North Dakota Property & Casualty Insurance License, Practice Exams

What gift may a North Dakota producer give under NDCC 26.1-04-03(8)(c), and to whom?

1. A gift, prize, promotional article, meal or entertainment activity of any value, provided it is given in connection with marketing, promoting or advertising the business rather than as an inducement to a particular contract, and to any person at all who is or may become a customer of the producer in this state.
2. A gift, prize, promotional article, logo merchandise, meal or entertainment activity worth no more than one hundred dollars in aggregate per person per year, to the named insured, policy owner or prospective client or a spouse of one, but not to a certificate holder, child or employee. ✓
3. A gift not exceeding an aggregate retail value of one hundred dollars per person per year, given to the named insured, the policy owner or a prospective client, including a certificate holder, a child or an employee of any of them, the object being to reach everyone connected with the household or the business insured.
4. A gift not exceeding one hundred dollars per person for each policy written rather than per year, given to the named insured or policy owner but not to a prospective client, since a gift to a person who is not yet insured could only be an inducement to the insurance which that person afterwards buys.

Why: NDCC 26.1-04-03(8)(c): NOTWITHSTANDING ANY OTHER PROVISION IN THIS SUBSECTION, IF THE COST DOES NOT EXCEED AN AGGREGATE RETAIL VALUE OF ONE HUNDRED DOLLARS PER PERSON PER YEAR, AN INSURANCE PRODUCER MAY GIVE A GIFT, PRIZE, PROMOTIONAL ARTICLE, LOGO MERCHANDISE, MEAL, OR ENTERTAINMENT ACTIVITY DIRECTLY OR INDIRECTLY TO A PERSON IN CONNECTION WITH MARKETING, PROMOTING, OR ADVERTISING THE BUSINESS. AS USED IN THIS SUBDIVISION, PERSON MEANS THE NAMED INSURED, POLICY OWNER, OR PROSPECTIVE CLIENT OR THE SPOUSE OF ANY OF THESE INDIVIDUALS, BUT THE TERM DOES NOT INCLUDE A CERTIFICATE HOLDER, CHILD, OR EMPLOYEE OF THE NAMED INSURED, POLICY OWNER, OR PROSPECTIVE CLIENT. The identical rule appears again in NDCC 26.1-04-06(2).

In the Business Auto Coverage Form, covered auto designation symbols determine:

1. The deductible that applies to each physical damage loss
2. The geographic territory within which the covered autos may be operated and garaged
3. Which autos are covered for each coverage shown in the Declarations ✓
4. The size of the fleet discount applied to the premium charged for each covered auto

Why: Numbered symbols (1–9) entered next to each coverage in the Declarations define which categories of autos that coverage applies to.

Coverage B of the CGL provides protection against which of the following?

1. Bodily injury to an employee arising out of employment
2. Medical expenses paid without regard to the insured's legal liability
3. Personal and advertising injury such as libel, slander, and false arrest ✓
4. Damage to the insured's own product after it leaves the premises

Why: Coverage B — Personal and Advertising Injury — covers offenses like libel, slander, false arrest, and wrongful eviction. It is separate from bodily injury and property damage.

Under the PAP, an insured loaning their covered auto to a friend who then causes an accident results in:

1. Liability coverage applying, since a permissive user of the covered auto is an insured ✓
2. Coverage only if the friend is a family member or a resident of the named insured's household at the time of the accident
3. No coverage because the named insured was not driving, leaving the friend's own policy as the only source of recovery
4. Coverage only under Part C, treating the friend as an uninsured motorist

Why: A person using the named insured's covered auto with permission is an insured under Part A, so the policy responds to that permissive user's liability.

What is a PROFESSIONAL INSURANCE ASSOCIATION under NDCC 26.1-26-02(11)?

1. Any organization of insurance licensees, however constituted and whether or not it offers any instructional programs, whose members pay a subscription, the definition being deliberately wide so that a producer may take credit for active participation in a local or a regional grouping as well as in a state or a national one.
2. A state or national membership organization that offers instructional programs certified by the commissioner as approved continuing education; is organized as an association or corporation for the express purpose of promoting the interests of insurance licensees; and is based on paid membership renewable for a fee. ✓
3. A state or national membership organization that offers courses, lectures or seminars, whether or not they are certified by the commissioner as approved continuing education activities, and which is organized for the express purpose of promoting the interests of insurance licensees. Membership need not be paid or renewable.
4. A state or national membership organization certified by the commissioner as a provider of approved continuing education activities and organized for the purpose of promoting the interests of insurance consumers in this state, membership in which is open without charge to every licensee of this state who applies for it.

Why: NDCC 26.1-26-02(11): PROFESSIONAL INSURANCE ASSOCIATION MEANS A STATE OR NATIONAL MEMBERSHIP ORGANIZATION THAT OFFERS COURSES, LECTURES, SEMINARS, OR OTHER INSTRUCTIONAL PROGRAMS CERTIFIED BY THE COMMISSIONER AS APPROVED CONTINUING EDUCATION ACTIVITIES PURSUANT TO SECTION 26.1-26-31.3; IS ORGANIZED AS AN ASSOCIATION OR CORPORATION FOR THE EXPRESS PURPOSE OF PROMOTING THE INTERESTS OF INSURANCE LICENSEES IN THIS STATE OR NATIONALLY; AND IS BASED ON PAID MEMBERSHIP RENEWABLE ANNUALLY OR BIENNIALLY FOR A MEMBERSHIP FEE. All three limbs, joined by AND.

A single limit of insurance covering multiple items or multiple locations under one amount is:

1. Specific insurance
2. Scheduled insurance
3. Blanket insurance ✓
4. Valued insurance

Why: Blanket insurance applies a single limit across multiple properties, items, or locations rather than assigning separate limits.

If an insured carries 100/300 UM limits and is hit by a driver with 25/50 liability limits, underinsured motorists coverage may provide additional recovery of up to:

1. Nothing at all, because the at-fault driver carried liability limits that met the state minimum
2. The difference between the UM/UIM limit and the at-fault driver's coverage, per policy terms ✓
3. The full $300,000 per accident, paid on top of whatever the at-fault driver's insurer already paid
4. Only $25,000, because UIM recovery is capped at the at-fault driver's per-person liability limit

Why: UIM allows the insured to recover the gap between their UIM limit and the underinsured driver's limits, subject to how the state/policy coordinates the limits.

The policy provision that states the insurer's promise to pay covered losses is the:

1. Conditions
2. Insuring agreement ✓
3. Definitions
4. Declarations

Why: The insuring agreement is the insurer's core promise describing what coverage is provided in exchange for premium.

A North Dakota producer, acting without malice, reports a suspected fraudulent insurance act to the fraud unit and is sued for defamation. What does NDCC 26.1-02.1-04 provide?

1. That in the absence of malice no civil cause of action of any nature exists against the producer for libel, slander or any other relevant tort for filing reports or otherwise cooperating with an investigation. ✓
2. That the producer who reports without malice is immune from a defamation action brought by the person reported but not from one brought by that person's own insurer, the section protecting the reporter against the subject of the report alone and leaving other claimants to the common law.
3. That the producer has a qualified privilege which the plaintiff may overcome by showing that the report was made without reasonable grounds, the chapter protecting a reporter who has acted carefully rather than one who has merely acted in good faith upon information which turned out to be wrong.
4. That the producer is immune only if the report was made to the commissioner. A report made to a not-for-profit anti-fraud organization or to a federal agency is outside the section, which protects the statutory reporting channel alone and leaves other disclosures to the common law.

