Chapter 5 - State Laws, Rules, and Regulations
An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an - self-insurer - authorized insurer - local insurer - certified insurer
Authorized insurer
Any insurer who issues a crop insurance policy, other than federal crop insurance, for tobacco crops grown in GA, shall make available coverage for what until the crop is harvested? - hail/fire - fire/insect - insect/wind - wind/hail
Wind/hail
Workers Comp laws in GA apply to businesses that employ: - 4 - 50 employees - 2 employees - 3 or more employees - 2 - 100 employees
3 or more employees
How many days before a policy is nonrenewed must an insurer deliver or mail written notice to the insured? - 30 days - 10 days - 15 days - 20 days
30 days
What documentation grants express authority to an agent? - agents insurance license - fiduciary contract - state provisions - agents contract with the principal
Agents contract with the principal
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? - assumed - apparent - express - implied
Apparent
Which of the following entities has the power to issue certificates of authority? - department of insurance - NAIC - federal insurance regulation board - Commissioner of insurance
Commissioner of Insurance
When does a producers license expire? - every 2 years on the last day of the producers birth month - every even-numbered year - every 3 years - annually on January 1
Every 2 years on the last day of the producers birth month
Circulating deceptive sales materials to the public is what type of Unfair Trade Practice? - defamation - coercion - misrepresentation - false advertisement
False advertisement
The Commissioner of Insurance is - the president of the NAIC - used as a synonym for the department of insurance - the national head of all state insurance departments - the chief officer of the department of insurance
The chief officer of the Department of Insurance
Which of the following is NOT a responsibility of an insurance agent? - explaining policy provisions - submitting the application to the insurer - underwriting the contract - delivering the contract
Underwriting the contract
Which of the following conditions must be met for a vehicle to be licensed in GA? - the owner has selected a repair facility in case of damage to the vehicle - the owner has furnished proof of advance premium payment - the owner has furnished proof of auto liability insurance or an approved self-insurance plan - the owner has furnished proof of uninsured motorist coverage
The owner has furnished proof of auto liability insurance or an approved self-insurance plan
Under workers compensation laws, injured workers are entitled to how many weeks of treatment from the date of the accident
400 weeks
A producer who fails to segregate premium monies from his own personal funds is guilty of - commingling - larceny - embezzlement - theft
Commingling
When a producer was reviewing a potential customers coverage written by another company, the producer made several remarks that were maliciously critical of that other insurer. The producer could be found guilty of - misrepresentation - discrimination - nothing, unless the remarks were in writing - defamation
Defamation
Who might receive dividends from a mutual insurer? - subscribers - stockholders - agents - policyholders
Policyholders
How many days before a policy is nonrenewed must an insurer deliver or mail written notice to be insured? - 20 days - 30 days - 10 days - 15 days
30 days
An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of? - false advertisement - unfair claims - twisting - defamation
False advertisement
The requirement that agents not commingle insurance monies with their own funds is known as: - accepted accounting principals - fiduciary responsibility - premium accountability - express authority
Fiduciary responsibility
What is the function of a certificate of authority? - it gives the Commissioner of Insurance his or her authority - it is given to the Department of Insurance by the federal insurance regulation board to allow it to enforce the provisions of the insurance code - it is presented to all agents wen they receive their licenses - it allows an insurer to transact insurance in GA
It allows an insurer to transact insurance in GA
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 - 25/15/10 - 50/100/50 - 25/25/25 - 25/50/25
25/50/25
After an insurer has filed an application for a certificate of authority, how long does the Commissioner have to approve the application? - 15 days - 30 days - 45 days - 90 days
90 days
If an agent advises a policyholder to replace an insurance policy but only does so for the purpose of making commissions, the agent has committed - defamation - coercion - churning - misrepresentation
Churning
An insurance producer just sold an insurance policy to his sister. What kind of business is this? - illegal - internal - personal - controlled
Controlled
Which of the following positions is responsible solely for offering advice on insurance policies (for a fee)? - agent - sub-agent - broker - counselor
Counselor
Which of the following will NOT be considered unfair discrimination by insurers? - assigning different risk classifications to applicants based on gender identity - discriminating in benefits and coverages based on the the insureds habits and lifestyle - charging applicants with similar health histories different premiums based on their ethnicity - cancelling individual coverage based on the insureds marital status
Discriminating in benefits and coverages based on the insureds habits and lifestyle
The authority granted to an agent through the agents contract is referred to as - apparent authority - implied authority - absolute authority - express authority
Express authority
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? - nonprofit service organization - stock - mutual - reciprocal
Mutual
Which of the following is NOT true regarding a Certificate of Authority? - it is equivalent to an insurance license - it is issued by the state department of insurance - it is issued to group insurance participants - it maybe necessary for transacting business in a specific state
it is issued to group insurance participants
The violation of a cease and desist order may result in a fine of - $3,000 - $5,000 - $7,500 - $10,000
$10,000
Workers comp benefits in Georgia are limited to what amount of a workers avg weekly wage? - a quarter - a half - two-thirds - three-quarters
