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  3. Personal Lines
  4. General Insurance Concepts

Free General Insurance Concepts Practice Questions

North Carolina Personal Lines exam — 58 practice questions.

Subtopics: Contributory negligence, Insurable interest, Indemnity, Subrogation, Utmost good faith, Hazard, Pure vs speculative risk, Peril, Moral hazard, Morale hazard, Physical hazard, Law of large numbers, Risk avoidance, Risk retention, Risk transfer, Elements of a contract, Contract of adhesion, Aleatory contract, Representation, Concealment, Warranty, Express authority, Apparent authority, Implied authority, Stock vs mutual insurer, Domestic foreign alien, Admitted insurer, Estoppel, Adverse selection, Reinsurance, Underwriting, Loss ratio, Rate regulation goals, Reciprocal insurer, Lloyds of London, Risk retention group, Self-insurance, Surplus lines, Fundamental vs particular risk, Loss exposure, Frequency vs severity, Unilateral contract, Conditional contract, Personal contract, Waiver, Material misrepresentation, Fiduciary duty, Commingling, Agent vs broker, Rebating, Twisting, Coercion, Defamation, Unfair claims settlement

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Sample questions & answers

1. North Carolina is among the few states that follow which rule, under which a claimant even 1 percent at fault may be barred from recovery?

Pure contributory negligence

North Carolina applies pure contributory negligence: a claimant who is even slightly at fault generally cannot recover, which strongly affects personal liability claims.

2. For homeowners insurance, the insured must have an insurable interest in the home:

At the time of loss

In property insurance such as homeowners, insurable interest must exist at the time of loss to support recovery under the indemnity principle.

3. The indemnity principle in personal lines means the insured should:

Be restored to the pre-loss financial position without profiting

Indemnity limits recovery to the actual loss, restoring but not enriching the insured.

4. Subrogation in a personal auto claim allows the insurer to:

Recover its payment from the at-fault third party

After paying the insured, the insurer may pursue the at-fault party to recover the amount paid, consistent with the principle of indemnity.

All Personal Lines topics

Practice: General Insurance Concepts

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Practice questions are study aids generated for exam preparation and are not actual exam questions. Content is provided for educational purposes and is not legal advice. Verify current statutes, rules, and exam specifications with the Insurance Department and the exam administrator before relying on it.