E&O
An insurance producer is ethically required to
Avoid saying or doing anything that could mislead the prospect - CORRECT ANSWER
A client paid $75,000 to a producer for surplus lines fishing vessel coverage
Breach of contract
A manufacturer had 5 business locations.
Breach of duty - CORRECT ANSWER
Insurance producers have fiduciary responsibilities obligating them to act in the best interest of their customers and the insurance companies they represent. A producer's fiduciary responsibilities to the insurer include
Complying with marketing rules on behalf of the insurer - CORRECT ANSWER
When face with an E&O claim, it is important for a producer to
Cooperate with the producer's E&O carrier - CORRECT ANSWER
In the life insurance policy suitability analysis, the producer must consider
Duration of the need, the client's premium paying ability, and risk tolerance - CORRECT ANSWER
A producer wrote automobile coverage for a 40 year old who was married with 2 children.
Failure to provide adequate coverage
A producer created a brochure for a new product and promoted it as an investment program that would provide current and future benefits.
False or prohibited advertising - CORRECT ANSWER
During his prospecting efforts, a producer identifies a common need among many prospects for retirement planning.
He must disclose that, although he is not a retirement planning expert, he works with specialists who provide retirement planning expertise - CORRECT ANSWER
An apartment building owner had a commercial property insurance policy
Immediately notify the insured of cancellation and obtain replacement coverage - CORRECT ANSWER
A producer wrote hull coverage on a fleet of tuna boats with a surplus lines, unrated carrier
Lack of knowledge - CORRECT ANSWER
Which of the following is a part of insurance law that determines producer status and binds the insurer for the producer's acts and errors?
Law of agency - CORRECT ANSWER
For more than 10 years a private aviation company worked with a particlular producer to purchase all of its insurance.
NOT - Breach of contract
A life insurance policy replacement may NOT be in the client's best interest due to
NOT - No new suicide or cons testability period NOT - Lower premiums for new coverage due to current attained age NOT - Increased value of the existing policy due to unpaid loans being deducted New surrender charges - CORRECT ANSWER
A broker sold a business owner a workers compensation policy.
Negligence - CORRECT ANSWER
All of the following are steps a producer should take when an E&O claim if filed EXCEPT
Provide agency records to the plaintiff's attorney - CORRECT ANSWER
Which of the following is NOT an appropriate method of utilizing a procedures manual?
Requiring only certain employees to use the manual - CORRECT ANSWER
An insured has a maximum limit of coverage available under her liability policy during a policy year, regardless of the number of claims made or the number of accidents.
Split - CORRECT ANSWER
An insurance producer plans to have an expert's article on estate planning appear in a magazine published by an organization in his city.
The article should contain a disclaimer indicating that no expertise should be inferred by the ad - CORRECT ANSWER
Prompt delivery of a new policy is very important for many reasons. Which of the following one of those reasons?
The free-look period - CORRECT ANSWER
A widow wanted to increase her income, so she started doing tailoring and alterations out of her home.
The producer should have advised the client of her need for additional business coverage - CORRECT ANSWER
An insurer is permitted to disclose an insured's protected health information for all of the following reasons EXCEPT
To help another agent make a sale - CORRECT ANSWER
When acting as a fiduciary, an insurance producer
Will be held to a higher standard of due care - CORRECT ANSWER
In any case where there is a controversy or dispute between the insurance company and the insured, the soliciting producer is considered the agent of the
insurer
A producer wrote a homeowners policy and gave the client and mortgage company evidence of property insurance form.
Breach of duty - CORRECT ANSWER
If an agent failed to ensure that an insurance application is complete and accurate, and properly signed prior to submitting it to the insurer, the agent may be found guilty of which of the following?
Breach of duty - CORRECT ANSWER
A producer advised her client not to purchase the collision (or loss) damage waiver for a rental car he needed while his own auto was in the shop.
Breach of duty to advise
For more than 10 years a private aviation company worked with a particular producer to purchase all of its insurance.
Breach of fiduciary duty - CORRECT ANSWER
A client requested flood insurance coverage from his agent
NOT - Breach of contract Breach of standard of care - CORRECT ANSWER
A producer completed an application for auto insurance and Dave the client a temporary insurance card.
NOT - Breach of duty Negligence - CORRECT ANSWER
A business owner received a workers compensation policy renewal and contacted a producer.
NOT - Breach of fiduciary duty Failure to place coverage - CORRECT ANSWER
A patient sustained brain damage due to complications during a surgery on January 3.
NOT - Breach of fiduciary duty NOT - None
All of the factors being equal, which of the following types of liability coverage will have the highest limit?
NOT - Combined single NOT - Per claim
A producer took an application for flood insurance but didn't tell the client that his mobile home was located in an unincorporated are that was ineligible for any coverage under the National Flood Insurance Plan.
NOT - Due care
An insurance producer has 2 companies.
NOT - ERISA FRAUD NOT - Discretionary control NOT - Recommending unsuitable purchases Breach of fiduciary duty - CORRECT ANSWER
A client purchased a welding truck for his son's business.
NOT - Endorsed the personal auto policy to include coverage for the welding truck Documented each conversation with the client and put a copy in the agency file - CORRECT ANSWER
A client corporation manufactures a tent-like covering for infant cribs.
NOT - Failure to place coverage
All of the following are examples of misrepresentation EXCEPT
NOT - Guaranteeing the dividends to be received or that were previously paid on an insurance policy NOT - Disguising the true nature of an insurance policy or class of insurance policies Using alternate words to explain the terms, benefits, or advantage of an insurance policy - CORRECT ANSWER NOT - Using a misleading name or title of a policy
A client asked his agent for an opinion on an auto policy for his teenage daughter.
NOT - Misrepresentation Breach of duty to advise - CORRECT ANSWER
A producer intentionally advised his client that his automobile coverage would take effect on April 2, but in truth, coverage was to be effective on April 3.
NOT - Negligence
Insurance companies may sue producers when which of the following occurs?
NOT - Producers sell insurance for other insurance companies
A producer retired a year ago; however, he just received a notice of a claim filed against him. Which of the following coverages in the E&O policy may protect the producer against liability?
NOT - Professional liability endorsement NOT - Commercial liability plan "Run-off" protection - CORRECT ANSWER NOT - Consideration clause
Which of the following is an example of an agent's fiduciary responsibilities?
NOT - Reviewing the client's insurance coverage Helping a client to file claims - CORRECT ANSWER
An E&O claim was filed against a producer.
NOT - Selling unsuitable products NOT - Failure to notify an insured of a cancellation
A producer's assistant printed an automated policy summary from the agency's computer system for a Businessowners policy and mailed it to the client
NOT - The assistant should have put a copy of the summary on the producer's desk for verification NOT - Only the producer should have printed the automate policy summary Ensure that the office has procedures in place to address double-checking generic/template documents against actual insurance company quotations and or/inforce coverage - CORRECT ANSWER NOT - Automated policy summaries should not be mailed to clients
A couple is getting divorced.
No, the agent is not legally able to do so without written authorization from all insureds - CORRECT ANSWER
A long-time client asked his insurance producer to obtain additional insurance.
Notify the client of the terminated insurance - CORRECT ANSWER
A client requested automobile insurance from his producer.
Notify the client that there was no coverage - CORRECT ANSWER