property and casualty chapter 15 questions
The fine for a knowingly violating a cease and desist order is what amount per infraction?
$10,000-- If a person knowingly violates a cease and desist order, the Commissioner may order a civil fine of up to $10,000 for each violation, or a suspension or revocation of the person's license, or both. Fines may not exceed an aggregate of $50,000.
What is the minimum amount of earned premium that must be refunded in Michigan when a CGL policy is canceled?
$25-- No policy of casualty insurance (except Workers' Compensation and mortgage guaranty insurance) may be issued in Michigan without the provision that that the minimum earned premium on any policy canceled, other than automobile insurance, will be at least the pro rata premium or $25, whichever is greater.
The Michigan Property and Casualty Insurance Guaranty Association will pay the obligations an insolvent insurer for an auto policy up to what amount for a single claim?
$5 million-- Covered claims (other than a Workers' Compensation claim or a claim for personal protection insurance benefits) may not exceed $5 million.
The Michigan Property and Casualty Insurance Guaranty Association will pay the unearned premium of an insolvent insurer up to what amount for a single claim?
$500-- Obligations to refund unearned premiums may not exceed the first $500 of unearned premiums per claimant from any single insolvent insurer.
Cancellation by the insurer must be preceded by providing notice to each named insured and/or any mortgagee at least________ notice before the cancellation.
10 days
An insurer must file a notice of appointment within _______ after the contract is executed or the first application for insurance is submitted.
15 days
How many days after appointing an agent must an insurer notify the Commissioner of the appointment?
15 days
Within _______ after notifying the Commissioner of termination of appointment, the insurer will mail a copy of the notification to the producer.
15 days
A claim must be made within _______ of the date the employee or his/her survivors had knowledge that the occupational disease or death was work related.
2 years
The counselor must retain a copy of each agreement for ______ after completion.
2 years
insurance producers in Michigan must complete:
24 hours of continuing education every 2 years, including 3 hours of Ethics
How many credit hours of continuing education must a producer complete to maintain his/her license during each renewal period?
24-- To maintain a producer's license, each licensee must complete a minimum of 24 credit hours of approved insurance continuing education courses every 2 years.
How many credit hours of CE must be devoted to ethics during each renewal period?
3
A premium discount offered to an insured over age 50 who has completed a traffic accident prevention course will be effective for how many years?
3 years-- An automobile insurer may offer a premium discount to insureds 50 years of age and older who successfully complete a traffic accident prevention course, for 3 years after completion of the course.
Notification of the appointment or termination of the appointment of a managing general agent must be submitted to the Commissioner within _________ after entering into a contract or termination.
30 days
Upon receipt of a notice of appointment, the Commissioner will determine within ______ whether the producer is eligible for appointment.
30 days
Within ______ of occurrence, a licensed agent must report any disciplinary action by the insurance regulatory agency of any other state or territory of the United States;
30 days
Within how many days must a producer notify the Commissioner of a change of address?
30 days
If the producer is not, the Commissioner will notify the insurer within ________ after the determination is made.
5 days
How much will a disabled employee earn in disability benefits if his/her wage is less than it was before the injury?
80% of the difference between the old and new wage-- If an employee remains employed and his/her average weekly wage is less than before the date of injury, the employee will receive weekly benefits equal to 80% of the difference between the weekly wage before the date of injury and the weekly wage which the employee is able to earn after the date of injury. The benefit may not exceed 90% of the state average weekly wage.
How much will an employee's dependents receive in benefits after the employee's death from a covered injury?
80% of the employee's average weekly wage
To qualify the applicant must be currently licensed in the originating state, or have applied for a Michigan license within _______ of the cancellation of the applicant's previous license.
90 days
A producer has a _________ from the expiration date of his/her license within which to meet his/her continuing education requirements or the license will be canceled.
90-day grace period
Which of the following statements regarding auto insurance in Michigan are true? A After it has been in force for 55 days, an automobile liability policy may only be suspended if the insured license is suspended B A PAP policy does not automatically cover a vehicle rented for more than 30 days C The minimum liability insurance limit in Michigan is $10,000 per person and $20,000 per accident D The purchase of uninsured motorist coverage is required in Michigan
A PAP policy does not automatically cover a vehicle rented for more than 30 days-- fter 30 days, the insured is considered an owner, and therefore the coverage must be added by endorsement. The minimum limit for bodily injury is $20,000/$40,000. Uninsured motorist coverage must be offered, but may be declined.
