North Dakota Property & Casualty Insurance License, Practice Exams

An employee is injured in a car crash while driving between two job sites during the workday as part of assigned duties. This injury most likely is:

1. Compensable because it arose out of and in the course of employment ✓
2. Not compensable because it occurred while driving
3. Covered by the employee's personal auto policy exclusively
4. Compensable only under Part Two

Why: Travel that is part of the job's duties (not merely commuting) generally arises out of and in the course of employment and is compensable under workers' compensation.

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.

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.

A homeowner stores a guest's furniture temporarily. Property of others while on the residence premises is:

1. Covered only under Section ii liability, since the guest is not an insured
2. Subject to the $200 special limit for money
3. Never covered while owned by a non-insured
4. Coverable at the insured's option under Coverage C ✓

Why: Coverage C may, at the insured's option, apply to property of others while on the part of the residence premises occupied by an insured.

What is the primary purpose of a Commercial Package Policy (CPP)?

1. To insure only commercial automobiles owned by a single named insured
2. To provide property coverage only, and only for large corporations
3. To combine two or more coverage parts into a single policy for one insured ✓
4. To replace the need for separate liability coverage entirely

Why: A CPP allows two or more coverage parts (e.g., property, general liability, crime) to be combined under a single policy with shared declarations and conditions.

A peril is best described as:

1. A condition that increases the chance of loss
2. The reduction in value of property
3. The legal obligation to pay for a loss
4. The cause of a possible loss, such as fire or theft ✓

Why: A peril is the direct cause of a loss, such as fire, windstorm, or theft. A hazard increases the likelihood of a peril causing loss.

What is REPLACEMENT SERVICES LOSS under NDCC 26.1-41-01(18)?

1. The cost of hiring anyone to do what the injured person can no longer do, including a member of the injured person's own household who gives up work to provide the care, and including work which the injured person would have done for income had the injury not occurred.
2. Expenses not exceeding fifteen dollars per day for ordinary and necessary services from non-household members in place of those the injured person would have performed not for income; and nothing after death of that person. ✓
3. The cost of replacing the services of a household member who has been killed in the accident, payable to the dependent survivors at fifteen dollars per day for the period of their dependency upon the person who died.
4. Expenses not exceeding fifteen dollars per day in obtaining services from others, without any restriction as to who provides them, the figure being a daily allowance which the insurer pays on proof that some help was needed rather than on proof of what was actually spent upon it.

Why: NDCC 26.1-41-01(18). $15 a day; NOT from a household member; NOT for income-earning work; and nothing after death. SURVIVORS' REPLACEMENT SERVICES LOSS in subsection 23 is the mirror image and carries the same $15 figure.

A North Dakota insurer pays uninsured motorist benefits because the responsible driver's insurer is insolvent. Against whom may it recover?

1. Against the guaranty fund for the whole of its payment, the fund standing in the place of the insolvent insurer and answering to any person who has met an obligation which that insurer should have met under the policy it issued.
2. Not against the insured of the insolvent insurer, and not against the North Dakota guaranty fund, except for the amount that is in excess of the limits of liability of the policy of the insolvent insurer. ✓
3. Against the insured of the insolvent insurer alone, that person remaining personally liable for the damage caused and the insolvency of the liability insurer being a misfortune which falls upon the person who chose it rather than upon the injured party's own carrier.
4. Against nobody. An insurer which pays because of an insolvency pays under its own contract and has no rights of reimbursement or subrogation at all, the loss lying where the statute has placed it.

Why: NDCC 26.1-40-15.5(3). The paying insurer is pushed back to the excess above the insolvent insurer's limits.

A statement made by an applicant on an insurance application that is believed to be true to the best of the applicant's knowledge is a:

1. Waiver
2. Representation ✓
3. Concealment
4. Warranty

Why: A representation is a statement believed to be true to the best of one's knowledge; it need not be absolutely true, only true in material respects.

How does the BOP commonly differ from a Commercial Package Policy for property valuation?

1. The BOP excludes business income entirely unless it is added by a separate endorsement carrying a scheduled limit
2. The BOP contains no liability coverage, only property
3. The BOP typically provides replacement cost and includes business income automatically ✓
4. The BOP values both building and contents at actual cash value

Why: A BOP typically provides replacement cost valuation and includes business income/extra expense automatically (often without a separate dollar limit), unlike a CPP which adds these separately.