Why: NDCC 26.1-02.1-04(1) and (3). ABSENCE OF MALICE is the condition throughout. Subsection 2 adds protection from criminal proceedings and civil penalties EXCEPT IN PROSECUTION FOR PERJURY OR INSURANCE FRAUD, and subsection 5 preserves any existing common law or statutory privilege.

May the North Dakota commissioner audit a continuing education course, and what does absence cost a student?

1. The commissioner may audit a course only after giving the provider written notice, and a student who misses any part of a course receives no certificate, attendance at the whole of the instruction being a condition of credit in this state.
2. The commissioner or an authorized representative may audit offerings with or without notice to the provider; and no certificate of attendance will be issued to a participant who is absent for more than ten percent of the classroom hours. ✓
3. The commissioner may audit on seven days' notice, and a student absent for more than twenty-five percent of the classroom hours receives a certificate for the hours actually attended rather than for the whole course.
4. Audits are conducted by the provider itself and reported to the department, and absence is a matter for the provider's own attendance policy, the rules fixing no threshold and leaving the certificate to the provider's judgment.

Why: NDAC 45-02-04-03(7) and (8). WITH OR WITHOUT NOTICE; and the absence threshold is TEN PER CENT of classroom hours.

The Special Causes of Loss form is best characterized as:

1. An open-perils (all-risk) form covering risks of direct physical loss unless excluded ✓
2. A form that excludes theft, so a separate crime coverage part must be purchased for stolen stock
3. A named-peril form covering only fire and lightning, with all other causes added by endorsement
4. A liability form protecting the insured against third-party claims arising from the premises

Why: The Special form is open-perils: it covers risk of direct physical loss unless specifically excluded or limited, shifting the burden of proof to the insurer.

A home has a replacement cost of $300,000 but a market value of $230,000. For insurance-to-value purposes, the amount of insurance should be based on:

1. The original purchase price
2. The land value
3. Replacement cost of $300,000 ✓
4. Market value of $230,000

Why: Insurance to value is based on the cost to rebuild (replacement cost), not market value, which includes land and location factors.

Under TRIA, insurers writing certain commercial property and casualty lines must:

1. Deny any claim arising from a certified act of terrorism and refer the insured to Treasury for payment
2. Attach a mandatory terrorism exclusion to every commercial policy they issue in that state
3. Provide flood coverage at no extra charge on each commercial property policy written
4. Make available (offer) coverage for certified acts of terrorism to policyholders ✓

Why: TRIA requires participating insurers to make terrorism coverage available to commercial policyholders, though the insured may decline it.

Does North Dakota require a resident producer to countersign a policy covering a risk located in this state, under NDCC 26.1-11-07?

1. No. Notwithstanding any other provision of this title or policy forms to the contrary, there may not be any requirement that an insurance producer resident in this state sign or countersign an insurance policy covering a subject of insurance resident, located, or to be performed in this state. ✓
2. Yes. Every insurance policy covering a subject of insurance resident, located or to be performed in this state must be signed or countersigned by an insurance producer resident in this state, whoever wrote it, and the policy is invalid until a resident producer agrees to countersign it.
3. Yes, but only where the policy was written by a nonresident insurance producer. A policy written by a producer resident in this state needs no further signature, and the requirement is imposed by the general provisions of this title rather than by the section, which deals only with the splitting of the commission.
4. No, unless the policy form itself requires it. The section leaves the matter to the insurer, which may by the terms of its own forms require a resident countersignature, and a policy issued on such a form without the countersignature is voidable at the election of the insurer which issued it in this state.

Why: NDCC 26.1-11-07: NOTWITHSTANDING ANY OTHER PROVISION OF THIS TITLE OR POLICY FORMS TO THE CONTRARY, THERE MAY NOT BE ANY REQUIREMENT THAT AN INSURANCE PRODUCER RESIDENT IN THIS STATE SIGN OR COUNTERSIGN AN INSURANCE POLICY COVERING A SUBJECT OF INSURANCE RESIDENT, LOCATED, OR TO BE PERFORMED IN THIS STATE. NOTWITHSTANDING POLICY FORMS - the insurer cannot reimpose it by its own form either.

An existing North Dakota customer buys a second personal policy. What initial notice is owed?

1. Either a revised notice under section 45-14-01-09 covering the new product, or no new notice if the initial, revised or annual notice most recently given to that customer was accurate for the new product. ✓
2. A fresh initial notice in every case, each product being a separate relationship for the purposes of the chapter and each requiring its own notice not later than when the new relationship is established with the customer.
3. No notice at all in any case, the customer having already received one, and the annual notice being the only further notice which the chapter requires during the continuation of a customer relationship.
4. A short-form initial notice, which is the form the chapter provides for a customer who already holds the licensee's full privacy notice and needs only to be told that the new product is covered by the same practices.

Why: NDAC 45-14-01-05(4)(a) and (b). The accuracy of the LAST notice is what decides it. The short-form initial notice is for NONCUSTOMERS - 45-14-01-07(4).

What must the rules the North Dakota commissioner adopts under NDCC 26.1-02-27(2) look like?

1. They must be consistent with and may be more restrictive than the national association of insurance commissioners' model regulation, the model being a floor rather than a ceiling, and they may not in any circumstances require an authorization from the individual before nonpublic personal health information concerning that individual is disclosed.
2. They must be identical to the model regulation adopted by the national association of insurance commissioners, the commissioner having no discretion to depart from it in any respect, and they may not preserve the affiliate sharing exception, which the legislative assembly of this state has declined to adopt for insurance companies here.
3. They must be consistent with and not more restrictive than the model regulation adopted by the national association of insurance commissioners. Notwithstanding that, and subject to the model's own exceptions including the affiliate sharing exception, the rules may still prohibit any disclosure unless an authorization is obtained from the individual. ✓
4. They must be consistent with and not more restrictive than the national association of insurance commissioners' model regulation. The commissioner may not require an authorization from the individual before disclosure of that individual's nonpublic personal health and financial information, since such a requirement would be more restrictive than the model.

Why: NDCC 26.1-02-27(2): THE COMMISSIONER SHALL ADOPT RULES NECESSARY TO CARRY OUT THIS SECTION. (a) THE RULES MUST BE CONSISTENT WITH AND NOT MORE RESTRICTIVE THAN THE MODEL REGULATION ADOPTED BY THE NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS ENTITLED 'PRIVACY OF CONSUMER FINANCIAL AND HEALTH INFORMATION REGULATION'. (b) NOTWITHSTANDING SUBDIVISION a AND SUBJECT TO THE EXCEPTIONS, INCLUDING THE AFFILIATE SHARING EXCEPTION PROVIDED FOR IN THE MODEL REGULATION, THE RULES MAY PROHIBIT THE DISCLOSURE OF NONPUBLIC PERSONAL HEALTH AND FINANCIAL INFORMATION CONCERNING AN INDIVIDUAL UNLESS AN AUTHORIZATION IS OBTAINED FROM THE INDIVIDUAL WHOSE INFORMATION IS SOUGHT TO BE DISCLOSED. Subdivision (b) is the one express departure the statute allows from (a).

