Chapter 8: Florida State Insurance Laws

Catastrophic ground cover collapse must meet 4 requirements. Which of the following is NOT one of those requirements? a. Failure of lateral loads of the structure b. Depression in the ground cover clearly visible to the naked eye c. Abrupt collapse of the ground cover d. Structural damage to the covered building

A. Failure of lateral loads of the structure Catastrophic ground cover collapse also includes an insured structure being condemned and ordered to be vacated by the responsible governmental agency.

Which of the following is NOT an exception to the requirement to inspect a motor vehicle prior to issuing physical damage coverage? A. A temporary substitute motor vehicle B. A renewal policy C. A policyholder who has been insured for at least one year, if the agent of the insurer verifies the previous coverage D. An unused motor vehicle purchased from a licensed motor vehicle dealer or leasing company subject to certain requirements

C. A policyholder who has been insured for at least one year, if the agent of the insurer verifies the previous coverage. A policyholder must have been insured for 2 years or longer, without interruption, and the agent of the insurer must verify the previous coverage in order to be exempt from the inspection requirement.

The Florida Insurance Guaranty Association will assume the contractual obligations of an insolvent insurer up to _________ for any one policy. a. $100,000 b. $150,000 c. $250,000 d. $300,000

D. $300,000 The Association's liability for the contractual obligations of the insolvent insurer does not exceed $300,000 for any one policy and an additional $200,000 for the portion of a covered claim for damage to the structure and contents.

Which of the following statements is false with respect to the Citizens Property Insurance Corporation (Citizens)? A. The corporation is for applicants who are unable to obtain property insurance through ordinary methods B. Participation by member insurers is proportional to the net direct premiums of each member insurer during the preceding calendar year C. All insurers required to be members of the corporation must participate in its writings, expenses, and losses D. The association must reject a commercial lines residential risk with limits above $10 million or a personal lines residential risk with limits above $1 million

D. The association must reject a commercial lines residential risk with limits above $10 million or a personal lines residential risk with limits above $1 million. The association must accept a commercial lines residential risk with limits above $10 million or a personal lines residential risk with limits above $1 million.

Which of the following is not considered unethical as described in the Unfair Trade and Marketing Practices? a. Representation b. Rebating c. Twisting d. Churning

a. Representation Unfair Trade and Marketing Practices provide examples of unethical behavior, such as twisting, rebating, churning, and misrepresentation.

Which state entity decides conflicts between insurance companies and policyholders? a. State legislature b. State judicial system c. Office of Insurance Regulation d. Department of Financial Services Division

b. State judicial system The State judicial system also enforces the code by administering criminal penalties and decides if new laws are constitutional.

After the first 60 days a policy is in force, the underwriter cannot cancel for which of the following reasons? a. Material misrepresentation b. Unacceptable driving record since effective date c. Nonpayment of premium d. License suspension

b. Unacceptable driving record since effective date After the first 60 days a policy is in force, notice of cancellation will be effective only if it is based on nonpayment of premium, material misrepresentation or fraud, or suspension or revocation of the license or registration of the named insured or other operator covered by the policy.

In the event of the total loss of a building, the insurer's liability under the policy if caused by a covered peril will be the amount of money for which the property was insured. This describes which of the following? a. Replacement Cost b. Insurance to Value c. Valued Policy Law d. Agreed Value

c. Valued Policy Law The policy Coverage A amount will be the insurer's liability regardless of the replacement cost of the dwelling, but it does not apply if there has been any change increasing the risk without the insurer's consent or fraudulent or criminal fault on the part of the insured or acting in the insured's behalf.

The administration of state insurance law is the responsibility of which of the following? a. Attorney General b. Director of Financial Regulation c. Governor d. Chief Financial Officer

d. Chief Financial Officer The administration of state insurance law is the responsibility of the Chief Financial Officer (CFO), Financial Services Commission and Director of the Office of Insurance Regulation.

A person acting as an insurer without a Certificate of Authority and collects $150,000 in premiums is guilty of which of the following? a. 1st degree felony b. 2nd degree misdemeanor c. 2nd degree felony d. 3rd degree misdemeanor

A. 1st degree felony A person, while acting as an insurer without a Certificate of Authority, is subject to not more than 30 years imprisonment if the total premium collected is over $100,000.

With regard to market conduct examinations: A. All accounts, records, documents, files, etc. must be freely available to the examiners B. The Division of Financial Services of the Office conducts market conduct examinations C. The costs of examinations are paid by the Market Investigation Division D. The Special Investigations Unit conducts market conduct examinations

A. All accounts, records, documents, files, etc. must be freely available to the examiners The costs of an examinations will be paid by the person or entity examined. The Special Investigations Unit investigates allegations of unauthorized and illegal insurance activity. The Division of Market Investigations conducts market conduct examinations.