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.

A North Dakota life insurance beneficiary receives the blank form of proof of loss. What period applies?

1. Sixty days after the blank form is furnished to make proof of loss, which is the period the section fixes for every claimant, the distinction between life and other insurance in the section going to who receives the form rather than to how long that person has to complete it and return it to the insurer.
2. Ninety days after the death of the insured, the period running from the event insured against so that an insurer which is slow to furnish the form cannot extend the beneficiary's time by its own delay.
3. Ninety days after receipt of the blank form in which to make proof of loss. The life beneficiary's period is measured from receipt of the form rather than from the death, and it is thirty days longer than the period the section allows an insured to make proof of loss on insurance other than life insurance. ✓
4. A reasonable time. No period is fixed for a life claim, the section's periods applying to insurance other than life, and what is reasonable depending upon the difficulty the beneficiary has in obtaining the documents needed to prove the claim.

Why: NDCC 26.1-32-08. 90 days, and for the life beneficiary the period runs from RECEIPT of the blank form.

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 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 Business Income coverage, the 'period of restoration' begins:

1. 72 hours after the time of direct physical loss ✓
2. At the time of direct physical loss caused by a covered peril
3. When the policy is purchased
4. When the business reopens

Why: Business income payments are subject to the standard 72-hour waiting period in the ISO form (CP 00 30): although measured from the direct physical loss, coverage does not begin paying until 72 hours after the loss.

An employer headquartered in one state sends a crew temporarily into another state not listed on the policy. Which Part of the policy is designed to provide coverage in states not listed in Part One?

1. Part Two — Employers Liability
2. Part Three — Other States Insurance ✓
3. Part One — Workers Compensation
4. Part Four — Your Duties If Injury Occurs

Why: Part Three (Other States Insurance) extends coverage to operations in states listed in the Part Three item, providing benefits if the insured incurs WC obligations in a state not shown in Part One.

Under the CGL, the duty to defend ends when:

1. The policy is renewed and a fresh set of aggregate limits takes effect for the new term
2. The applicable limit of insurance has been exhausted by payment of judgments or settlements ✓
3. The insured retains its own attorney and the insurer reimburses those fees
4. The first claim of the policy period is filed against the insured

Why: The insurer's duty to defend ceases once the applicable limit is used up by judgments or settlements.

What may the North Dakota commissioner do after receiving a properly completed license application, under NDCC 26.1-26-14?

1. Nothing further. Once an application is properly completed the commissioner must either approve it or refuse it on the material it contains, any inquiry into the applicant's residence or business affiliations having to be made before the application is accepted as properly completed by the department.
2. Within thirty days after receipt, conduct investigations concerning the applicant's qualifications and residence only, the applicant's business affiliations being outside the commissioner's inquiry at the licensing stage and examinable only after a licence has been issued and the producer has begun to transact business.
3. Within a reasonable time after receipt, conduct investigations and propound interrogatories concerning the applicant's qualifications, residence, business affiliations, and any other matter which the commissioner believes necessary or advisable to determine compliance with this chapter or for the protection of the public. ✓
4. Within a reasonable time after receipt, conduct investigations and propound interrogatories concerning any matter the commissioner believes necessary, provided the applicant first consents in writing to the investigation, an applicant who declines to consent being entitled to have the application determined on the papers as filed.

Why: NDCC 26.1-26-14: WITHIN A REASONABLE TIME AFTER RECEIPT OF A PROPERLY COMPLETED APPLICATION FOR A LICENSE UNDER THIS CHAPTER, THE COMMISSIONER MAY CONDUCT INVESTIGATIONS AND PROPOUND INTERROGATORIES CONCERNING THE APPLICANT'S QUALIFICATIONS, RESIDENCE, BUSINESS AFFILIATIONS, AND ANY OTHER MATTER WHICH THE COMMISSIONER BELIEVES NECESSARY OR ADVISABLE TO DETERMINE COMPLIANCE WITH THIS CHAPTER OR FOR THE PROTECTION OF THE PUBLIC.

A North Dakota insurer's claims manager reports a fraudulent insurance act. May that manager claim the reward under NDCC 26.1-02.1-05.1(5)?