The Peak Season endorsement is most useful for an insured whose:

1. Personal property (inventory) increases significantly during certain periods ✓
2. Automobile fleet expands each summer to handle additional delivery routes and drivers
3. Liability exposure drops in the winter months when the seasonal operation is closed
4. Building value stays constant year after year and needs no adjustment at renewal

Why: Peak Season provides additional limits on business personal property during seasonal periods of higher inventory, such as a retailer before the holidays.

Personal watercraft, such as jet skis, are typically:

1. Insured under a crop-hail policy when stored on farm premises
2. Covered automatically for liability and physical damage under a homeowners policy with no dollar limit
3. Covered only by an NFIP flood policy while moored at a dock
4. Excluded or sharply limited under a homeowners policy and better insured under a watercraft or boatowners policy ✓

Why: Homeowners forms severely limit or exclude watercraft liability and physical damage, so personal watercraft are best covered by a separate watercraft policy.

The primary purpose of underwriting is to:

1. Settle claims quickly so that the insured is restored without delay
2. Investigate suspected fraud after a loss has already been reported
3. Select and classify risks to determine acceptability and proper pricing ✓
4. Sell as many policies as possible to spread the insurer's fixed costs

Why: Underwriting is the process of evaluating, selecting, classifying, and pricing risks to maintain a profitable book of business.

How is WORK LOSS calculated in North Dakota?

1. Eighty-five percent of the income from work the person would have performed during the disability, reduced by substitute work actually done or unreasonably refused; and nothing after death of the injured person. ✓
2. The whole of the income lost during the period of disability, up to one hundred fifty dollars per week, the percentage reduction applying to survivors' income loss alone because that element is paid over a longer period and to persons who were not themselves injured in the accident.
3. Eighty-five percent of the injured person's gross income for the twelve months before the accident, divided by fifty-two and paid weekly for the period of disability, the historic figure being used so that the parties need not argue about what the person would have earned.
4. The loss of income actually suffered, without any percentage reduction but without any credit for substitute work, the chapter leaving an injured person free to take other employment without affecting the benefit payable for the work which the injury prevented.

Why: NDCC 26.1-41-01(24). 85 per cent, reduced by actual OR unreasonably refused substitute work, and nothing after death. The weekly ceiling of $150 sits on top of this calculation.

In a CLAIMS-MADE form, coverage is generally triggered when:

1. The claim is first made against the insured during the policy period (on or after the retroactive date) ✓
2. The general aggregate limit has been exhausted by earlier payments
3. The injury occurs, even if that happens after the policy has expired and no extended reporting period was bought
4. The full annual premium has been paid to the insurer

Why: A claims-made policy responds when the claim is first made during the policy period, provided the injury occurred on or after the retroactive date.

A bar overserves a patron who then injures a third party in a fight. Which coverage is designed to respond to the bar's liability?

1. Workers compensation, because the bartender was on duty when the fight started
2. Liquor Liability / Dram Shop coverage ✓
3. A surety bond posted with the state liquor control board
4. CGL Coverage A, because the patron's injury is bodily injury on the premises

Why: Because the CGL excludes the liquor business's liability, the bar needs liquor liability/dram shop coverage for injuries connected to serving alcohol.

Section III of the BOP contains:

1. The declarations page listing limits, deductibles, and the insured's name
2. Only the property exclusions
3. Common policy conditions applicable to the whole policy ✓
4. The liability limits of insurance

Why: Section III contains the Common Policy Conditions (cancellation, changes, etc.) that apply to the entire Businessowners Policy.

An SR-22 is best described as:

1. A title document the state issues when a vehicle changes owners
2. A certificate filed with the state by the insurer verifying that an at-risk driver carries required liability coverage ✓
3. A no-fault accident report the driver must file with the motor vehicle department within 10 days of any crash causing injury
4. A high-risk auto liability policy sold through the state's assigned risk plan

Why: An SR-22 is a financial responsibility certificate the insurer files to confirm a high-risk driver maintains the state's required liability insurance.

How is a North Dakota producer appointment filed, and who pays for it?

1. Filed with the department on a prescribed form or electronically through the NAIC subsidiary; and the insurer pays an appointment fee for each producer appointed under NDCC 26.1-01-07, the fee being the insurer's own obligation. ✓
2. The producer files the appointment with the department and pays the fee, the appointment being a privilege of the licensee rather than an obligation of the insurer, which simply confirms the agency relationship when the department asks it to do so.
3. The appointment is filed by whichever party the agency contract designates, and the fee is shared equally between the insurer and the producer unless the contract provides otherwise in writing signed by both of them.
4. No filing is required at all. The agency contract itself creates the appointment and the department learns of it from the insurer's annual statement, which lists the producers appointed during the year just ended.

Why: NDAC 45-02-02-06(1). Prescribed form OR the NAIC subsidiary; THE INSURER pays, under NDCC 26.1-01-07.

In commercial trucking, a non-trucking ("bobtail") liability policy covers an owner-operator's tractor when it is:

1. Being used without a trailer or not in the business of the motor carrier (e.g., personal use) ✓
2. Parked at the motor carrier's terminal under load while awaiting the dispatcher's next assignment
3. Hauling a loaded trailer under dispatch for the motor carrier identified in the operating lease
4. Carrying placarded hazardous materials that require the carrier to make a federal MCS-90 filing

Why: Non-trucking/bobtail liability covers the tractor when used outside the motor carrier's business, filling the gap when the carrier's policy does not apply.

Unlike Part One, Part Two (Employers Liability) of the policy does include limits of liability. The three Part Two limits typically apply to:

1. Medical benefits, wage-replacement indemnity benefits, and death benefits payable to the worker's surviving dependents
2. Temporary disability benefits, permanent disability benefits, and survivor benefits, each shown as a separate dollar amount
3. A per-claim limit, a per-occurrence limit, and an annual aggregate limit applied to the worker's medical payments
4. Bodily injury by accident, bodily injury by disease per employee, and bodily injury by disease policy limit ✓

Why: Part Two shows three limits: bodily injury by accident (each accident), bodily injury by disease (policy limit), and bodily injury by disease (each employee).

PAP Part D — Coverage for Damage to Your Auto includes which two basic perils categories?

1. Uninsured and underinsured motorists, split between bodily injury and property damage
2. Fire and theft only, with every other cause of physical damage excluded
3. Collision and other than collision (comprehensive) ✓
4. Liability for bodily injury to others and medical payments for the insured's own injuries

Why: Part D physical damage coverage is divided into Collision and Other Than Collision (comprehensive) coverages.

What is the North Dakota appointment RENEWAL cycle under NDAC 45-02-02-07?

1. The department invoices each company on the anniversary of its certificate of authority and the fees are due within thirty days of the invoice, appointments lapsing automatically if the invoice is not paid by the end of that period.
2. Appointments run for two years from the date of filing and are renewed by the producer rather than by the insurer, the producer paying the renewal fee at the same time as the licence renewal fee so that one payment covers both.
3. The preliminary list is furnished by March first, the invoice by May first and the fees are payable before July first, the cycle being timed to follow the filing of the annual statement by the companies which must pay the fees.
4. A preliminary renewal list by December first, an electronic renewal invoice through the NAIC subsidiary by March fifteenth, and payment of the fees before may first each year. ✓

Why: NDAC 45-02-02-07(1) to (3). December 1, March 15, May 1.

When may the North Dakota rules NOT require an annual privacy notice, under NDCC 26.1-02-27(2)(c)?

