CHAPTER 15 STATE LAWS
Which of the following statements correctly describes a Guaranteed Renewable health insurance policy? A The insurer must renew the policy to a stated age, but may increase the premium in the underwriting class B The insurer can refuse to renew the policy only under certain circumstances listed in the policy C The insurer may not cancel during the policy term, but reserves the right to nonrenew the policy upon its expiration D The insurer cannot cancel the policy, change the benefits, or increase the premium; and must renew the policy at the option of the insured
A - A guaranteed renewable policy provides that the insurer must renew the policy to a stated age, but may increase the premium in the underwriting class.
Coverage for a catastrophic ground cover collapse is provided: A For no additional premium B At the option of the insurer C For an additional premium D Only at the request of the insured
A - Coverage for a catastrophic ground cover collapse must be provided, but no additional premium is necessary unless sinkhole coverage is also chosen.
Unlicensed entities is a regulatory concern due to which of the following issues? A Potential for criminal activity B State insurance department has minimal oversight over unlicensed entities C Federal funds will pay unpaid claims D Rates are higher
A - Unlicensed entities also have an adverse economic impact on authorized insurers, potential for unpaid claims due to dishonesty and lack of sound actuarial decisions and the state and federal guaranty funds do not pay for those unpaid claims.
Which of the following statements correctly describes a Guaranteed Renewable health insurance policy? A The insurer cannot cancel the policy, change the benefits, or increase the premium; and must renew the policy at the option of the insured B The insurer must renew the policy to a stated age, but may increase the premium in the underwriting class C The insurer can refuse to renew the policy only under certain circumstances listed in the policy D The insurer may not cancel during the policy term, but reserves the right to nonrenew the policy upon its expiration
B - A guaranteed renewable policy provides that the insurer must renew the policy to a stated age, but may increase the premium in the underwriting class.
As part of holding a Florida surplus lines agent license, a surplus lines agent must: A Be licensed for all lines of insurance B Be a member of the Surplus Lines Service Office Association C Satisfy the applicable seasoning requirements D Hold the CPCU designation
B - As part of holding a Florida surplus lines agent license, a surplus lines agent must be a member of the Surplus Lines Service Office Association. There is no requirement to be licensed for all lines of insurance, hold a CPCU designation, or seasoning.
Which renewable option provides the greatest degree of protection for the insured? A Guaranteed B Noncancellable C Optional D Conditional
B - Noncancellable provides the greatest degree of protection as the insurer cannot cancel the policy, change the benefits, or increase the premium, and must renew the policy, at the option of the insured.
If you are found guilty of any crime punishable by imprisonment one year or more, you must report it to the Insurance Department within how many days? A 20 B 30 C 60 D 15
B -If you are declared guilty of any crime that is punishable by imprisonment for 1 year or more, you must report it to the Insurance Department within 30 days, even if you pleaded "no contest" or it occurred outside of Florida or even the U.S.
The respective minimum limits of auto liability must be at least: A $20,000, $10,0000, $20,000 B $25,000, $60,000, $30,000 C $10,000, $20,000, $10,000 D $25,000, $50,000, $10,000
C
The Market Investigation division includes four sections with unique duties. Which of the following is not one of those four sections? A Market Analysis B Life and Health C Special Investigation Unit D Approval
D - The Property and Casualty section conducts exams and investigates business practices of authorized P&C insurers. The Special Investigation unit investigates illegal activity. The Market Analysis section identifies trends and date relating to the insurance industry.
When a policy covers the peril of Windstorm or Hail, a risk may be eligible for a credit to the wind portion of the premium. Which of the following do these credits NOT apply to? A Opening Protection B Roof-Wall Connection C Roof Shape D Flooring
D -The credits to the wind portion of the premium do not apply to flooring.