1. No. Persons required to report fraudulent insurance acts under section 26.1-02.1-06(1) are not eligible to receive a reward, and a person engaged in the business of insurance is exactly the person on whom that duty to report falls. ✓
2. No, because a reward is payable only to an individual not engaged in the business of insurance at all, the subsection excluding every employee of an insurer or of a producer whether or not that employee was under any duty to report the act to the department.
3. Yes, provided the manager signs the written complaint which the subsection requires. The reward is open to any individual whose report results in an admission or finding of fraud, and nothing in the section withholds it from a person who was under a duty to make the report in the first place.
4. Yes, but the reward is reduced to the department's assessment for costs, fifteen per cent of the penalty, where the person who reported was under a duty to do so, the full reward being reserved for a member of the public who volunteered the information.

Why: NDCC 26.1-02.1-05.1(5), last sentence. The mandatory reporter under 26.1-02.1-06(1) - A PERSON ENGAGED IN THE BUSINESS OF INSURANCE - is expressly excluded.

Defining key terms (often in quotation marks or bold) so they have a consistent meaning throughout the contract is the purpose of the:

1. Definitions section ✓
2. Endorsements
3. Exclusions section
4. Declarations

Why: The definitions section clarifies the precise meaning of specific terms used throughout the policy.

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.

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.

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.

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).

An 'occurrence' is defined in the CGL as:

1. An accident, including continuous or repeated exposure to substantially the same general harmful conditions ✓
2. Any claim first made against the insured and reported during the policy period, whenever the conduct occurred
3. Only a sudden and abrupt event happening at one identifiable time and place, so gradual exposure never qualifies
4. An intentional act by the insured that produces unexpected harm

Why: The CGL defines occurrence as an accident, including continuous or repeated exposure to substantially the same harmful conditions.

What must a North Dakota notice of cancellation say about the reasons for it?

1. It must state the reason for the cancellation in every case. The insured is entitled to know why the cover has been withdrawn without having to ask for it, and a notice which omits the reason is ineffective to cancel the policy to which it relates.
2. It need say nothing about the reasons. The statement of reasons belongs to the declination section and to the nonrenewal section, a cancellation being governed by the notice period alone.
3. It must state the reason, or state that the insurer will specify it in writing on the named insured's written request made ten days before the effective date - or within ten days after it for a five-day cancellation. ✓
4. It must state the reason and must also inform the insured of the right to appeal the cancellation to the commissioner within ten days of receiving the notice, the commissioner deciding within five business days whether the cancellation was justified.

Why: NDCC 26.1-39-15. Either the reason or an offer of the reason; ten days before the effective date, or ten days AFTER it for a five-day cancellation under 26.1-39-14; reply within ten days. The ten-day appeal and five-business-day decision belong to a LOSS OF REINSURANCE cancellation of a COMMERCIAL policy, 26.1-30.1-02(6).

Who is entitled to basic no-fault benefits from the insurer of a secured North Dakota motor vehicle?

1. Any person injured in an accident involving the secured motor vehicle, wherever in the world the accident occurs, the coverage following the vehicle and answering to everyone hurt by it without regard to fault or to where the person was at the time.
2. The owner and any relative of the owner, but only while occupying the secured motor vehicle itself, the benefits attaching to the vehicle rather than to the person so that an owner injured in somebody else's automobile must look to the policy on that vehicle.
3. The owner or a relative of the owner injured anywhere in the United States, its possessions or Canada while occupying any motor vehicle or as a pedestrian; any other occupant of the secured vehicle there; and any pedestrian in this state. ✓
4. Any person injured while occupying the secured motor vehicle, and no one else. A pedestrian struck by the vehicle has a claim against the driver in tort rather than a claim for benefits, the chapter compensating occupants only.

Why: NDCC 26.1-41-06(1) to (3). Note the geography: the owner and relatives are covered anywhere in the United States, its possessions or Canada, but a PEDESTRIAN struck by the secured vehicle is covered only IN THIS STATE.

What is NONPUBLIC PERSONAL FINANCIAL INFORMATION in the North Dakota privacy rules?

1. Any information about a consumer's finances which the licensee holds, including information taken from a public record such as a mortgage register, since the aggregation of public information about an individual is itself a privacy intrusion which the chapter is designed to prevent.
2. Information about a consumer's income, assets and credit history alone, the chapter protecting financial particulars rather than the fact of the relationship, so that a list of an insurer's policyholders is outside it whatever it was derived from.
3. Personally identifiable financial information and health information together, the two being treated alike throughout the chapter and subject to the same notice and authorization requirements in every case.
4. Personally identifiable financial information, and any list or grouping of consumers derived using such information that is not publicly available; it does not include health information or publicly available information except on such a list of consumers. ✓

Why: NDAC 45-14-01-04(20)(a) and (b). Health information is expressly carved out - it has its own rules in 45-14-01-17 and 45-14-01-18.

