17 Free North Carolina P&C Practice Questions: Personal Property Coverages (2026)
How to Use This Personal Property Coverages Set
Personal property coverages are the heart of the Property Agent exam. Section II, Personal Insurance Coverages, is 25 of the 55 scored items on the Property exam and 18 on the Casualty exam, and the homeowners, dwelling and flood forms in this chapter are a large part of it.
This set covers the Standard Fire Policy, the DP-1, DP-2 and DP-3 dwelling forms, the HO-2011 homeowners form and its endorsements, additional living expense, actual cash value, yacht hull coverage, and flood insurance under the NFIP and in excess of it. It follows the way the exam works: a short scenario, a coverage rule and a calculation.
These 17 questions come from LanePrep's North Carolina P&C quiz bank. Answer before you open the explanation.
Practice Questions 1-6: Limits, Dwelling Forms and Flood Basics
Start with the structure of the forms. What a dwelling policy does not include, what hull coverage pays for and what flood insurance can and cannot be stacked on are all tested as plain rules.
Question 1 (Chapter 2)
A policyholder has a Standard Fire Policy with a $15,000 limit and a $500 deductible. The policy provides replacement‑cost settlement. A covered fire destroys personal property with a replacement cost of $20,000. How much will the insurer pay?
- A) $20,000
- B) $15,000
- C) $19,500
- D) $14,500
Show answer & explanation
Answer: D
The insurer may not exceed the policy limit of $15,000. After applying the $500 deductible, the payable amount is $15,000 – $500 = $14,500. A is wrong because it exceeds the limit. B is wrong because it ignores the deductible. C is wrong because it subtracts the deductible from the replacement cost instead of from the limit.
Question 2 (Chapter 2)
A landlord insures a rental property with a DP‑1 (Basic Form) dwelling policy. A tenant reports that a burglary resulted in the loss of a laptop and jewelry. Which statement is correct regarding coverage?
- A) The DP‑1 policy will cover the loss of the laptop and jewelry because they are personal property.
- B) The DP‑1 policy automatically includes theft coverage for personal property.
- C) The DP‑1 policy will cover the loss only if the landlord adds a theft endorsement.
- D) The DP‑1 policy excludes theft of personal property unless a separate personal liability endorsement is purchased.
Show answer & explanation
Answer: C
DP‑1 provides dwelling coverage only; it does not include personal property or theft coverage unless the policy is endorsed. A and B are incorrect because DP‑1 lacks theft coverage. D is misleading; a personal liability endorsement does not provide theft coverage.
Question 3 (Chapter 2)
A resident operates a licensed home‑day‑care out of her dwelling. Her HO‑2011 policy includes the mandatory amendatory endorsement HO‑32‑96. What effect does this endorsement have?
- A) It expands liability coverage to include injuries to day‑care children.
- B) It provides additional coverage for equipment used in the day‑care.
- C) It excludes liability for day‑care activities and limits property coverage for business use.
- D) It removes the deductible for any day‑care related claim.
Show answer & explanation
Answer: C
HO‑32‑96 specifically excludes liability arising from home‑day‑care business activities and limits property coverage for business‑related property. A is the opposite of the endorsement's purpose. B and D are unrelated to the endorsement.
Question 4 (Chapter 2)
A yacht owner purchases hull coverage for his vessel. The yacht collides with a dock, causing damage to the hull. Which statement best describes the coverage provided by a standard hull policy?
- A) Hull coverage only pays for damage caused by fire, not collisions.
- B) Hull coverage provides liability protection for damage the yacht causes to third parties.
- C) Hull coverage pays for physical damage to the yacht from a covered peril, including collision, unless specifically excluded.
- D) Hull coverage is limited to loss of the yacht due to sinking, not to damage from collisions.
Show answer & explanation
Answer: C
Standard hull coverage insures the yacht against physical loss or damage from covered perils, which typically include collision, fire, theft, and others, unless an exclusion applies. A is false because collision is a covered peril. B describes liability coverage, which is separate. D is too narrow; hull coverage includes collision damage.
