Insurance Regulations, Basics, and general
The reduction, decrease, or disappearance of value of the person or property insured in a policy by a peril insured against is known as A. Hazard. B. Risk. C. Loss. D. Exposure.
C
Pertaining to insurance, what is the definition of a fiduciary responsibility? A. Helping insureds to file claims B. Performing reviews of insured's coverage C. Offering additional coverage to clients D. Promptly forwarding premiums to the insurance company
D
A temporary license in this state is valid for a maximum of A. 30 days. B. 60 days. C. 90 days. D. 180 days.
D
Which of the following coverages in dwelling and homeowners policies is for indirect losses? A. Loss of use B. Dwelling C. Structures D. Contents
A
Which insurance companies are exempt from the Essential Insurance Act? A. Insurers whose annual financial statements show a surplus of more than $4,000,000 B. Insurers whose annual financial statements show a surplus of less than $4,000,000 C. Insurers with fewer than 1,000 appointed producers D. None are exempt
B
Which is NOT required of an applicant for an insurance license in Michigan? A. Applicant must be 18 years old B. A Certificate of Completion from the required pre-licensing study course C. Two letters of recommendation attesting to trustworthiness, reliability, and good reputation D. The passing of a written examination
C
Which of the following is a statutory defense? A. Assumption of risk B. Intervening cause C. Contributory negligence D. Comparative negligence
D
With respect to the business of insurance, a hazard is A. Any condition or exposure that increases the possibility of loss. B. The risk taken when performing something dangerous. C. The tendency of poorer risks to seek insurance more often than better risks. D. The basic reason for an insured to purchase insurance.
A
Termination of an in-force insurance policy prior to the expiration date shown in the policy is known as A. Cessation. B. Cancellation. C. Rescission. D. Nonrenewal.
B
Which of the following insurers are owned by stockholders? A. Fraternal B. Stock C. Mutual D. Reciprocal
B
Which of the following is the correct formula for computing a loss ratio? A. Loss adjusting expenses - incurred expenses B. (Incurred losses + loss adjusting expense)/earned premium C. (Incurred expenses + loss adjusting expenses)/earned premium D. (Incurred losses - loss adjusting expense)/earned premium
B
If an insurer terminates a producer, the Commissioner must be notified. How many days does the insurer have to deliver this notice? A. 7 days B. 3 days C. 30 days D. 10 days
C
When the amount of insurance written in a property policy is not subject to any coinsurance provision and that amount is paid in the event of a covered loss, the coverage is said to be written as A. Actual cash value. B. Specific insurance. C. Stated amount. D. Replacement cost.
C
Which of the following provisions requires that the insured protects the damaged property from further damage, cooperates with the insurer in settling the loss, and submits to the insurer signed proof of loss within a specified period of time? A. Loss settlement B. Proof of loss C. Duties after loss D. Legal action
C
Which of the following types of agent authority is also called "perceived authority"? A. Implied B. Fiduciary C. Apparent D. Express
C
A participating insurance policy may do which of the following? A. Provide group coverage B. Pay dividends to the stockholder C. Require 80% participation D. Pay dividends to the policyowner
D
Events or conditions that increase the chances of an insured loss occurring are referred to as A. Exposures. B. Risks. C. Perils. D. Hazards.
D
For the purpose of insurance, risk is defined as A. The certainty of loss. B. The cause of loss. C. An event that increases the amount of loss. D. The uncertainty or chance of loss.