1. Where the company has sent an initial privacy notice to each of its customers at the inception of the relationship, that notice discharging the obligation once and for all, so that no further notice need be sent however the company's policies and practices with regard to disclosing nonpublic personal information may afterwards change.
2. Where the company complies with the nonaffiliated third-party sharing rules adopted by the commissioner. Whether the company has changed its policies and practices since the most recent notice is immaterial, since a company which complies with the sharing rules gives the consumer everything the annual notice would have given.
3. Where the company has not changed its policies and practices with regard to disclosing nonpublic personal information since the most recent notice sent to consumers. Compliance with the nonaffiliated third-party sharing rules is a separate matter and is not a condition of the relief from the annual notice requirement.
4. Where the company complies with nonaffiliated third-party sharing rules adopted by the commissioner and has not changed its policies and practices with regard to disclosing nonpublic personal information from the policies and practices that were disclosed in the most recent notice sent to consumers. ✓

Why: NDCC 26.1-02-27(2)(c): THE RULES MAY NOT REQUIRE AN INSURANCE COMPANY, NONPROFIT HEALTH SERVICE CORPORATION, OR HEALTH MAINTENANCE ORGANIZATION TO PROVIDE AN ANNUAL PRIVACY NOTICE IF IT (1) COMPLIES WITH NONAFFILIATED THIRD-PARTY SHARING RULES ADOPTED BY THE COMMISSIONER; AND (2) HAS NOT CHANGED ITS POLICIES AND PRACTICES WITH REGARD TO DISCLOSING NONPUBLIC PERSONAL INFORMATION FROM THE POLICIES AND PRACTICES THAT WERE DISCLOSED IN THE MOST RECENT NOTICE SENT TO CONSUMERS. BOTH conditions, joined by AND.

A North Dakota car dealer lends a vehicle to a customer who has her own automobile policy. Whose coverage is primary under NDCC 26.1-40-17?

1. The dealer's policy is primary in every case, the owner of the vehicle bearing the first responsibility for the use to which the vehicle is put, and the borrower's own policy answering only for any amount above the owner's limits.
2. The two policies share the loss rateably according to their limits, neither being primary, since both were written to cover the very use which gave rise to the claim and neither insurer can be preferred over the other under this section.
3. The borrower's policy is primary, and the dealer's policy provides no coverage at all to the borrower, the section removing the borrower from the dealer's policy altogether once other insurance is shown to exist.
4. The borrower's own policy is primary and the owner's policy is excess only, limited by its terms; where the borrower has no other policy, the owner's policy extends to the borrower if by its terms it does so extend. ✓

Why: NDCC 26.1-40-17(1) and (2). It applies to a policy in force for anyone in the business of SELLING, REPAIRING, SERVICING, STORING, LEASING, RENTING OR PARKING motor vehicles, and any policy provision at variance MUST BE INTERPRETED SO AS TO COMPLY.

Who is immune from civil liability for a termination report under NDCC 26.1-26-34(5)(a), and on what condition?

1. The insurer alone, and only where the report was accurate in every particular, the immunity being lost by any error in the report whether or not the insurer was at fault in making it, and not extending to the commissioner or to any organization which compiles the information and makes it available to others.
2. In the absence of actual malice, an insurer, its authorized representative, an insurance producer, the commissioner, or an organization of which the commissioner is a member and that compiles the information for other regulators is not subject to civil liability, and no civil cause of action arises. ✓
3. Everyone named in the subsection, absolutely and in every circumstance, so that no civil action of any nature may be brought upon a statement made or information provided under this section however maliciously the person making the statement or providing the information may have acted in doing so.
4. In the absence of negligence, an insurer, its authorized representative, a producer and the commissioner. An organization of which the commissioner is a member and which compiles the information for other regulators is not within the immunity, its function being commercial rather than regulatory in its character.

Why: NDCC 26.1-26-34(5)(a): IN THE ABSENCE OF ACTUAL MALICE, AN INSURER, THE AUTHORIZED REPRESENTATIVE OF THE INSURER, AN INSURANCE PRODUCER, THE COMMISSIONER, OR AN ORGANIZATION OF WHICH THE COMMISSIONER IS A MEMBER AND THAT COMPILES THE INFORMATION AND MAKES IT AVAILABLE TO OTHER INSURANCE COMMISSIONERS OR REGULATORY OR LAW ENFORCEMENT AGENCIES IS NOT SUBJECT TO CIVIL LIABILITY, AND A CIVIL CAUSE OF ACTION OF ANY NATURE DOES NOT ARISE AGAINST THESE ENTITIES OR THEIR RESPECTIVE AGENTS OR EMPLOYEES. The standard is ACTUAL MALICE, not negligence and not inaccuracy.

A North Dakota claimant has a claim covered both by a solvent insurer's policy and by the association. What must the claimant do?

1. Claim against either, at the claimant's election, the association standing on an equal footing with any other insurer whose policy answers to the loss and the two sharing the payment rateably according to their limits.
2. Claim first against the association, which pays and then recovers from the other insurer by subrogation, the claimant being spared the inconvenience of pursuing two contracts for the same loss.
3. Exhaust the other policy first, but without any reduction in the covered claim, since the premium for the other cover was separately paid and the chapter does not allow a collateral source to reduce what the association owes.
4. Exhaust the other policy first and reduce the covered claim by what is recovered; and among guaranty associations, claim first from that of the insured's residence, or of the property's location. ✓

Why: NDCC 26.1-42.1-09(1) and (2). Exhaust, then reduce; and among guaranty associations, RESIDENCE OF THE INSURED first, or LOCATION OF THE PROPERTY for a first-party property claim.

Which of the following is one of the four required elements of a legally enforceable contract?

1. Aleatory exchange
2. Subrogation
3. Indemnification
4. Consideration ✓

Why: The required elements of a contract are offer and acceptance, consideration, competent parties, and legal purpose.

A retailer's net income before a fire was $10,000/month with $4,000/month continuing expenses. The store is closed for two months. Assuming no coinsurance/limit issues, the Business Income loss is approximately:

1. $40,000
2. $8,000
3. $28,000 ✓
4. $20,000

Why: Business income = net income + continuing expenses = ($10,000 + $4,000) x 2 months = $28,000.

A policy covering a North Dakota risk lacks a countersignature which NDCC 26.1-11-07 required. What is the effect on the policy?

1. The policy is void from inception and the insurer must return the whole of the premium to the insured, the countersignature being a condition precedent to the validity of a policy which the section requires to be signed or countersigned by an insurance producer resident in this state.
2. The policy is voidable at the election of the insured, who may treat it as at an end on discovering the absence of the countersignature and recover the unearned premium, though the insurer remains bound upon it until the insured makes that election in writing to the insurer which issued it.
3. None. An insurance policy may not be deemed invalid because of the absence of the required signature or countersignature, and the insurer remains bound on it in the ordinary way. ✓
4. The policy is valid but the resident producer who ought to have countersigned it forfeits the pro rata portion of the commission which the section would otherwise have required that producer to retain, the forfeiture being the sanction for which the section provides in place of any effect upon the policy.

Why: NDCC 26.1-11-07: AN INSURANCE POLICY MAY NOT BE DEEMED INVALID BECAUSE OF THE ABSENCE OF THE REQUIRED SIGNATURE OR COUNTERSIGNATURE. The saving protects the insured, who had no part in the omission.