Question 5 (Chapter 2)
A property owner holds a DP‑3 (Special Form) policy and the home is flooded after a nearby river overflows. What is the correct statement regarding this loss?
- A) The flood loss is covered because DP‑3 includes all perils except those specifically excluded
- B) The loss is covered only if the policy contains a flood endorsement
- C) The loss is partially covered up to the deductible
- D) The loss is excluded because flood is not a covered peril under any DP form
Show answer & explanation
Answer: D
All DP forms (DP‑1, DP‑2, DP‑3) exclude flood unless a separate flood endorsement is added, which is rare. Therefore the loss is excluded (D). A is wrong because flood is an explicit exclusion. B would be correct only with an endorsement, which is not indicated. C is incorrect because there is no partial coverage for flood.
Question 6 (Chapter 2)
After an NFIP claim, a homeowner seeks additional flood protection. Which statement accurately describes excess flood insurance?
- A) It must be written by the same insurer that issued the NFIP policy
- B) It can be purchased from a private insurer to provide limits above the NFIP maximums
- C) It is limited to an additional $10,000 above the NFIP limit
- D) It is only available to properties located in high‑risk flood zones
Show answer & explanation
Answer: B
Excess flood insurance is written by private insurers on their own forms and sits above the NFIP policy's maximum limits ($250,000 building and $100,000 contents for a residence). It need not come from the same insurer (A), has no fixed $10,000 cap (C), and is not restricted to high-risk zones (D).
Get the 25-question sample set by email
Want a full-exam practice set to study offline? Drop your email — we'll send 25 questions across every content area, each with the answer and explanation.
No spam. Just the questions and one optional follow-up.
Practice Questions 7-12: Endorsements, Sublimits and Living Expense
These questions turn on a named endorsement or a stated limit. Find the sublimit in the scenario, apply it and ignore the number that looks bigger.
Question 7 (Chapter 2)
A commercial tenant signs a lease that includes a waiver of subrogation in favor of the landlord. The landlord's property insurance includes a standard waiver of subrogation endorsement. What is the effect of this endorsement?
- A) The insurer may still pursue the tenant for recovery after paying the claim
- B) The insurer must increase the deductible for any claim involving the tenant
- C) The insurer must obtain a court order before exercising subrogation
- D) The insurer is prohibited from subrogating against the tenant for the loss
Show answer & explanation
Answer: D
A waiver of subrogation endorsement prevents the insurer from seeking recovery against the named party (the tenant), so D is correct. A is the opposite of the endorsement's effect. B and C describe requirements that do not exist under a waiver of subrogation.
Question 8 (Chapter 2)
A North Carolina property owner purchases a DP-3 (Special Form) Dwelling Policy with a $400,000 dwelling limit and a $100,000 personal property limit. The policy's declarations show an Additional Living Expense (ALE) coverage limit of $120,000 for this policy (equal to 30% of the dwelling limit, as stated in the declarations). During a covered loss, the homeowner incurs $60,000 in additional living expenses while the home is repaired. How much will the insurer pay for ALE under this policy?
- A) $120,000, the full ALE limit, regardless of the actual expenses incurred.
- B) $90,000, the actual expenses plus an additional allowance for inflation.
- C) $60,000, the actual additional living expenses incurred, since that amount is below the $120,000 ALE limit.
- D) $40,000, the actual expenses reduced by one-third for partial occupancy.
Show answer & explanation
Answer: C
The insurer pays the actual additional living expenses incurred, up to the policy's stated ALE limit. Since the actual expenses ($60,000) are below the $120,000 limit shown in the declarations, the insurer pays the full $60,000 actually incurred. Options A, B, and D either ignore the actual amount incurred or apply adjustments that have no basis in the stated facts.
