Ch.15 - TX Insurance Laws

Person

An individual, partnership, corporation, or depository institution.

Floor plan floater

Provides coverage against loss or damage to financed merchandise in which a lending institution has interest or the merchandise is held as collateral.

Texas FAIR Plan

Provides residential property insurance in designated under-served areas located in Texas. Insurance is available to applicants whose property is insurable using reasonable underwriting standards but who have been declined by at least 2 insurers that are licensed to write, and are actively writing, residential property insurance in Texas.

Authorization

Under the insurance code it means a permit, license, Certificate of Authority, registration, or other authority issued or granted by the Commissioner or Department

Discrimination

Unfair discrimination in the terms and conditions of insurance policies, including during the processes of underwriting and rating, based on gender, race, ethnicity, income or marital status.

Unfair Comparisons

Unfair or incomplete comparison of 2 policies in advertisements, including comparisons of their benefits, dividends, or rates.

False advertising, misrepresentation, and defamation are all examples of which of the following? a. Unfair Trade Practices b. Unfair Claims Methods c. Unfair Claims Practices d. Unfair Marketing Practices

a. Unfair Trade Practices [Rebating, fraud, unfair comparison, and boycott, coercion, intimidation are also Unfair Trade Practices.]

General Property and Casualty agents must complete ______ continuing education hours each year. a. 10 b. 12 c. 20 d. 24

b. 12 [Individuals holding a general property and casualty license must complete 12 credit hours of continuing education annually. ]

Who is not covered by a workers' compensation policy? a. Employee injured while working b. Workers injured while working on a moving vessel c. Texans' Work program trainee d. Repairman working on employer's premises

b. Workers injured while working on a moving vessel [Workers on a vessel engaged in interstate or foreign commerce is not covered under Workers' Compensation insurance.]

What types of adjuster licenses are issued in Texas?

- All lines - Property, casualty, and surety - Workers' Compensation, employer's liability, and U.S. Longshoremen's and Harbor Workers' Compensation

Underinsured Motor Vehicle

A motor vehicle insured by liability limits less than those provided by the insured's policy for Underinsured Motorists Coverage.

Uninsured Motor Vehicle

A motor vehicle not protected by a motor vehicle liability policy and includes a motor vehicle insured by an insolvent insurer.

The Joint Underwriting Association (JUA)

A voluntary unincorporated association authorized by member insurers to act on their behalf in jointly underwriting, or in severally issuing, syndicate policies.

Transacting Insurance

Activities relating to the business of insurance, such as the solicitation and negotiation of insurance, including the execution of an insurance contract and the transaction of matters relating to the contract.

Compensable Injury

An injury arising out of the course and scope of employment for which Workers' Compensation is payable.

Misrepresentation

An untrue or misleading statement, the omission of a pertinent disclosure or a material fact, or a material misstatement of law, whether the misstatement is made verbally or in writing

How can someone establish Financial responsibility in Texas?

Financial responsibility may be established through: - A motor vehicle liability insurance policy that complies with requirements of insurance code - A surety bond filed with the Department - A deposit of $55,000 filed with the Comptroller or the county judge in the county in which the vehicle is registered - Self-insurance, if the insured has registered 25 or more vehicles in Texas

Boycott, Coercion, and Intimidation

Forceful actions intended to result in the unreasonable restraint of trade, or the establishment of a monopoly, in the business of insurance.

When will the Department will issue an agent license to an applicant?

If they: - are at least 18 years of age - have not committed an act for which a license may be denied - have submitted the application, appropriate fees, and any other required information - have passed a personal written licensing exam within the past 12 months

Certificate of Authority

Issued to applicants that have complied with state law, this certificate states the specific lines of insurance for which the insurer is authorized to transact business.

Texas Windstorm Insurance Association (TWIA)

Issues windstorm insurance, which provides coverage for loss resulting from direct damage to insured property as a result of windstorm or hail. All authorized property insurers in Texas must be members of the TWIA.

Injury

Physical damage or harm to the body, or Disease or infection naturally resulting from physical damage or harm to the body

Repetitive Trauma Injury

Physical harm or damage to the body that occurs as the result of repetitious, physical, traumatic activities that occur over time and in the course and scope of employment.

The Texas Automobile Insurance Plan Association (TAIPA)

Provides auto insurance to eligible individuals who are unable to obtain automobile insurance through standard insurance markets. To be eligible for auto liability coverage from the Association, an applicant's request for auto insurance must have been rejected by at least two licensed, authorized, and active insurers.