2/3
Which of the following are the authorities that an agent can hold? - primary and secondary - express and implied - apparent and allowed - authorized and admitted
Express and implied
When doing business in this state, an insurance company that is formed under the laws of another is known as which type of insurer? - domestic - alien - nonadmitted - foreign
Foreign
An agent commingled $500 of insurance premiums collected with new applications with his personal funds. The agent could be found guilty of a - misdemeanor - fiduciary crime - breech of contract - felony
Misdemeanor
All of the following are examples of transacting insurance in Georgia EXCEPT - preliminary insurance negotiations - making an insurance contract go into effect - placing advertisements for an insurer - insurance solicitation
Placing advertisements for an insurer
Who elects the Commissioner of Insurance to office? - The state department of insurance - NAIC - member insurers - registered voters
Registered voters
An insurance agents responsibilities include all of the following EXCEPT - represent the client - perform faithfully - represent the insurer - perform professionally
Represent the client
All of the following are unfair claims settlement practices EXCEPT - suggesting negotiations in settling the claim - refusing to pay claims without conducting a reasonable investigation - failing to adopt and implement reasonable standards for settling claims - failing to acknowledge pertinent communication pertaining to a claim
Suggesting negotiations in settling the calm
Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insureds best interest are guilty of - misrepresentation - rebating - twisting - defamation
Twisting
A participating insurance policy may do which of the following? - provide group coverages - pay dividends to the stockholder - require 80% participation - pay dividends to the policyowner
Pay dividends to the policyowner
Which of the following best describes a misrepresentation? - discriminating among individuals of the same insuring class - issuing sales material with exaggerated statements about policy benefits - making a deceptive or untrue statement about a person engaged in the insurance business - making a maliciously critical statement that is intended to injure another person
Issuing sales material with exaggerated statements about policy benefits
The Standard Fire Insurance policy DOES NOT apply to which type of insurance? - casualty insurance - marine or transportation insurance - insurance on growing crops - it does not apply to any of the above
It does not apply to any of the above
The purpose of the Georgia Automobile Insurance Plan is to - protect insureds from insurance companies that become insolvent - make automobile insurance available for insureds who are unable to purchase coverages in the voluntary market - make automobile insurance available for insureds over the age of 60 - make automobile insurance available for insureds who have a perfect driving record
Make automobile insurance available for insureds who are unable to purchase coverage in the voluntary market
Which of the following best describes the unfair trade practice of defamation? - refusing to deal with other insurers - making derogatory oral statements about another insurer financial condition - assuming the name and identity of another person - issuing false advertising material
Making derogatory statements about another insurers financial condition
A binder is effective for a period of: - 30 days - 60 days - 90 days - 10 days
30 days
An insured must get advance warning if the premiums will be increased by more than - 5% - 10% - 15% - 20%
15%
Which of the following is an example of a producer being involved in an unfair trade practice of rebating? - telling a client that his first premium will be waived if he purchases the insurance policy today - inducing the insured to drop a policy in favor of another one when its not in the insureds best interest - charging a client a higher premium for the same policy as another client in the same insuring class - making deceptive statements about a competitor
Telling a client that his first premium will be waived if he purchases the insurance policy today
Which of the following is required of an insurer in order to legally transact insurance in Georgia? - decree of power - insureres certificate - agents license - certificate of authority
Certificate of Authority
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT - stocks, securities, or bonds - an offer to share in commissions generated by the sale - dividends from a mutual insurer - an offer of employment
Dividends from a mutual insurer
Pertaining to insurance, what is the definition of a fiduciary responsibility? - promptly forwarding premiums to the insurance company - helping insureds to file claims - performing reviews of insureds coverage - offering additional coverage to clients
Promptly forwarding premiums to the insurance company
If an agent changes his residence address, within how many days must the agent notify the Commissioner of the change? - 10 days - 15 days - 30 days - 60 days
30 days
How long is the Commissioner's term of office? - 2 years - 3 years - 4 years - 6 years
4 years
What is a foreign insurer? - an insurer with a home office in another country - an insurer with licensed agents doing business in other countries - an insurer with licensed agents who are citizens in more than one country - an insurer with a home office in another state
An insurer with a home office in another state
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 - applicant - insured - company - beneficiary
Company
Which of the following best describes an insurance company that been formed under the laws of this state? - domestic - sovereign - alien - foreign
Domestic
The valued policy statute applies in which of the following events? - in the event of a total loss by fire to an apartment building containing at least 10 apartments - in the event of a total loss by fire to a one or two family residential building or structure - in the event of a total loss by tornado to an apartment building containing at least 10 apartments - in the event of a total loss by tornado to a one or two family residential building or structure
In the event of a total loss by fire to a one or two family residential building or structure
