N.C. State Exam Practice

32 Questions | By Charrom | Updated: Mar 20, 2022 | Attempts: 97

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This test is focused on COMMERCIAL INSURANCE and is designed to provide practice for the state exam. Some of the questions are designed to trick you, so READ VERY CAREFULLY. There are questions which require arithmetic. Take your time. There are 32 questions in the total bank. Each time you take it you'll pull 10 random questions from the bank. You'll get a final score at the end.

Questions and Answers

1.

All of the following cease Builders Risk coverage except:
- A.
  
  The purchaser goes bankrupt.
- B.
  
  The purchaser places a receptionist just inside the main entry to the building.
- C.
  
  The builder's interest in the property ceases.
- D.
  
  90 days have passed after construction is completed.
2.

L Corporation, a retailer buys a Commecial General Liability policy. 45 days later they are sued by a customer because the customer was yelled at and called names by one of L's employees in the store. L is protected by Coverage B of the CGL.
- A.
  
  True
- B.
  
  False
3.

Company X is a manufacturer of hand-made wooden barrels and operates out of a leased building Their wooden barrels are valuable and indispensable to the local cheese industry so they must operate 24 hours a day, 7 days a week. Which of the following is the most likely kind of insurance Company X would hold?
- A.
  
  Extra Expense Form
- B.
  
  Assigned Risk Form
- C.
  
  Completed Value Form
- D.
  
  Installation Form
4.

Quick and Dirty Paper Company has a fire which partially destroys their paper mill valued at $200,000. The loss was valued at $100,000. They held a Building and Personal Property Coverage Form on the property with a limit of $90,000 and a co-insurance requirement of 90%. They only have coverage through the Basic Form perils. If the deductible is $20,000 how much will their insurer pay?
- A.
  
  $0
- B.
  
  $20,000
- C.
  
  $30,000
- D.
  
  $45,000
5.

Leaky Pen Company makes fountain pens which each cost $1 to make, and they each sell for $10. They have orders for 10,000 pens when the factory roof collapses under the weight of snow. They own the factory and the building loss is $50,000. 5,000 pens are destroyed. The company carries a Building and Personal Property Basic Coverage Form with a limit of $100,000 a $10,000 deductible and and no co-insurance requirement. How much will the Leaky Pen Company recover for their loss of pens and the building?
- A.
  
  More than $50,000 but less than $90,000
- B.
  
  $90,000 or more
- C.
  
  More than $25,000 but less than $50,000
- D.
  
  Less than $25,000
6.

Smeary Pen Company makes roller ball pens which each cost $2 to make, and they each sell for $10. They have orders for 5,000 pens when the factory is partially destroyed in a lightning strike. They own the factory (valued at $400,000) and the building loss is $50,000. 1,000 pens are destroyed. The company carries a Building and Personal Property Special Coverage Form with a limit of $300,000 a $5,000 deductible and a 70% co-insurance requirement. How much will the Smeary Pen Company recover for their loss of pens and the building?
- A.
  
  More than $50,000 but less than $90,000
- B.
  
  $90,000 or more
- C.
  
  More than $25,000 but less than $50,000
- D.
  
  Less than $25,000
7.

A supplier is visiting the Soggy Tater Chips Company and while walking through the plant slips on a potato peel, falling and injuring herself. She goes to the hospital and is charged $700 for a nurse to put a bandaid on the her elbow. Exactly 400 days later, she remembers to send the bill to the Soggy Tater Chip Company. How much will she collect?
- A.
  
  All $700
- B.
  
  Nothing.
- C.
  
  Not enough information given to figure it out.
- D.
  
  Somewhere between $0 and $700 depending on the deductible.
8.

Tacky Ink Incorporated sells only ink products at retail for ink jet printers, fountain pens and tattoo artists. They have a CGL policy witten on an Occurance Basis. On September 1, 2011 S slipped in a small puddle of yellow ink which had leaked from a faulty package. On September 30, 2011 Tacky Ink changed insurers of their CGL and switched to a Claims Made basis. There is no retroactive date. Which of the following is true?
- A.
  
  The claims made coverage could apply, but only on an excess basis.
- B.
  
  The claims made coverage never would apply.
- C.
  
  The occurrence claims coverage would never apply.
- D.
  
  The occurrence claims coverage could apply but only on an excess basis.
9.

Which of the following is not true about the BOP?
- A.
  
  Part B is regarding Business Personal Property.
- B.
  
  Settlement for Part B is on a replacement part basis.
- C.
  
  There is no value limit placed on Loss of Income.
- D.
  
