NJ Insurance Specific Questions
The commissioner may issue a temporary producer license for a max of __ days to a surviving spouse, business partner or employee is a producer dies, becomes disabled, or is called to active military service *NOT the same as "temporary work authority*
180 days
Cancellation of Agency Contract: The commissioner must be notified of cancellation within ___ days, including reason for cancellation
15 days
Minimum age to obtain a producer's license
18 years old
Maintenance and duration of license: Expiration date of license is every ____ years on the last day of the birth month
2 years
Prelicensing Education Requirements
20 hours for life insurance 20 hours for accident and health insurance 40 hours for property and casualty insurance
Continuing education: Total CE hours required every 2 years: ____ Includes ____ hours of ethics CE
24 hours 3 hours
Branch offices notifications: Department of banking and insurance must be notified ____ days before opening or closing a branch office (regulates the banking & insurance industries in NJ)
30 days
Criminal acts must be reported to the commissioner within ____ days of conviction
30 days
Number of days to report change of mailing, residence and email address or business name
30 days
Time frame for a nonresident insurance producer to file a change of address
30 days
A person must be licensed to:
- Discuss rating factors of a prospective policyholder - Initiate sales over the telephone - Make (or propose) an insurance contract - Complete insurance applications - Sign binders, endorsements, riders, and policies - Add or delete coverage - Interpret or explain policies in response to policyholder questions - Quote premiums
Producers must reply to any department inquiry within the time requested in said inquiry or no later than ___
15 calendar days
Penalties for unfair completion, act or practice
$1,000 Max fine for each violation committed unknowingly $5,000 Max fine for violations committed knowingly $5,000 Max fine for violating a cease and desist order
Basic auto insurance policy mandatory & optional coverages: -Maximum PIP medical benefits per person, EXCEPT - Max PIP medical benefits per person for significant or permanent injuries Property damage liability limit of ___ per accident Optional bodily injury or death liability limit ___ per accident
$15,000 $250,000 $5,000 $10,000
AUTO: Minimum auto mobile insurance liability limits ___ bodily injury or death to any one person per accident ___ bodily injury or death to two or more persons per accident ___ property damage per accident
$15,000 $30,000 $5,000 "15/30/5"
What is the limit for the forgery or alteration coverage in the businessowners policy? a) $500 b) $1,000 c) $2,500 d) $5,000
$2,500
Special automobile insurance policy for low income individuals: Emergency PIP coverage up to ___ per person Death benefits of ____
$250,000 $10,000
Uninsured/Underinsured Motorist: Insurers must offer limits up to atleast: ___ bodily injury or death to any one person per accident ___ bodily injury or death to two or more persons per accident ___ property damage per accident; or ___ single limit
$250,000 $500,000 $100,000 $500,000
No-fault personal injury protection (PIP) : Maximum limit for bodily injury to insured and family members ___ PIP benefits must be paid by insurer within ___ days after receiving notice of loss
$250,000 60 days
Insurance Fraud: A person found guilty of insurance fraud is subject to the following civil penalties: ____ for the first offense ____ for the second offense ____ for each subsequent offense
$5,000 $10,000 $15,000
Maximum civil penalties for violating Insurance producer Licensing Act
$5,000 Fines for first violation $10,000 Each subsequent violation
Complaint Records
- A complaint is a written communication expressing a grievance -Kept on calendar all year and maintained until the department's next examination - Upon any receipt from the Insurance Department respecting a claim, insurers must reply within 15 working days of receipt of the inquiry - MUST KEEP FOR 6 YEARS
Eligibility requirements for coverage under the Commercial Auto Insurance Plan (CAIP)
- Applicants domiciled in New Jersey and own a registered automobile must certify that an attempt was made to obtain automobile insurance within 60 days before the date of application, but were unable to do so through ordinary methods. - Applicants with 10 or more vehicles must provide a notice of cancellation or nonrenewal and certification of declination from three named insurers within 60 days of the date of application. liability coverage for a basic combined single limit of $35,000 and statutory uninsured motorist coverage.