None of the following are required to obtain a license, except: A A person who secures and furnishes information for the purpose of group insurance B An officer of an insurer or of an insurance producer, who does not receive any commission C A fraternal benefit society producer if more than 50% of his/her time is devoted to the sale of insurance contracts for the society D An employee of an insurer who provides customer service only
A fraternal benefit society producer if more than 50% of his/her time is devoted to the sale of insurance contracts for the society
All of the following would be eligible to have their prelicensing requirements waived by the Commissioner except an applicant who: 1.Applies for a credit insurance producer's license 2.Has been a licensed insurance producer within the preceding 36 months 3.Has obtained the CPCU designation 4.Has a bachelor's degree with a concentration in insurance from an approved institution
Has been a licensed insurance producer within the preceding 36 months-- The Commissioner may waive the exam or prelicensing requirements for an applicant who applies for a limited license, has been a licensed insurance producer within the preceding 12 months, has obtained the CPCU, CLU, CIC or other professional designations, or has an associate's, bachelor's, or master's degree with a concentration in insurance from an approved institution.s
Which of the following is not a prerequisite to apply for a producer's license in Michigan? 1.Being at least 18 years old 2.Having a high school diploma 3.Completion of the prelicensing course 4.Passage of the licensing exam
Having a high school diplomas--There is no requirement other than an applicant possess a diploma or degree.
An agent/solicitor is a ___________ for all money received or held by the agent in his/her capacity as an agent.
Fiduciary
Which of the following is not a required provision for fire policies in Michigan? 1.Mandatory replacement cost valuation 2.Minimum coverage of direct loss from fire or lightning 3.The policy is void in case of fraud 4.Liability is shared on a pro rata basis with other policies
Mandatory replacement cost valuation-- Coverage must be provided for no less than the actual cash value (not replacement cost) of the property at the time of the loss.
Which of the following would be considered twisting? A Making false or maliciously critical statements about a competitor in order to replace one of their policies B Misrepresenting policy terms in order to induce a consumer to replace an existing insurance policy C Implying that a consulting contract is dependent on the replacement of an existing insurance policy D Offering a rebate in order to effect the replacement of an insurance policy
Misrepresenting policy terms in order to induce a consumer to replace an existing insurance policy
All of the following acts are defined by statute as unfair methods of competition and unfair or deceptive acts or practices, except: A Offering any rebate of premiums payable, any special favor in dividends or other benefits, or any valuable consideration or inducement specified in the policy B Misrepresenting for the purpose of inducing or tending to induce the lapse, forfeiture, exchange, conversion, or surrender of any insurance policy C Basing eligibility for insurance on the applicant's age, sex, race, creed, national origin or marital status D Making any false or maliciously critical statement regarding the financial condition of any person, with the intent to injure the person
Offering any rebate of premiums payable, any special favor in dividends or other benefits, or any valuable consideration or inducement specified in the policy
Which of the following is not an example of declination? 1.Refusal by an agent to submit an application on behalf of an applicant 2.Refusal to issue insurance upon receipt of an application for insurance 3.Offering insurance at higher rates with a different insurer than that requested 4.Offering coverage with more favorable terms or conditions than those requested
Offering coverage with more favorable terms or conditions than those requested--Declination includes offering coverage with less favorable, not more favorable, terms or conditions than those requested.
Which of the following statements regarding The Terrorism Risk Insurance Act and the losses it covers is true? A In Michigan Terrorism coverage is mandatory on all Commercial Fire insurance policies B Once federal assistance is triggered, insurers pay a 15% co-pay C Currently, covered acts of terrorism must be done on behalf of a foreign interest D In the U.S., the Secretary of Homeland Security and the Attorney General must agree before an act is officially deemed to be an Act of Terrorism
Once federal assistance is triggered, insurers pay a 15% co-pay
All of the following are considered acts constituting improper claim settlement practices, except: A Compelling an insured to file suit by offering substantially less than what a lawsuit would award B Making known to claimants a policy of appealing arbitration awards that favor claimants, for the purpose of compelling them to accept a lesser settlement than that awarded C Paying claims without conducting a reasonable investigation D Failing to maintain a complete record of all complaints received since the date of the last examination
Paying claims without conducting a reasonable investigation
Under the Essential Insurance Act, rates may be which of the following? 1.Excessive 2.Profitable 3.Inadequate 4.Unfairly discriminatory
Profitable-- Rates must not be excessive, inadequate, or unfairly discriminatory.
Producer B tells applicants that if they buy their auto insurance with her agency, she'll refund the first month's premium. This is an example of what Unfair Trade Practice?
Rebating-- Rebating is the offer of any rebate of premiums due, any special favor in dividends or other benefits, or any valuable consideration or inducement not specified in the policy.
Which of the following is not considered an Unfair Trade Practice? 1.Representation 2.Rebating 3.Twisting 4.Churning
Representation-- While there is an unfair trade practice called misrepresentation, representation is simply the assertion of a material fact on a policy application.
