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

17 min read|Updated 2026-10-17

How to Use This Property Agent Question Set

North Carolina's Property Agent exam is one of two separate Pearson VUE exams required for a Property & Casualty license — the other being the Casualty Agent exam. It has 55 scored questions (plus up to 5 unscored pretest questions mixed in unlabeled), a 75-minute time limit, and a $45 fee per attempt. Passing is a scaled score of 70 on a 0-100 scale, not a raw percentage.

Content outline #123415, effective March 2, 2026, splits the 55 items as: Terms and Concepts (7), Personal Insurance Coverages (25, nearly half the exam), Commercial Insurance Coverages (10), and North Carolina Statutes and Regulations Pertinent to Property Insurance (13).

These 17 questions come from chapters 2, 3 and 7 of LanePrep's North Carolina P&C quiz bank, continuing past the 25-question hub sample in roughly that proportion: six more on personal property coverages (the Standard Fire Policy, dwelling forms and homeowners endorsements), six on commercial property coverages (the Building and Personal Property form, cause-of-loss forms and Businessowner's Policy eligibility), and five on North Carolina property law (the Rate Bureau, the Beach Plan and the statutory scope of a fire insurance policy).

North Carolina has not required a pre-licensing course since October 1, 2025 (Session Law 2025-45 repealed the old 20-hour requirement), and Property is the weaker of North Carolina's two producer exams: the NAIC compiled pass-rate reports put first-time Property Agent pass rates at 48.9-49% for 2024-2025, against 53-54% for Casualty.

Work them before you read the answer. Every question has the explanation folded underneath it. Guessing and then reading is worth more than reading and then agreeing.

Practice Questions 1-6: Personal Property Coverages

A quarter of the Property Agent exam's Personal Insurance Coverages section runs through the Standard Fire Policy and the three dwelling-policy forms. These six move through a Standard Fire Policy's named-peril limits, the DP-1 through DP-3 progression from basic to broad to special coverage, and the homeowners endorsements that change replacement-cost valuation, day-care liability and sump-pump water backup.

Question 1 (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 2 (Chapter 2)

A homeowner with a DP‑2 (Broad Form) dwelling policy experiences water damage when a sprinkler system accidentally discharges, soaking the carpet. Is this loss covered?

A) No, because water damage is excluded from all dwelling forms.
B) No, unless the policy contains a specific sprinkler endorsement.
C) Yes, but only if the loss is caused by a fire.
D) Yes, because DP‑2 includes sprinkler leakage as a covered peril.

Show answer & explanation

Answer: D

DP‑2 (Broad Form) expands coverage to include sprinkler leakage, among other named perils. A is wrong because DP‑2 does cover sprinkler water damage. B is unnecessary; the coverage is built‑in. C is incorrect; the cause need not be fire.

Question 3 (Chapter 2)

A property owner holds a DP‑3 (Special Form) dwelling policy. After a severe flood, the foundation of the home is compromised. Which of the following is true about coverage for this flood damage?

A) The DP‑3 policy will cover the flood damage because it covers all perils unless excluded.
B) The DP‑3 policy covers flood damage only if the loss occurs in a designated flood zone.
C) The DP‑3 policy excludes flood damage unless a separate flood endorsement is attached.
D) The DP‑3 policy provides limited coverage for flood damage up to 10% of the policy limit.

Show answer & explanation

Answer: C

Even the Special Form excludes flood unless an endorsement is added. A is a common misconception; DP‑3 still excludes flood. B and D are not accurate provisions of DP‑3.

Question 4 (Chapter 2)

A homeowner with a standard HO‑2011 policy wants replacement‑cost coverage for personal belongings. Which endorsement must be added to achieve this?

A) HO‑04‑61 (Scheduled Personal Property)
B) HO‑32‑94 (Absolute Windstorm/Hail Exclusion)
C) HO‑24‑71 (Business Pursuits)
D) HO‑04‑90 (Personal Property Replacement Cost)

Show answer & explanation

Answer: D

HO‑04‑90 provides replacement‑cost coverage for personal property. A schedules specific items but does not change the valuation method. B is an exclusion endorsement unrelated to valuation. C adds business‑pursuits coverage, not replacement cost.