What is the cancellation notice requirement if an insurer is cancelling a homeowners or personal auto policy for nonpayment of premium? A. At least 10 days' written notice of cancellation B. At least 15 days' written notice of cancellation C. At least 45 days' written notice of cancellation D. At least 20 days' written notice of cancellation

A. At least 10 days' written notice of cancellation When an insurer cancels a homeowners or personal auto policy for nonpayment of premium, the insurer must provide at least 10 days' written notice of cancellation.

Which of the following is not a function of the Division of Consumer Services? A. Examine and investigate licensees B. Receive inquiries and complaints C. Report alleged violations of law by persons licensed by the Department of Financial Services, Office of Insurance Regulation, or Office of Financial Regulation to the appropriate regulator D. Compile and distribute information the Department of Financial Services deems necessary to assist consumers

A. Examine and investigate licensees The Division of Consumer Services does not examine or investigate licensees.

If cancelation or nonrenewal of a homeowners policy is to be effective during the duration of a hurricane, the effective date of cancellation or nonrenewal is: A. Extended until the end of the duration of the hurricane B. Immediately C. Disregarded D. Extended for 90 days

A. Extended until the end of the duration of the hurricane If cancelation or nonrenewal of a homeowners policy is to be effective during the duration of a hurricane, the effective date of cancellation or nonrenewal is extended until the end of the duration of the hurricane.

Which type of adjuster is hired on behalf of a third-party claimant to negotiate and settle a claim? a. Public b. All lines c. Independent d. Company

A. Public A public adjuster is a person hired for a fee on behalf of an insured or third-party claimant to negotiate and settle a claim. An all-lines adjuster is self-employed or employed by an insurer or an independent adjusting firm and determines the amount of a claim and settles the claim, but cannot concurrently be licensed as a public and all-lines adjuster.

Which state entity decides conflicts between insurance companies and policyholders? A. Office of Insurance Regulation B. State judicial system C. State legislature D. Department of Financial Services Division

B. State judicial system The State judicial system also enforces the code by administering criminal penalties and decides if new laws are constitutional.

Which of the following is false with respect to the Division of Rehabilitation and Liquidation? A. The Division handles unclaimed property B. The Division plans, coordinates, and directs the conservation, rehabilitation, and liquidation of insolvent insurance companies C. The Division performs the duties as receiver of any insurer placed into receivership in Florida D. The Division monitors the financial condition of insurers and rehabilitates or liquidates insurers as needed

A. The Division handles unclaimed property. The Division of Rehabilitation and Liquidation does not handle unclaimed property.

Which of the following statements is NOT correct concerning mediation or appraisal? A. The costs of mediation are shared by the policyholder and the insurer B. Mediation may be requested only by the policyholder, as a first-party claimant, or the insurer C. Policyholders and insurers should try to resolve claims quickly and fairly before resorting to mediation or appraisal D. Mediation is nonbinding

A. The costs of mediation are shared by the policyholder and the insurer. The costs of mediation are paid solely by the insurer.

A general lines agent can finance insurance premiums and charge service charges up to______ per installment. a. $1.50 b. $3.00 c. $4.25 d. $5.00

B. $3.00 A general lines agent may make service charges for financing insurance premiums on policies produced by the agent, but it cannot exceed $3 per installment, or $36 per year, or a simple interest rate over 18% on unpaid balances.

For a dwelling with limits of $250,000 or more, the insurer must offer hurricane deductibles of: A. 2%, of the policy dwelling limits B. 2%, 5%, or 10% of the policy dwelling limits C. 5% of the policy dwelling limits D. 10% of the policy dwelling limits

B. 2%, 5%, or 10% of the policy dwelling limits For a dwelling with limits of $250,000 or more, the insurer must offer hurricane deductibles of 2%, 5%, or 10% of the policy dwelling limits.

A new agent must complete ____ hours of continuing education every ____year(s). a. 20 hours/1 year b. 24 hours/2 years c. 30 hours/2 years d. 30 hours/3 years

B. 24 hours/2 years New agents must take 24 hours of continuing education every 2 years and agents licensed for 6 years or more must complete 20 hours in intermediate or advanced courses.

A driver's license may be issued to a 16 or 17 year old who completes an application and the parents certify that they accompanied her for how many hours of behind-the-wheel experience? a. 30 b. 50 c. 75 d. 90

B. 50 A driver's license may be issued to a person at least 16 but under 18 years old who completes an application, and if a responsible adult certifies that she, or another licensed driver over 21 years old, accompanied the applicant for a total of not less than 50 hours' behind-the-wheel experience, with at least 10 hours during the night.