Under Florida law, how is the deductible determined when there are hurricane losses on multiple policies issued by the same insurer within a calendar year? A The deductible will be the highest amount stated in any one of the policies B The deductible will be the lowest amount stated in any one of the policies C The deductible will be capped at $500 D The deductible will be waived
A - If there are hurricane losses in a calendar year on more than one policy issued by the same insurer, the hurricane deductible will be the highest amount stated in any one of the policies.
With regard to market conduct examinations: A All accounts, records, documents, files, etc. must be freely available to the examiners B The costs of examinations are paid by the Market Investigation Division C The Special Investigations Unit conducts market conduct examinations D The Division of Financial Services of the Office conducts market conduct examinations
A - The costs of an examinations will be paid by the person or entity examined. The Special Investigations Unit investigates allegations of unauthorized and illegal insurance activity. The Division of Market Investigations conducts market conduct examinations.
Which of the following statements is false regarding PIP Coverage under auto insurance? A Disability benefits payable under this provision must be paid at least every 2 weeks B Death benefits of $2,500 per individual are in addition to the medical and disability benefits provided under the insurance policy C 80% of all reasonable expenses for medically necessary benefits are covered D Benefits are not payable to an insured person if they have committed insurance fraud relating to their coverage
B - Death benefits of $5,000 per individual are in addition to the medical and disability benefits provided under the insurance policy.
For a dwelling with limits of $250,000 or more, the insurer must offer hurricane deductibles of: A 5% of the policy dwelling limits B 2%, 5%, or 10% of the policy dwelling limits C 10% of the policy dwelling limits D 2%, of the policy dwelling limits
B - For a dwelling with limits of $250,000 or more, the insurer must offer hurricane deductibles of 2%, 5%, or 10% of the policy dwelling limits.
What determines whether an action is a negligence action? A The court B The substance of the action C The amount of loss incurred D The type of loss incurred
B - Neither a court, nor the type or amount of loss incurred, determines whether an action is a negligence action. The substance of the action determines whether an action is a negligence action.
Which state entity is responsible for approving a Certificate of Authority for an insurance company? A Department of Financial Services Division B State judicial system C Office of Insurance Regulation D State legislature
C - The Commissioner of the Office of Insurance Regulation also regulates insurance licensing, rates, policy forms, market conduct, claims, and company solvency.
A notice explaining the reason for the denial of insurance coverage applies in which of the following? A Homeowner rejection B Automobile nonrenewal C All notices of denials require a reason D Life insurance cancellation
C - The denial of an application for an insurance policy and each notice of nonrenewal or cancellation must be accompanied by the specific reasons for denial, including the specific underwriting reasons.
Which of the following statements is NOT correct with respect to premium financing? A The service charge by an insurer may not be more than 1/2 of the additional charge by premium finance companies B A premium finance agreement provides that the premium finance company will forward premiums to the insurer to be repaid by the insured C The service charge allowed for a premium finance company is the same as the service charge allowed for an agent D A premium finance company must file all forms, service charge, and interest rate plans with the Office for approval
C - The service charge allowed for a premium finance company is up to a maximum of $12 per $100 per year plus a nonrefundable additional charge up to $20, whereas the service charge allowed for an agent or agency cannot exceed $3 per installment, or $36 per year.
Which of the following is correct with regard to surplus lines? A Applicants for surplus lines coverage must verify that a diligent effort has been made to procure the full amount of required insurance from an authorized insurer before pursuing surplus lines coverage B The policy form under which the insurance is exported may be more favorable in coverage or rates to the insured than similar contracts in actual current use in Florida by the majority of authorized insurers C Residential and multi-peril residential policies are subject to the diligent effort requirements D The premium rate at which the coverage is exported may be lower than the rate in actual and current use by a majority of the authorized insurers for the same coverage on a similar risk
C - The surplus lines agent, not the applicant, must verify that a diligent effort has been made to procure the full amount of required insurance from an authorized insurer. Premiums at which the coverage is exported must not be lower than that rate in actual and current use by a majority of the authorized insurers for the same coverage. The policy form under which the insurance is exported must not be more favorable in coverage or rates to the insured than similar contracts in actual current use.