  Any losses will be paid on an Actual Cash Value basis.
10.

The Shelac Shack is a high-end nail salon catering to Charlotte-based celebrities. Business has been very good and has grown to over $2 million in sales. At this level of sales they are not eligible for BOP.
- A.
  
  True
- B.
  
  False
11.

Which of the following is a form in which Builders Risk is written?
- A.
  
  Reporting Form
- B.
  
  Coverage Form
- C.
  
  Occurrence Form
- D.
  
  Assigned Risk Form
12.

All of the following are Part I Benefits of Worker's Compensation except:
- A.
  
  Medical Expenses
- B.
  
  Disability Expenses
- C.
  
  Rehabilitation Benefits
- D.
  
  Personal Injury Benefits
13.

A Supplememental ERP provides coverage:
- A.
  
  Of a limited duration.
- B.
  
  On an excess basis only.
- C.
  
  Requires purchase within 60 days of the end of the policy period.
- D.
  
  Covers only damage done to tangible items.
14.

Leaky Pens Company has suffered a judgement $3 million against it in a liability case. Fortunately they have sufficient CGL coverage with Insurer C with a liability limit of $7 million. They also have concurrent coverage with Insurer S with a limit of $2.5 million. How much will Insurer S be responsible to pay?
- A.
  
  $3 million
- B.
  
  $1.5 million
- C.
  
  Nothing
- D.
  
  $2.5 million
15.

Smeary Pens Incorporated has Building and Personal Property Coverage written under the Basic Cause of Loss Form with a $250,000 limit, co-insurance of 80% and a deductible of $5,000. During Halloween, a group of kids with slingshots shot out 5 windows each containing 2 glass panes. What's the maximum Smeary's insurer will pay for the damage.
- A.
  
  $0
- B.
  
  $500
- C.
  
  $5,000
- D.
  
  $1,000
16.

All disputes concerning Workers Compensation issues are referred to:
- A.
  
  The North Carolina Rate Bureau
- B.
  
  The Industrial Commission
- C.
  
  The North Carolina Commissioner of Insurance
- D.
  
  The North Carolina Underwriting Association
17.

Basic rates for workers compensation insurance are based upon a system of job classifications and geographic locations.
- A.
  
  True
- B.
  
  False
18.

D had been temporarily disabled for 28 days. While working D's average weekly earnings were $600 per week. How much in Workers Compensation disability benefits will D collect?
- A.
  
  $600
- B.
  
  $1600
- C.
  
  $2400
- D.
  
  $1200
19.

Bent and Broken Auto Repair fixes minor body damage to Mercedes Benz automobiles. They carried $1,000,000 in Garage Liability. On the night of July 4th, fireworks lands on the roof of the business and it burns to the ground, also destroying 3 cars all together valued at $120,000. The building and equipment was worth $800,000 and there was a 80% co-insurance requirement and a $10,000 deductible. What will Bent and Broken be paid by their insurer?
- A.
  
  $0
- B.
  
  $900,000
- C.
  
  $910,000
- D.
  
  $1,000,000
20.

A Blanket Position Fidelity Bond:
- A.
  
  Covers all employees, but its limits are expressed on a per employee basis.
- B.
  
  Covers multiple employees, but lists them by job title rather than name.
- C.
  
  Covers all employees and its limits are expressed on a per loss basis.
- D.
  
  Covers several named employees.
21.

The CPP specifially covers all of the following except:
- A.
  
  Business Auto
- B.
  
  Commercial Inland Marine
- C.
  
  Boiler and Machinery
- D.
  
  Motor Truck Cargo
22.

R is the obligee in a construction contract for building. This best means:
- A.
  
  They are the owner for whom the building is being constructed.
- B.
  
  They are the contractor constructing the building.
- C.
  
  They are neither the owner nor the contractor.
- D.
  
  They will have to pay a bond.
23.

For a potential liability under a CGL policy, a civil tort need not be alleged.
- A.
  
  True
- B.
  
  False
24.

L bought a fountain pen from Leaky Pen Company and set it on her desk. That night, it leaked down an electrical cord and into an electric outlet causing a fire which damaged L's home. Which portion of the CGL sublines most applies?
- A.
  
  Completed Operations
- B.
  
  Products
- C.
  
  Property Damage
- D.
  
  Premises
25.

Contractual Liability protects against liability assumed under a contract. Which of the following is a common situation where a business is almost forced to assume liability?
- A.
  
  Elevator Maintenance
- B.
  
  Boiler Maintenance
- C.
  
  A Surety Bond
- D.
  
  Supplementary Maintenance