Choose the statement that is true about the payment of claims. a. An insurer must contact the Department of Highway Safety and Motor Vehicles records to determine whether a partially damaged vehicle owned by the insured is subject to any liens. b. A property insurer must transmit claims payments directly to the primary policyholder c. An insurer must pay or deny any claim no later than 90 days after receiving the claim d. As long as the claim is settled, it doesn't matter how the third-party spends the claim benefit

B. A property insurer must transmit claims payments directly to the primary policyholder A property insurer must transmit claims payments directly to the primary policyholder, payable to the primary policyholder only.

Which of the following is a function of the Bureau of Financial Investigations? A. Prosecute violations of Insurance or Criminal law B. Act as a criminal justice agency within the Department of Financial Services C. Supervise insurer and agent licensing D. Handle consumer complaints

B. Act as a criminal justice agency within the Department of Financial Services The Bureau of Financial Investigations does not supervise insurer and agent licensing, prosecute violations of Insurance or Criminal law, or handle consumer complaints.

Which of the following is incorrect about insurance company appointments? a. Also applies to health applications b. An agent must be appointed for property and casualty insurance separately c. An agent may not use the same insurer appointment to sell life insurance and excess business d. An agent may present a proposal to a company without being appointed

B. An agent must be appointed for property and casualty insurance separately The department may issue a single appointment covering both property and casualty insurances to an individual licensed for both kinds of insurance and appointed as agent for both kinds by the same insurer.

Coverage for a catastrophic ground cover collapse is provided: A. Only at the request of the insured B. For no additional premium C. At the option of the insurer D. For an additional premium

B. For no additional premium Coverage for a catastrophic ground cover collapse must be provided, but no additional premium is necessary unless sinkhole coverage is also chosen.

An agent willfully violated a requirement in the Insurance Code and his penalty was which of the following? a. $5,000 fine b. Imprisonment up to 60 days c. $1,000 fine d. Imprisonment up to 30 days

B. Imprisonment up to 60 days A willful violation of the Insurance Code is a misdemeanor of the 2nd degree and imprisonment up to 60 days.

Which of the following is not a qualification to apply for an insurance license in Florida? a. Must be at least 18 years old b. Must have a high school diploma or GED c. U.S. Citizen d. Legal alien with U.S. work authorization

B. Must have a high school diploma or GED The person must also be trustworthy and competent and a resident of Florida.

Which of the following statements is false regarding the Florida Automobile Joint Underwriting Association (FAJUA)? A. Each auto insurer must be a member of the Association B. The FAJUA provides automobile liability insurance when an insurer becomes insolvent C. The FAJUA provides automobile liability insurance for individuals who have been unable to obtain auto insurance through normal markets. D. Losses and expenses are equitably apportioned among the member insurers

B. The FAJUA provides automobile liability insurance when an insurer becomes insolvent. The FAJUA provides automobile liability insurance for individuals who have been unable to obtain auto insurance through normal markets, not claims for an insolvent insurer.

Which of the following is not true of a nonadmitted carrier? a. A nonadmitted carrier is also unauthorized b. The Florida Guaranty Association protects residents who buy from a nonadmitted carrier c. A nonadmitted carrier is not licensed in Florida d. An agent may not do business with a nonadmitted carrier

B. The Florida Guaranty Association protects residents who buy from a nonadmitted carrier Nonadmitted companies are not state licensed nor regulated by Florida, and the Florida Guaranty Association does not extend protection for Floridians who buy from these companies.

Which of the following is NOT a purpose of licensing? A. For the applicant to be familiar with the Florida insurance laws B. To authorize the agent to insure risks C. To authorize and enable the licensee to actively and in good faith engage in the insurance business as an agent D. To facilitate the public supervision of such activities in the public interest

B. To authorize the agent to insure risks. An insurer, not an agent, is authorized to insure risks.

Charging different rates or providing different benefits to insureds of the same actuarial class or hazard category is which of the following? a. Sliding b. Unfair discrimination c. Fictitious grouping d. Defamation

B. Unfair discrimination Unfair discrimination is knowingly making or permitting individuals of the same actuarially supportable class and equal expectation of life to be charged different rates, paid different dividends or have different terms/conditions regarding any life insurance contract.

A diligent effort for a residential structure with a dwelling replacement cost of $250,000 means rejections from how many authorized insurers are required? a. 1 b. 2 c. 3 d. 4

C. 3 For a residential structure with a dwelling replacement cost of less than $1 million, rejections from 3 authorized insurers are required, and if $1 million or more, rejection from at least 1 authorized insurer is required constitute diligent efforts to obtain insurance from an authorized insurer.