In insurance terms, risk is best defined as:

1. The financial amount of a loss after it has occurred
2. The certainty that a loss will occur
3. The cause of a loss, such as fire
4. Uncertainty regarding the occurrence of a loss ✓

Why: Risk is the uncertainty about whether a loss will happen. Without uncertainty there is no insurable risk.

How much notice must a North Dakota insurer give of nonrenewal of a property insurance policy?

1. At least thirty days before the expiration date, which is the same period required for a notice of cancellation, the legislature having set one period for the withdrawal of cover whether it is withdrawn during the term or at the end of it.
2. At least sixty days before the expiration date, and ninety days for any policy of professional liability insurance whatever the profession insured, the longer period reflecting the difficulty a professional has in finding replacement cover in a hard market for that class of business.
3. At least forty-five days before the expiration date in every case. The section fixes one period for all property policies, and a professional liability policy is not a property policy at all, so the section says nothing about it.
4. At least forty-five days before the expiration date, mailed or delivered to the named insured at the last-known address; except that where the policy provides professional liability coverage for legal and medical services the notice must be given at least ninety days before the expiration date. ✓

Why: NDCC 26.1-39-16(1). 45 days; 90 days ONLY for professional liability covering LEGAL AND MEDICAL services. The commercial nonrenewal period in 26.1-30.1-06 is 60 days - a different chapter.

Under the BACF "who is an insured" provision, an employee using their OWN auto on company business is:

1. An insured automatically under Symbol 2, owned autos subject to no-fault
2. An insured for physical damage to their own auto, but not for liability
3. Always an insured under the business's owned-auto symbols
4. Generally not an insured for that personally owned auto under owned-auto symbols ✓

Why: An employee's own auto is not a covered "owned" auto; coverage for such use requires non-owned auto coverage (Symbol 9), and the employee is not an insured under owned-auto symbols.

A mortgagee's insurable interest in an insured building is generally limited to:

1. The unpaid balance of the mortgage loan ✓
2. The full replacement cost of the building
3. The market value of the land only
4. The borrower's down payment

Why: A mortgagee (lender) has an insurable interest equal to the outstanding balance of the loan it has secured by the property.

What is the North Dakota automobile insurance plan?

1. A state fund administered by the insurance department which writes automobile liability insurance for drivers whom the voluntary market has refused, financed by premiums and by appropriations from the legislative assembly when premiums fall short of the losses.
2. A voluntary association of insurers which have agreed to share substandard automobile risks, membership being open to any company licensed here and carrying with it a share of the business assigned through the plan in proportion to its voluntary writings.
3. The guaranty association's automobile division, which pays claims against insolvent automobile insurers and places the policyholders of a failed company with a solvent one until their policies expire.
4. An association of all companies licensed to write automobile insurance here and the residual market mechanism for automobile liability insurance, run by AIPSO. ✓

Why: NDAC 45-05-07-03. ALL licensed automobile insurers belong; it is the residual market mechanism; AIPSO manages it.

Under the BACF, coverage for autos the named insured does not own, hire, or borrow but that are used in the business by employees is most economically added through:

1. Specified causes of loss physical damage endorsed onto each employee's personal auto, with a separate premium charged for every vehicle
2. Non-owned auto liability (Symbol 9), which carries no separate vehicle premium for owned units ✓
3. Garagekeepers coverage added to the business auto policy, which insures autos of others while they are in the named insured's care, custody, or control
4. Symbol 1 physical damage, which sweeps any auto the business uses into the schedule

Why: Symbol 9 non-owned liability is typically rated on a flat or employee/exposure basis rather than per scheduled auto, providing economical vicarious-liability protection.

Who bears the attorney's fees in a North Dakota uninsured or underinsured motorist claim?

1. Each bears its own unless the contract provides otherwise or the insurer is found to have acted in bad faith; and it is neither a conflict of interest nor bad faith for an insurer to press the defences the motorist could press in that claim. ✓
2. The insurer bears both, the claim being one under the insured's own policy and the insurer being obliged to defend its insured's interests rather than to resist them, so that a fee award follows as of course where the insured recovers anything at all.
3. The insured bears both unless the insurer is found to have acted in bad faith, in which case the court may award the insured's fees against the insurer as part of the damages for the bad faith conduct.
4. Each bears its own, and an insurer which presses the defences available to the uninsured motorist acts in conflict of interest, since it is resisting a claim by the very person to whom it owes the duty of good faith under the policy.

Why: NDCC 26.1-40-15.2(4) and 26.1-40-15.3(3). The second sentence is the useful one: pressing the tortfeasor's defences is neither a conflict nor bad faith.

In a CPP, which provision governs cancellation, transfer of rights, and examination of books for ALL coverage parts?

1. The Causes of Loss form
2. The Declarations only
3. The Common Policy Conditions ✓
4. The BPP

Why: The Common Policy Conditions apply to every coverage part in the package and address cancellation, changes, inspections, premiums, and transfer of rights.

Which condition or use of the insured vehicle is a cancellation ground under NDCC 26.1-40-02(1)(d)?

1. That the vehicle has been modified in any way since the policy was written, any alteration being a change in the risk which the insurer accepted, and the insured being obliged to disclose it and to accept whatever terms the insurer then offers for the altered vehicle.
2. That the vehicle is used in the insured's business or profession, or is used to carry passengers, including the carriage of fellow employees in a car pool arrangement, the subdivision drawing no distinction between a commercial carriage and a shared journey to work.
3. That the vehicle has been involved in more than one at-fault accident during the policy period, the accident record of the insured vehicle being the condition at which the subdivision is aimed and the other listed matters being examples of it.
4. That it is so mechanically defective as to endanger public safety; carries passengers for hire (A car pool is not); carries flammables or explosives or serves an illegal purpose; is an emergency vehicle; or was altered so as to increase the risk substantially. ✓

Why: NDCC 26.1-40-02(1)(d)(1) to (5). The CAR POOL proviso is the detail to hold.

A North Dakota insurer declines an application for homeowners insurance solely because the applicant has no credit card. Is that permitted?

1. No. An insurer may not take any account of the absence of a credit card, which the chapter removes altogether from the factors an insurer may weigh in underwriting or rating a policy of personal insurance in this state.
2. Yes. The absence of a credit card account is not credit information within the meaning of the chapter, which reaches information derived from a credit report, and an insurer is free to treat an applicant who has no card as it thinks fit provided it does so consistently.
3. No. An insurer may not take an adverse action against a consumer solely because the consumer has no credit card account, without considering any other applicable factor independent of credit information; nor deny, cancel or nonrenew on credit information alone. ✓
4. Yes, provided the insurer gives the applicant an adverse action notice describing up to four factors which were the primary influences of the decision, the chapter regulating the notice which follows an adverse action rather than the grounds on which one may be taken.

Why: NDCC 26.1-25.1-03(2) and (3). Both are SOLELY prohibitions: the vice is acting on credit alone, without consideration of another applicable factor independent of credit information.

For an owned pickup or van to qualify as a 'covered auto' under the PAP, its gross vehicle weight rating must not exceed:

1. 6,000 pounds
2. 8,000 pounds
3. 10,000 pounds ✓
4. 12,000 pounds

Why: The PAP treats an owned pickup or van as eligible only if its gross vehicle weight rating is 10,000 pounds or less and it is not used to deliver or transport goods, other than incidentally to installing or repairing furnishings or equipment, or for farming or ranching.