The maximum weekly benefit paid for workers' compensation benefits is _____% of the state average weekly wage. a. 100 b. 67 c. 50 d. 25

a. 100 [The maximum weekly benefit paid for temporary income benefit is 100% of the state average weekly wage rounded to the nearest whole dollar.]

Which domicile is organized under the laws of Canada? a. Alien b. Admitted c. Foreign d. Domestic

a. Alien [An alien insurer is organized under the laws of any jurisdiction outside of the United States, whether or not it is admitted to do business in this state.]

Which company's Board of Directors is elected by the policyholders? a. Mutual b. Reciprocal c. Stock d. Fraternal

a. Mutual [A Board of Trustees or Directors directs the mutual company operations and is elected by policyholders.]

If the Commissioner notifies a producer that his insurance license will be suspended, and the producer requests a hearing to appeal the suspension, within how many days must the Commissioner hold a hearing to resolve the issue? a. 21 b. 10 c. 30 d. 15

b. 10 [First, the Commissioner will order that the license be suspended; second, the producer must request a hearing within 30 days after receiving the order; and third, the Commissioner must hold the hearing within 10 days after receiving the hearing request.]

An agent's insurance license expires on the ______ anniversary of the date the license is issued. a. 1st b. 2nd c. 5th d. 3rd

b. 2nd [As long as the license has not been suspended or revoked by the Commissioner, the insurance license expires on the 2nd anniversary of the date the license is issued.]

Income benefits are subject to a waiting period of: a. 10 days b. 7 days c. 30 days d. 20 days

b. 7 days

Which of the following statements is correct with respect to medical benefits? a. Medical benefits are payable from the date the injury is diagnosed b. Medical benefits are payable from the injury date c. An employee may receive medical treatment from any physician d. An insurer is not liable for medical costs related to spinal surgery, except in a medical emergency

b. Medical benefits are payable from the injury date [An employee must receive medical treatment from a list of Division-approved physicians. An insurer is liable for medical costs related to spinal surgery, as provided by statute, except in a medical emergency. Medical benefits are payable from the injury date.]

An adjuster applicant is not required to meet which of the following in order to be licensed? a. Texas resident b. Post a $50,000 bond c. Pass an exam d. Trained on handling claims

b. Post a $50,000 bond [The surplus lines agent must post a bond. The adjuster is not required to post a bond, but is required to have some experience and training in handling claims.]

If a licensed agent violates a Texas insurance law, which of the following is not a disciplinary action taken by the Commissioner? a. Pay a penalty b. Retake the licensing exam c. Revoke the license d. Reprimand the licensee

b. Retake the licensing exam [If an individual violates Texas insurance code, insurance law in another state, or a rule of the Department of Insurance, the person may also be placed on probation instead of suspending the license.]

Before issuing a nonresident license, the Department must find that the applicant: a. Is experienced in the selling of insurance b. Is at least 21 years of age c. Has not committed an act for which a license may be denied d. Has been a nonresident agent in any state within the past 10 years

c. Has not committed an act for which a license may be denied [Past experience is not a requirement for a nonresident license being age 21 is not a requirement for a nonresident license.]

Which of the following is not a duty that the Commissioner must administer? a. Enforce the state insurance laws b. Approve an insurance license for a producer c. Make state insurance laws d. Administer the Workers' Compensation system

c. Make state insurance laws [The Commissioner does not make or establish state insurance laws.]

A Joint Underwriting Association: a. Is not subject to examination by the Commissioner b. Is an association made up of employers c. May act only on behalf of association members who are admitted and licensed to do business in Texas d. License expires 1 year from the issuing date unless renewed

c. May act only on behalf of association members who are admitted and licensed to do business in Texas [A Joint Underwriting Association license expires 3 years from the issuing date unless renewed. A Joint Underwriting Association is made up of authorized insurers. A Joint Underwriting Association is subject to examination by the Commissioner.]

Which of the following is not a fiduciary duty of an agent? a. Forward premiums collected from the insured to the insurer on a timely basis b. Do not just recommend the most profitable coverage for the company c. Serve the best interests only of the insurer d. Keep premium funds in a trust account separate from other funds

c. Serve the best interests only of the insurer [Although agents represent the insurer, the agent must also serve the best interests of the applicant or the insured.]

A Certificate of Authority is issued to an insurer for which of the following reasons? a. The insurer has passed a market conduct exam by the Department b. A Certificate is given for each specific kind of insurance conducted by the insurer c. The insurer is approved to transact insurance business d. Recognizes the insurer for excellent claim handling

c. The insurer is approved to transact insurance business [The Certificate of Authority that gives the insurer approval to act as an insurer is effective until suspended or revoked.]