A business decides not to manufacture a dangerous chemical at all to eliminate the chance of related liability claims. This is an example of risk:

1. Transfer
2. Reduction
3. Avoidance ✓
4. Retention

Why: Risk avoidance eliminates the possibility of a particular loss by not engaging in the activity that creates the exposure.

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 neighbor is injured by the insured's dog and incurs medical bills. Even though no lawsuit is filed and fault is unclear, payment may be available under:

1. Coverage E — Personal Liability
2. Coverage F — Medical Payments to Others ✓
3. Coverage C — Personal Property
4. Coverage D — Loss of Use

Why: Coverage F pays reasonable medical expenses for injured third parties on a no-fault, goodwill basis without requiring a finding of legal liability.

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.

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.

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.

Who is a LICENSEE for the purposes of the North Dakota privacy rules?

1. Licensed insurers alone. A producer holds the insurer's information as its agent and is covered by the insurer's own privacy notice, so the chapter imposes no separate obligation upon the individual licensee who sells the product to the consumer.
2. All licensed insurers and producers and other persons licensed, authorized or registered - or required to be - under the insurance law of this state, and health maintenance organizations; but not either of the two North Dakota guaranty associations. ✓
3. Every person licensed by the department, including the two guaranty associations, which handle the claims of insolvent insurers and hold as much nonpublic personal information as any other body regulated under this title.
4. Any person doing insurance business in this state, licensed or not, together with any service provider to whom such a person discloses nonpublic personal information in the ordinary course of its business here.

Why: NDAC 45-14-01-04(17)(a). Both guaranty associations are excluded by name.

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.

Violations of 18 U.S.C. § 1033 can result in:

1. A written warning letter from the state insurance department and nothing further
2. Loss of eligibility to write NFIP flood policies, with no other consequence
3. A surcharge added to the producer's errors and omissions premium at renewal
4. Federal criminal penalties including fines and imprisonment ✓

Why: Section 1033 carries federal criminal penalties, including fines and imprisonment, depending on the offense and resulting harm.

Under the Business Auto Coverage Form, the covered "auto" definition generally includes:

1. Mobile equipment such as forklifts kept entirely on the insured's premises
2. Company aircraft and watercraft used to carry employees
3. Railcars operated on a private siding
4. Land motor vehicles, trailers, and semitrailers designed for use on public roads ✓

Why: A covered auto is a land motor vehicle, trailer, or semitrailer designed for travel on public roads, including attached machinery, but not most mobile equipment.

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 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.

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 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 need a North Dakota insurer NOT obtain current credit information for an insured, despite a request at annual renewal?

1. Where the insured has been with the insurer for more than thirty-six months, the chapter excusing a refresh for a long-standing policyholder whose loss experience with the insurer is a better guide to the risk than any credit report could be.
2. Where the insurer has already obtained a report within the last twelve months, that being the only exception, so that a consumer may in effect compel one recalculation a year and no more whatever the insurer's own practice may be.
3. Where it is treating the consumer as otherwise approved by the commissioner; where the insured is in the most favorably priced tier; where credit was not used when the policy was first written; or where the insurer re-evaluates on other factors from thirty-six months. ✓
4. Where obtaining the report would cost the insurer more than the premium saving the consumer could expect from it, the chapter excusing a refresh which would be uneconomic and leaving the judgment to the insurer subject to the commissioner's examination of its practice.

Why: NDCC 26.1-25.1-03(6)(c)(1) to (4). Four exceptions. In the most-favorably-priced-tier case the insurer MAY still order the report if that is consistent with its underwriting guidelines.

What are STOCK OPERATIONS AND ADVISORY BOARD CONTRACTS under NDCC 26.1-04-03(6)?