Question 5 (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 6 (Chapter 2)

A homeowner experiences water backup from a basement sump pump that overflows during a storm, damaging stored items. The policy includes endorsement HO‑04‑84. How will the loss be handled?

A) The loss is excluded because water backup is never covered.
B) The loss is covered only if the homeowner can prove the sump pump was defective.
C) The loss is covered, but only for structural damage, not for personal property.
D) The loss is covered up to the policy limit, subject to the deductible.

Show answer & explanation

Answer: D

HO‑04‑84 provides coverage for water backup and sump‑pump overflow, subject to the policy's limit and deductible. A is wrong because the endorsement adds coverage. B is unnecessary; the endorsement does not require proof of defect. C is incorrect; the endorsement covers both structural and personal property damage caused by the backup.

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Practice Questions 7-12: Commercial Property Coverages

Commercial Insurance Coverages is 10 of the Property Agent exam's 55 items. These six move through a BPP policy's agreed-value endorsement, a vacancy clause, the Basic/Broad/Special cause-of-loss tiers, an optional earthquake endorsement, a Builders Risk reporting form, and Businessowner's Policy eligibility.

Question 7 (Chapter 3)

A contractor adds an "agreed value" endorsement to the Business Personal Property portion of a BPP policy, setting the agreed value at $500,000. After a covered loss, the actual cost to replace the equipment is $650,000. What is the maximum amount the insurer will pay?

A) $650,000
B) $550,000, the average of agreed and actual
C) $0, because agreed value replaces the loss valuation clause
D) $500,000

Show answer & explanation

Answer: D

An agreed‑value endorsement caps the insurer's liability at the agreed amount, regardless of actual replacement cost. Therefore the maximum payable is $500,000. A is wrong because the insurer is not obligated beyond the agreed amount. B is not how agreed value works. C is incorrect; the endorsement does not eliminate coverage, it simply limits the payout.

Question 8 (Chapter 3)

A retail store's BPP policy contains a vacancy clause that limits coverage if the premises are vacant for more than 30 days. The store closes for renovations for 45 days and a covered water leak occurs on day 40. What is the effect of the vacancy clause?

A) The loss is covered because the store is still owned by the insured
B) Coverage is reduced to 50% of the loss
C) Only the building portion is covered, not the personal property
D) The loss is not covered because the premises were vacant over 30 days

Show answer & explanation

Answer: D

The vacancy clause in this BPP policy excludes coverage when the premises are vacant beyond the specified period (30 days). Since the loss occurred on day 40, the policy excludes the loss, so D is correct. A is wrong because continued ownership does not override a vacancy exclusion. B is not a typical provision; the clause is an exclusion, not a percentage reduction. C is incorrect because the vacancy clause as written here excludes coverage broadly, not just for personal property.

Question 9 (Chapter 3)

An insurer offers three cause-of-loss forms: Basic, Broad, and Special. Which of the following perils is added at the Broad level but is not part of the Basic form?

A) Fire
B) Windstorm or hail
C) Explosion
D) Falling objects

Show answer & explanation

Answer: D

The Basic form's named perils include fire, lightning, explosion, windstorm/hail, smoke, aircraft or vehicles, riot or civil commotion, vandalism, sprinkler leakage, sinkhole collapse, and volcanic action. The Broad form keeps all of those and adds falling objects, the weight of ice/snow/sleet, and certain water-damage and collapse perils. Fire, windstorm/hail, and explosion (A, C, D) are already covered under the Basic form.

Question 10 (Chapter 3)

A coastal hotel in North Carolina wants earthquake coverage. Under North Carolina law, which statement is true regarding earthquake endorsements?

A) Earthquake coverage is mandatory for all commercial properties located within 5 miles of the coast
B) North Carolina statutes prohibit earthquake endorsements on commercial policies
C) Earthquake coverage is automatically included in the Basic cause‑of‑loss form
D) An earthquake endorsement can be added to a BPP policy, but it is not required by state law

Show answer & explanation

Answer: D

North Carolina does not mandate earthquake coverage for commercial properties; coverage is optional and may be added to a BPP policy by endorsement. A invents a mandatory-coverage rule that does not exist. B is false; endorsements are permitted. C is false because the Basic cause-of-loss form does not include earthquake.

