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NC state law · part 2 of 2
North Carolina Adjuster Practice Test: North Carolina law, Part 2
15 more North Carolina law questions for the North Carolina Adjuster exam. Every explanation cites the statute or rule it is based on, so you can read the source when a rule surprises you. Start with part 1 on the main North Carolina adjuster page if you have not done it yet.
Subtopics in this part: Motor vehicle claim rules, Auto liability and UM/UIM, Residual markets and guaranty association, Property policy laws and mediation, Public adjusters, Workers compensation.
0 of 15 answered
Motor vehicle claim rules · Application
Nadia's collision claim settles for $2,400. She owes $150 of past-due premium on her homeowners policy with the same insurer and has not agreed to any offset. Under 11 NCAC 04 .0421, the insurer must:
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Correct answer: C. Mail the full $2,400 within 10 business days after settlement
Rule .0421(b) requires loss payments to be mailed or delivered within 10 business days after the claim is settled. Unless the insured consents, the insurer may not deduct premium owed on one policy from a claim payment under another policy, and it may never withhold the entire payment because the insured owes a smaller amount. Nadia did not consent, so the full $2,400 is due.
A third-party claimant's car was worth $6,000 before the accident, and liability is not disputed. After repairs, the claimant says diminished value is $3,200 and the liability insurer says $1,500. Under G.S. 20-279.21(d1), may either side demand appraisal?
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Correct answer: D. Yes, because $1,700 exceeds 25% of value ($1,500)
Appraisal under G.S. 20-279.21(d1) is available when liability is not in dispute and the two diminution estimates differ by more than $2,000 or 25% of the pre-accident retail value, whichever is less. Here 25% of $6,000 is $1,500, which is less than $2,000, so the $1,700 gap qualifies. Either party may then demand appraisal, with each side naming a competent and disinterested appraiser within 20 days.
Under 11 NCAC 04 .0426, when may an insurer require an aftermarket part in the repair of a motor vehicle?
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Correct answer: C. Only when it equals the original in fit, quality, performance and warranty
Rule .0426 bars an insurer from requiring an aftermarket part unless it is at least equal to the original part in fit, quality, performance and warranty, and the estimate must include the cost of any modifications the aftermarket part makes necessary. Rule .0427 requires a policy disclosure and requires every aftermarket part installed to be identified on the estimate and the repair invoice.
For North Carolina auto policies issued or renewed on or after July 1, 2025, what are the minimum liability limits under G.S. 20-279.21(b)(2)?
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Correct answer: B. $50,000 per person, $100,000 per accident, $50,000 property damage
Session Law 2023-133, as amended by Session Law 2024-29, raised the North Carolina minimum to $50,000 per person and $100,000 per accident for bodily injury and $50,000 for property damage, for policies issued or renewed on or after July 1, 2025. The previous minimum was 30/60/25. Uninsured and underinsured motorist coverage must also be included at limits tied to the liability limits.
Leah's parked car is hit by an identified driver who has no liability insurance. Damage is $4,250, and she claims under her uninsured motorist property damage coverage. Under G.S. 20-279.21(b)(3), how much does that coverage pay?
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Correct answer: B. $4,150
G.S. 20-279.21(b)(3) makes uninsured motorist property damage limits subject, for each insured, to an exclusion of the first $100 of damages. $4,250 minus $100 is $4,150. UMPD limits equal the policy's highest property damage liability limit unless the named insured chooses lower limits, which cannot go below the required minimum property damage limit.
Omar's damages exceed the at-fault driver's $50,000 liability limit. Before settling with that driver, Omar gives his underinsured motorist (UIM) insurer written notice of the tentative $50,000 settlement. Under G.S. 20-279.21(b)(4), what happens if the UIM insurer does not advance $50,000 within 30 days?
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Correct answer: D. The UIM insurer loses its subrogation right and its right to approve settlement
Under G.S. 20-279.21(b)(4), once the UIM insurer receives written notice of a tentative settlement between its insured and the underinsured motorist, it must advance a payment equal to the tentative settlement within 30 days to protect its position. If it does not, it may not exercise any right of subrogation or any right to approve the settlement, and Omar may settle and still pursue UIM benefits.
Residual markets and guaranty association · Application
An insurer has ceded Ray's auto policy to the North Carolina Motor Vehicle Reinsurance Facility. A supervisor suggests giving claims on ceded policies lower priority because the Facility bears the loss. Under G.S. 58-37-35(c), this is:
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Correct answer: C. Not permitted: ceded losses must be adjusted like voluntary business
Cession transfers the risk of loss from the individual insurer to all insurers through the Facility (G.S. 58-37-1), but the member insurer still services the policy. G.S. 58-37-35(c) requires each member to adjust losses on ceded business fairly and efficiently in the same manner as voluntary business losses, and G.S. 58-37-25(b) requires the same type of service for ceded and voluntary policies.