Temporary Work Authority
- COMMISSIONER allows applicant to begin work when they have submitted proper application for a license that does not disclose any info that would disqualify them. - expires in 60 days
Cancellations and nonrenewals may not be arbitrary, capricious, or unfairly discriminatory. Reasons for termination include the following
- Nonpayment of premium - Moral hazard - Fraud, material misrepresentation, or nondisclosure - Increased hazard or material change in the risk - Substantial breaches of contractual duties - Lack of cooperation from the insured on loss control - Loss of or reduction in available insurance capacity - Material increase in exposure due to law changes - Loss of or substantial changes in reinsurance - Failure by the insured to comply with law or ordinance - Failure by the insured to provide reasonable and necessary underwriting information to the company - Agency termination
The following are exempt from state licensing examination:
- Nonresident producer apps - Nonresident producers moving to state from reciprocal state who apply for resident license within 90 days
Basic auto insurance mandatory coverages
- PIP medical expense benefits coverage limits are $15,000 per person per accident (with the exception of a maximum benefit of $250,000 for the treatment of permanent or significant brain injury, spinal cord injury, or disfigurement.) - Property damage liability coverage limits are $5,000 per accident. - Optional coverage limits up to $10,000 per accident for bodily injury or death. - Optional comprehensive and collision damage coverage.
The purpose of the Personal Automobile Insurance Plan (PAIP) is:
- To provide personal private passenger automobile insurance coverage to qualified applicants - To preserve the benefits of price competition to the public by encouraging maximum use of the voluntary insurance system - To establish a procedure for the equitable distribution of private passenger automobile risks to assigned companies. ALL INSURERS HAVE TO PARTICIPATE RATES REFLECT THE EXPERIENCE OF THE RISKS INSURED
The purpose of the Commercial Insurance Deregulation Act is to:
- encourage independent action by price competition among insurers in the writing of commercial lines insurance; - prevent practices that tend to bring about monopoly or lessen or destroy competition; and - encourage the most efficient and economic rating and marketing practices.
Benefits provided by workers' compensation include:
- loss of income benefits (partial and total disability); - unlimited reasonable medical expenses incurred by an injured (afflicted) employee; - rehabilitation expenses that help an injured employee return to work more quickly; and - survivor benefits, including funeral expenses.
Failure to comply with UEZ provisions may result in:
- penalties up to $1,000 for a first violation and up to $2,000 for each subsequent violation; - a fine of up to $25,000; or - suspension or revocation of an insurer's certification as a qualified insurer.
Business entity producer applications must include the following:
- the business entity's legal name and addresses; - other business names, if any; - names, license numbers, license lines of authorities for each licensed officer or partner and, if any, all persons owning 10% or more of the business entity; and - responses to questions concerning the applicant's character, fitness, and financial responsibility.
The following provisions apply to homeowners policies and all commercial insurance policies except:
- workers' compensation insurance; - employers liability; - fidelity and surety; - performance and forgery bonds; - ocean marine and aviation insurance; - accident and health insurance; and - surplus lines.
Hurricane deductibles
-Insurers and the FAIR Plan must provide notice to policyholders regarding their hurricane deductible program. • The notice must be provided for any mandatory or optional hurricane deductible programs utilized by the insurer.