1. Issuing or delivering, or permitting agents, officers or employees to issue or deliver, agency company stock or other capital stock, benefit certificates, securities, or special or advisory board contracts promising returns and profits as an inducement to insurance. ✓
2. Issuing or delivering capital stock or securities of the insurer to any person, whether or not it is done as an inducement to insurance, an insurance company being forbidden by this subsection to raise capital from the public in this state except through a registered offering made under the securities laws of the state.
3. Issuing or delivering any special or advisory board contract promising returns and profits, but not the issuing of stock or securities, which is regulated by the securities commissioner rather than by the insurance commissioner and is outside the unfair trade practices chapter of this title of the Century Code.
4. Permitting an agent, officer or employee to hold stock in the insurer for which that person sells insurance, the conflict between the person's interest as a shareholder and duty as a producer being the mischief at which the subsection is aimed in the business of insurance in this state.

Why: NDCC 26.1-04-03(6), STOCK OPERATIONS AND ADVISORY BOARD CONTRACTS: ISSUING OR DELIVERING OR PERMITTING AGENTS, OFFICERS, OR EMPLOYEES TO ISSUE OR DELIVER, AGENCY COMPANY STOCK OR OTHER CAPITAL STOCK, OR BENEFIT CERTIFICATES OR SHARES IN ANY COMMON-LAW CORPORATION, OR SECURITIES OR ANY SPECIAL OR ADVISORY BOARD CONTRACTS OR OTHER CONTRACTS OF ANY KIND PROMISING RETURNS AND PROFITS AS AN INDUCEMENT TO INSURANCE. The closing words AS AN INDUCEMENT TO INSURANCE govern the whole of it.

Under the FCRA, an investigative consumer report differs from an ordinary consumer report because it includes:

1. Only the consumer's numerical credit score and the four factors that most depressed it, with no narrative gathered from any other person
2. Information about a consumer's character, reputation, and lifestyle obtained through interviews with associates or neighbors ✓
3. Records of criminal convictions copied from county courthouse files
4. Flood zone determinations drawn from FEMA mapping data

Why: An investigative consumer report gathers information on a consumer's character, general reputation, and mode of living through personal interviews, triggering additional notice requirements.

Which valuation method pays the cost to repair or replace property with new property of like kind and quality, without deduction for depreciation?

1. Agreed value
2. Functional replacement cost
3. Actual cash value
4. Replacement cost ✓

Why: Replacement cost pays to repair or replace with new property of like kind and quality with no deduction for depreciation.

How long must a North Dakota consultant keep the written agreement, and who may see it?

1. The consultant shall retain a copy for not less than two years after the agreement is signed, whether or not the services have by then been completed, and the copy must be produced to the client on request but need not be made available to the commissioner unless a complaint has been made about the consultant.
2. The consultant shall retain a copy of the agreement for not less than two years after completion of the services, and this copy must be available to the commissioner. The period runs from completion rather than from signature, and no subpoena is needed to obtain it from the consultant who is holding on to it. ✓
3. The consultant shall retain a copy for not less than five years after completion of the services, that being the ordinary record retention period for a licensee under this chapter, and the copy must be available to the commissioner and to any other person who asks the consultant to produce it in this state.
4. The consultant shall retain a copy for not less than two years after completion of the services. The copy is the consultant's private record and is available to the commissioner only upon a subpoena issued in a formal proceeding brought against the consultant in conformity with chapter 28-32 of the Century Code.

Why: NDCC 26.1-26-35: THE CONSULTANT SHALL RETAIN A COPY OF THE AGREEMENT FOR NOT LESS THAN TWO YEARS AFTER COMPLETION OF THE SERVICES. THIS COPY MUST BE AVAILABLE TO THE COMMISSIONER. Two years AFTER COMPLETION, and available without any further process.

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 mobile-home policy is most similar to which standard form, with endorsements addressing the unique nature of the dwelling?

1. A commercial package policy
2. A surety bond
3. A homeowners policy ✓
4. A workers compensation policy

Why: Mobile-home coverage is generally written as a modified homeowners policy with endorsements addressing transportation, tie-downs, and the structure's mobility.

In the Homeowners policy, the term 'insured location' generally includes all of the following EXCEPT:

1. Other premises acquired during the policy period for use as a residence
2. The residence premises
3. A commercial warehouse rented to a third party ✓
4. Vacant land owned by the insured

Why: Insured location includes the residence premises, newly acquired residences, vacant land, and certain other personal-use premises, but not a separately rented commercial property.

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.