Question 11 (Chapter 3)

A contractor purchases a Builders Risk policy using the reporting form. The contract price is $2,000,000, and the contractor reports $500,000 of work completed to date. A covered fire destroys the partially completed structure. How does the reporting form determine the maximum indemnity?

A) The full contract price of $2,000,000
B) The amount reported as completed ($500,000) plus a 10% contingency
C) The lesser of the contract price and the amount reported as completed
D) Only the amount of the loss, up to the reported completed value

Show answer & explanation

Answer: D

The reporting form provides indemnity up to the amount of loss, but not exceeding the amount reported as completed. Thus the insurer will pay the loss amount, limited to $500,000. A is incorrect because the full contract price is not payable until the project is completed. B adds a contingency not provided by the form. C misstates the limitation; the insurer pays loss up to the reported completed value, not the lesser of contract price and reported value.

Question 12 (Chapter 3)

A small consulting firm wants to obtain a Businessowner's Policy (BOP) rather than a Commercial Package Policy. Which of the following is generally true about BOP eligibility?

A) The firm must own the building it occupies
B) The firm must have no employees
C) The firm must carry workers' compensation coverage as a condition of BOP eligibility
D) A BOP is intended for small to medium-sized businesses meeting the insurer's eligibility criteria for size, class of business, and revenue; it is not available to every commercial risk

Show answer & explanation

Answer: D

A BOP packages property and liability coverage for small-to-medium businesses that meet an insurer's eligibility criteria for size, revenue, and eligible class of business; it is not available to every type of commercial risk. Building ownership, having zero employees, and carrying workers' compensation are not themselves BOP eligibility requirements.

Practice Questions 13-17: North Carolina Property Law

North Carolina Statutes and Regulations Pertinent to Property Insurance is 13 of the Property Agent exam's 55 items — a quarter of the exam. These five move through an insurer's annual financial statement filing, a fire insurance policy's statutory list of covered perils, the Beach Plan, claim-file retention, and the statutory line between a fire policy and wind damage.

Question 13 (Chapter 7)

A property insurer is preparing its first annual financial statement for the Commissioner. Which of the following is accurate under Article 43?

A) The insurer need only file a statement if the Commissioner specifically requests one.
B) No annual financial statement is required of property insurers under Article 43.
C) The insurer may file the statement with the North Carolina Rate Bureau instead of the Commissioner.
D) The insurer must file the statement with the Commissioner in the form and manner the Commissioner prescribes.

Show answer & explanation

Answer: D

Article 43 (general business regulations) requires insurers to file an annual financial statement with the Commissioner. It is a standing filing obligation, not one made only on request (A) or waived entirely (B), and it is filed with the Commissioner, not the Rate Bureau (C).

Question 14 (Chapter 7)

A homeowner in Wilmington purchases a fire insurance policy that lists "fire, lightning, and explosion" as covered perils. Which provision of G.S. 58-44-5 is the insurer complying with?

A) The requirement that fire policies must be issued on a standard form approved by the Commissioner.
B) The requirement that fire policies must name the insured and describe the premises.
C) The requirement that fire policies must provide a replacement‑cost clause.
D) The requirement that fire policies must list the perils of fire, lightning, and explosion.

Show answer & explanation

Answer: D

G.S. 58-44-5 specifically mandates that a fire insurance policy must enumerate the perils covered, which are fire, lightning, and explosion. Option A relates to form approval (G.S. 58-44-1), B to naming insured (also 58-44-5 but not the focus here), and D to replacement‑cost language (required but not the specific provision referenced).

Question 15 (Chapter 7)

An insurer operating in the Outer Banks wants to offer coverage for a beachfront condo that is not eligible for standard homeowners insurance because of high wind risk. Which state program can the insurer use to provide required property coverage?

A) The Essential Property Insurance for Beach Area Property (Beach Plan).
B) The North Carolina Rate Bureau.
C) The Fair Access to Insurance Requirements (FAIR) Plan.
D) The North Carolina Workers' Compensation Fund.