Surplus Lines Producer
-MUST hold a property + casualty insurance license -allows them to procure a policy for you from an insurer that is not licensed in your state
Suspension or revocation of License
-Provided incorrect, misleading, incomplete or materially untrue info in the license app -violating any law, rule, regulation, subpoena or order the commissioner or another state comm. -obtained a license by fraud or misrepresentation -cheated on a licensing exam
A producer who allows his license to expire may reinstate the license within ___ years of expiration
1 year
The commissioner must give notice at least ____ days before a hearing for unfair trade practices
10 days
Cancellation & Nonrenewal: Notice of cancellation or nonrenewal of homeowners and commercial policies must be given at least: ___ days in advance for cancellation due to nonpayment of premium or moral hazard ___ days in advance for any other cancellation; or ___ days in advance for nonrenewal
10 days 30 days 30 days
New Jersey Commercial Insurance Deregulation Act: Forms must be filed no later than ___ days after the effective date Rates must be filed no later than ___ days after the effective date, except medical malpractice insurance Medical malpractice rates become effective ____ days after they are filed
30 days 30 days 30 days
A producer must issue a premium receipt when a payment is received from an insured. Premium receipts must be kept for _____
5 years
Records must be retained for at least ___ years
5 years
Nonrenewal notice for medical malpractice must be delivered at least ___ days before the expiration of the policy
60 days
Temporary work authority for resident producer applicants is valid for ___ days
60 days
Credit insurance
A buyer has the right to obtain insurance on purchased goods through an agent of his own choosing, as long as the insurance company is acceptable to the seller. • A certificate of insurance must be provided to the buyer within 25 days after the execution of the retail installment contract. - The certificate must state premium, the kind of insurance, the scope of the coverage, and all the terms, exceptions, limitations, and conditions of the insurance.
Medical Payments coverage under a homeowner policy are available for expenses resulting from an injury to: A residence employee. The named insured. Any regular resident in the household of the insured. A tenant of the insured.
A residence employee.
Limitation on lawsuit option
A: This selection means that you have limited your legal rights to make a claim or file a lawsuit against another driver for pain and suffering resulting from the accident unless you sustained one of the following types of injuries: Death Dismemberment Significant Disfigurement or Scarring Displaced Fracture Loss of a Fetus Permanent Injury (injury to a body part that has not and will not heal to function normally).
Producers must maintain adequate records of transactions
All records must be maintained for a period of five years after termination of coverage.
An insurance agent is: An individual who has the authority to sell insurance and countersign insurance contracts for an insurer. An individual who has the authority to sell insurance for an insurer, but cannot countersign insurance contracts for that insurer. An individual who does not represent an insurer, but instead works with a client to find an insurer that will provide an insurance policy that meets the client�s needs. An individual who helps a client to identify the benefits of different insurance policies, even though he or she does not actually sell insurance.
An individual who has the authority to sell insurance and countersign insurance contracts for an insurer.
In the event of a dispute between the insurer and insured concerning the value of a property settlement, which of the following conditions of the Homeonwer's policy would apply? Appraisal Duties of the insured Suit against the company Loss settlement
Appraisal
George Wilson has a personal auto policy. Select the coverage that would apply when a deer leaps onto Mr. Wilson's car and causes extensive damage. Comprehensive (other than collision) Collision Medical Payments Bodily Injury and Property Damage Liability
Comprehensive (other than collision)
The Commissioner:
Department of Banking & Insurance regulates the banking and insurance industries in NJ Appointed by the Governor Authority to: -conduct investigation & examination -make reasonable rules & regulations -issue order and notices -issue insurance licenses & certificates of authority Impose penalties - fines, suspensions, and revocations -approve insurance policy forms & rates
A Pro Rata Liability Clause is included in an insurance policy to deal with the problem of: Duplicate insurance policies. Conditional coverages. Inadequate coverages. Excessive insurance policies
Duplicate Insurance Policies
Information Security Program
Each licensee must implement a comprehensive written information security program that includes administrative, technical, and physical safeguards for the protection of customer information.
Domestic employee (homeowners) coverage
Every homeowners policy or other policy covering comprehensive personal liability insurance issued and delivered in this state must afford coverage against liability for the payment of any obligation the policyholder may incur to an injured domestic servant or household employee (or dependents thereof)
Exemptions for Licensing:
Generally applies to people who are not actively soliciting or selling insurance and do not receive commission based on compensation such as executives, managers, clerical employees MEEEEEEEEEEEE!!!!!!!!