Compared with a loss payable clause, a standard mortgage clause gives the mortgagee:

1. No rights of its own, so it must sue the insured to collect
2. Independent rights, including payment even if the insured's own claim is denied for certain acts ✓
3. The same derivative rights a loss payee has, so denial of the insured's claim also bars payment
4. Only the right to take salvage after the insurer pays

Why: A standard (union) mortgage clause grants the mortgagee independent rights, so it may still be paid even if the insured's claim is voided by certain acts.

The Business Auto Coverage Form (BACF) is designed primarily for:

1. Motorcycle clubs insuring members' bikes for rallies
2. Individuals who want to insure one family car used for commuting and personal errands
3. Businesses needing liability and physical damage coverage on their autos ✓
4. Personal use of motor homes and travel trailers

Why: The Business Auto Coverage Form provides liability and physical damage coverage for vehicles owned, hired, or used by a business.

In a Homeowners policy, damage by a vehicle to the dwelling is:

1. Covered only under the auto liability policy of the driver who struck the house, since the homeowners form defers to it
2. Covered as a named peril (vehicles), with limited coverage for the insured's own vehicle to fences/driveways ✓
3. Always excluded because vehicle impact is treated as a highway hazard rather than a property peril under the form
4. Covered under Coverage F medical payments, which pays for repair of the dwelling struck by a vehicle up to the Coverage A limit

Why: Damage caused by vehicles is a named peril; however, there are limitations for vehicles owned or operated by a resident and for damage to certain property like driveways.

What must the North Dakota commissioner do about an insolvency, and what may the commissioner do about an unpaid assessment?

1. Notify the association within three days of learning of an insolvency and supply net premium figures on request; and for an unpaid assessment, suspend or revoke the certificate after hearing or fine five percent of it monthly, with a hundred-dollar floor. ✓
2. Notify the association within thirty days of the order of liquidation and publish notice to policyholders; and for an unpaid assessment, refer the member insurer to the attorney general for collection, the commissioner having no power to fine or to touch the certificate of authority.
3. Apply to the district court for an order of liquidation and appoint the association as receiver of the insolvent insurer; and for an unpaid assessment, levy a fine of up to ten thousand dollars for each month the assessment remains unpaid by the member insurer.
4. Nothing in particular. The association learns of an insolvency from the liquidation proceeding itself, and an unpaid assessment is recovered by the association in a civil action in the district courts of this state, which have exclusive jurisdiction over its affairs.

Why: NDCC 26.1-42.1-07(1) and (2). THREE DAYS; and the fine is 5 per cent of the unpaid assessment PER MONTH with a $100 monthly floor. The association is also entitled to a copy of any complaint seeking an order of liquidation against a member.

An Extended Reporting Period (tail coverage) on a claims-made policy:

1. Removes the retroactive date from the policy so that injuries from any earlier year become covered claims
2. Extends the time within which claims may be reported for injuries that occurred during the policy period ✓
3. Increases the each-occurrence limit throughout the reporting window without any additional premium charge
4. Extends the period during which the injury itself must occur, adding a further year of covered exposure time

Why: A tail/ERP extends only the reporting window for claims arising from covered occurrences; it does not extend the period during which injury must take place.

When must a North Dakota producer become an appointed agent of an insurer under NDCC 26.1-26-13.1(1)?

1. An insurance producer may not act as an agent of an insurer unless the producer becomes an appointed agent of that insurer, and an insurance producer who is not acting as an agent of an insurer is not required to become appointed. ✓
2. Every licensed insurance producer must hold at least one appointment at all times, a licence without an appointment being of no effect in this state, and a producer whose last appointment is terminated must obtain another within thirty days or the licence ceases to continue in force under section 26.1-26-31.
3. An insurance producer may not act as an agent of an insurer unless appointed by that insurer, and a producer who is not acting as an agent of an insurer must still become appointed by at least one insurer in order to sell, solicit or negotiate insurance for any person in this state under this chapter of the Century Code.
4. An insurance producer must become appointed before submitting the first insurance application to an insurer, and a producer who has executed an agency contract with an insurer is appointed by that contract, the filing of the notice of appointment being a matter of record only and not a condition of the producer's authority to act.

Why: NDCC 26.1-26-13.1(1): AN INSURANCE PRODUCER MAY NOT ACT AS AN AGENT OF AN INSURER UNLESS THE INSURANCE PRODUCER BECOMES AN APPOINTED AGENT OF THAT INSURER. AN INSURANCE PRODUCER WHO IS NOT ACTING AS AN AGENT OF AN INSURER IS NOT REQUIRED TO BECOME APPOINTED. The second sentence is the one that is usually forgotten: a producer acting for the INSURED under 26.1-26-07 needs no appointment.