The death benefit amount is ______ % of the employee's average weekly wage. a. 90 b. 65 c. 55 d. 75

d. 75 [The death benefit amount is 75% of the employee's average weekly wage, and entitlement to the death benefit begins on the day after the employee's death.]

The Floor Plan Merchandise floater covers which of the following? a. Architect's blueprints b. Contractor's floor plans c. Department store's inventory d. Car dealer's cars

d. Car dealer's cars [The floor plan floater provides coverage against loss or damage to financed merchandise, such as the inventory of cars at a car dealer. A lending institution has interest or the merchandise is held as collateral.]

Which of the following is NOT a reason for which the Commissioner may revoke, suspend, or refuse to renew a license? a. Been convicted of a felony b. Obtained a license by misrepresentation c. Offered a premium rebate to an insured d. Issued insufficient coverage to a customer through apparent authority

d. Issued insufficient coverage to a customer through apparent authority [If a licensee issues insufficient coverage to an individual through apparent authority, this is not grounds for license suspension, non-renewal, or revocation. Being convicted of a felony, obtaining a license by fraud or misrepresentation, and offering a premium rebate to an insured are all grounds for license suspension, non-renewal, or revocation.]

Occupational Disease

A disease that arises out of and in the course and scope of employment and causes physical harm or damage to the body. An "occupational disease" includes a repetitive trauma injury.

Texas Property and Casualty Insurance Guaranty Association

A nonprofit, unincorporated legal entity composed of all property and casualty insurers that transact insurance business in Texas. The Association pays covered claims against an insolvent insurer.

The death benefit amount is _____ % of the employee's average weekly wage. a. 90 b. 75 c. 65 d. 55

b. 75 [The death benefit amount is 75% of the employee's average weekly wage. ]

Which of the following does NOT qualify as evidence of financial responsibility? a. Auto insurance binder b. Savings account statement c. Auto insurance card d. Certificate of surety bond

b. Savings account statement [Evidence of financial responsibility may take the form of an motor vehicle insurance policy, standard proof of insurance form, insurance binder, certificate of deposit, or certificate of self-insurance. ]

For what types of loss may a person obtain insurance from the Texas Windstorm Insurance Association? a. Only hail b. Only windstorm c. Windstorm and hail d. Windstorm and fire

c. Windstorm and hail [Windstorm insurance is for direct damage caused to covered property by windstorm or hail.]

Fraudulent Insurance Acts

An act that violates a penal law and is committed while engaging in the insurance business, as part of an insurance transaction, or as a part of an attempt to defraud an insurer

Which of the following does NOT constitute acting as an agent? a. Transmitting an insurance policy of an insurer b. Collecting insurance premiums c. Examining a risk d. Examining claims for an insurer

d. Examining claims for an insurer [Examining claims for an insurer does not constitute acting as an agent.]

Choose the incorrect statement about a Joint Underwriting Association (JUA). a. License expires every 3 years b. Must have a Certificate of Authority to transact business c. Acts only on behalf of association members who are admitted and licensed d. Is not subject to an exam by the Commissioner

d. Is not subject to an exam by the Commissioner [A JUA is subject to an exam by the Commissioner as well as an annual audit by an independent CPA and the audit report must be filed with the Commissioner.]

With regard to examination of records by the Department of Insurance, the Department: a. Must conduct an examination of an insurer at least once every 7 years b. Must conduct an examination of an insurer at least once every 10 years c. May, but is not required to examine insurance companies d. Must conduct an examination of an insurer at least once every 5 years

d. Must conduct an examination of an insurer at least once every 5 years

Which of the following is NOT a fiduciary duty of an agent? a. Forward premiums collected from the insured to the insurer on a timely basis b. Serve the best interests of the insurer c. Keep premium funds in a trust account separate from other funds d. Recommend the most profitable coverage for the agent

d. Recommend the most profitable coverage for the agent [Fiduciary duties require an agent to put the best interests of the insurer and applicant before his/her own interests. ]

Which person would not be covered under a Workers' Compensation policy? a. Repairman working on employer's premises b. Employee injured while working c. Texans' Work program trainee d. Seaman injured on board moving vessel

d. Seaman injured on board moving vessel [A master of, or seaman on, a vessel engaged in interstate or foreign commerce is not covered under Workers' Compensation insurance.]

After the 60-day underwriting period, an insurer cannot cancel a personal auto policy for which of the following reasons? a. The insured submitted 3 claims in the past 5 years b. Non-payment of the policy premium c. The spouse's driver's license was suspended d. The insured submitted a fraudulent claim.

a. The insured submitted 3 claims in the past 5 years [After the 60-day underwriting period, the personal auto policy cannot be cancelled for claim experience. The insurer must wait for the anniversary date to nonrenew the policy]

Individual

A natural person, whether a resident of Texas or a nonresident.

