17 Free North Carolina Casualty Agent Exam Practice Questions (2026)

Question 1 (Chapter 4)

Jordan is involved in an accident with a driver who has no insurance. Which coverage on Jordan's personal auto policy will respond, and what is the primary limitation of that coverage?

• A) Part C – Uninsured Motorist Coverage; limited to the uninsured motorist limit selected by the insured.
• B) Part A – Liability Coverage; limited to the policy limits for bodily injury.
• C) Part B – Medical Payments Coverage; limited to the per‑person medical expense limit.
• D) Part D – Physical Damage Coverage; limited to the deductible amount.

Question 2 (Chapter 4)

A policyholder elects a $500 deductible on the collision portion of Physical Damage Coverage. If the insured's car sustains $3,200 in collision damage, how much will the insurer pay?

• A) $2,700
• B) $3,200
• C) $500
• D) $2,200

Question 3 (Chapter 4)

After a crash, the insured fails to give the insurer a written notice of the loss within the time required by the policy. What is the most likely consequence under the North Carolina Rate Bureau form?

• A) The insurer must still pay the claim but may reduce the settlement amount.
• B) The insurer can cancel the policy retroactively to the date of the accident.
• C) The insurer may deny the claim for breach of the insured's duties.
• D) The insurer is required to provide a grace period of 30 days before denial.

Question 4 (Chapter 4)

A policyholder requests cancellation of her personal auto policy. The insurer agrees to cancel effective 15 days after the request and returns the unearned premium on a short‑rate basis. Which statement correctly describes the short‑rate calculation?

• A) The insurer retains the full unearned premium as a penalty.
• B) The insurer returns the unearned premium on a pro‑rata basis because short‑rate applies only to non‑payment of premium.
• C) The insurer returns a portion of the unearned premium after applying a short‑rate penalty, which is greater than the pro‑rata refund.
• D) The insurer must refund the entire unearned premium because the policyholder initiated the cancellation.

Question 5 (Chapter 4)

During a roadside breakdown, the insured's vehicle is towed 30 miles to a repair shop. Which optional coverage would reimburse the towing expense, and what is the typical limit?

• A) Extended Transportation Expenses (NC 03 02); reimburses mileage-based transportation costs, not towing.
• B) Towing and Labor (NC 03 03); reimburses towing based on distance towed rather than a per-incident amount.
• C) Extended Non‑Owned Coverage (NC 03 06); extends liability to non‑owned vehicles, not towing expenses.
• D) Towing and Labor (NC 03 03); reimburses reasonable towing and labor costs up to the endorsement's stated per-incident limit.

Question 6 (Chapter 4)

A policyholder drives a friend's car with permission and is involved in an accident. Which endorsement would extend the insured's liability coverage to this non‑owned automobile?

• A) Extended Transportation Expenses (NC 03 02)
• B) Towing and Labor (NC 03 03)
• C) Extended Non‑Owned Coverage (NC 03 06)
• D) Coverage for Damage to Your Auto (NC 03 15)

Question 7 (Chapter 5)

A construction contractor is added as an additional insured on a subcontractor’s CGL policy because the contract requires it. Which statement accurately reflects the contractor’s coverage?

• A) The contractor is covered for all liabilities arising from its own negligence, even if the subcontractor is not at fault.
• B) The contractor is covered for liability arising out of the subcontractor’s work, but only if the subcontractor is named in the policy.
• C) The contractor receives primary coverage for all claims, and the subcontractor’s insurance is excess.
• D) The contractor is covered only for liability arising out of the subcontractor’s operations on the contractor’s premises.

Question 8 (Chapter 5)

A retailer's CGL policy has a $2,000,000 aggregate limit and a $1,000,000 per‑occurrence limit for Coverage A. Two separate occurrences happen during the policy period: a slip‑and‑fall injury costing $600,000 and a product liability claim costing $1,800,000. How much total loss will the insurer pay for Coverage A?

• A) $2,000,000
• B) $1,800,000
• C) $2,100,000
• D) $1,600,000

Question 9 (Chapter 5)

A restaurant’s CGL policy contains a supplementary payments provision that states the insurer will pay defense costs "in addition to the limits of liability." How does this affect the aggregate limit of $1,000,000 for Coverage A?