It would be considered unfair discrimination to ask an insurance applicant about which of the following and then use that info as a rating factor to determine insurability? - address - sexual orientation - age - gender
Sexual orientation
Georgia requires that all owners and operators of motor vehicles in the state carry which type of auto insurances as evidence of security in complying with the states financial responsibility law? - spousal coverage - personal auto insurance - uninsured motorist coverage - auto liability coverage
Auto liability coverage
A worker who suffered catastrophic injuries on the job is entitled to - a max of 52 weeks of treatment - lifetime medical benefits - a max of 500 weeks of treatment - a max of 400 weeks of treatment
Lifetime medical benefits
If the Commissioner is not able to serve due to disability, resignation, or death, which of the following will happen? - the department will form a committee to serve as the Commissioner until the next election - the chief deputy commissioner will serve as the Commissioner until next elction - the governor will serve as the commissioner until next election - the department will elect a new commissioner immediately
The Chief Deputy Commissioner will serve until next election
An auto owner in this state has motor vehicle coverage with the limits 25/50/25. All of the following are true EXCEPT - the driver must obtain new insurance - the drivers coverage for bodily injuries is $25,000 - the driver has proof of financial stability in this state - the policy meets the minimum coverage requirents
The driver must obtain new insurance
An agent offers his client free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of - twisting - controlled business - rebating - coercion
Rebating
If the premiums for a policy will be increased by more than 15%, how much warning must the insured get? - 30 days - 15 days - 60 days - 45 days
45 days
An agent must be a resident of the state and be present in the state for at least how many months each year - 4 - 6 - 1 - 3
6
If policy is cancelled per non-payment, how many days in advance of the cancellation date must the insurer provide notice to the mortgagee - 7 days - 30 days - 15 days - 10 days
10 days
If an insurance premium is paid by the policyowner to the agent, and the agent fails to remit that premium to the insurer, which of the following statements is true? - the policy will lapse since the premium was not received by the insurer - the policy will not lapse since the payment to the agent is the same as a payment to the insurer - the premium will betaken out of the Guaranty Association funds - The agents license will be automatically revoked
The policy will not lapse since the payment to the agent is the same as a payment to the insurer
Which of the following is an example of a producers fiduciary duty? - the trust that a client places in the producer in regard to handling premiums - an obligation to state every known fact about the policy the the producer is selling - a duty to base all transactions upon the principle of Utmost good Faith - the obligation to tell the truth to the best of ones knowledge
The trust that a client places in the producer in regard to handling premiums
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? - two or fewer claims against the policy in the preceding 36 months - a change in the risk that substantially increases the hazard insured against - lack of supporting business with insurer - change in the insurers underwriting guidelines that is not approved by the Commissioner
A change in the risk that substantially increases the hazard insured against
A willful violation of an agents fiduciary responsibility that involved funds exceeding $1,000 will considered - subject to imprisonment - misdemeanor - a felony - a minor violation
A felony
Which of the following persons is required to hold a producer license? - a person who administers employee benefits - a person who negotiates insurance contracts - a person who creates insurance advertisements - a person who takes messages related to claims
A person who negotiates insurance contracts
Which of the following would be required to be licensed as an insurance producer? - a person whose activities are limited to producing insurance advertisements - a salaried FT employee who furnishes information for group insurance - an insurance company director who performs executive, administrative and managerial duties - a salaried employee who advertises and solicits insurance
A salaried employee who advertises and solicits insurance
All of the following would be considered rebating EXCEPT - an agent offers the use of his lake house to a client as an inducement to buy an insurance policy from him - an agent offers to share his commission with a policyholder - an agent offers tickets to a baseball game as an inducement to buy insurance - an agent misrepresents policy benefits to convince a policyowner to replace policies
An agent misrepresents policy benefits to convince a policyowner to replace policies
A worker received a concussion after getting hit on the head at work and missed work for 5 days. At what point will the worker receive workers comp for the missed work? - the 7th day after the accident - the 21st day after the accident - within 30 days of the accident - never; benefits start once a worker has been unable to work for more than 7 days
Never; benefits start once a worker has been unable to work for more than 7 days
If the insurer pays an amount less than the amount insured under the policy in the event of a total loss to property, how much of the insureds premium must the insurer return? - the amount of premium actually paid and the premium that would have been charged for a policy with an amount of insurance equal to the amount paid by the insurer for the loss - the insurer does not have to return any of the premium paid - 50% of the amount of premium actually paid and the premium that would have been charged for a policy with an amount of insurance equal to the amount paid by the insurer for the loss - 80% of the amount o premium actually paid and the premium that would have been charged for a policy with an amount of insurance equal to the amount paid by the insurer for the loss
The amount of premium actually paid and the premium that would have been charged for a policy with an amount of insurance equal to the amount paid by the insurer for the loss