Property and Casualty Insurance can be utilized to handle: I. Pure risks. II. Speculative risks. I only II only Both I and II Neither I nor II
I only
Temporary Producer License
Issue for up to 180 days without requiring examination if necessary for servicing of an insurance business
Misrepresentation
It is illegal to make any written or oral statement, sales presentation or comparison that: - misrepresent the dividends, benefits, advantages, conditions or terms of policy -uses a name of any insurance policy that misrepresents its true nature - misrepresentation for the prupose of inducing the lapse,
Defamation
Making any statement, written or oral, which is false or maliciously critical of the financial condition of an insurance company or a producer representing that company
Insurance Producers:
May be agents, brokers or both: - AGENT: licensed insurance producer appointed by an insurer to sell insurance - Agent reps the insurer, not the insured - BROKER: Licensed insurance producer who negotiates insurance on behalf of insureds or policyholders, not behalf of insurer or agent
Commercial auto insurance applies to accidents or losses in all of the following locations, EXCEPT: Mexico. Canada. Puerto Rico. Alaska.
Mexico
Rebating
Offering valuable consideration, other than that which is offered in the contract, as an inducement to purchase a policy is illegal
In automobile insurance Supplementary Payments refer to which of the following? Payment of defense and other expenses by the insurance company beyond the limits of liability. Payments made by the insurance company for the insured's own medical expenses, to supplement any other medical insurance. Payments received by the insured directly from the person or persons who caused a loss. Payments made by the insured for damages exceeding his policy limits.
Payment of defense and other expenses by the insurance company beyond the limits of liability.
A producer who offers a prospect one-half of the commissions as an inducement to purchase insurance is guilty of: Rebating. Twisting. Misrepresentation Concealment.
Rebating.
Urban Enterprise Zone Program (UEZ) :
The purpose of the program is to encourage greater availability of private passenger automobile insurance in certain urban areas of New Jersey. - This provision applies to all insurers authorized to transact private passenger automobile insurance in New Jersey.
Special Automobile Insurance Policy (SAIP)
The special automobile insurance policy was designed to assist low-income drivers in complying with the mandatory private passenger automobile insurance requirements. - MEDICAID
Who shares enforcement authority for Insurance Fraud?
The state attorney general and director of the division of anti-fraud compliance in the department of banking and insurance
Stacking prohibited
UM and UIM coverage cannot be increased by stacking the limits of coverage of multiple motor vehicles covered under the same policy of insurance, nor increased by stacking limits of coverage of multiple policies available to the insured.
Under law of agency, all of the following are the types of authority an agent might have EXCEPT: Uncertain Authority Apparent Authority Implied Authority Express Authority
Uncertain Authority
The company owes premium money to the insured. The insurer gave the funds to the producer to return to the insured. Within how many days must the producer pay the insured? a) 5 b) 10 c) 14 d) 30
a) 5 business days after the receipt of funds
The PAIP provides :
bodily injury and property damage liability, PIP, uninsured/underinsured motorists, and physical damage (collision and comprehensive) coverages at the minimum levels required by law. • Increased limits may be provided.
Certificate of Authority
is a certificate issued by the Commissioner of Banking and Insurance demonstrating the authority of an insurer to transact insurance business in this state.
insurance agent
is an insurance producer who is authorized, in writing, by any insurance company to act as its agent to solicit, negotiate, or sell insurance contracts on its behalf or to collect insurance premiums. He also may be authorized to countersign insurance policies on its behalf.
Reinsurance
is the transfer of insurance business from one insurer to another. Its basic purpose is to shift risks from an insurance company (ceding company) whose financial safety may be threatened by retaining too large a risk to other reinsurers that will share in the risk of large losses. In addition, reinsurance helps stabilize profits and losses of insurance companies.
Surplus Lines: Exportable List
means a list of classes of insurance coverages or risks declared by the commissioner for which there is no reasonable or adequate market among authorized insurers in this state.
Surplus Lines: Diligent Effort
means a process by which a producer places coverage on behalf of a New Jersey insured with a surplus lines insurer after the risk has been declined by three authorized insurers writing the kind of insurance requested.
Fair Credit Reporting Act of 1970
requires fair and accurate reporting of information about consumers, including applicants for insurance - Insurers must inform applicants about any investigations being made - If any consumer report is used to deny coverage or charge an applicant a higher rate, the insurer must furnish the applicant with the name of the reporting agency conducting the investigation -The proposed insured has the right to contact the reporting agency in order to review their personal file - The reporting agency must also inform the proposed insured of all reports released in the last six months - When misinformation has been uncovered, the reporting agency is allowed up to three months to correct the file.