Which of the following best describes fraud in an insurance context?

1. A clerical error by the insurer in preparing the declarations page
2. An ambiguous policy provision that is capable of two readings
3. An honest mistake on the application that the applicant did not know was wrong, and would not have made had the true position been explained
4. An intentional act of deception to induce the other party to part with something of value ✓

Why: Fraud is an intentional deception or misrepresentation made to gain an unfair or unlawful advantage.

What duty does NDCC 26.1-26-35 lay on a North Dakota insurance consultant?

1. To serve the interests of the consultant's client and of any insurer with which the consultant places the client's business even-handedly, the consultant standing between the two of them, and to render such information and counsel as an ordinarily competent consultant would render in the circumstances of the case.
2. To exercise reasonable care and skill in advising the client, measured by the standard of a reasonably competent insurance consultant, the section imposing a duty of care rather than a duty of loyalty, and to disclose to the client any commission which the consultant receives from an insurer in connection with the advice.
3. To serve with objectivity the interests of the consultant's client and of the client's insurer alike, and to render such information, counsel and service as best serves the client's insurance needs, the consultant's own good faith opinion being immaterial where it differs from what an expert would objectively have advised.
4. To serve with objectivity and complete loyalty the interests of the consultant's client alone, and to render the client such information, counsel, and service as within the knowledge, understanding, and opinion, in good faith of the licensee, best serves the client's insurance needs and interests. ✓

Why: NDCC 26.1-26-35: AN INSURANCE CONSULTANT SHALL SERVE WITH OBJECTIVITY AND COMPLETE LOYALTY THE INTERESTS OF THE CONSULTANT'S CLIENT ALONE AND TO RENDER THE CLIENT SUCH INFORMATION, COUNSEL, AND SERVICE AS WITHIN THE KNOWLEDGE, UNDERSTANDING, AND OPINION, IN GOOD FAITH OF THE LICENSEE, BEST SERVES THE CLIENT'S INSURANCE NEEDS AND INTERESTS. THE CLIENT ALONE, and the standard is the licensee's own good faith opinion.

Hired auto physical damage coverage under the BACF can be provided by:

1. Symbol 7 alone, since it reaches every auto the insured operates, rented units included
2. An endorsement to the workers compensation policy covering autos employees rent on trips
3. Symbol 1, which covers any auto and so picks up hired units for physical damage
4. Endorsement or designation that extends physical damage to autos the insured hires or rents ✓

Why: Physical damage on hired autos is added via the appropriate symbol (e.g., 8) or hired auto physical damage endorsement, often with a stated limit.

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.

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.

The Dwelling Under Construction endorsement is designed to:

1. Cover a tenant's contents in a newly built dwelling until the owner's permanent policy is issued
2. Add theft coverage to a finished home, which the unendorsed dwelling form leaves out entirely
3. Provide earthquake coverage for the foundation and framing while the structure is being erected
4. Adjust coverage and reporting for a home being built where value increases over time ✓

Why: The dwelling under construction endorsement tailors coverage to a home being built, where the insurable value grows as construction progresses.

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.

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.

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.

Most workers' compensation laws impose a 'waiting period' before income (indemnity) benefits begin. The purpose is to:

1. Give the employer time to contest compensability
2. Delay medical benefits until a doctor files a report
3. Let the state audit the employer's payroll records
4. Avoid paying wage benefits for very short, minor absences ✓

Why: The waiting period (commonly a few days) means no wage-loss benefits are paid for minor, brief absences; medical benefits, however, usually begin immediately.

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.

A homeowner's water heater bursts and water damages flooring. Under HO-3, this sudden and accidental discharge of water is:

1. Generally a covered named peril (accidental discharge or overflow of water) ✓
2. Covered only under Section ii liability if a guest is injured by the accidental discharge of water
3. Subject to a $500 sublimit that applies to all plumbing-related losses
4. Excluded as flood damage, since the exclusion applies to any water that escapes onto floors

Why: Sudden and accidental discharge or overflow of water from a plumbing system is a covered broad-form peril; gradual seepage and flood are excluded.

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.

