17 Free North Carolina P&C Practice Questions: Personal Casualty Coverages (2026)

Question 1 (Chapter 4)

After his car is in the shop for repairs, Alex rents a vehicle for two weeks. Which of the following best describes the rental car's status under Alex's personal auto policy?

• A) It is not covered because the policy only insures vehicles listed on the declarations page.
• B) It is covered only if Alex purchases a separate rental reimbursement endorsement.
• C) It is a covered automobile because it is a temporary substitute automobile.
• D) It is considered a non‑owned automobile and is excluded from coverage.

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)

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 4 (Chapter 4)

Which of the following is a required condition for a personal umbrella liability policy to provide coverage for a claim?

• A) The insured must have a deductible of at least $5,000 on the underlying policy.
• B) The claim must involve bodily injury only; property damage is excluded.
• C) The underlying policy must be a non‑standard (high‑risk) policy.
• D) The underlying auto policy must have been in force at the time of the loss.

Question 5 (Chapter 4)

Lena purchases a personal umbrella liability policy with a $1,000,000 limit and a $500 self-insured retention (SIR). Her underlying homeowners policy has a $300,000 liability limit. Lena is sued for $900,000 due to a dog bite incident on her property. The underlying homeowners policy pays its full limit of $300,000. How much will the umbrella policy pay toward the $900,000 judgment, assuming no other underlying policies are involved?

• A) $0, because the umbrella policy only responds after the underlying policy is exhausted, and here the underlying policy was not exhausted.
• B) $500, because the umbrella policy pays only the self-insured retention amount.
• C) $900,000, because the umbrella policy pays the full judgment regardless of the underlying limit.
• D) $600,000, because the umbrella policy pays the amount of the judgment that exceeds the underlying homeowners limit.

Question 6 (Chapter 4)

Ethan’s personal auto policy includes Part C (Uninsured/Underinsured Motorist Coverage) with limits of 25/50. He is rear-ended by a driver who has no liability insurance and whose at-fault negligence causes $30,000 in medical expenses and $15,000 in property damage to Ethan’s vehicle. The at-fault driver’s assets are insufficient to cover the claim. How much will Ethan’s policy pay for his medical expenses under this coverage?

• A) $0, because uninsured motorist coverage only applies to property damage, not medical expenses.
• B) $30,000, because the policy pays the full amount of medical expenses up to the bodily injury limit.
• C) $50,000, because the policy’s bodily injury limit is split between property damage and medical expenses.
• D) $25,000, because the policy’s bodily injury limit applies to medical expenses caused by an uninsured motorist.

Question 7 (Chapter 4)

Under the North Carolina Rate Bureau form, which of the following scenarios would NOT qualify as a temporary substitute automobile for purposes of coverage under Part A (Liability Coverage)?

• A) A rental car used while the insured’s primary vehicle is in the shop for repairs.
• B) A borrowed car used for a one-time errand while the insured’s primary vehicle is being serviced.
• C) A borrowed car used for a two-week vacation while the insured’s primary vehicle is being repaired.
• D) A company car provided to the insured for exclusive personal use while their primary vehicle is undergoing long-term repairs.

Question 8 (Chapter 4)

A policyholder’s personal auto policy includes Medical Payments Coverage (Part B) with a limit of $5,000 per person. While driving her insured vehicle, she is injured in an accident and incurs $3,000 in medical expenses. The at-fault driver is uninsured, and the policyholder’s Uninsured Motorist (UM) coverage has a bodily injury limit of $25,000. How much will the Medical Payments Coverage pay toward her $3,000 claim?

• A) $0, because Medical Payments Coverage does not apply if Uninsured Motorist coverage is also available.
• B) $2,000, because Medical Payments Coverage is excess over Uninsured Motorist coverage.
• C) $5,000, because Medical Payments Coverage pays the full limit even if the claim is less.
• D) $3,000, because Medical Payments Coverage pays medical expenses regardless of fault or other coverage.

Question 9 (Chapter 4)

Maria signs a personal auto policy on the North Carolina Rate Bureau form. Her husband, John, is listed on the declarations page as an additional insured. Which statement best describes the difference between "named insured" and "an insured" under the policy?

• A) "Named insured" includes only Maria, while "an insured" includes Maria, John, and any family members who drive the car with permission.
• B) "Named insured" and "an insured" are interchangeable terms that both refer only to the policyholder who pays the premium.
• C) "Named insured" refers to the persons whose names appear on the declarations page; "an insured" is a broader term that includes the named insured, additional insureds, and any other persons covered under the policy definitions.
• D) "Named insured" includes only the primary driver, while "an insured" includes only the vehicle owner.