Show answer & explanation

Answer: A

G.S. 58-45 creates the Beach Plan to provide essential property insurance for beach‑area properties that are uninsurable in the voluntary market. The Rate Bureau (B) supplies data only, the FAIR Plan (C) covers other high‑risk properties but not specifically beach‑area properties, and the Workers' Compensation Fund (D) is unrelated.

Question 16 (Chapter 7)

A property insurer is reviewing its claim-file retention practices for compliance with Article 43 (G.S. 58-43-5) and the Department's rules. Which statement is accurate?

A) Retention of claim files is left entirely to each insurer's internal policy, with no statutory minimum.
B) Only claim files that go to litigation must be retained; all others may be discarded once closed.
C) The retention requirement applies only to insurers domiciled outside North Carolina.
D) The rule sets a minimum retention period for claim files; the insurer may not discard them before that period elapses.

Show answer & explanation

Answer: D

G.S. 58-43-5, implemented through the Department's rules, sets a minimum retention period for claim files; insurers may not simply discard them at will (A), limit retention to litigated claims (B), or treat the rule as applying only to out-of-state insurers (C).

Question 17 (Chapter 7)

A resident of a coastal community files a claim for wind damage to a beachfront home. The insurer denies coverage, citing that the policy is a standard fire policy. Which statutory provision most directly addresses this type of exclusion?

A) G.S. 58-45-15, which outlines exclusions for the Beach Plan.
B) G.S. 58-46-10, which governs the FAIR Plan’s coverage limitations.
C) G.S. 58-36-55, which sets the Rate Bureau’s data usage rules.
D) G.S. 58-44-30, which defines the scope of fire insurance policies.

Show answer & explanation

Answer: D

G.S. 58-44-30 clarifies that fire insurance policies cover only fire, lightning, and explosion, not wind damage. Therefore the insurer’s reliance on a fire policy to deny wind damage is grounded in that provision. The Beach Plan (A) and FAIR Plan (B) are alternative programs, not exclusions in a fire policy, and the Rate Bureau (C) is unrelated.

The Property Agent Mistakes That Cost Marks

Assuming every dwelling form covers the same perils. DP-1 (Basic Form) insures the dwelling only, with no personal property or theft coverage unless endorsed. DP-2 (Broad Form) adds perils such as sprinkler leakage. DP-3 (Special Form) still excludes flood unless a separate endorsement is attached — the 'special' in the name does not mean 'all perils.'

Treating a BPP's property-of-others limit like a coinsurance calculation. The limit for personal property of others caps the payout at the stated amount regardless of the actual loss; coinsurance, by contrast, compares insurance carried to insurance required against the value at the time of loss. They are two different mechanisms and do not combine.

Capping an agreed-value endorsement at the wrong number. Once an agreed-value endorsement sets a dollar figure, that figure is the maximum payable, even when the actual replacement cost of the damaged property turns out to be higher.

Assuming North Carolina mandates earthquake or flood coverage. Neither is required by state law on a commercial property policy or a DP-3; both are optional endorsements the insured has to add separately.

Confusing the Rate Bureau, the Beach Plan and the FAIR Plan. The Rate Bureau supplies loss-cost data for rate filings. The Beach Plan provides essential property coverage for beach-area properties that are otherwise uninsurable in the voluntary market. They serve different purposes and neither one sets final premiums.

Your Next Step

How did you score?

14 or more correct (82%+): You have this exam covered. Move to the Casualty Agent question set if you need both lines, and the 25-question sample for a check across both exams.
10-13 correct: You are close but not secure on the exam's biggest section. Note which chapter (2, 3 or 7) your misses fell in and re-listen to that chapter's audio lesson before retesting.
Under 10 correct: Property is the weaker of North Carolina's two producer exams — first-time pass rates run 48.9-49% — so this is not a set to guess through. Start with chapter 2 of the course and work forward.

Chapters 1 and 9 of the LanePrep North Carolina course are free at /nc/p-and-c/preview — full audio and the chapter quiz, no signup. For a full-length timed run, try the practice exam.

Exam structure and fees from the NCDOI/Pearson VUE candidate guide #123400 (October 2025 edition). Question counts and content weighting from Pearson VUE content outline #123415 (effective March 2, 2026, Property Agent extract). Pass rates from the NAIC compiled pass-rate reports for 2024 and 2025. Read October 2026.

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