When must an insurable interest exist under NDCC 26.1-29-06?

1. At the time of the loss only. Insurance is a contract of indemnity, and what matters is whether the insured stood to be damnified when the peril struck, so that a person who acquires an interest after the policy is written may recover upon it if the interest is held when the loss happens.
2. When the insurance takes effect only. The contract is judged as at its formation, so that an insured who parts with the property afterwards may still recover, subject to the insurer's right to cancel on learning of the transfer.
3. Throughout the policy period without interruption. An insurable interest is a continuing condition of the contract, and a break in the interest at any time during the term avoids the policy from that moment, whatever the position may be when the loss eventually occurs to the property insured.
4. When the insurance takes effect and when the loss occurs, but it need not exist in the meantime, so a gap in the middle of the term does not of itself defeat a claim, while an interest gone by the day of the loss does. ✓

Why: NDCC 26.1-29-06, in one sentence: AT BOTH ENDS, NOT IN BETWEEN. The section does not follow the rule, often taught as general property doctrine, that an interest is needed only at the time of loss.

Which optional coverage can be added to a BOP to cover liability arising from autos the insured hires or borrows but does not own?

1. Hired and Non-Owned Auto liability ✓
2. Protective safeguards endorsement for alarms
3. Peak season limit increase
4. Utility services coverage

Why: Hired and Non-Owned Auto liability can be added to a BOP to cover liability arising from autos hired or used in the business that the insured does not own.

When must a North Dakota insurer tell an automobile insured about the assigned risk plan?

1. Whenever a policy is cancelled or not renewed for any reason, including nonpayment of premium, so that an insured who loses cover always learns of the residual market which stands behind the voluntary one in this state and may apply to it before the existing policy comes to an end.
2. Only on the insured's written request made within ten days of receiving the notice of cancellation, the insurer being obliged to supply information about the plan but not to volunteer it.
3. When a policy is cancelled other than for nonpayment of premium, or where there is a failure to renew a policy to which NDCC 26.1-40-05(1) applies; and the notification must accompany or be included in the notice of cancellation or nonrenewal required by sections 26.1-40-03 and 26.1-40-05. ✓
4. When the insurer declines an application, the notification of possible eligibility being part of the written reasons for a declination which the chapter requires the insurer to provide within twenty-one days of a timely written request.

Why: NDCC 26.1-40-06. Not for a nonpayment cancellation - the insured who did not pay is not sent to the plan.

The Products-Completed Operations Aggregate is separate from the General Aggregate primarily because:

1. Products and completed operations exposures can produce numerous severe claims, so they are given a distinct limit ✓
2. The two aggregates share a single medical expense limit that is applied to each person and to each accident
3. Products claims are historically minor, so a small carve-out limit is enough
4. Products and completed operations are never covered without an endorsement

Why: A separate aggregate protects products/completed operations capacity from being eroded by premises/operations claims and vice versa.

Which further building conditions carry the North Dakota five-day cancellation under NDCC 26.1-39-14?

1. Vacancy for sixty consecutive days, except seasonal or properly secured construction; danger of collapse; an order to vacate or demolition order; removal of fixed and salvageable items unexplained; and exposure to arson. ✓
2. Buildings unoccupied for thirty consecutive days, buildings in need of repair, and buildings whose owners have been convicted of an offence involving dishonesty, those being the conditions the section lists as justifying the shortest notice the chapter allows.
3. Buildings which the local authority has ordered to be vacated, and nothing else. A physical condition short of an official order is dealt with by an ordinary thirty-day cancellation on the ground of a change in the risk which substantially increases a hazard insured against.
4. Buildings which have been unoccupied for any period, including seasonal dwellings and buildings under construction, the section making vacancy itself the trigger because an empty building is the one the insurer can least easily protect against fire or vandalism.

Why: NDCC 26.1-39-14(4) to (8). The seasonal and under-construction exceptions to the sixty-day vacancy ground are the detail most likely to be tested.

The Ordinance or Law endorsement provides coverage for:

1. The insured's liability to the city for operating in violation of building codes
2. Increased costs from enforcement of building codes after a covered loss ✓
3. Flood damage to the building whenever a local ordinance requires floodproofing
4. Earthquake shake damage only, in designated seismic zones

Why: Ordinance or Law covers loss to the undamaged portion, demolition costs, and increased construction costs required to comply with current building codes after a covered loss.

A North Dakota producer completes more than the minimum continuing education hours in one year. What does NDCC 26.1-26-31.1(1) allow?

1. Credits over the minimum, without limit of number, may be carried forward to any later year in which the producer is licensed in this state, so that a producer who completes a large number of hours in one year may be relieved of the requirement for several years afterwards under this section of the chapter.
2. Credits over the minimum, not to exceed twelve hours, may be credited to the year next following the year in which they were earned. They may not be credited backwards to an earlier year, since the requirement for that year had to be satisfied by coursework completed within it and cannot be satisfied afterwards.
3. Credits over the minimum, not to exceed six hours, may be credited to the year next preceding or the year next following, and ethics hours may not be carried over at all, the three hours of ethics having to be completed within each of the years for which the producer reports compliance to the commissioner.
4. Credits for courses attended in any one year over the minimum number of hours required, not to exceed twelve hours, may be credited to the year next preceding the year in which they were earned or to the year next following the year in which they were earned. ✓

Why: NDCC 26.1-26-31.1(1): CREDITS FOR COURSES ATTENDED IN ANY ONE YEAR OVER THE MINIMUM NUMBER OF HOURS OF COURSEWORK REQUIRED, NOT TO EXCEED TWELVE HOURS, MAY BE CREDITED TO THE YEAR NEXT PRECEDING THE YEAR IN WHICH THEY WERE EARNED OR TO THE YEAR NEXT FOLLOWING THE YEAR IN WHICH THEY WERE EARNED. TWELVE hours, and it may go BACKWARDS as well as forwards - one year each way.

When an employer is held responsible for the negligent acts of an employee committed within the scope of employment, this is:

1. Contributory negligence
2. Vicarious liability ✓
3. Absolute liability
4. Strict liability

Why: Vicarious liability holds one party (e.g., an employer) responsible for the actions of another (e.g., an employee acting within the scope of employment).

The policy period condition specifies:

1. The deductible that applies to each covered loss during the term
2. The territory within which a covered loss must occur for coverage to apply
3. The number of persons who may qualify as insureds under the contract
4. The dates and times during which coverage is effective ✓

Why: The policy period sets the effective and expiration dates/times defining when coverage applies.

Where must an action against the North Dakota guaranty association be brought?

1. In the courts of this state, which have exclusive jurisdiction, with exclusive venue in the district courts, though the association may waive that venue in specific actions; a member insurer aggrieved by a final action appeals to the commissioner. ✓
2. In any court of competent jurisdiction, in this state or elsewhere, the association being deemed the insolvent insurer for all purposes and being amenable to suit wherever that insurer could have been sued upon the policy which gave rise to the claim.
3. Before the commissioner in the first instance, whose decision is final as to any question arising under the chapter, the district courts having no jurisdiction until the administrative remedy has been exhausted by the claimant.
4. In the district court of Burleigh County alone, that being the venue the Century Code fixes for proceedings against bodies created by statute and regulated by the insurance department of this state.