Residual markets and guaranty association · Application
Which statement about North Carolina's residual property markets under Articles 45 and 46 of Chapter 58 is accurate?
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Correct answer: A. The Coastal Property Insurance Pool is a last-resort market for the beach and coastal areas
The North Carolina Insurance Underwriting Association runs the Coastal Property Insurance Pool, formerly the Beach Plan, for the beach area and 18 coastal counties, and G.S. 58-45-1(b) calls it the market of last resort, not the first choice. The FAIR Plan under Article 46 applies to every area of the state except the beach area (G.S. 58-46-1(b)). Neither plan insures motor vehicles.
Residual markets and guaranty association · Challenging
A property and casualty insurer licensed in North Carolina is placed in liquidation with a finding of insolvency in 2026. Under G.S. 58-48-35, which covered claim does the North Carolina Insurance Guaranty Association pay in full, without its usual dollar cap?
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Correct answer: B. Workers compensation benefits owed to an injured employee
G.S. 58-48-35(a)(1) limits the Association to the part of each covered claim over $50 and under $500,000 and caps unearned premium refunds at $10,000 per policy, but it pays the full amount of covered workers compensation benefits. Ocean marine insurance is outside the Article entirely under G.S. 58-48-10. The $500,000 cap applies to liquidation orders that became final on or after October 1, 2023.
Under the North Carolina standard fire insurance policy in G.S. 58-44-16(f), a suit to recover on the policy must be commenced within what period?
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Correct answer: C. Three years after the inception of the loss
Under G.S. 58-44-16(f)(18), no suit on the North Carolina standard fire policy is sustainable unless all policy requirements have been met and the suit is commenced within three years after inception of the loss. The older 1943 New York standard fire policy used by many states allows only 12 months. The North Carolina form also requires a sworn proof of loss within 60 days after the loss.
After a Governor-declared disaster, the Commissioner orders the mediation program in Part 2 of Article 44. Which dispute qualifies if the insured requests mediation within 60 days after the denial?
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Correct answer: A. A homeowner disputes a $4,000 difference over the cost to repair storm damage
The disaster mediation program covers first-party residential property claims; it does not apply to commercial insurance, motor vehicle insurance or liability coverage (G.S. 58-44-70(b)). A disputed claim generally involves $1,500 or more over the cause or amount of loss, and denials based on policy exclusions, terms or conditions are excluded (G.S. 58-44-75(3)). The insurer pays the mediator's and Administrator's fees.
After a Governor-declared catastrophe, a North Carolina public adjuster helps Gloria settle her home claim for $86,000. Her contract calls for a 15% fee. Under G.S. 58-33A-60(d), what is the most the public adjuster may collect?
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Correct answer: B. $8,600
In a catastrophic incident, G.S. 58-33A-60(d) bars a public adjuster from charging or accepting more than 10% of any insurance settlement or proceeds, and from taking any fee, retainer or deposit before the claim is settled. Ten percent of $86,000 is $8,600, so the 15% term ($12,900) cannot be collected in full. A catastrophic incident must be declared by the President or the Governor.
Under G.S. 58-33A-65, how long does an insured have to rescind a contract with a public adjuster, and how must the rescission be made?
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Correct answer: A. Three business days after signing, in writing mailed or delivered to the adjuster
G.S. 58-33A-65(i) gives the insured the right to rescind within three business days after the contract is signed; the rescission must be in writing and mailed or delivered to the public adjuster at the contract address within that period. Under subsection (j), anything of value the insured gave must be returned within 15 business days after the public adjuster receives the cancellation notice.
Tyrone's average weekly wage is $1,050. A compensable injury keeps him totally disabled and out of work for exactly 4 weeks (28 days). Under G.S. 97-28 and 97-29, how much temporary total disability compensation is owed for that period?
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Correct answer: B. $2,800
G.S. 97-29 pays 66 2/3% of the average weekly wage, so $1,050 x 2/3 = $700 per week, which is below the state maximum. G.S. 97-28 denies compensation for the first seven days of disability, but when disability lasts more than 21 days compensation runs from the date of disability. Since 28 days exceeds 21, all 4 weeks are paid: $2,800. The tempting $2,100 wrongly deducts the waiting week.
Under G.S. 97-2(1), which North Carolina employer is generally subject to the Workers' Compensation Act?
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Correct answer: D. A retail shop that regularly employs three people
G.S. 97-2(1) covers private employments in which three or more employees are regularly employed in the same business, plus any employer with even one employee working with radiation. Agriculture and domestic service are excepted, although agriculture is covered when 10 or more full-time nonseasonal farm workers are regularly employed. Four seasonal farm workers and two domestic workers fall within the exceptions.