Free North Carolina Property practice questions

Answer: C. Within 30 business days, to inform the policyholder of the nature and substance of the information and to let him see and copy it or obtain a copy by mail.

N.C. Gen. Stat. Sec. 58-39-45(a) applies where a properly identified individual makes a written request of this kind, and it gives the insurer 30 business days from receipt of the request to do several things. The first is to tell the individual what the recorded personal information is about and what it says. The second is to let the individual look at it and copy it in person, or else receive a copy through the mail, whichever the individual prefers. So the clock is 30 business days, and the choice between viewing in person and a mailed copy belongs to the individual. Disclosing the sources is part of the same duty but not the whole of it: subsection (b) requires that information furnished identify the source where that source is institutional. Nor does the insurer have to do any of this free, because subsection (d) allows a reasonable fee to cover the cost of providing a copy, except for personal information provided under Sec. 58-39-55.

Answer: A. The dealer's own extended warranty is not a contract of insurance, while the warranty sold by the finance company is a contract of insurance.

N.C. Gen. Stat. Sec. 58-1-15(b) takes certain warranties outside the Insurance Chapter. A warranty made only by a manufacturer, a distributor or a seller of the goods or services, whether given at no charge or offered as an optional extended warranty for a charge, is not a contract of insurance under Articles 1 through 64 where it guarantees indemnity for defective parts, for mechanical or electrical breakdown, for labor or for any other remedial measure. The dealer is a seller, and the subsection names the paid extended warranty in terms, so charging for it does not pull the dealer's warranty inside the Chapter. The three trades are listed as alternatives, so a seller need not also have manufactured or distributed what it sold. Subsection (c) draws the other side of the line: where the warranty or extended warranty comes from someone who is not the manufacturer, distributor or seller of the warranted goods or services, it is a contract of insurance. The finance company is none of the three, so its warranty is insurance.

Answer: B. The premium payment for the windstorm and hail insurance, together with a certificate that the essential property insurance is in force.

N.C. Gen. Stat. Sec. 58-45-35(e) states the condition in one sentence: to be eligible for a windstorm and hail policy, the applicant must give the Association a certificate that the essential property insurance is in force, together with the premium payment for the windstorm and hail insurance. The separate wind policy sits on top of coverage that somebody else has already written, which is why a certificate of that other coverage is the thing asked for. The same subsection opens by making these policies available only for risks in the beach and coastal areas where licensed insurers have written essential property insurance, so both the beach area and the coastal area are inside the program rather than one of them being excluded. It also places the adjusting duty the other way round from what an applicant might expect, since the licensed insurer that wrote the essential property insurance, and not the Association, adjusts catastrophic losses covered under the windstorm and hail coverage in those areas, with the Association reimbursing that insurer for the reasonable expenses of adjusting them. This subsection asks for no declination from the licensed insurer; the document it names is a certificate that the other coverage is in force.

Answer: A. It is a representation, and because it is neither material nor fraudulent it will not prevent a recovery on the policy.

N.C. Gen. Stat. Sec. 58-3-10 does two things in a single sentence. Every statement or description in an application for insurance, or in the policy itself, counts as a representation and not as a warranty; and a representation defeats a recovery on the policy only where it is material or fraudulent. The first half rules out treating the applicant's answer as a warranty. The second half limits the effect of an inaccurate representation to one that is material or fraudulent, which rules out rescission for an inaccuracy that is neither, so an innocent and immaterial answer leaves the recovery intact. The classification is stated without condition, so nothing turns on whether the application was attached to the policy, and because the section reaches statements in the policy as well as in the application it is not confined to the application form.

Answer: D. Display a sign in the office lobby giving the amount of the fee, take the applicant's written consent on a separate form entitled Policy or Service Fee Consent each time a fee is charged, and issue a dated receipt for the payment.

11 NCAC 04 .0120 begins by tying itself to the statute: it reaches an insurer, agent, broker or limited representative that intends to charge an applicant a policy or service fee under G.S. 58-33-85(b), and it forbids that charge unless three things are done. Item (1) calls for a sign, displayed in large bold print and visible to the public from any part of the office lobby, telling the applicant that a policy or service fee of a stated amount will be charged. Item (2) calls for the applicant's written consent on a separate form each time such a fee is charged, the form to be entitled Policy or Service Fee Consent and to carry the date and amount of each fee charged. Item (3) calls for a dated receipt for payment of a policy or service fee, issued either separately from the receipt for the policy premium or stated separately on that receipt. The consent is therefore a fresh one on every occasion, and the rule describes no filing with the Commissioner and no refund right.

Answer: D. The premium that the approved North Carolina rates would produce for the coverage applied for, and the insurer's own premium for that coverage, each as a dollar figure.