D
If a policy is terminated by the insurer within the first 55 days after the initial issuance of the policy, when can the termination be made effective? A. 30 days after the notice is delivered B. At any time C. Within 10 days of the insured's receiving the notice D. No sooner than 20 days after the mailing of the notice
D
When an insurance agency published an advertising brochure, it emphasized the company's financial stability and sound business practices. In reality, its financial health is terrible, and the company will soon have to file for bankruptcy. Which of the following terms best describes the advertisement? A. Defamation B. Twisting C. Rebating D. False financial statement
D
Which of the following lists all the required elements for establishing a charge of negligence? A. Legal duty owed, proximate cause, intervening cause, damages B. Legal duty owed, deliberate attempt to cause harm, damages C. Breach of reasonable person rule and proximate degree of care D. Legal duty owed, breach of legal duty owed, proximate cause, damages
D
Which of the following types of valuation works best for property whose value does not fluctuate much? A. Market value B. Stated amount C. Inflation guard D. Agreed value
D
Which of the following would be required to be licensed as an insurance producer? A. A person whose activities are limited to producing insurance advertisements B. A salaried full-time employee who furnishes information for group insurance C. An insurance company director who performs executive, administrative and managerial duties D. A salaried employee who advertises and solicits insurance
D
Which of the following, upon conviction, carries a fine of up to $2,000 for each violation? A. Rebating B. Twisting C. Unfair discrimination D. Misrepresenting the terms of a policy
D
What insurance policy provision defines how the policy will respond if there is more than one insurance policy written on the same risk? A. Nonconcurrency B. Primary and excess C. Other insurance D. Valid insurance
C
All of the following are factors in the determination of actual cash value EXCEPT A. Insurance premium paid. B. Type and quality of property. C. Age of the property. D. Replacement cost.
A
The section of an insurance policy that details what perils are not insured against and what persons are not insured is known as the A. Exclusions. B. Declarations. C. Endorsements. D. Conditions.
A
To legally transact insurance in this state, an insurer must obtain which of the following? A. Certificate of Authority B. Power of Attorney C. Business entity license D. Certificate of Insurance
A
When an insurance policy does not offer a continuation or replacement at its expiration date, it is considered a A. Nonrenewal. B. Suspension. C. Cessation. D. Cancellation.
A
Which of the following is NOT true regarding a Certificate of Authority? A. It is issued to group insurance participants. B. It may be necessary for transacting business in a specific state. C. It is equivalent to an insurance license. D. It is issued by the state department of insurance.
A
An applicant is purchasing a homeowners policy. A producer comes to her home, fills out the paperwork, and tells the applicant that her home will be covered as soon she signs all of the paperwork, and that she will receive a new policy in the mail in 5 business days. Even though the policy is not issued, the applicant's home is temporarily covered until then. Which of the following makes that possible? A. Notice of claim B. Binder C. Loss settlement provision D. Mortgagee clause
B
An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an A. Self-insurer. B. Authorized insurer. C. Local insurer. D. Certified insurer.
B
If a court ordered payment for a loss that was not covered in the policy even if it was clearly worded, it would be an example of which legal concept? A. Indemnity B. Reasonable expectations C. Cease and desist D. Nonforfeiture
B
Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe? A. Personal B. Adhesion C. Unilateral D. Conditional
B
The process an insurer uses to evaluate applications and determine if a policy should be issued and on what terms, conditions, and rates is known as A. Acceptance. B. Underwriting. C. Coding. D. Rating.
B
Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses? A. Insuring agreement B. Additional coverage C. Exclusions D. Declarations
B
After a storm dumps several inches of snow, an insured spends several hours clearing his sidewalk and driveway. Later that night it begins to sleet. Before the insured can clear his walks again, his neighbor slips and falls while walking past the insured's house, breaking his arm. Which defense will reduce recovery for the neighbor's injury? A. Comparative negligence B. Statute of limitations C. Intervening cause D. Contributory negligence
C
In property and casualty insurance, insurable interest must exist A. At the time a change is made to a policy. B. At the time of policy application. C. At the time of loss. D. At the time of policy solicitation.