Agent

A person authorized and licensed to transact insurance on behalf of an insurer, and includes a subagent and any other person who performs the acts of an agent

Subagent

A person who acts for, or on behalf of, an agent by soliciting, negotiating, or procuring insurance or collecting premiums payments for insurance. It does not matter whether the subagent acts verbally, in writing, electronically, or in any other fashion. Additionally, a person is a subagent even if he/she simply acts as a subagent.

Adjuster

A person who investigates or adjusts losses on behalf of an insurance company

Managing General Agent (MGA)

Any person, firm, or corporation responsible for supervising the local agency and field operations of an insurance company or carrier within this state. An MGA is also one authorized by a company or carrier to accept or process, on its behalf, policies produced and sold by other agents

False Advertising

Publicly making any untrue, deceptive, or misleading assertion or statement about any person working in the insurance business or about the business itself when the assertion or statement is: - Made directly or indirectly, and -Published, circulated, or placed before the public

Financial Responsibility

The ability to pay damages when legally liable for an auto accident and arises out of the ownership, maintenance, or use of a motor vehicle

Medical Benefit

The payment for health care reasonably required by a compensable injury if it is intended to: - Cure or relieve the effects of the compensable injury. - Promote recovery. - Enhance the employee's ability to return to work.

Defamation

The publication or circulation of a statement that is false, maliciously critical of, or derogatory to the financial condition of an insurance company if it is intended to injure any individual or organization engaged in the business of insurance. (Defamation includes the aiding, abetting, or encouragement of such a statement whether it is made verbally or in writing.)

An insurer is permitted to nonrenew a homeowners policy if the insured submits how many claims within a 3-year period? a. 3 b. 4 c. 5 d. 6

a. 3 [An insure may nonrenew a homeowners policy if 3 or more claims were submitted within any 3-year period]

Who is NOT eligible for an agent license in this state? a. A 17-year-old who passed the licensing exam 6 months ago b. A 25-year-old who passed the licensing exam 2 months ago c. A 30-year-old who submitted the appropriate application and fees 1 week ago d. A 43-year-old who submitted the appropriate application and fees 1 month ago

a. A 17-year-old who passed the licensing exam 6 months ago [Eligible applicants for an agent's license must be at least 18 years old. ]

For which employee is an employer NOT liable for workers' compensation benefits? a. An intoxicated employee b. An employee taking prescription drugs c. A careless employee d. An employee who accidentally injured himself

a. An intoxicated employee [A workers' compensation carrier is not liable for an injury that occurred while an employee was in a state of intoxication. ]

The Texas Automobile Insurance Plan Association (TAIPA) provides insurance for which of the following reasons? a. Applicant was rejected by two insurers b. Applicant's driver's license was suspended c. Applicant had no prior insurance d. Applicant has a poor claims history

a. Applicant was rejected by two insurers [To be eligible for auto liability coverage from the Association, an applicant must be rejected by at least two licensed, authorized, and active insurers.]

An automatic fine of $50 per credit hour applies if a licensee fails to comply with what continuing education requirement? a. Complete the required number of continuing education hours during a licensing period b. Obtain a life and health license during the first licensing period c. Prepare 30 course completion certificates during a licensing period d. Issue a course completion certificate within 60 days of completing a course

a. Complete the required number of continuing education hours during a licensing period [Licensees are assessed an automatic fine of $50 per credit hour for failure to complete the required number of hours within a licensing period.]

An agent's license expires on the _____ anniversary of the date the license was issued. a. First b. Second c. Third d. Fifth

b. Second [An insurance license will expire on the second anniversary of the date it was issued.]

Which of the following is NOT transacting insurance? a. Collecting an insurance payment b. Delivering an insurance contract c. Completing continuing education requirements d. Providing an insurance proposal

c. Completing continuing education requirements [Transacting insurance involves activities relating to the business of insurance.]

An employee's average weekly wage is calculated on which of the following basis? a. The previous calendar year's earnings b. The previous week's earnings c. The wages paid during the 13 weeks before the injury d. The wages paid during the 3 weeks after the injury

c. The wages paid during the 13 weeks before the injury [An employee's average weekly wage is calculated based on the wages paid during the 13 consecutive weeks immediately preceding an injury.]

A person must report a fraudulent insurance act to the Department's insurance fraud unit within ____ days after determining the act has occurred or is about to occur. a. 60 b. 90 c. 45 d. 30

d. 30 [A person must report a fraudulent insurance act to the Department's insurance fraud unit within 30 days after determining the act has occurred or is about to occur.]