An insurer who terminates an appointment, employment, or other relationship of a producer must notify:
The Commissioner, 30 days after the appointment is terminated
Which of the following statements regarding the penalties that may be imposed on an insurance licensee in Michigan is correct? A The maximum criminal fine for misrepresentation is $1,000 per violation B Criminal violations of the rebating provisions of the insurance code are felonies C The Commissioner may never summarily suspend a license without first holding a hearing D The Commissioner must provide 10-days' notice of hearing
The maximum criminal fine for misrepresentation is $1,000 per violation
Charging different rates or providing different benefits to insureds of the same actuarial class or hazard category is which of the following? 1.Sliding 2.Unfair discrimination 3.False statement 4.Defamation
Unfair discrimination-- It is an unfair trade practice to charge different rates for individuals of the same class and life expectancy for life and health insurance policies.
Which of the following is not a type of no fault insurance in Michigan? 1.Personal protection insurance 2.Property protection insurance 3.Uninsured motorist 4.Residual liability insurance
Uninsured motorist-- UM/UIM insurance is not provided regardless of fault.
Any person who commits a fraudulent insurance act is guilty of a felony punishable by imprisonment for up to 4 years and/or a fine of:
Up to $50,000 per violation
How much notice must a Michigan insurer provide before canceling an auto insurance policy?
10 days--No policy of casualty insurance (except Workers' Compensation and mortgage guaranty insurance) may be issued in Michigan without the provision that the policy may be canceled at any time by the insurer by mailing at least 10 days' written notice of cancellation.
Before taking the exam, the applicant must complete a prelicensing course no more than ________ before submitting the application for examination.
12 months
How many days' notice must an insurer provide before canceling an auto policy that has been in effect for longer than 55 days?
20-- No cancellation is effective unless a written notice of cancellation is mailed to the insured at least 20 days prior to the effective date of cancellation.
The minimum auto liability insurance limits in Michigan are:
20/40/10
The required auto liability insurance limits in Michigan are ____/____/____: $20,000 per person and $40,000 per occurrence for two or more persons in any one accident for bodily injury, and $10,000 per occurrence for property damage.
20/40/10
To maintain a producer's license, each licensee must complete a minimum of ______ ____, ____ _____ ___ ____ _____ __ __ __ _____, of approved insurance continuing education (CE) courses ______ __ ______.
24 credit hours, 3 hours of which must be in ethics, every 2 years
How many days after terminating the appointment of an agent must an insurer notify the Commissioner of the termination?
30 days
If an agent changes their residence or business address, they must notify the Department of Insurance within:
30 days
Death benefits are payable for what duration following an injured employee's death?
500 weeks
For the purposes of Workers Compensation, which of the following is not considered an employer in Michigan? 1.A public employer 2.A private employer who employs 2 or more employees 3.A private employer who employs at least one employee for at least 13 consecutive weeks at least 35 hours per week 4.A farming employer who employs 3 or more employees for at least 35 hours per week , 13 weeks a year
A private employer who employs 2 or more employees-- The definition of employer includes every private employer who usually employs 3 or more employees.
Producer A tells his clients, falsely, that a rival insurer does not pay claims in a timely fashion. This is an example of what Unfair Trade Practice? 1.Defamation 2.Rebating 3.Misrepresentation 4.Unfair Discrimnation
Defamation-- Defamation includes making any false or maliciously critical statement regarding the financial condition of any person or business entity, with the intent to injure.
What action can the Commissioner take if he/she finds that a person is conducting transactions of insurance for which a certificate of authority or license is required without having obtained a certificate of authority or license?
Issue a cease and desist order
Which of the following is not a limited line of insurance in Michigan? 1.Life 2.Credit 3.Marine 4.Legal Expense
Life-- Limited lines include Marine insurance, Credit insurance, Surety and fidelity insurance, Legal expense insurance, Livestock insurance, Malpractice insurance, and Plate glass insurance.
Which of the following is not grounds for license revocation? 1.Providing materially untrue information in the license application 2.Violating a cease and desist order 3.Committing an Unfair Trade Practice 4..Overinsuring a property risk
Overinsuring a property risk-- Overinsuring a risk is not grounds for license revocation.
Which of the following is not a required objective of an insurer's information security program? 1.Ensure the security and confidentiality of customer information 2.Protect against any anticipated threats or hazards to the integrity of the information 3.Provide for prosecution of those who violate privacy protections 4.Protect against unauthorized access to the information that could result in substantial harm or inconvenience to any customer
Provide for prosecution of those who violate privacy protections-- The insurer's responsibility in safeguarding consumer privacy involves administrative, technical, and physical safeguards for the protection of customer information. Prosecution of violators is the responsibility of law enforcement.
If an employee is disabled or dies due to an occupational disease:
The employee and/or beneficiaries have 2 years to file a claim from the date they might reasonably recognize the disease as job-related
If an insurer uses an inspection of a dwelling to determine whether the insured or applicant is eligible for home insurance, the criteria for selecting which dwellings to inspect may be based on: A The age of the dwelling B Lawful occupation C Location D The market value
The market value