C
Installing deadbolt locks on the doors of a home is an example of which method of handling risk? A. Transfer B. Self-insurance C. Reduction D. Avoidance
C
The insurance company that issued Fred's Businessowners insurance policy has become insolvent. Fred's policy currently has unearned premium of $675. If Fred places his insurance with another insurer, how much return premium will Fred receive? A. $0 B. $675 C. $500 D. $450
C
The loss ratio compares A. Premiums to interest rates. B. Earned premium to company expenses. C. Earned premium to losses. D. Losses to interest rates.
C
What documentation grants express authority to an agent? A. Fiduciary contract B. State provisions C. Agent's contract with the principal D. Agent's insurance license
C
What is a material misrepresentation? A. Any misstatement by the producer B. Concealment C. A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company D. Any misstatement made by an applicant for insurance
C
When would a misrepresentation on the insurance application be considered fraud? A. When the application is incomplete B. Any misrepresentation is considered fraud. C. If it is intentional and material D. Never: statements by the applicant are only representations.
C
Which of the following best describes the aleatory nature of an insurance contract? A. Ambiguities are interpreted in favor of the insured B. Policies are submitted to the insurer on a take-it-or-leave-it basis C. Exchange of unequal values D. Only one of the parties being legally bound by the contract
C
Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? A. Indemnity B. Representation C. Warranty D. Concealment
C
An agent is acting ethically in all of the following situations EXCEPT A. Working within the conditions of his/her contract. B. Representing the insurer, not the insured. C. Keeping customers' best interests in mind. D. Always representing the insured.
D
An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied? A. Waiver B. Utmost Good Faith C. Estoppel D. Material misrepresentation
D
In addition to the effective date of termination of coverage, a termination notice must contain A. The telephone number of the Commissioner. B. The amount of unearned premium. C. The name and address of the insurance producer. D. The specific reason or reasons for the termination.
D
In terms of parties to a contract, which of the following does NOT describe a competent party? A. The person must not be under the influence of drugs or alcohol. B. The person must be of legal age. C. The person must be mentally competent to understand the contract. D. The person must have at least completed secondary education.
D
Negligence may be defined as A. A situation that creates a probability of loss. B. A latent defect or fault in property. C. The inability to meet the burden of proof. D. The failure to use reasonable and prudent care.
D
The Essential Insurance Act established for home insurance, other than Inland Marine insurance, will be established on one or more factors, however, classification cannot be based on A. Security and safety devices. B. Fire protection class. C. Loss experience. D. Gender of the named insured.
D
The risk management technique that is used to prevent a specific loss by not exposing oneself to that activity is called A. Transfer. B. Reduction. C. Sharing. D. Avoidance.
D
What will happen if a house covered by a standard mortgage clause is a total loss? A. The mortgagee retains no rights to any contracts involving the policy. B. The insured receives the full benefit and passes the mortgagee's share to the mortgagee. C. The mortgagee receives the full benefit and passes the insured's share to the insured. D. The insurer pays the mortgagee according to the mortgagee's interest in the property.
D
When agents are acting within the scope of their contract, their actions will be assumed to be the acts of the A. Policyowner. B. Department of Insurance. C. Insured. D. Insurer.
D
Which of the following is the most common way to transfer risk? A. Increase control of claims B. Lessen the possibility of loss C. Name a beneficiary D. Purchase insurance
D
Which of the following would be named on the declarations page of a property or liability policy? A. Beneficiaries B. All insureds C. Additional insureds D. First named insured
D
The Commissioner may waive prelicensing requirements or examinations for someone who has been a licensed insurance producer A. In the preceding 12 months. B. In the preceding 2 years. C. In the last 5 years. D. Any time in the past.
A
The Michigan Property and Casualty Guaranty Association pays claims that do not exceed the policy limit that a member insurer is unable to pay because of insolvency, provided that the claim is in excess of A. $10. B. $1,000. C. $500. D. $100.
A
The legal process that gives the insurer, after payment of a loss, the right to seek recovery from a third party that was responsible for the loss is known as A. Subrogation. B. Adverse selection. C. Right of rescission. D. Principle of indemnity.
