Ethics and Code General Insurance

A hazard is defined as something that increases the risk. Which of the following is considered to be a morale hazard?

Driving recklessly

A representation that fails to correspond with its assertions or stipulations is:

False

The Insurance Commissioner may deny an insurance license application without a hearing:

If the applicant has a final conviction of a felony

When must a licensee notify the Insurance Commissioner of a change of address?

Immediately

Under the California Insurance Code (CIC), neither party to a contract of insurance is bound to communicate any of the following EXCEPT:

Information known to be material

The neglect to communicate that which a party knows, and ought to communicate, is concealment. Concealment entitles the injured party to rescind the insurance if it is:

Intentional or unintentional

Every licensee shall file with the Commissioner his or her true name and also all fictitious names under which he or she conducts business. The Commissioner may disapprove the use of any true or fictitious name for all of the following reasons EXCEPT:

It is the bona fide natural name of an individual

An insurer organized under the laws of another state who is legally transacting insurance in this state is known as:

A foreign insurer

All of the following definitions are correct EXCEPT:

A hazard is a cause of loss

All of the following are true regarding warranties in an insurance contract EXCEPT:

A particular form of words is necessary to create a warranty

When can a representation be altered or withdrawn?

Before the insurance is effected, but not afterwards

A person shall not solicit, negotiate, or effect contracts of insurance unless the person holds a valid license from the Commissioner authorizing them to act in that capacity. Any person who transacts insurance without a valid license to do so is guilty of a misdemeanor punishable by:

Both a fine not exceeding $50,000 and up to 1 year in a county jail Explanation: Any person who transacts insurance without a valid license to do so is guilty of a misdemeanor punishable by a fine not exceeding $50,000 or by imprisonment in a county jail for a period not exceeding one year, or by both that fine and imprisonment.

All of the following are ways to reduce risk EXCEPT:

Buying insurance

Transacting insurance includes all of the following activities EXCEPT:

Compiling a list of prospects

Your license will be considered to be inactive when you:

No longer have any appointments

A cause of loss is also known as a(n):

Peril

The chance of loss without any possibility for gain is known as:

Pure risk

When an insurer voids an insurance contract due to an intentionally fraudulent omission by the insured of a material fact, it is known as:

Rescission

The uncertainty about loss that exists whenever more than one outcome is possible is called:

Risk

An appointment as an agent of an insurer becomes effective on the date it is:

Signed by the insurer

Acting as an agent for a non-admitted insurer in the transaction of insurance in this state is considered to be a misdemeanor unless acting as a:

Surplus lines broker

All of the following must be specified in an insurance policy EXCEPT:

The financial rating of the insurer

An example of a fiduciary duty is:

The trust that your client places in you in regard to handling premiums

Any licensee who diverts fiduciary funds to his or her own use is guilty of:

Theft All funds received by any person acting as a licensee are received and held by that person in a fiduciary capacity. Any person who diverts those fiduciary funds to his or her own use is guilty of theft.

As specified by the California Insurance Code (CIC), every person must have insurable interest in the person insured at the time of application. Every person has an insurable interest in the life or health of all of the following persons EXCEPT:

Their best friend

Which of the following must be printed on every licensee's business cards, written price quotations and printed advertisements:

Their insurance license number

Making an insured whole again after a loss is known as:

To indemnify

All are true about transacting insurance EXCEPT:

Transacting without a license is a felony