Question 9 (Chapter 2)
A North Carolina homeowner with an HO-2011 policy experiences a theft of jewelry worth $20,000. The policy includes $1,500 special limits for jewelry, but the homeowner has added the HO-04-61 (Scheduled Personal Property) endorsement to cover the jewelry for $20,000. The theft occurs 45 days after the endorsement is added. How much will the insurer pay for this loss?
- A) $1,500, as the special limit applies instead of the scheduled amount.
- B) $18,500, as the insurer pays the scheduled amount minus the $1,500 special limit.
- C) $20,000, as the HO-04-61 endorsement covers the full scheduled value, and there is no waiting period for scheduled property.
- D) $0, as the endorsement was not in place for a 30-day waiting period required for scheduled property.
Show answer & explanation
Answer: C
The HO-04-61 endorsement schedules specific items, such as jewelry, for coverage at the scheduled amount, and coverage is effective immediately upon adding the endorsement, with no waiting period. The insurer will pay the full $20,000 scheduled amount. Option A ignores the scheduling. Option B invents a deduction that has no basis in the endorsement. Option D invents a 30-day waiting period that does not apply to scheduled property.
Question 10 (Chapter 2)
A North Carolina property owner purchases a DP-2 (Broad Form) Dwelling Policy with $350,000 dwelling coverage and $50,000 personal property coverage. The policy's declarations show a $1,000 limit for debris removal. During a covered windstorm, the homeowner incurs $1,500 in debris removal costs. How much will the insurer pay for debris removal?
- A) $500, half of the debris removal costs.
- B) $1,500, the full amount of debris removal costs incurred.
- C) $0, because debris removal is not covered under the DP-2 policy.
- D) $1,000, the full debris removal limit shown in the declarations.
Show answer & explanation
Answer: D
The policy's debris removal provision is capped at the $1,000 limit shown in the declarations, so the insurer pays up to $1,000 even though the actual cost was $1,500. Option A invents a 50% rule. Option B ignores the stated limit. Option C incorrectly treats debris removal as excluded.
Question 11 (Chapter 2)
A North Carolina homeowner with an HO-2011 policy purchases the HO-04-42 (Permitted Incidental Occupancies) endorsement to cover a home-based yoga studio generating $15,000/year in revenue. During a fire, the studio's $20,000 worth of mats, props, and equipment are destroyed. The policy's personal property limit is $100,000, and the endorsement limits business property coverage to $5,000. How much will the insurer pay for this loss?
- A) $5,000 (endorsement limit)
- B) $0 (business property is excluded without additional coverage)
- C) $10,000 (pro-rated coverage)
- D) $20,000 (full replacement cost)
Show answer & explanation
Answer: A
The HO-04-42 endorsement provides $5,000 of sublimit coverage for business property used in permitted incidental occupancies. Since the loss involves $20,000 in business property, the insurer will pay only up to the $5,000 sublimit. Option B is incorrect because the endorsement provides limited coverage. Option C ($10,000) is incorrect as it exceeds the endorsement's sublimit. Option D ($20,000) is incorrect because the policy does not cover the full amount without additional endorsements.
Question 12 (Chapter 2)
A North Carolina homeowner with an HO-2011 policy purchases the HO-32-96 (Home Day Care Business Liability Exclusions and Limited Property Coverage) endorsement. The homeowner operates a licensed day care with 5 children in the home. A child is injured while playing, and the homeowner is sued for $200,000. The policy's personal liability limit is $300,000. How much will the insurer pay for this claim?
- A) $300,000 (full policy limit)
- B) $0 (day care liability is excluded under HO-32-96)
- C) $200,000 (claim amount)
- D) $300,000 minus a $1,000 deductible
Show answer & explanation
Answer: B
The HO-32-96 endorsement excludes liability arising from home day care operations. Since the claim involves a day care-related injury, the insurer will deny coverage. Option A ($300,000) is incorrect because the exclusion applies. Option C ($200,000) is incorrect as it ignores the exclusion. Option D is incorrect because there is no deductible for excluded claims.