A
The part of the insurance contract that describes the covered perils and the nature of coverage of the contractual agreement between the insurer and the insured is called the A. Insuring agreement. B. Conditions. C. Exclusions. D. Declarations.
A
The risk of loss may be classified as A. Pure risk and speculative risk. B. Certain risk and uncertain risk. C. Named risk and un-named risk. D. High risk and low risk.
A
An insured wants to transfer his personal insurance policy to a friend. Under what conditions would this be possible? A. The insured can transfer the policy to his friend and then notify the insurer of the change. B. The insured will need a written consent of the insurer. C. It is impossible to transfer a policy. D. The insured would have to surrender his policy to the insurer, and his friend could then ask to buy it.
B
Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe? A. Assumed B. Apparent C. Express D. Implied
B
Following a career change, an insured is no longer required to perform many physical activities, so he has implemented a program where he walks and jogs for 45 minutes each morning. The insured has also eliminated most fatty foods from his diet. Which method of dealing with risk does this scenario describe? A. Retention B. Reduction C. Transfer D. Avoidance
B
Hazard is best defined as A. A deliberate attempt to deceive. B. Something that increases the risk of loss. C. The uncertainty of loss. D. Neglect to communicate a material fact.
B
In which of the following types of property valuation will the policy pay the full value as specified on the policy schedule, regardless of the insured property's appreciation or depreciation? A. Market value B. Agreed value C. Replacement cost D. Stated amount
B
Michigan's continuing education requirement has each of the following characteristics EXCEPT A. Other than the 3 hours of ethics, licensees may take courses in any line. B. It allows for up to 15 excess credit hours to be carried forward to the next reporting period. C. At least 3 hours must cover ethics. D. It requires satisfactory completion of at least 24 hours of approved training every biennium.
B
The policy conditions define A. The amount of coverage. B. How parties to the contract must act following a loss. C. The basic underwriting information. D. The excluded perils.
B
Which of the following would NOT be considered rebating? A. Collecting a lower premium than what's specified in a policy as a token of client appreciation B. Giving an applicant a $5 pen with the insurer's logo during the insurance application process C. Sending a $20 gift certificate to the insured's employee after the insurance has been effected as a thank you for the referral D. Sharing commission with the insured
B
In property insurance, actual cash value is defined as which of the following? A. Market value of the property at the time of the loss B. Stated value of the property as shown on the declaration C. The actual amount of a loss payable, less the policy deductible D. Replacement cost at the time of the loss, less depreciation
D
All of the following would be considered rebating EXCEPT A. An agent misrepresents policy benefits to convince a policyowner to replace policies. B. An agent offers the use of his lake house to a client as an inducement to buy an insurance policy from him. C. An agent offers to share his commission with a policyholder. D. An agent offers tickets to a baseball game as an inducement to buy insurance.
A
An applicant for a Counselor's license in Michigan must possess all of the following EXCEPT A. A license to practice law. B. A good business reputation and good moral character. C. A reasonable understanding of the Michigan insurance code D. A reasonable understanding of the provisions, terms, and conditions of the type of insurance he/she wishes to counsel.
A
A license may be denied, suspended, or revoked if the licensee does any of the following EXCEPT A. Materially misrepresents an insurance policy. B. Accidentally misspells the name of the insurance policy in a written communication to a customer. C. Engages in fraud. D. Deals with insurance outside the scope of the license.
B
An insurance policy has been in force for over 55 days when it was terminated by the insurer. Which how many days of policy termination must the insurer mail or deliver a notice of termination to the named insured? A. 20 days B. 30 days C. 5 days D. 10 days
B
A licensed counselor MAY NOT perform which of the following duties? A. Audit or abstract insurance policies or annuities B. Provide opinions concerning benefits, coverage, terms, and advantages and disadvantages of a policy or annuity C. Advertise business as an insurance counselor or consultant D. Solicit business as an insurance producer
D
An insured's 9-year-old son threw a ball, accidentally breaking a neighbor's plate glass window. The insured was found legally liable for the cost of replacing the window. This is an example of A. Vicarious liability. B. Intervening cause. C. Juvenile delinquency. D. Absolute liability.
