P&C Final Exam:

The violation of a cease and desist order may result in a fine of A$3,000. B$5,000. C$7,500. D$10,000.

$10,000. Incorrect! Anyone who violates a cease and desist order may be subject to a fine of up to $10,000 for each violation.

Which of the following would be required to be licensed as an insurance producer? AA person whose activities are limited to producing insurance advertisements BA salaried full-time employee who furnishes information for group insurance CAn insurance company director who performs executive, administrative and managerial duties DA salaried employee who advertises and solicits insurance

A salaried employee who advertises and solicits insurance Correct! A person does not require an insurance producer license if he or she only advertises without intent to solicit insurance. However, once there is solicitation, a license is required.

When does a producer's license expire? AEvery even-numbered year BEvery 3 years CAnnually on January 1 DEvery 2 years on the last day of the producer's birth month

Every 2 years on the last day of the producer's birth month Correct! Producer/agent licenses expire every 2 years, on the last day of the licensee's birth month.

If a policy is cancelled due to nonpayment of premium, how many days' advance notice must the insurer give the policyholder before cancellation? A15 days B10 days C7 days D30 days

10 days If a policy is cancelled due to nonpayment of premium, the insurer must give 10 days' notice before cancellation.

An insured must get advance warning if the premiums will be increased by more than A5%. B10%. C15%. D20%.

15% Written notice of an increase in premiums that exceeds 15% of the current policy's premium must be delivered or mailed to the insured at least 45 days before the effective date of the change.

Insurers must update copies of its rates, plans, systems, and underwriting rules every AYear. B2 years. C3 years. D4 years.

2 years Every insurer must maintain copies of the rates, plans, systems, and underwriting rules it uses. These rate filings must be updated by the insurer at least once every 2 years.

In this state, no automobile insurance policy issued as proof of financial responsibility will be issued with bodily injury and property damage limits less than A25/15/10 B50/100/50 C25/25/25 D25/50/25

25/50/25 In Georgia, the limits are 25/50/25: no less than $25,000 for bodily injury or death of one person; $50,000 for bodily injury or death of two or more people; and $25,000 for damage to property of others.

How many days before a policy is nonrenewed must an insurer deliver or mail written notice to the insured? A15 days B20 days C30 days D10 days

30 dYS

How long is the Commissioner's term of office? A2 years B3 years C4 years D6 years Correct! The Commissioner is elected to office for a term of 4 years.

4 years

Rates for private passenger motor vehicle insurance on file with the Commissioner are considered approved after A30 days. B45 days. C60 days. D90 days.

45 days

A binder is effective for a period of A60 days. B90 days. C10 days. D30 days.

90days A binder is effective for a period of 90 days.

A binder is effective for a period of A30 days. B60 days. C90 days. D10 days.

A binder is effective for a period of 90 days.

All of the following would be considered rebating EXCEPT AAn agent offers the use of his lake house to a client as an inducement to buy an insurance policy from him. BAn agent offers to share his commission with a policyholder. CAn agent offers tickets to a baseball game as an inducement to buy insurance. DAn agent misrepresents policy benefits to convince a policyowner to replace policies.

An agent misrepresents policy benefits to convince a policyowner to replace policies. Correct! Rebating occurs when an insured is offered something of value in order to induce the sale of an insurance product. Both the offer and acceptance of a rebate are illegal.

What is a foreign insurer? AAn insurer with a home office in another country BAn insurer with licensed agents doing business in other countries CAn insurer with licensed agents who are citizens in more than one country DAn insurer with a home office in another state

An insurer with a home office in another state Correct! A domestic insurer's home office is in this state, a foreign insurer's is in another state, and an alien insurer's is in another country.

In insurance transactions, fiduciary responsibility means AHandling insurer funds in a trust capacity. BMaintaining a good credit record. CBeing liable with respect to payment of claims. DCommingling premiums with agent's personal funds.

