North Carolina Personal Lines Insurance License Exam — All Questions

What minimum auto liability limits must a North Carolina personal auto policy carry to meet the state's financial-responsibility law?

• a.$50,000 bodily injury per person, $100,000 bodily injury per accident, and $50,000 property damage✓
• b.$15,000 per person / $30,000 per accident bodily injury and $5,000 property damage
• c.$25,000 per person / $50,000 per accident bodily injury and $10,000 property damage
• d.$30,000 per person / $60,000 per accident bodily injury and $25,000 property damage

North Carolina sets minimum motor-vehicle liability limits of 50/100/50 — $50,000 bodily injury per person, $100,000 bodily injury per accident, and $50,000 property damage. These higher limits (up from the former 30/60/25) took effect with the 2025 update to the Financial Responsibility Act. Source: N.C. Gen. Stat. 20-279.21; verify current figures with the North Carolina Department of Insurance (https://www.ncdoi.gov).

How does North Carolina generally handle liability for auto accidents?

• a.It bars all lawsuits between drivers and routes claims through a state fund
• b.It requires mandatory PIP on every policy in place of liability coverage
• c.It is a pure no-fault state; each driver's own insurer pays regardless of fault
• d.It is a traditional at-fault (tort) state; the at-fault driver is responsible for the other party's injuries and property damage✓

North Carolina is a traditional at-fault (tort) state: the driver who causes a crash is responsible for the other party's injuries and property damage, which is why liability and uninsured-motorist limits matter. North Carolina does not use a no-fault/PIP system. Confirm current rules with the North Carolina Department of Insurance (https://www.ncdoi.gov).

What coverage does North Carolina require on a personal auto policy in addition to liability limits?

• a.Nothing beyond the liability limits
• b.Personal injury protection in place of liability
• c.Uninsured motorist (and, at higher liability limits, underinsured motorist) coverage✓
• d.Earthquake coverage

North Carolina requires uninsured motorist (UM) coverage on personal auto policies, and underinsured motorist (UIM) coverage when liability limits exceed the statutory minimum. UM/UIM protects the insured when the at-fault driver is uninsured or underinsured. Source: N.C. Gen. Stat. 20-279.21; confirm current rules with the North Carolina Department of Insurance (https://www.ncdoi.gov).

How are cancellation and nonrenewal of a personal auto or homeowners policy regulated in North Carolina?

• a.State law limits the reasons an insurer may cancel or nonrenew and requires advance written notice to the insured; confirm the exact notice period with the North Carolina Department of Insurance✓
• b.Only the policyholder may ever cancel; insurers can never cancel mid-term
• c.There are no notice rules; cancellation is governed solely by the contract
• d.An insurer may cancel any personal policy at any time for any reason with no notice

North Carolina restricts mid-term cancellation of personal auto and homeowners policies to specified reasons (such as nonpayment or material misrepresentation) and requires advance written notice of cancellation or nonrenewal. The exact number of days varies by reason and line — verify the current North Carolina notice periods with the North Carolina Department of Insurance.

Which best describes the body that writes and enforces North Carolina's insurance regulations affecting personal lines policies?

• a.The North Carolina Department of Insurance, a state agency that supervises insurers and licenses producers✓
• b.The county clerk's office where the policy is issued
• c.A private trade association of insurers with no government authority
• d.The federal Department of Insurance in Washington, D.C.

Insurance in North Carolina is regulated at the state level by the North Carolina Department of Insurance. There is no federal department of insurance; each state supervises its own market, licenses producers, and enforces cancellation, rating, and coverage rules. Source: North Carolina Department of Insurance (https://www.ncdoi.gov).