A
If an application for home insurance, made in writing, is declined, how must the insurer or insurance producer provide the explanation for the reason or reasons for the declination? A. In writing B. By direct oral communication made by the insurance producer C. By any means acceptable to the insurer and the Commissioner D. By a means consistent with the companies underwriting standard
A
State law specifically prohibits using illegal inducements in the marketing of insurance. All of the following would be considered illegal inducements EXCEPT A. Offering benefit certificates or securities in return for purchasing insurance. B. Inviting prospective clients to the grand opening of the company's new office. C. Issuing or delivering insurance company stock in return for purchasing insurance. D. Promising returns and profits from the purchase of insurance.
B
The Commissioner finds that a producer is violating the Insurance Code by frequently using rebates as an incentive for clients to purchase policies. What may the Commissioner issue after a hearing confirms the producer's guilt? A. Stop action order B. Cease and desist order C. Notice of noncompliance D. Arrest warrant
B
The Michigan Property and Casualty Guaranty Association secures funds in order to pay claims of insolvent member insurers by A. Assessments on all policyholders in the state. B. Government loans. C. Lotteries. D. Assessments on all member insurers.
D
The requirement that agents not commingle insurance monies with their own funds is known as A. Premium accountability. B. Express authority. C. Accepted accounting principal. D. Fiduciary responsibility.
D
Which of the following best describes a misrepresentation? A. making a deceptive or untrue statement about a person engaged in the insurance business B. making a maliciously critical statement that is intended to injure another person C. Discriminating among individuals of the same insuring class D. Issuing sales material with exaggerated statements about policy benefits
D
Which of the following is the closest term to an authorized insurer? A. Certified B. Licensed C. Legal D. Admitted
D
A mortgage company is named as a loss payee on the insured's homeowners policy, under the standard mortgage clause. If the insured suffers a loss due to a fire, which of the following is true? A. The loss is payable to the insured and the mortgagee. B. The mortgagee should submit a claim to its insurer, and the insured should submit a claim to the HO policy. C. The entire loss is payable to the mortgagee. D. The entire loss is payable to the insured.
A
If an insurer terminates a producer, the Commissioner will receive a notification. Within how many days of this notification must the producer be sent a copy? A. 15 B. 30 C. 7 D. 10
A
If the policyholder requests the cancellation of a Standard Fire Policy, any unearned premium will be returned to the policyholder on a A. Pro rata basis. B. An actual cash value basis. C. Cancellation of the policy before the expiration date is not permitted. D. Short-rate basis.
A
A producer who fails to separate premium monies from his own personal funds is guilty of A. Theft. B. Commingling. C. Larceny. D. Embezzlement.
B
All of the following are considered unfair trade practices in the business of insurance EXCEPT A. Defamation. B. Sharing commissions. C. Boycott. D. Rebating.
B
All of the following events will terminate a producer's certificate of appointment EXCEPT A. A producer's license is suspended or revoked by the Department of Insurance. B. A new Commissioner or Director is put into office. C. A producer's license expires and is not renewed. D. A termination issued by the appointing insurer.
B
All of the following statements describe the concept of strict liability EXCEPT A. It is applied in product liability cases. B. It is imposed on defendants engaged in hazardous activities. C. Claimants may need to provide proof that a product defect caused an injury. D. It is imposed regardless of fault.
B
Producers are permitted to share or split commissions, providing that A. There is a written agreement between the producers. B. Both are properly licensed for the line of insurance. C. The insured knows and agrees to the arrangement. D. The Insurance Department knows of the arrangement.