Handling insurer funds in a trust capacity.

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

Issuing sales material with exaggerated statements about policy benefits Misrepresentation is issuing, publishing or circulating any illustration or sales material that is false, misleading or deceptive as to policy benefits or terms, the payment of dividends, etc. This includes oral statements.

Which of the following is NOT true regarding a Certificate of Authority? AIt is equivalent to an insurance license. BIt is issued by the state department of insurance. CIt is issued to group insurance participants. DIt may be necessary for transacting business in a specific state.

It is issued to group insurance participants. DIt may be necessary for transacting business in a specific state. Correct! Before insurers may transact business in a specific state, they must apply for a license or Certificate of Authority from the state department of insurance and meet any financial (capital and surplus) requirements set down by the state.

In which of the following situations is it legal to limit coverage based on marital status? AIt is never legal to limit coverage based on marital status. BExcessive number of divorces, as defined by the Insurance Code CLegal separation during the application process DDivorce within the last six months of applying for insurance

It is never legal to limit coverage based on marital status. Availability of insurance benefits or coverage may not be denied based on sex or marital status. Marital status may be considered for the purpose of defining persons eligible for dependent benefits.

If the Commissioner is not able to serve due to disability, resignation, or death, which of the following will happen? AThe Department will form a committee to serve as the Commissioner until the next election. BThe Chief Deputy Commissioner will serve as the Commissioner until the next election. CThe Governor will serve as the Commissioner until the next election. DThe Department will elect a new Commissioner immediately.

The Chief Deputy Commissioner will serve as the Commissioner until the next election. If the Commissioner cannot serve due to death, disability or resignation, the Chief Deputy Commissioner serves until the next election.

The Commissioner of Insurance is AThe chief officer of the Department of Insurance. BThe President of the NAIC. CUsed as a synonym for the Department of Insurance. DThe national head of all state insurance departments.

The chief officer of the Department of Insurance.

Which of the following conditions must be met for a vehicle to be licensed in Georgia? AThe owner has furnished proof of uninsured motorist coverage. BThe owner has selected a repair facility in case of damage to the vehicle. CThe owner has furnished proof of advance premium payment. DThe owner has furnished proof of auto liability insurance or an approved self-insurance plan.

The owner has furnished proof of auto liability insurance or an approved self-insurance plan. A vehicle may not be licensed in Georgia until the owner has furnished proof of auto liability insurance or an approved self-insurance plan. This is in compliance with Georgia's financial responsibility law.

Which type of liability insurance may an insured reject in writing? AThe Georgia Automobile Insurance Plan BUninsured motorist coverage CAuto liability insurance DCompulsory insurance

Uninsured motorist coverage

Workers compensation coverage would NOT pay for which of the following? APrescriptions BTravel expenses CIn-home medical devices DPhysical therapy

Workers compensation coverage pays for doctor bills, hospital bills, physical therapy, prescriptions, and necessary travel expenses.

Who elects the Commissioner of Insurance to office? ARegistered voters BThe State Department of Insurance CNAIC DMember insurers

a

An agent commingled $500 of insurance premiums collected with new applications with his personal funds. The agent could be found guilty of a AMisdemeanor. BFelony. CFiduciary crime. DBreach of contract.

a Any willful violation will be considered a misdemeanor unless the amount involved exceeds $1,000, in which case the violation will be considered a felony.

On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are ANot taxable since the IRS treats them as a return of a portion of the premium paid. BPaid at a fixed rate every year. CTaxable as ordinary income. DGuaranteed.

a With participating policies, policyowners are entitled to dividends, which, in the case of mutual companies, are nontaxable because they are considered a return of excess premiums.

An agent commingled $500 of insurance premiums collected with new applications with his personal funds. The agent could be found guilty of a AMisdemeanor. BFelony. CFiduciary crime. DBreach of contract.

a Any willful violation will be considered a misdemeanor unless the amount involved exceeds $1,000, in which case the violation will be considered a felony.

