

Businessowners Policy (BOP)

Accepted Answer

A prepackaged policy for small businesses combining property and liability coverage in one form, with limited customization. Typically covers buildings, personal property, business income, and general liability. Excludes most auto and professional liability.

Question 34

Causes of Loss Forms (Commercial Property)

Accepted Answer

Three ISO cause-of-loss options: Basic (named perils — fire, lightning, wind, etc.), Broad (adds falling objects, weight of snow, water damage), and Special (open perils — all risks except listed exclusions). The Special form is the broadest.

Question 35

Coinsurance (Commercial Property)

Accepted Answer

A clause requiring the insured to carry coverage equal to a stated percentage (often 80%) of the property's value. If underinsured at loss time, the insurer pays only a proportionate share of the loss.

Question 36

Occurrence vs. Claims-Made (CGL)

Accepted Answer

Occurrence covers bodily injury or property damage that happens during the policy period, regardless of when the claim is reported. Claims-made covers claims first reported during the policy period, regardless of when the loss occurred. Tail coverage extends reporting after a claims-made policy ends.

Question 37

CGL Coverage A — Bodily Injury and Property Damage

Accepted Answer

The core general liability coverage paying for bodily injury or property damage caused by an 'occurrence' arising from the insured's premises, operations, products, or completed work. Subject to a per-occurrence and general aggregate limit.

Question 38

CGL Coverage B — Personal and Advertising Injury

Accepted Answer

Covers false arrest, detention, malicious prosecution, libel, slander, defamation, wrongful eviction, and copyright infringement in the insured's advertising. Smaller limit than Coverage A and excludes most intentional acts.

Question 39

Products and Completed Operations

Accepted Answer

CGL coverage for bodily injury or property damage arising from the insured's products after they leave the insured's premises, or from completed work. Triggered by an occurrence, not the sale date. Common exclusion: expected or intended injury.

Question 40

Workers Compensation — Exclusive Remedy

Accepted Answer

The principle that workers comp is the sole remedy an injured employee has against the employer — the employee cannot sue the employer in tort. In exchange, the employer pays benefits regardless of fault. Third parties can still be sued.

Question 41

NC Industrial Commission

Accepted Answer

The North Carolina state agency that administers workers compensation claims, approves settlements, and resolves disputes between injured workers, employers, and insurers. NCCI classification codes set the premium basis.

Question 42

Part Two of Workers Comp Policy — Employers Liability

Accepted Answer

Covers the employer's liability to employees in situations where workers comp does not apply (e.g., third-party-over actions, consequential bodily injury, care and loss of services). Separate limits from Part One's statutory benefits.

Question 43

Surety Bond vs. Insurance

Accepted Answer

A surety bond is a three-party guarantee (principal, obligee, surety) that the principal will fulfill an obligation; if they default, the surety pays and can recover from the principal. Insurance is a two-party risk-transfer contract with no recovery right.

Question 44

Fidelity Bond

Accepted Answer

A bond that protects an employer against employee dishonesty — theft, embezzlement, or forgery of money or property. Covers the employer's direct loss, not third-party losses. Often bundled with crime coverage in commercial policies.

Question 45

NC Commissioner of Insurance

Accepted Answer

The elected official heading the North Carolina Department of Insurance (NCDOI), serving a 4-year term. Has authority to approve or disapprove NCRB rate filings, hold hearings, suspend producer licenses, and enforce unfair trade practice rules.

Question 46

North Carolina Rate Bureau (NCRB)

Accepted Answer

The NC rating organization that files proposed rates for property and casualty lines with the Commissioner on behalf of all NC insurers. The Commissioner may approve, modify, or disapprove filings and hold public hearings before a rate takes effect.

Question 47

NCIUA Beach Plan

Accepted Answer

The North Carolina Insurance Underwriting Association — the property insurer of last resort providing wind and hail coverage in the 18 designated coastal counties. Funded by assessments on property insurers. Used when voluntary market coverage is unavailable.

Question 48

NCJUA FAIR Plan

Accepted Answer

The North Carolina Joint Underwriting Association — the residual property market for risks that cannot obtain coverage in the voluntary market anywhere in the state (not just coastal). Provides basic property coverage; broader than the Beach Plan's coastal wind focus.

Question 49

NC Continuing Education Requirement

Accepted Answer

Resident producers must complete 24 hours of CE every 2 years, including 3 ethics hours. Property licensees also need 3 hours of flood insurance training in the first renewal period and every 4 years thereafter. Renewal is tied to the last day of the producer's birth month.

Question 50

Rebating (Prohibited Practice)

Accepted Answer

Offering the insured a portion of the premium or any other unlisted inducement as an incentive to purchase insurance — prohibited in North Carolina and most states. Distinct from legitimate discounts and advertising giveaways; constitutes an unfair trade practice under NC law.

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