After a hearing the North Dakota commissioner finds an unfair practice. What must and what may the commissioner order under NDCC 26.1-04-13(1)?

1. The commissioner may order the person to cease and desist, and must in every case impose a monetary penalty of one thousand dollars for each act, whether or not the violation was wilful, the penalty being the means by which the chapter is enforced and the cease and desist order a matter of the commissioner's discretion.
2. The commissioner shall order the person to cease and desist; and for a willful violation of 26.1-04-03 may order up to one thousand dollars for each act and ten thousand in the aggregate, or five thousand for each act and fifty thousand in any six months where the person knew, and may revoke the license. ✓
3. The commissioner shall order the person to cease and desist and may order a monetary penalty of not more than ten thousand dollars for each act without any aggregate limit, and may suspend or revoke the person's licence whether or not that person knew or reasonably should have known of the violation of the section.
4. The commissioner shall order the person to cease and desist. A monetary penalty may be imposed only by a court, upon proof of a violation of the cease and desist order after it has become final, and the commissioner has no power to suspend or revoke a licence under this chapter of the Century Code.

Why: NDCC 26.1-04-13(1): IF, AFTER HEARING, THE COMMISSIONER DETERMINES THAT THE PERSON CHARGED HAS ENGAGED IN AN UNFAIR METHOD OF COMPETITION OR AN UNFAIR OR DECEPTIVE ACT OR PRACTICE, THE COMMISSIONER SHALL ORDER THE PERSON TO CEASE AND DESIST. IF THE PERSON CHARGED IS FOUND TO HAVE WILLFULLY ENGAGED IN A METHOD OF COMPETITION, ACT, OR PRACTICE IN VIOLATION OF SECTION 26.1-04-03, THE COMMISSIONER MAY ORDER ANY ONE OR MORE OF THE FOLLOWING: (a) PAYMENT OF A MONETARY PENALTY OF NOT MORE THAN ONE THOUSAND DOLLARS FOR EACH AND EVERY ACT OR VIOLATION BUT NOT TO EXCEED AN AGGREGATE PENALTY OF TEN THOUSAND DOLLARS UNLESS THE PERSON KNEW OR REASONABLY SHOULD HAVE KNOWN THAT PERSON WAS IN VIOLATION OF SECTION 26.1-04-03, IN WHICH CASE THE PENALTY MUST BE NOT MORE THAN FIVE THOUSAND DOLLARS FOR EACH AND EVERY ACT OR VIOLATION BUT NOT TO EXCEED AN AGGREGATE PENALTY OF FIFTY THOUSAND DOLLARS IN ANY SIX-MONTH PERIOD; (b) SUSPENSION OR REVOCATION OF THE PERSON'S LICENSE IF THE PERSON KNEW OR REASONABLY SHOULD HAVE KNOWN THAT PERSON WAS IN VIOLATION OF SECTION 26.1-04-03.

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.

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.

An insured increases jewelry coverage by scheduling items. Scheduled items differ from blanket Coverage C because they:

1. Are excluded from theft coverage unless a burglar alarm is installed
2. Have lower limits than Coverage C provides for the same class of property
3. Require a mortgage clause naming the lender before the schedule takes effect
4. Are individually listed and valued, often with broader perils and no deductible ✓

Why: Scheduled personal property is individually listed and valued, generally insured on a broader open-peril basis, often with no deductible and above Coverage C sublimits.

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.

An injured worker recovers WC benefits, then sues and recovers from a negligent third party who caused the injury. The WC insurer typically has what right regarding that recovery?

1. The right to rescind the employer's policy back to inception and bill the employer for benefits paid
2. A right of subrogation/lien to recover benefits it paid ✓
3. A duty to double the benefits already paid
4. No interest in the recovery, because the exclusive remedy rule bars the insurer from sharing in a tort settlement

Why: The WC insurer generally has subrogation (lien) rights against a third-party recovery, allowing it to be reimbursed for benefits paid out of the worker's recovery.

Which of the following best defines a "family member" under the PAP?

1. Only the minor children of the named insured who are listed by name in the Declarations page
2. A person related by blood, marriage, or adoption who is a resident of the named insured's household ✓
3. Any blood relative of the named insured, regardless of where that relative maintains a residence of his or her own
4. Any person living in the named insured's household, whether or not related, including roommates and boarders

Why: A family member is a person related to the named insured by blood, marriage, or adoption who resides in the household, including a ward or foster child.