N.C. Gen. Stat. Sec. 58-36-30(b1) applies only to insurance against loss to residential property with no more than four housing units, and it lets an insurer charge a rate above the Bureau's on a specific risk where the higher rate is charged under rules the Commissioner has adopted. It then prescribes the notice word for word, in capitals, and the prescribed wording carries two dollar figures: what the premium would be under the approved North Carolina rates for the residential property coverage applied for, and the insurer's own premium for that coverage. Both blanks are money, so the residential notice puts the two premiums side by side. The same subsection fixes where and how the notice appears, on page one of the declarations, or on a separate page before it, bolded, capitalized and in at least 14 point type or a larger font than the rest of the document, and it requires the notice on any renewal or endorsement where the rates charged exceed the approved manual rate. The automobile physical damage notice in subsection (b) is the one that names no figures, telling the insured only that the premium charged exceeds the premium based on the approved North Carolina rates. Territory level figures do appear in this section, at subsection (b2), but as data the Commissioner collects from all insurers and publishes in aggregate for each geographical rate making territory, and the notice that subsection (b1) prescribes carries neither a percentage nor a territory.

Answer: D. Within 15 days after the date the first insurance application is submitted.

N.C. Gen. Stat. Sec. 58-33-40(b) lets any insurer authorized to transact business in this State appoint as its agent an individual holding a valid producer license, and it sets the filing deadline in the same breath: the appointing insurer files a notice of appointment, in a format the Commissioner approves, within 15 days of the date the first insurance application is submitted. The period therefore begins with the first application rather than closing before it. April 1 belongs to a different duty in the same section, because subsection (f) has every insurer remit the renewal appointment fee before April 1 each year. Subsection (a) is why the appointment matters at all: except as subsection (b) provides, an individual holding a producer license may not solicit, negotiate or otherwise act as an agent for an insurer that has not appointed the individual. That exception is what the 15 day window is, because it lets the first application go in before the notice of appointment is filed.

Answer: C. 24 ICECs in all, because the rule states one figure for a person holding any of the licenses it names rather than a figure for each license.

11 NCAC 06A .0802(a) sets the requirement in one sentence: a person holding an adjuster license or a license in life, accident and health or sickness, property, casualty or personal lines must obtain 24 ICECs in each biennial compliance period. The subject of that sentence is the person, and the figure is stated once for a person holding any of the licenses the sentence lists. The Section defines the person it is addressing the same way: under 11 NCAC 06A .0801(11) a licensee is a licensed adjuster, a licensed broker, or a licensed agent whose lines of authority include property, casualty, personal lines, life, or accident and health or sickness. That definition is written at the level of the person and speaks of a licensee's lines of authority in the plural, which is not a per-license count. Nowhere in 11 NCAC 06A .0802 is a figure stated against a license rather than against a person, and the rule provides for no multiplication and no reduction by the number of lines held. An ICEC is defined at 11 NCAC 06A .0801(9) as a value the Commissioner assigns to a course, and the same subdivision equates it with the credit hour as G.S. 58-33-130 uses that term.

Answer: C. For at least five years after the final disposition of the complaint or, for a domestic company, until the Commissioner adopts a final examination report reviewing those records for that calendar year, whichever is later.

11 NCAC 19 .0103 makes each insurer or its agents keep a register or log itemizing every written complaint, with the Department's file number, the insured's name, the nature of the complaint, the insurer's department that the complaint is about, the insured's policy or claim number, and how the complaint was finally disposed of. On retention the rule sets two possible end points and takes the later one: five years run from the final disposition of the complaint, and for a domestic company the records must also be kept until the Commissioner has adopted a final general examination report that reviews those records for that calendar year. Final disposition therefore starts the five year clock rather than ending the duty to keep the record, and for a domestic company an examination report can push the date further out. The period runs from the disposition of the complaint, not from the day it was received and not from the end of the policy.

Answer: C. That the conduct was committed or performed with such frequency as to indicate a general business practice.

N.C. Gen. Stat. Sec. 58-63-15(11) defines unfair claim settlement practices as the listed kinds of conduct committed or performed often enough to indicate a general business practice, and one of the listed items is a failure to acknowledge and act reasonably promptly on communications about claims under insurance policies. The frequency element sits inside the definition rather than being a remedy or an aggravating factor, so one instance of listed conduct does not satisfy the subdivision on its own. The same subdivision adds a proviso that a violation of it creates, by itself, no cause of action for anyone other than the Commissioner, which is why the subdivision does not turn on what the insured lost. It calls for no malice and no indifference, and it calls for no earlier order: under Sec. 58-63-32 a cease and desist order follows a finding made under Sec. 58-63-15 rather than having to come before one.