Which type of adjuster is hired on behalf of a third-party claimant to negotiate and settle a claim? A Independent B All lines C Public D Company
C -A public adjuster is a person hired for a fee on behalf of an insured or third-party claimant to negotiate and settle a claim. An all-lines adjuster is self-employed or employed by an insurer or an independent adjusting firm and determines the amount of a claim and settles the claim, but cannot concurrently be licensed as a public and all-lines adjuster.
After the first 60 days a policy is in force, the underwriter cannot cancel for which of the following reasons? A License suspension B Nonpayment of premium C Unacceptable driving record since effective date D Material misrepresentation
C -After the first 60 days a policy is in force, notice of cancellation will be effective only if it is based on nonpayment of premium, material misrepresentation or fraud, or suspension or revocation of the license or registration of the named insured or other operator covered by the policy.
Which of the following is NOT an unfair claims practice? A Failing to outline the allocation of a claim payment B Refusing to pay a claim without investigating it C Promptly acknowledging communications pertinent to a claim D Misrepresenting pertinent policy facts or provisions to claimants
C- Promptly acknowledging communications pertinent to a claim is required with respect to claim practices. The other choices are unfair claim practices.
Which of the following are part of the legal responsibility of maintaining an insurance license? A An agent must inform the Department of any change in address within 60 days B An agent must inform the Department of any change in address within 10 days C An agent must inform the Department of any change in address within 90 days D An agent must inform the Department of any change in address within 30 days
D - An agent is required notify the Department within 30 days of a change in address.
Coverage for a catastrophic ground cover collapse is provided: A Only at the request of the insured B For an additional premium C At the option of the insurer D For no additional premium
D - Coverage for a catastrophic ground cover collapse must be provided, but no additional premium is necessary unless sinkhole coverage is also chosen.
For a dwelling with limits of at least $100,000, but less than $250,000, the insurer may, in lieu of offering a policy with a $500 hurricane deductible, offer a policy that: A Contains up to a 6% hurricane deductible B Contains up to a 4% hurricane deductible C Contains up to a 10% hurricane deductible D Contains up to a 2% hurricane deductible
D - For a dwelling with limits of at least $100,000, but less than $250,000, the insurer may, in lieu of offering a policy with a $500 hurricane deductible, offer a policy that contains up to a 2% hurricane deductible.
A new agent must complete ______ hours of continuing education every ______ year(s). A 30 hours/3 years B 30 hours/2 years C 20 hours/1 year D 24 hours/2 years
D - New agents must take 24 hours of continuing education every 2 years and agents licensed for 6 years or more must complete 20 hours in intermediate or advanced courses.
Which of the following is not true of a nonadmitted carrier? A An agent may not do business with a nonadmitted carrier B A nonadmitted carrier is also unauthorized C A nonadmitted carrier is not licensed in Florida D The Florida Guaranty Association protects residents who buy from a nonadmitted carrier
D - Nonadmitted companies are not state licensed nor regulated by Florida, and the Florida Guaranty Association does not extend protection for Floridians who buy from these companies.
With regard to market conduct examinations: A The Division of Financial Services of the Office conducts market conduct examinations B The costs of examinations are paid by the Market Investigation Division C The Special Investigations Unit conducts market conduct examinations D All accounts, records, documents, files, etc. must be freely available to the examiners
D - The costs of an examinations will be paid by the person or entity examined. The Special Investigations Unit investigates allegations of unauthorized and illegal insurance activity. The Division of Market Investigations conducts market conduct examinations.
In the event of the total loss of a building, the insurer's liability under the policy if caused by a covered peril will be the amount of money for which the property was insured. This describes which of the following? A Replacement Cost B Insurance to Value C Agreed Value D Valued Policy Law
D - The policy Coverage A amount will be the insurer's liability regardless of the replacement cost of the dwelling, but it does not apply if there has been any change increasing the risk without the insurer's consent or fraudulent or criminal fault on the part of the insured or acting in the insured's behalf.