Practice Questions 13-17: Valuation, Exclusions and Flood Calculations
Settlement basis, neglect exclusions and the order in which a deductible is applied decide these answers. Read each scenario for the valuation clause before calculating.
Question 13 (Chapter 2)
A North Carolina homeowner with an HO-2011 policy purchases the HO-32-32 (Special Provisions) amendatory endorsement. The policy includes a $500,000 dwelling limit and $250,000 personal property limit. During a hailstorm, the roof is damaged, and the insurer estimates repairs at $25,000. The homeowner's policy includes a $1,000 deductible, and the insurer determines the roof was 20% depreciated at the time of the loss. The insurer also determines, under the policy's general conditions excluding loss caused by the insured's failure to maintain the property, that the homeowner neglected the roof for an extended period and that this neglect caused the damage. How much will the insurer pay for the roof repair?
- A) $0, because the policy excludes losses caused by the insured's neglect or failure to maintain the property.
- B) $22,000, the actual cash value of the loss after applying the deductible, because the exclusion does not apply to maintenance-related claims.
- C) $24,000, the replacement cost minus depreciation and the deductible, because the exclusion does not void the claim entirely.
- D) $1,000, because the insurer can reduce the claim to the deductible amount for maintenance-related issues.
Show answer & explanation
Answer: A
Homeowners policies generally exclude losses caused by the insured's own neglect or failure to maintain the property. Because the insurer determined the damage resulted from the homeowner's prolonged neglect of the roof, the insurer is not obligated to pay this claim. Options B and C incorrectly assume partial coverage applies despite the exclusion, and Option D incorrectly applies a deductible reduction rather than a full exclusion.
Question 14 (Chapter 2)
After a covered loss, the insured and the insurer cannot agree on the amount of loss. The policy contains an appraisal clause. What is the next step under the appraisal provision?
- A) The insurer must pay the amount it believes is correct and the insured must accept it.
- B) The dispute must be resolved in court before any payment is made.
- C) The insurer may unilaterally decide to settle the claim for the policy limit.
- D) Either party may demand an appraisal, and an umpire will be appointed if the appraisers disagree.
Show answer & explanation
Answer: D
An appraisal clause allows either the insurer or the insured to demand appraisal. Each selects an appraiser; if the two appraisers cannot agree, they select an umpire whose decision is binding. A is wrong because the clause provides a mechanism to resolve disagreement. B is unnecessary; appraisal is an alternative to litigation. C is incorrect; the insurer cannot ignore the appraisal process.
Question 15 (Chapter 2)
A Standard Fire Policy pays a claim for fire damage to a homeowner's dwelling. The insurer then sues the neighbor who caused the fire. What duty does the insured have after the insurer asserts subrogation?
- A) The insured must assign all rights to the insurer and cannot be involved further.
- B) The insured must pay any judgment against the neighbor to protect the insurer's interest.
- C) The insured may withhold any settlement from the insurer.
- D) The insured must cooperate with the insurer's investigation and may be required to testify.
Show answer & explanation
Answer: D
When an insurer asserts subrogation, the insured is obligated to cooperate, including providing testimony and documents. A is too broad; the insured retains some rights unless the policy states otherwise. B is wrong; the insurer, not the insured, pursues the third‑party claim. C is wrong; the insured cannot withhold the insurer's payment.
Question 16 (Chapter 2)
A North Carolina property owner purchases a DP-3 (Special Form) Dwelling Policy with $600,000 dwelling coverage and $150,000 personal property coverage. The policy includes Coverage E (Personal Liability) with a $500,000 limit and the HO-32-82 (Personal Injury) endorsement. A neighbor sues the homeowner for $750,000, alleging the homeowner's dog bit and injured the neighbor during a visit. The policy excludes ‘intentional acts’ under the liability section. The homeowner's dog has a history of aggression that was not previously reported to the insurer. Which of the following is correct?