Why: NDCC 26.1-42.1-05(3), read with 26.1-42.1-06(3)(h): a member insurer aggrieved by a final action of the association APPEALS TO THE COMMISSIONER WITHIN THIRTY DAYS.

Against whom may a North Dakota basic no-fault insurer exercise subrogation?

1. Against the person legally responsible for the accident, including a secured person, the insurer standing in the shoes of its own insured and recovering what it has paid from whoever caused the loss whether or not that person carried the security which this chapter requires.
2. Against nobody. Basic no-fault benefits are paid without regard to fault and the chapter gives no right of recovery over, the cost of the benefits being borne by the insurer which collected the premium for them.
3. Against the injured person's own health insurer and any other collateral source which has paid for the same elements of loss, the section preventing a double recovery rather than shifting the loss to the person who caused the accident.
4. Against any person other than a secured person, to the extent of its obligations and to all of the rights of the injured person; and the subrogee has a lien to the extent of its obligations, no release of rights being effective against them without the subrogee's consent. ✓

Why: NDCC 26.1-41-16. The exclusion of a SECURED PERSON is the counterpart of the tort exemption in 26.1-41-08 - the chapter does not take back through subrogation what it gave by exemption.

A North Dakota producer failed to place a coverage on 1 March 2020. The claimant discovers the failure on 1 March 2025 and could not reasonably have discovered it earlier. Absent any fraud by the producer, by when must the action be commenced under NDCC 26.1-26-51?

1. By 1 March 2026. NDCC 26.1-26-51 takes the earlier of two years from discovery or reasonable discoverability and six years after performance of the service, so the six-year limb expires first, unless discovery was prevented by the licensee's fraud. ✓
2. By 1 March 2027. The claimant has two years from the discovery in 2025, and the six-year limb has no application where the claim was not discoverable earlier, the section taking the later of the two periods so that a claimant always has two years to sue.
3. By 1 March 2022. The two-year period runs from the failure to place the coverage rather than from its discovery, so that a claimant who discovers the matter in 2025 has already lost the right to sue upon it in the courts of this state.
4. There is no time limit in these circumstances. Where the claimant could not reasonably have discovered the act, omission or neglect within six years of the performance of the service, the section does not apply at all and the ordinary limitation periods of title 28 of the Century Code govern the action instead.

Why: NDCC 26.1-26-51: the action must be COMMENCED ON OR BEFORE THE EARLIER OF (1) TWO YEARS FROM THE DATE THE ALLEGED ACT, OMISSION, OR NEGLECT IS DISCOVERED OR SHOULD HAVE BEEN DISCOVERED BY THE EXERCISE OF REASONABLE DILIGENCE; OR (2) SIX YEARS AFTER PERFORMANCE OF THE SERVICE FOR WHICH THE CLAIM FOR RELIEF ARISES, UNLESS DISCOVERY WAS PREVENTED BY THE FRAUDULENT CONDUCT OF THE LICENSEE. Two years from discovery on 1 March 2025 would run to 1 March 2027, but six years from the failure on 1 March 2020 ends on 1 March 2026, and the section takes THE EARLIER.

The Personal Injury endorsement adds coverage for offenses such as:

1. Libel, slander, false arrest, and invasion of privacy ✓
2. Mechanical breakdown of household appliances
3. Flood losses to the dwelling
4. Earthquake damage to the foundation

Why: The personal injury endorsement broadens liability to include offenses like libel, slander, defamation, false arrest, and invasion of privacy, which are otherwise excluded.

Under the BACF, the "care, custody, or control" exclusion in liability coverage means the policy does NOT cover:

1. Damage to property the insured owns, transports, or has in its care ✓
2. Bodily injury to a passenger riding in another car that the insured's covered auto strikes
3. Injury to a pedestrian struck in a crosswalk by the insured's delivery van
4. Damage to another vehicle the insured's driver strikes while backing out of a loading dock

Why: BACF liability excludes property owned, transported, or in the care, custody, or control of the insured; such exposures require other coverage (e.g., cargo or property).

A client asks for flood coverage; the producer forgets to bind it, and a flood later destroys the home. This situation most directly creates exposure under:

1. The producer's E&O (errors and omissions) coverage ✓
2. The TRIA backstop, which reimburses uncovered flood losses
3. Federal crop insurance through the Risk Management Agency
4. The federal Do-Not-Call rules

Why: Failing to obtain requested coverage is a classic errors and omissions claim against the producer.

Which Homeowners form is intended for condominium unit-owners?

1. HO-6 ✓
2. HO-8
3. HO-4
4. HO-2

Why: HO-6 is the Unit-Owners form for condominium and co-op owners, covering personal property and improvements to the unit with a small base Coverage A limit.

Which of these is also OUTSIDE the scope of the North Dakota guaranty association chapter?

1. Inland marine insurance, automobile physical damage cover and crop hail insurance, none of which is within the chapter because each is written on a specially rated basis rather than according to a filed manual rate applicable to the class of risk insured.
2. Insurance of warranties or service contracts; title insurance; ocean marine insurance; a transaction transferring investment or credit risk unaccompanied by transfer of insurance risk; and any insurance provided by or guaranteed by government. ✓
3. Homeowners and private passenger automobile insurance, which are protected instead by the assigned claims plan of the no-fault chapter, the guaranty association existing for commercial policyholders whose claims the assigned claims plan does not reach.
4. Workers' compensation insurance alone. Every other kind of direct insurance written in this state is within the chapter, including title insurance and ocean marine insurance, which are direct insurance as much as any other line of business.

Why: NDCC 26.1-42.1-01(5) to (9). Workforce safety and insurance is excluded too, but by the definition of COVERED CLAIM in 26.1-42.1-02(5)(d) rather than by the scope section.

A North Dakota insured's credit information is found to be incorrect through the federal dispute resolution process. What must the insurer do?

1. Rerate the policy from the next renewal date. The correction of a credit report has no retrospective effect upon a premium already earned, and the insured's remedy for the period already run is against the consumer reporting agency which supplied the incorrect information to the insurer.
2. Reunderwrite and rerate the consumer within thirty days and refund any overpayment back to the date on which the incorrect information first entered the credit report, however long ago that was, the insured being entitled to be put in the position which correct information would have produced.
3. Reunderwrite and rerate the consumer within thirty days of the notice, and refund any overpayment back to the shorter of the last twelve months of coverage or the actual policy period. ✓
4. Cancel the policy and rewrite it on the corrected information, the premium for the cancelled policy being returned in full and a new policy being issued at the rate the corrected credit information supports.

Why: NDCC 26.1-25.1-04. Thirty days from notice; refund back to THE SHORTER of the last twelve months of coverage or the actual policy period.

The maximum NFIP building coverage limit available for a single-family residential structure under the regular program is:

1. $250,000 ✓
2. $100,000
3. $500,000
4. $150,000

Why: The NFIP caps building coverage for a single-family dwelling at $250,000, with a separate $100,000 limit available for contents.

The characteristic that requires certain acts, such as paying premium and providing proof of loss, before the insurer must pay a claim is that insurance is a contract of:

1. Aleatory nature
2. Conditional nature ✓
3. Indemnity
4. Adhesion

Why: Insurance is a conditional contract because both parties must meet certain conditions before the contract can be enforced.

Is restitution discretionary when a person is convicted under NDCC 26.1-02.1-02.1?