B
Property insurance that provides $100,000 coverage for a building and $50,000 coverage for personal property at a single location is called A. Described coverage. B. Specific coverage. C. Schedule coverage. D. Blanket coverage.
B
What is the maximum fine for submitting a false or fraudulent claim to the insurer? A. $500 B. $1,000 C. $1,500 D. $2,000
B
What is the minimum civil fine per violation of the Insurance Code of this state? A. $500 B. $1,000 C. $2,000 D. $5,000
B
When a parent is required to pay for damages caused by his or her children, this is an example of A. Assumption of risk. B. Vicarious liability. C. Strict liability. D. Intervening cause.
B
Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost? A. Reasonable expectations B. Indemnity C. Stop-loss D. Consideration
B
Which of the following insurance options would be considered a risk-sharing arrangement? A. Surplus lines B. Reciprocal C. Stock D. Mutual
B
Which of the following statement concerning the replacement cost endorsement is INCORRECT? A. In the event of loss, repairs are made with new material of like kind and quality B. The insured need not actually make repairs in order to collect the replacement cost amount C. Replacement cost is determined at the time of the loss D. The insurer, under the replacement cost endorsement, agrees in the event of a partial loss to pay the amount necessary to repair or rebuild the property
B
Which statement regarding insurable risks is NOT correct? A. An insurable risk must involve a loss that is definite as to cause, time, place and amount. B. Insureds cannot be randomly selected. C. Insurance cannot be mandatory. D. The insurable risk needs to be statistically predictable.
B
Within how many days does a licensee have to inform the Commissioner of a change of address? A. 15 B. 30 C. 45 D. 60
B
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT A. Stocks, securities, or bonds. B. An offer to share in commissions generated by the sale. C. Dividends from a mutual insurer. D. An offer of employment.
C
An additional loss that results from a direct loss of property is called a/an A. Liability loss. B. Punitive loss. C. Indirect loss. D. Proximate loss.
C
An insurance company assures its new policyholders that their premium costs will not increase for a period of at least 5 years. However, due to increasing financial strain, they plan to raise premium costs for all insureds by 10% over the next 2 years. What term best describes this act? A. Defamation B. Unfair discrimination C. Fraud D. Errors and omissions
C
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy? A. Nonprofit service organization B. Stock C. Mutual D. Reciprocal
C
An insurer may cancel a property policy at any time by mailing notice of the cancellation to the insured no less than how many days before cancellation is effective? A. 5 B. 7 C. 10 D. 15
C
An insurer or producer, upon making a declination of insurance, must A. Nothing, when the application is rejected, their obligation to the applicant ceases. B. Offer to resubmit the application to the underwriting department. C. Inform the applicant of each specific reason for the declination. D. Provide the application of at least 2 other insurers or producers who may accept their request for coverage.
C
An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an A. Certified insurer. B. Self-insurer. C. Authorized insurer. D. Local insurer.
C
How much is an agent's appointment fee? A. $1 B. $100 C. $5 D. $500
C
If a licensee does not earn 24 hours of Continuing Education by the license review date, the license will be suspended for up to how many days? A. 30 days B. 60 days C. 90 days D. 120 days
C
In Michigan the state's continuing education requirement A. Cannot be extended or waived under any circumstances. B. Applies to life, annuity, and accident and health licensees only. C. Consists of completing 24 hours of CE each biennium. D. Must be completed by all licensed resident and nonresident producers.
C
In any case where there is a controversy or dispute between the insurance company and the insured, the soliciting agent is the agent of the A. Applicant. B. Insured. C. Company. D. Beneficiary.
C
In property and casualty insurance, what is the term for the amount of a loss that the insured must cover out of pocket, and the insurer will only pay for the additional amount of the loss above this limit? A. Coinsurance B. Premium C. Deductible D. Self-insured retention
C
In this state, a temporary license may be issued for any of the following reasons EXCEPT A. A producer's disability. B. A producer's time in the military service. C. A producer's retirement. D. The death of a producer.