Question 10 (Chapter 4)

A policyholder's personal auto policy is cancelled by the insurer under G.S. 20‑310 for non‑payment of premium, after the insurer gives the notice the statute requires. What is the effect on the policy's liability coverage after the cancellation date?

• A) Liability coverage remains in effect until the end of the original policy term
• B) Liability coverage continues indefinitely until the policyholder is notified a second time
• C) Liability coverage is automatically reinstated the moment the insured mails any overdue premium
• D) Liability coverage terminates on the cancellation date, and the insurer is not liable for accidents occurring thereafter

Question 11 (Chapter 4)

Carlos purchases a personal umbrella liability policy that requires underlying liability limits of at least $300,000 on each underlying policy. His auto policy has $250,000 limits, but his homeowners policy has $350,000 limits. If a claim arises from an auto accident exceeding the auto policy limits, what will the umbrella policy do?

• A) Pay the loss above $300,000 and leave Carlos responsible for the $50,000 gap between his actual auto limit and the required underlying limit
• B) Provide coverage because the homeowners policy meets the underlying limit requirement
• C) Deny the auto claim entirely because the auto policy does not meet the $300,000 underlying limit
• D) Provide partial coverage up to the amount of the auto policy's limit

Question 12 (Chapter 4)

Samantha is sued for bodily injury after a collision. Which part of her personal auto policy provides the primary defense and indemnity for this liability claim?

• A) Part B – Medical Payments Coverage
• B) Part C – Uninsured/Underinsured Motorist Coverage
• C) Part A – Liability Coverage
• D) Part D – Physical Damage Coverage

Question 13 (Chapter 4)

Under the North Carolina Rate Bureau form, a policyholder’s personal auto policy includes Uninsured Motorist (UM) coverage with limits of 25/50. The insured is involved in an accident with a driver who has no liability insurance. The at-fault driver’s negligence causes $40,000 in medical expenses and $15,000 in property damage to the insured’s vehicle. The at-fault driver’s assets are insufficient to cover the claim. How much will the insured’s UM coverage pay for the medical expenses?

• A) $40,000, because UM coverage pays all medical expenses regardless of the policy limit.
• B) $25,000, but only after the insured’s Medical Payments Coverage pays its limit.
• C) $25,000, because UM coverage pays up to the bodily injury limit for medical expenses.
• D) $0, because UM coverage does not apply to medical expenses.

Question 14 (Chapter 4)

A policyholder’s personal auto policy includes Part C (Uninsured/Underinsured Motorist Coverage) with limits of 25/50. The insured is involved in an accident with a driver who has $10,000 in liability coverage, which is insufficient to cover the $30,000 in damages caused. How much will the insured’s UM coverage pay for the property damage portion of the claim?

• A) $25,000, because UM coverage pays up to its property damage limit.
• B) $20,000, because UM coverage pays the difference between the at-fault driver’s limit and the actual damages.
• C) $10,000, because UM coverage only pays after the at-fault driver’s policy is exhausted.
• D) $0, because UM coverage does not apply to property damage in underinsured motorist scenarios.

Question 15 (Chapter 4)

Maria’s personal auto policy includes Part C (Uninsured/Underinsured Motorist Coverage) with limits of 25/50. She is rear-ended by an at-fault driver with no liability insurance. The collision causes $35,000 in medical expenses and $12,000 in property damage to Maria’s vehicle. The at-fault driver has no assets. Under North Carolina law, how much will Maria’s Uninsured Motorist (UM) coverage pay for her property damage?

• A) $0, because UM coverage does not apply to property damage.
• B) $12,000, as UM coverage pays up to the policy’s property damage limit.
• C) $25,000, as UM coverage pays up to the bodily injury limit for property damage.
• D) $12,000 for property damage and $25,000 for medical expenses, as UM coverage splits payments between bodily injury and property damage.

Question 16 (Chapter 4)

During a family picnic, a child is injured when a baseball strikes a passenger in the back seat of Laura's car. Which coverage pays for the passenger's medical expenses, assuming the injury is not caused by a third party?

• A) Part B – Medical Payments Coverage
• B) Part A – Liability Coverage
• C) Part C – Uninsured Motorist Coverage
• D) Part D – Physical Damage Coverage

Question 17 (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.