1. No, but restitution is limited to the insurance proceeds actually paid out. It does not extend to the insurer's investigation costs or to the lost earnings of any other person, those being recoverable only in a civil action brought by the person who lost them.
2. Yes. The court may order restitution where the victim has not been made whole by the insurer or by a civil judgment, the criminal penalty being the primary sanction and restitution an additional remedy which the court will consider on the application of the person who suffered the loss.
3. No. In addition to any other punishment, the person must be ordered to make restitution to the insurer or any other person for any financial loss sustained; the court decides only the extent and method of the restitution. ✓
4. Yes, and it is available only against a practitioner. Restitution in this chapter is a professional sanction rather than a criminal one, and it is ordered by the licensing authority after the administrative hearing which subsection 2 requires that authority to hold.

Why: NDCC 26.1-02.1-05(3): MUST BE ORDERED TO MAKE RESTITUTION. FINANCIAL LOSS is itself defined in 26.1-02.1-01(4) - loss of earnings, out-of-pocket and other expenses, repair and replacement costs, and claims payments.

Provisions that remove or restrict coverage for certain perils, property, or losses are found in the:

1. Insuring agreement
2. Declarations
3. Exclusions ✓
4. Supplementary payments

Why: Exclusions identify perils, property, hazards, or losses that the policy does not cover.

What must the North Dakota commissioner waive for a nonresident license applicant under NDCC 26.1-26-47.1(1)?

1. Every requirement of this chapter, including those imposed by section 26.1-26-20, for any nonresident applicant holding a valid licence from that applicant's home state, whether or not the home state awards nonresident licences to residents of this state on the same basis as this state awards them to residents of that state.
2. The examination requirement alone. Every other requirement of this chapter applies to a nonresident applicant in the same way as to a resident applicant, and the commissioner has no power to waive any of them however the applicant's home state may deal with residents of North Dakota applying there.
3. Any requirements for a nonresident license applicant with a valid license from the producer's home state, except the requirements imposed by section 26.1-26-20, if the applicant's home state awards nonresident licenses to residents of this state on the same basis. ✓
4. Any requirements for a nonresident applicant with a valid home state licence, including those imposed by section 26.1-26-20, provided the applicant's home state awards nonresident licences to residents of this state on the same basis, so that a reciprocal applicant need neither pay a fee nor submit any application here.

Why: NDCC 26.1-26-47.1(1): THE COMMISSIONER SHALL WAIVE ANY REQUIREMENTS FOR A NONRESIDENT LICENSE APPLICANT WITH A VALID LICENSE FROM THE INSURANCE PRODUCER'S HOME STATE, EXCEPT THE REQUIREMENTS IMPOSED BY SECTION 26.1-26-20, IF THE APPLICANT'S HOME STATE AWARDS NONRESIDENT LICENSES TO RESIDENTS OF THIS STATE ON THE SAME BASIS. The four conditions of 26.1-26-20(1) survive the waiver - they are the one thing not waived.

Which vehicles may be designated in a POLICY as NDCC 26.1-40-01(3) defines it?

1. Any motor vehicle registered in this state and insured under a policy issued to an individual, the definition being drawn by reference to the insured rather than to the vehicle, so that a truck or a trailer owned by a private individual for private use is within it as readily as a family automobile.
2. A private passenger automobile only. Motorcycles are written under their own form and are outside the termination provisions of this chapter, as are pickups and other light trucks whatever their load capacity.
3. A private passenger type vehicle; a four-wheel vehicle of 1,500 pounds load capacity or less not used in business; a motorcycle; and an unconventional vehicle - none used as a public or livery conveyance. ✓
4. Any vehicle of the private passenger type, and any four-wheel vehicle with a load capacity of one thousand five hundred pounds or less, including one used in the insured's business, the restriction on business use applying to the public or livery conveyance rather than to the owner's own trade.

Why: NDCC 26.1-40-01(3)(a) to (d). Four vehicle types, each with the public-or-livery and rented-to-others exclusions; the 1,500 pound vehicle also carries a no-business-use restriction.

Nonconcurrency refers to a situation where:

1. Two or more policies covering the same risk have differing terms or coverage, creating gaps ✓
2. The insured has allowed every applicable policy to lapse, so no coverage at all responds to the loss
3. Two or more policies covering the same risk carry identical terms, so each one responds the same way
4. Every policy covering the loss contributes an identical dollar amount regardless of the limits shown

Why: Nonconcurrency occurs when policies covering the same exposure do not have matching coverage terms, potentially leaving gaps or disputes.

A maintenance bond is best described as a surety bond that:

1. Guarantees the workmanship and materials of completed construction for a stated period ✓
2. Covers loss from dishonest acts of the contractor's employees on the job site
3. Guarantees payment to subcontractors, laborers, and material suppliers on the project, which is the function of a payment bond
4. Guarantees the contractor will honor the bid price it submitted

Why: A maintenance bond guarantees that completed work will be free from defects in workmanship/materials for a specified time.

May a North Dakota commercial fire policy exclude loss caused by terrorism?

1. Yes. NDCC 26.1-39-06(4) provides that a commercial insurance policy providing fire coverage in accordance with the section may exclude coverage for loss by fire insured against if the fire is caused directly or indirectly by terrorism. ✓
2. No. The standard policy insures against loss by fire whatever its cause, and the section permits no provision inconsistent with the standard form to be made a part of a policy issued on property in this state, so an exclusion of that kind is of no effect however clearly it is expressed.
3. Yes, any fire policy, personal or commercial, may exclude fire caused by terrorism, provided the exclusion is printed apart from the other conditions of the policy under the separate title which the section requires for provisions required by law to be stated in the policy.
4. Yes, but only with the commissioner's approval of the wording in each case, the exclusion being a departure from the standard form which the section allows the commissioner to permit on a showing that the reinsurance market requires it.

Why: NDCC 26.1-39-06(4). COMMERCIAL policies, fire caused DIRECTLY OR INDIRECTLY by terrorism.

Under a valued policy, the amount paid in the event of a total loss is:

1. The replacement cost of the property at the time of the loss
2. The amount stated (agreed) in the policy regardless of actual value ✓
3. The salvage value of whatever remains after the loss has occurred
4. The actual cash value at the time of loss, being replacement cost less depreciation

Why: A valued policy pays the agreed-upon amount stated in the policy upon total loss, common for fine art and antiques.

When must a North Dakota property and casualty insurer release a policyholder's loss information?

1. On any request from the policyholder or from a competing agent, within thirty days, the rule existing so that a policyholder may shop the account and the incumbent insurer being unable to delay the process by insisting upon formalities.
2. Within twenty days of a written request, which need not be notarized, the notarization requirement having been dropped when the rule was amended, and the information being sent to the policyholder alone rather than to any agent or broker.
3. Only upon the order of the commissioner made on a complaint by the policyholder, loss experience being the insurer's own underwriting information and not the property of the policyholder to whose account it relates.
4. On written and notarized request, within twenty days of receiving it, provided the request is dated, signed by the policyholder and says where to send the information. ✓

Why: NDAC 45-05-04-01. WRITTEN AND NOTARIZED, twenty days, and three conditions on the request.

Most Professional Liability/E&O and D&O policies are written on what kind of trigger?

1. Claims-made ✓
2. Named perils
3. Open peril
4. Occurrence

Why: Professional and management liability lines are typically claims-made, with a retroactive date and ERP options.