The minimum financial responsibility liability limit in Texas is _____. a. 10/20/5 b. 15/30/10 c. 25/50/15 d. 30/60/25

d. 30/60/25 [$30,000 Bodily Injury per person per accident, $60,000 Bodily Injury total per accident, $25,000 Personal Property per accident]

Who does not qualify for exemption from continuing education requirements necessary to maintain an insurance license? a. Nonresident agent b. Agent licensed for 25 years c. Agent who is in a coma d. Agent who serves in the Army Reserves

d. Agent who serves in the Army Reserves [In order to qualify for an exemption for military duty, an agent must be on active duty in a combat theater.]

Which of the following facts is TRUE about UM/UIM coverage in Texas? a. UM/UIM coverage is mandatory b. Hit-and-run accidents are NOT covered c. Mandatory UM/UIM coverage is $100,000 d. An insured may decline UM/UIM coverage

d. An insured may decline UM/UIM coverage [UM/UIM coverage must be included on an auto policy unless the insured rejects it in writing. ]

Who must report any actual or suspected act of insurance fraud to the Department or the NAIC within 30 days? a. Only insurers b. Only agents c. Only agents and insurers d. Any person

d. Any person [Any person who discovers or suspects that insurance fraud has been, or will be, committed must file a report with the Department or the NAIC within 30 days.]

Risk Manager

A person who holds himself/herself out to the public and examines, assesses, or evaluates risks for a person wishing to obtain or renew a property and casualty insurance policy in Texas

Insurance Service Representative

A person who is a salaried employee of a property and casualty agent who only performs assigned duties in the agent's office

Who among the following are NOT exempt from continuing education requirements? a. An agent under extenuating circumstance who makes a timely written request to the Commissioner b. An agent licensed for limited lines c. Nonresident licensees in compliance with their resident state's continuing education requirements d. An individual continuously licensed for at least 20 years

b. An agent licensed for limited lines [An agent licensed for limited lines must complete 5 credit hours of continuing education annually.]

What line of insurance does NOT require a licensee to complete a certification course, and a specified number of continuing education hours, if he/she acts as an agent with respect to insurance products in that specialty? a. LTC partnership insurance b. Medicare-related insurance c. Annuities a. Auto insurance

a. Auto insurance [Lines of insurance that require certification courses and a specified number of hours of continuing education are small employer health benefit plans and LTC partnership, Medicare-related, and annuity products. ]

Which of the following statements about continuing education is true? a. Every licensee must complete 2 continuing education hours on the topic of ethics b. Every licensee must complete 3 continuing education hours on the topic of flood insurance c. At least 90% of continuing education hours must be completed online d. At least 50% of continuing education hours must be completed via webinar

a. Every licensee must complete 2 continuing education hours on the topic of ethics [Each licensed individual must complete two continuing education hours on the topic of ethics during every license renewal period.]

A licensed agent is required do which of the following before transacting insurance in Texas? a. Obtain an appointment from an insurer b. Pass an appointing exam c. Obtain a Certificate of Authority d. Obtain an insurance counselor's license

a. Obtain an appointment from an insurer [Licensed agents are not permitted to transact insurance as an agent until they have been appointed by an insurer authorized to transact insurance in this state.]

In addition to any other remedy available for the violation of insurance laws, the Department may: a. Place on probation a person whose license has been suspended b. Impose a penalty of imprisonment c. Hold the agent's estate accountable d. Forbid an agent from transacting insurance in any state

a. Place on probation a person whose license has been suspended [The Commissioner does not impose prison sentences, hold an agent's estate accountable, or forbid transacting insurance in any state other than Texas for violation of insurance laws.]

The respective minimum limits of auto liability must be at least: a. $25,000, $50,000, $10,000 b. $30,000, $60,000. $25,000 c. $60,000, $30,0000, $25,000 d. $25,000, $60,000, $30,000

b. $30,000, $60,000. $25,000 [The minimum limits of liability are $30,000 for bodily injury or death of one person in one accident, $60,000 per accident for bodily injury or death of 2 or more persons in one accident, and $25,000 per accident for property damage.]

A new policy form must be submitted to the Commissioner at least _______ days before the date the policy form will be used. a. 45 b. 60 c. 90 d. 120

b. 60 [Each form or endorsement must be filed with the Commissioner no later than the 60th day before the date of use.]