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be ACertified. BQualified. CApproved. DAuthorized.

authorized

If a policy has been in effect for at least 60 days or is due for renewal, a cancellation may only be effected for which of the following reasons? ATwo or fewer claims against the policy in the preceding 36 months BA change in the risk that substantially increases the hazard insured against CLack of supporting business with the insurer DChange in the insurer's underwriting guidelines that is not approved by the Commissioner

b A policy that has been in effect for at least 60 days or is due for renewal may only be cancelled if there was a changed in the risk that substantially increased the hazard insured against.

Which of the following positions is responsible solely for offering advice on insurance policies (for a fee)? ABroker BCounselor CAgent DSub-agent

b An agent represents the company. A sub-agent represents the agent. A sub-agent cannot take or sign an application. A counselor receives a fee for advice, and can maintain a dual license as an agent and counselor.

Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance? ASlandering BDefamation CUndercutting DTwisting

b Defamation is making statements that are false as to the financial condition of any insurer and which are calculated to injure any person engaged in the business of insurance.

Rates for private passenger motor vehicle insurance on file with the Commissioner are considered approved after A30 days. B45 days. C60 days. D90 days.

b Rates for private passenger motor vehicle insurance providing only the mandatory minimum limits must be filed with the Commissioner. If the rate has been on file with the Commissioner for 45 days - and has not been disapproved - it may be considered approved.

What is the title of the chief officer of the Department of Insurance? ASuperintendent BCommissioner CPresident DDirector

b The Commissioner of Insurance is the chief officer of the Department of Insurance in Georgia. The Commissioner is elected to office for a term of 4 years. The purpose and function of the Department and the duties and powers of the Commissioner are to carry out and enforce the provisions of the Insurance Code.

Workers compensation benefits in Georgia are limited to A$375 a week. B$575 a week. C$750 a week. D$925 a week.

b Workers compensation benefits in Georgia are limited to two-thirds of a worker's average weekly wage up to $575 a week.

A nonresident agent is allowed to conduct insurance transactions in Georgia because his home state allows Georgia residents to transact insurance business in it. This is known as a/n AOverinsurance. BAppointment. CReciprocity agreement. DNonresident arrangement.

c A nonresident agent may receive a nonresident's license if he or she resides in a state that awards nonresident agent licenses to residents of Georgia on the same basis. This is known as a reciprocity agreement.

Which of the following is an example of a producer's fiduciary duty? AA duty to base all transactions upon the principle of Utmost Good Faith. BThe obligation to tell the truth to the best of one's knowledge CThe trust that a client places in the producer in regard to handling premiums. DAn obligation to state every known fact about the policy the producer is selling.

c An agent acts in a fiduciary capacity, based upon trust and confidence, when handling the financial affairs of their customers, including the handling of premiums.

An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of? ATwisting BDefamation CFalse advertising DUnfair claims

c False advertising is the illegal practice of advertising or circulating materials that are untrue, deceptive, or misleading.

An auto owner in this state has motor vehicle coverage with the limits of 25/50/25. All of the following are true EXCEPT AThe driver has proof of financial responsibility in this state. BThe policy meets the minimum coverage requirements. CThe driver must obtain new insurance. DThe driver's coverage for bodily injuries is $25,000.

c Limits of 25/50/25 are considered suitable proof of financial responsibility and are required in this state.

Which of the following best describes an insurance company that has been formed under the laws of this state? ASovereign BAlien CForeign DDomestic

d

How is the Commissioner of Insurance selected to be the chief officer of the Department of Insurance? AElected to office BHired by the Department CNominated by insurers DAppointed by the Governor

elected The Commissioner is elected to office for a term of 4 years.

A willful violation of an agent's fiduciary responsibility that involved funds exceeding $1,000 will be considered AA minor violation. BSubject to imprisonment. CA misdemeanor. DA felony.

felony