C
Licensees who are currently licensed, and have recently become residents of the state of Michigan may not have to complete any prelicensing education. To qualify for this exemption, they must apply to become resident licensees within a few days of establishing a legal residence within how many days? A. 60 days B. 7 days C. 90 days D. 30 days
C
M, who is not licensed as an insurance agent, works part-time in her father's insurance agency. M may perform all of the following duties EXCEPT A. Assist her father in completing applications for insurance. B. Call prospects and collect expiration dates of their existing policies for her father. C. Collect premium for in-force policies and explain coverages to clients that have existing policies written by her father. D. Make appointments with clients and prospective clients to meet with her father.
C
On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of A. Unfair claim practice. B. Rebating. C. Misrepresentation. D. Concealment.
C
Persons covered under an insurance policy, whether named or not, are known as the A. First named insureds. B. Additional insureds. C. Insureds. D. Named insureds.
C
The part of a policy that clarifies terms in the policy is the A. Conditions. B. Exclusions. C. Definitions. D. Insuring agreement.
C
Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called? A. Misrepresentation B. Adverse selection C. Discrimination D. Law of large numbers
C
When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is A. Personal. B. Unilateral. C. Conditional. D. Aleatory.
C
Which of the following policy provisions would automatically broaden coverage under a policy without requiring additional premium? A. Subrogation B. Assignment C. Liberalization D. Other insurance
C
Which of the following would require an individual to stop participating in a specific activity if the Commissioner believes to be violating the Insurance Code? A. Restriction of authority B. Suspension of authority C. Cease and desist order D. Stop action order
C
An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice? A. A legal advertising strategy B. Unfair Discrimination C. Defamation D. Illegal
D
An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act? A. Legal, provided that the information can be verified B. Illegal until endorsed by the Guaranty Association C. Legal, provided that the other insurers are paid royalties for the usage of their names D. Illegal under any circumstances
D
In property and casualty insurance, insurable interest must exist A. At the time of policy solicitation. B. At the time a change is made to a policy. C. At the time of policy application. D. At the time of loss.
D
Which of the following could be used when a corporation, association, partnership, or limited liability partnership acts as a producer? A. Natural Group B. Stock Company C. Mutual Company D. Business Entity
D
What insurance concept is associated with the names Weiss and Fitch? A. Guides describing company financial integrity B. Policy dividends C. Types of mutual companies D. Index used by stock companies
A
Which of the following individuals could qualify for a temporary insurance license? A. The designee of a producer that is called to active service with the Navy B. A deceased producer's brother who is employed by the Department of Insurance C. A retired producer D. An employee of a deceased producer
A
Which of the following is a mandatory part of an insurance policy that varies with each individual policy? A. Declarations B. Conditions C. Exclusions D. Insuring agreement
A
Which of the following produces evaluations of insurers' financial status often used by state departments of insurance? A. AM Best B. NAIC C. Consumer's guide D. SEC
A
Representations are written or oral statements made by the applicant that are A. Immaterial to the actual acceptability of the insurance contract. B. Considered true to the best of the applicant's knowledge. C. Guaranteed to be true. D. Found to be false after further investigation.
B
What is the major difference between a stock company and a mutual company? A. Types of whole life policies B. Ownership C. Amount of death benefit D. Number of producers
B
Which of the following would be considered an illegal inducement to purchase insurance? A. Mailing an agency brochure to a prospective client B. Listing the insurance companies the agency represents in a letter C. Inviting prospective clients to the grand opening of the producer's new office D. Confirming future dividends in a life insurance proposal
D
Without endorsement, in Michigan, the Standard Fire Policy insures property against loss from the perils of A. Fire, lightning and extended coverage perils. B. Fire, lightning, and flood. C. Fire, lightning and inherent vice. D. Fire, lightning, and removal.
D