Which of the following is NOT correct with respect to a joint Underwriting Association? a. A JUA must have a Certificate of Authority to transact business b. A JUA is not subject to an examination by the commissioner c. A JUA only acts on behalf of association members d. A JUA's license expires every 3 years

b. A JUA is not subject to an examination by the commissioner

In addition to the instructor, who must visually monitor a classroom continuing education course at all times? a. An employee of an insurer b. A disinterested third party c. A student attending the course d. A student's spouse

b. A disinterested third party [Instructors and disinterested third parties must visually monitor a classroom continuing education course at all times.]

The term, 'Employee', does not include: a. A trainee under the Texans' Work program b. A master of, or seaman on, a vessel engaged in interstate or foreign commerce c. A person whose employment is in the usual course and scope of the employer's business d. A person employed in construction, remodeling, or repair work for the employer on the premises of the employer

b. A master of, or seaman on, a vessel engaged in interstate or foreign commerce ['Employee' includes person whose employment is in the usual course and scope of the employer's business, a person employed in construction, remodeling, or repair work for the employer on the premises of the employer and a trainee under the Texans' Work program. 'Employee' does not include a master of, or seaman on, a vessel engaged in interstate or foreign commerce.]

The Texas Property and Casualty Insurance Guaranty Association pays covered claims against which of the following? a. Workers' compensation carriers that have denied coverage b. Insolvent insurers c. Labor associations that have denied coverage d. Unauthorized insurance companies

b. Insolvent insurers

Which of the following statements is correct with regard to the FAIR Plan? a. Losses are paid by the state b. Insurers, except TWIA, must be members c. Property must be an uninsurable risk d. The FAIR Plan is designed to provide a means to purchase basic property insurance at reduced rates

b. Insurers, except TWIA, must be members [The FAIR Plan is designed to provide a means to purchase basic property insurance when it cannot be obtained through standard or regular markets. Losses are paid by the insurance industry in the private sector; and property must be insurable.]

A Certificate of Authority is issued to an insurer for which of the following reasons? a. It recognizes the insurer for excellence in handling claims b. It certifies the insurer is authorized to transact insurance in this state c. It certifies the insurer has passed a market conduct exam in this state d. It certifies the insurer can break some laws

b. It certifies the insurer is authorized to transact insurance in this state [The Certificate of Authority that gives the insurer approval to act as an insurer is effective until suspended or revoked.]

Which of the following is not a duty the Commissioner must administer? a. Enforce state insurance laws b. Make state insurance laws c. Administer the workers' compensation system d. Approve an insurance license for a producer

b. Make state insurance laws [The Commissioner must enforce state insurance laws, not establish them.]

What prohibited trade practice does an agent commit when he lies about policy terms in order to convince a policyholder to cancel an existing policy in order to buy a new policy? a. Rebating b. Misrepresentation c. Defamation d. False advertising

b. Misrepresentation [Misrepresentation involves a false statement made to a policyholder about a policy to induce the policyholder to lapse, cancel, or surrender an existing policy]

Which of the following is not a prohibited claims settlement practice? a. Misrepresenting a material fact to a claimant b. Requiring a claimant's income tax return while investigating a fire c. Refusing to pay a claim without reasonably investigating it d. Requiring an insured to release the insurer from a claim in order to receive a partial payment

b. Requiring a claimant's income tax return while investigating a fire [Requiring a claimant's federal income tax return to settle the claim is permitted under a court order or if the claim involves a fire, lost profits, or lost income.]

Which of the following is not a prohibited claims practice? a. Requiring an insured to release the insurer from a claim in order to receive a partial payment b. Requiring a claimant's income tax return while investigating an arson fire c. Refusing to pay a claim without reasonably investigating it d. Misrepresenting a material fact to a claimant

b. Requiring a claimant's income tax return while investigating an arson fire [Requiring a claimant's federal income tax return to settle the claim is an unfair claim settlement practice unless a court orders that such returns be provided or the claim involves a fire/arson loss, lost profits, or lost income.]

With regard to surplus lines agents: a. An individual surplus lines agent may be licensed only in his/her assumed name b. The agent's license will be cancelled if he/she fails to maintain or renew his/her general property and casualty or managing general agent license c. A surplus lines agent may delegate his/her professional responsibilities to a person or agency not licensed as a surplus lines agent d. Each licensed surplus lines agent must maintain a surety bond for at least $25,000

b. The agent's license will be cancelled if he/she fails to maintain or renew his/her general property and casualty or managing general agent license [A surplus lines agent may not delegate his/her professional responsibilities to a person or agency not licensed as a surplus lines agent. An individual surplus lines agent may be licensed only in his/her name, but any assumed name may be used if his/her true name is also disclosed. A licensed surplus lines agent must maintain a surety bond for at least $50,000.]