- A) The insurer will pay the full $750,000 claim because the dog's prior aggression was not disclosed to the insurer.
- B) The insurer will pay $0 because the ‘intentional acts’ exclusion applies, and the insured's failure to disclose the dog's history does not override the policy exclusion.
- C) The insurer will pay $500,000 (the liability limit) because the ‘intentional acts’ exclusion does not apply to a dog's unforeseen aggression.
- D) The insurer will pay $250,000 (the excess over the dwelling limit) because the ‘personal injury’ endorsement broadens coverage for animal-related claims.
Show answer & explanation
Answer: B
Whether an exclusion applies depends on the policy's own exclusion language, not on whether the insured disclosed the dog's history, so Option A is incorrect. Option C is wrong because the facts describe the ‘intentional acts’ exclusion as applying to this claim. Option D is incorrect because the HO-32-82 endorsement extends coverage for offenses such as libel or slander, not animal-liability claims, and does not expand coverage for an excluded intentional act. Given the stated facts, the insurer denies the claim under the exclusion.
Question 17 (Chapter 2)
A homeowner purchases a Standard Fire Policy for a single‑family dwelling. After a severe winter, a pipe bursts and water floods the basement, damaging flooring and personal items. Which of the following statements is correct regarding coverage for this loss?
- A) The loss is covered because water damage is a named peril in the Standard Fire Policy.
- B) The loss is covered under the policy's “interest of the insured” clause.
- C) The loss is covered because the Standard Fire Policy automatically includes all water‑related perils.
- D) The loss is excluded unless the policy contains a specific endorsement covering water damage from burst pipes.
Show answer & explanation
Answer: D
The Standard Fire Policy only covers the perils expressly listed (fire, lightning, explosion, aircraft, riot, and any endorsed perils). Water damage from a burst pipe is not a listed peril, so it is excluded unless an endorsement is added. A is wrong because water damage is not a named peril. C is wrong; the interest of the insured clause allows the insurer to deduct the deductible, not to add coverage. B is wrong because the policy does not automatically cover all water‑related perils.
The Mistakes That Cost Marks
Paying the replacement cost instead of the limit. The most the insurer pays is capped by the limit, and the deductible comes off the amount payable, as the Standard Fire Policy question shows.
Assuming a basic dwelling form covers theft. The DP-1 gives dwelling coverage only. Theft of a tenant's property is not part of it unless the policy is endorsed.
Ignoring the settlement basis. Without a replacement-cost endorsement, the dwelling loss settles at actual cash value, which means depreciation comes off before the deductible.
Letting a sublimit grow. A business-property sublimit pays up to its stated amount and no more, however large the destroyed property.
Forgetting that flood is a separate market. Flood is excluded from the dwelling forms, the NFIP is the base layer and excess flood sits above it and may come from any private insurer.
Your Next Step
Pick the chapter where you missed the most questions and go back to its audio lesson, then retest. For the full list of sets, see the free North Carolina P&C practice question hub. To see how the audio lessons and quizzes work, try the course preview.
Free: 25 North Carolina P&C practice questions
Liked this article? Get 25 exam-style questions emailed to you — with full answer explanations, no credit card. Closest thing to studying offline.
No spam. Just the questions and one optional follow-up.
Study this topic with LanePrep
Listen to these audio chapters on your commute — no screen required.
Related Articles
How to Pass the North Carolina Property & Casualty Exam on Your First Try (2026)
8 min read
$277 for Both Exams: North Carolina P&C License Cost 2026
7 min read
25 Free North Carolina P&C Exam Practice Questions (2026)
25 min read
Is the North Carolina Property & Casualty Exam Hard? Pass Rates and Difficulty (2026)
5 min read
17 Free North Carolina P&C Practice Questions: Commercial Property Coverages (2026)
12 min read
17 Free North Carolina P&C Practice Questions: Personal Casualty Coverages (2026)
12 min read