McCarran-Ferguson Act (1945)
the act stated that the federal government had the right to regulate the business of insurance when state law did not. This act led each state to revise its insurance laws to conform to the federal law and helped eliminate conflicts between state and federal law.
Anyone who believes that insurance fraud is being committed, or will be committed, must immediately notify _______
the division of anti-fraud compliance - no one is liable for libel or violation of privacy for filing a report or giving info related to good-faith suspicions of insurance fraud
The purpose of the New Jersey Insurance Underwriting Association (FAIR Plan) is to:
to provide basic property insurance coverage to those who are unable to obtain insurance coverage in the standard or normal market. All New Jersey authorized insurers writing fire and extended coverage insurance in New Jersey are required to participate in the FAIR Plan.
License Reinstatement
• A lapsed producer's license may be reinstated within 12 months from the renewal due date, without passing a written examination. • To reinstate a license, a producer must: - provide proof of completion of required CE credits; - indicate if any business was transacted during the unlicensed period; and - pay late renewal fees of up to double the unpaid renewal fee.
License Renewal
• An initially issued individual producer license expires on the last day of the producer's birth month in the year that results in the term of the license being at least 18 months. - An insurance producer's license renews biennially (every two years) thereafter. • A producer must complete all required continuing education. • Renewal fees must be submitted at least 10 days prior to the expiration date of the license.
PIP coverage includes:
• Benefits protect the named insured and resident family members who sustain bodily injury as a result of an accident while occupying, entering, or alighting from the vehicle or by being struck by objects propelled by a vehicle, or if struck as a pedestrian. - medical expense benefits; - income continuation benefits; - essential services benefits; - death benefits; and - funeral expense benefits. • No person may recover PIP benefits under more than one policy for injuries sustained in any one accident.
Unfair Claims Settlement Practices
• Knowingly misrepresenting relevant facts or policy provisions to claimants and insureds • Failing to acknowledge communications regarding claims • Failing to implement procedures for the prompt investigation and settlement of claims • Not attempting in good faith to bring about prompt, fair, and equitable settlement of claims submitted in which liability has become reasonably clear • Compelling insureds to institute suits to recover amounts due under their policies by offering substantially less than the amounts ultimately recovered in suits brought by them • Refusing to pay claims without conducting a reasonable investigation • Failing to affirm or deny coverage within a reasonable time after completing a claim investigation • Making claims payments without indicating the coverage under which each payment is being made • Unreasonably delaying the claim investigation or payment by requiring both a formal proof of loss and subsequent verification that duplicates the information • Denying a claim or offering a compromise settlement without a prompt explanation for such actions • Failing to provide claim forms • Issuing partial claim settlement payments under a specific coverage, which contains language that releases the insurer from its total liability
Unfair Trade Practice Penalties
• The commissioner may impose the following penalties for unfair trade practices or unfair claims settlement practices: - Up to $1,000 for each act or violation - Up to $5,000 for each act or violation if the violator knew or should have known the act was illegal • Any person who violates a cease and desist order may be subject to a penalty of no more than $5,000 per violation.
Nonresident License
• The commissioner may issue an insurance producer's license to qualified nonresident producers. • The person must be currently licensed and in good standing in her resident state. • The person must submit the proper application and applicable fees. • The person's home state must award insurance producer licenses to producers of this state on the same basis (a reciprocal agreement).
Coastal Properties
• These regulations set forth the expedited process and uniform language for a homeowners' insurer or rating organization to file changes to its rating system. • The commissioner will approve rates that are not excessive, inadequate, or unfairly discriminatory. - The commissioner will rule on a complete filing within
New Jersey Workers' Compensation Insurance Plan.
• This plan provides a means for which employers may secure coverage if they are unable to do so in the normal or voluntary market. • Insurers who are licensed to solicit workers' compensation coverage in this state must participate in the plan.