Choose the true fact about uninsured/underinsured motorist coverage. a. Hit-and-run accidents are excluded under uninsured motorist coverage b. The insured can decline the UM/UIM coverage c. The minimum UM coverage is 100/300/50 d. UM/UIM is mandatory in Texas

b. The insured can decline the UM/UIM coverage [Auto liability insurance must cover persons legally entitled to recover due to bodily injury or property damage caused by operators of uninsured or underinsured motor vehicles, unless the insured rejects such coverage in writing.]

An insurer must maintain a record of complaints received during the preceding: a. 5 years b. 4 years c. 3 years d. 2 years

c. 3 years [An insurer must maintain a record of complaints received during the preceding 3 years.]

The Department must examine each insurance company at least once every _____ years. a. 3 b. 4 c. 5 d. 7.

c. 5 [The Department must examine domestic and licensed insurers no less often than once every 5 years]

The Department of Insurance must examine each insurance company as least once every ______ years. a. 4 b. 7 c. 5 d. 3

c. 5 [The Department will examine the insurer's financial condition and legal compliance at least every 5 years, and at any other time as necessary.]

If the Department issues a temporary agent license, for how many days is it valid? a. 30 days b. 60 days c. 90 days d. 180 days

c. 90 days [A temporary agent license is valid for 90 days and cannot be issued or renewed to the same applicant more than once in any consecutive 6-month period]

Which of the following statements is false with regard to renewal of licenses? a. Each agent expires on the 2nd anniversary of the date the license is issued c. A person may not renew an expired license b. A license remains in effect from the date the renewal application is filed until the date the Department issues the renewal license or the Commissioner issues an order revoking the license d. A person may not renew a license that has been suspended or revoked

c. A person may not renew an expired license [An expired license may be renewed within 90 days of the expiration date.]

All of the following are motor vehicles EXCEPT: a. A camping trailer towed by a car b. A pickup truck c. A train d. A car towing a boat

c. A train [A vehicle that operates on rails is not a motor vehicle.]

Which of the following persons may renew his insurance license? a. Donald, whose license was revoked b. Michael, whose license expired 6 months ago c. Brendon, whose license expired 30 days ago d. Timothy, whose license expired 2 years ago

c. Brendon, whose license expired 30 days ago [A person may only renew a license that is not current if it expired no more than 90 days previously. Licenses that have been suspended or revoked may not be renewed]

An employee is injured and the doctor approved disability for one to two weeks. If the disability continues for 2 or more weeks, from what date would the compensation benefits begin? a. Beginning of the 2nd week b. Date of injury c. Date the disability begins d. The date the employer was notified

c. Date the disability begins [If a disability continues for more than 1 week, weekly income benefits begin to accrue 8 days after the injury date, but if it continues for 2 or more weeks, compensation is computed from the date the disability begins.]

The purpose of the Texas FAIR Plan Association is to: a. Handle insurance complaints by policyholders b.Mediate claim disagreements between insurers and policyholders c. Insure property owners who are unable to obtain insurance coverage d. Review premium rates to investigate allegations of discrimination

c. Insure property owners who are unable to obtain insurance coverage [The purpose of the FAIR Plan is to provide insurance for property owners who are unable to secure insurance coverage.]

Which of the following statements is true with respect to a cease and desist order? a. The Commissioner must consult with the Attorney General before the Commissioner may issue an emergency Cease and Desist Order b. The order is final on the 31st day after the date it is received, regardless of whether the affected person requests a hearing c. The Commissioner's order must contain a statement of charges and must be served by registered or certified mail d. A hearing must be held no later than the 30th day after the date the Commissioner receives the hearing request

c. The Commissioner's order must contain a statement of charges and must be served by registered or certified mail [The order is final on the 31st day after the date it is received, unless the affected person requests a hearing. A hearing must be held no later than the 10th day after the date the Commissioner receives the hearing request. The Commissioner may issue an emergency cease and desist order without consultation.]

Which of the following statements is true? a. Each licensee or agent must notify the Department within 60 days of a change in mailing address b. Each licensee or agent must notify the Department on an annual basis of a change in mailing address c. The Department may deny a license application or discipline a license holder if they misappropriate or convert funds for their own use or illegally withhold money d. An agent must notify the Department within 10 days after moving from one state to another state

c. The Department may deny a license application or discipline a license holder if they misappropriate or convert funds for their own use or illegally withhold money [Each licensee or agent must notify the Department on a monthly basis of a change in mailing address. An agent must notify the Department within 30 days after moving from one state to another state.]