• A) Defense costs are subtracted from the $1,000,000 aggregate limit.
• B) Defense costs are only paid if the claim is settled, not if it goes to trial.
• C) The provision is void under G.S. 58‑63‑20, so defense costs are not covered.
• D) Defense costs are paid separately and do not reduce the $1,000,000 aggregate limit.

Question 10 (Chapter 5)

A garage keeps a fleet of customer‑owned cars for repair. Under the Garage Liability form, which of the following is covered?

• A) Physical damage to the customer’s car while it is in the garage’s care, custody, or control
• B) Loss of the customer’s car due to theft while parked in the garage’s lot
• C) Damage to the garage’s own service trucks while they are on the road
• D) Bodily injury to a third party caused by the garage’s employee while driving the customer’s car on a public road

Question 11 (Chapter 5)

After an employee suffers a work‑related injury, which of the following is a statutory duty of the North Carolina employer under G.S. Chapter 97?

• A) Immediately provide a lump‑sum settlement to the employee
• B) Offer the employee a position with reduced duties without changing wages
• C) Require the employee to sign a release before any medical treatment is provided
• D) Notify the employer's workers' compensation insurer of the injury within the time required by G.S. Chapter 97

Question 12 (Chapter 5)

An employee who suffers a hand injury at work is unable to perform his previous job but can work part‑time in a different role. Under workers’ compensation definitions, this injury is classified as:

• A) Temporary total disability
• B) Permanent partial disability
• C) Permanent total disability
• D) Temporary partial disability

Question 13 (Chapter 8)

A motor insurer files a rate that is lower than the Rate Bureau’s recommendation for a class of drivers. Which of the following must the insurer do to comply with North Carolina law?

• A) Submit a filing showing actuarial justification for the lower rate.
• B) Obtain a written waiver from the Rate Bureau.
• C) Nothing; the insurer may use any rate it chooses.
• D) File a petition with the state legislature to amend the Rate Bureau’s recommendation.

Question 14 (Chapter 8)

The North Carolina Motor Vehicle Reinsurance Facility is asked to provide reinsurance after a severe winter storm causes widespread auto losses across the state. Under Article 37, which condition must be met before the Facility can provide reinsurance coverage?

• A) The event must result in losses that threaten the solvency of insurers participating in the Facility.
• B) The Commissioner's declaration of a state of emergency, by itself, automatically triggers Facility activation.
• C) A single claim exceeding a dollar amount set by the insurer automatically qualifies for Facility coverage.
• D) The Facility's Board of Directors must vote unanimously regardless of whether insurer solvency is at risk.

Question 15 (Chapter 8)

How is the North Carolina Motor Vehicle Reinsurance Facility primarily funded?

• A) Assessments on participating insurers, with possible supplemental funding from the state’s general fund.
• B) Premiums paid by policyholders directly to the Facility.
• C) Federal disaster relief grants.
• D) A special sales tax levied on motor vehicle purchases.

Question 16 (Chapter 8)

A policyholder files a single large liability claim after a multi-vehicle accident. Can the North Carolina Motor Vehicle Reinsurance Facility provide coverage for this single claim?

• A) No, the Facility is intended to address catastrophic aggregate losses, not individual claims.
• B) Yes, because any sufficiently large individual claim is automatically covered by the Facility.
• C) Yes, but only if the insurer has exhausted its own separate reinsurance arrangements first.
• D) No, because the Facility only covers property damage, not bodily injury.

Question 17 (Chapter 8)

Under G.S. 20‑279.21, which of the following best defines a "motor vehicle liability policy" in North Carolina?

• A) A policy that provides coverage for bodily injury and property damage arising out of the ownership, maintenance, or use of a motor vehicle.
• B) Any policy that provides coverage for collision, comprehensive, and uninsured motorist bodily injury.
• C) A policy that includes personal injury protection (PIP) and medical payments coverage.
• D) Any insurance contract that includes coverage for rental reimbursement.