In order to receive credit for attending a classroom insurance continuing education course, how much of the course must a student attend? a. The entire course b. More than half of the course c. No less than 3/4 of the course d. At least 90% of the course

d. At least 90% of the course [A student may only receive continuing education credit for completing a classroom or one-time-event course if he/she attended at least 90% of the course. ]

The Commissioner may discipline a licensed insurance agent for all the following behavior, EXCEPT: a. Deliberately violating a Texas insurance law b. Stealing a client's insurance premium c. Being convicted of a felony d. Being arrested for overdue parking tickets

d. Being arrested for overdue parking tickets [Being arrested for overdue parking tickets is not one of the offenses for which the Commissioner may discipline a licensed agent. ]

An automobile liability policy in Texas must provide which of the following coverages? a. Uninsured and underinsured motorist b. Bodily injury, death, and PIP c. Medical payments d. Bodily injury, death, and property damage

d. Bodily injury, death, and property damage [A motor vehicle liability insurance policy must be an owner's or operator's policy that must provide liability coverage for bodily injury, death, and property damage.]

Which if the following is a requirement of a Texas surplus lines agent? a. Hold a personal lines property and casualty agent license b. Hold a Fair Plan agent license c. Obtain and maintain business auto insurance d. Obtain and maintain a $50,000 surety bond

d. Obtain and maintain a $50,000 surety bond [Each licensed surplus lines agent must maintain a surety bond for at least $50,000, unless waived by the Commissioner.]

When is an employee entitled to temporary income benefits? a. After death b. Before an injury c. When not disabled d. When disabled

d. When disabled [An employee is entitled to temporary income benefits if he/she has a disability and has not attained maximum medical improvement. ]

An injury for which workers' compensation benefits are payable is called a(n) _____ injury. a. Traumatic b. Occupational c. Compensable d. Employment

c. Compensable [A compensable injury arises out of the course and scope of employment for which workers' compensation is payable.]

An insurer may nonrenew a homeowner policy if the insured submitted how many claims in the past 3 years? a. 3 b. 5 c. 6 d. 4

a. 3 [An insurer selling homeowner, fire, or farm/ranch policies may nonrenew if 3 or more claims have been filed in any 3-year period, as long as the insurer notifies the insured of this fact when the second claim is filed.]

Which of the following definitions is NOT correct? a. Repetitive Trauma Injury means physical damage resulting from repetitious, physically traumatic activities occurring over time from personal activities b. Employer means a person contracting for hire, employing at least 1 employee, and having Workers' Compensation insurance coverage c. Compensable Injury means an injury, arising from the course and scope of employment, for which Workers' Compensation is payable d. Occupational disease means disease from employment that causes physical damage or harm

a. Repetitive Trauma Injury means physical damage resulting from repetitious, physically traumatic activities occurring over time from personal activities [Repetitive Trauma Injury means physical damage resulting from repetitious, physically traumatic activities occurring over time and arising in the course of employment.]

Which of the following may the Commissioner not do if he/she cancels or revokes an insurance license? a. Suspend the license for up to 5 years b. Issue a cease and desist order c. Order the licensee to pay an administrative penalty and/or make restitution d. Refer the matter to the Attorney General for enforcement of any unpaid penalty or restitution

a. Suspend the license for up to 5 years [The Commissioner may suspend the license for up to 1 year.]

Which of the following statements is correct with regard to temporary licenses? a. An applicant must pass a written exam to obtain a temporary license b. A temporary license may only be issued or renewed to the same applicant once in any consecutive 6-month period c. An applicant must complete at least 10 hours of supervised training d. A temporary agent's license is valid for 180 days

b. A temporary license may only be issued or renewed to the same applicant once in any consecutive 6-month period [A temporary agent's license is valid for 90 days. An applicant is not required to pass a written exam to obtain a temporary license. An applicant must complete at least 40 hours of supervised training, with at least 10 of those hours in a classroom.]

Which of the following is NOT among the powers and duties of the Commissioner? a. Enforce insurance laws b. Act to protect the best interests of authorized insurers c. Administer oaths d. Hold hearings

b. Act to protect the best interests of authorized insurers [The Commissioner does not act in a way to protect the best interests of authorized insurers.]

Choose the true statement about an admitted company. a. An admitted company has not yet applied for a Certificate of Authority b. An admitted company can do business in Texas c. Surplus lines policies are issued by an admitted company d. The domicile determines whether an admitted company can do business in Texas

b. An admitted company can do business in Texas [An Admitted insurer is authorized by the Commissioner of Insurance to do business in Texas and receive a Certificate of Authority.]