A change of address must be reported to the DFS within how many days after moving? a. 15 b. 20 c. 30 d. 60

C. 30 A new residence address, principal business street address, mailing address, contact telephone numbers, including a business telephone number, or e-mail address must be reported to the Department of Financial Services within 30 days.

If you are found guilty of any crime punishable by imprisonment one year or more, you must report it to the Insurance Department within how many days? a. 15 b. 20 c. 30 d. 60

C. 30 If you are declared guilty of any crime that is punishable by imprisonment for 1 year or more, you must report it to the Insurance Department within 30 days, even if you pleaded "no contest" or it occurred outside of Florida or even the U.S.

A hurricane warning is issued _______ hours before the anticipated onset of tropical storm force winds of 74 mph or higher, and will stay in effect when dangerously high water or a combination of dangerously high water and waves continue. a. 18 b. 24 c. 36 d. 48

C. 36 A hurricane watch or warning is issued for any part of Florida by the National Hurricane Center of the National Weather Service as the beginning of the hurricane threat, and ends 72 hours following the last hurricane watch or warning issued for any part of Florida by the National Hurricane Center of the National Weather Service.

An agent may have no more than ________ of his total business within a 12-month period be from controlled business. a. 25% b. 35% c. 50% d. 65%

C. 50% Controlled business is the practice of an agent selling policies or annuity contracts to himself or family members, officers, directors, stockholders, partners, or employees of a business in which he or a family member is engaged, or the debtors of a firm, association, or corporation of whom he or she is an officer, director, stockholder, partner, or employee.

A person must maintain proof of financial responsibility if physically present within Florida for more than how many days during the preceding 365 days? a. 30 b. 60 c. 90 d. 120

C. 90 Each nonresident owner or registrant of a motor vehicle that has been physically present within Florida for more than 90 days during the preceding 365 days must maintain proof of financial responsibility that is in effect continuously throughout the period the motor vehicle remains within Florida.

An agent who induces a client to use the cash value of an existing policy to buy an additional but unneeded policy is guilty of _______________. a. Twisting b. Rebating c. Churning d. Fraud

C. Churning Churning is the practice whereby policy values, such as cash value, in an existing life insurance policy, annuity contract, and/or any riders, are used to purchase another insurance policy or annuity contract with that same insurer for the purpose of earning additional premiums, fees, commissions, or other compensation.

Hurricane damage is NOT considered as: A. Damage to the interior of a building B. Damage caused by rain, snow, sleet, hail, sand, or dust C. Damage by a third party D. Damage to property inside a building

C. Damage by a third party Hurricane damage is not considered as damage due to the acts of a third party. Hurricane damage does include damage caused by rain, snow, sleet, hail, sand, or dust if the direct force of the windstorm causes an opening through which rain, snow, sleet, hail, sand, or dust enters and causes damage.

Which of the following statements is incorrect with respect to cancellation and nonrenewal of a personal auto policy? A. Driver's license suspension is grounds for cancellation B. After the first 60 days, the insurer can only cancel an auto policy for certain specific reasons C. Insurers may cancel a personal auto policy solely due to occupation, marital status, or age D. The insurer must provide 45 days' notice of nonrenewal

C. Insurers may cancel a personal auto policy solely due to occupation, marital status, or age. An insurer cannot cancel or nonrenew a personal auto policy solely due to occupation, marital status, or age.

A personal lines agent may not sell which type of insurance? a. Homeowner b. Automobile c. Limited credit insurance d. Condominium

C. Limited credit insurance A personal lines agent is limited to transacting business related to property and casualty insurance sold to individuals and families for noncommercial purposes.

An insurance license may not be suspended for which of the following? A. Cheating on the license exam B. Violating the code of ethics C. Over-insuring a health insurance risk D. Twisting

C. Over-insuring a health insurance risk An agent's license will not be suspended for over-insuring a health insurance risk unless the agent willfully over-insured it.

Which of the following handles unclaimed property? A. The Department of Financial Services B. The Division of Rehabilitation and Liquidation C. The Department of Commerce Division of Unclaimed Funds D. The Division of Consumer Services

C. The Department of Commerce Division of Unclaimed Funds The Department of Commerce Division of Unclaimed Funds handles unclaimed property.

Which of the following statements is NOT correct with respect to premium financing? A. A premium finance company must file all forms, service charge, and interest rate plans with the Office for approval B. The service charge by an insurer may not be more than 1/2 of the additional charge by premium finance companies C. The service charge allowed for a premium finance company is the same as the service charge allowed for an agent D. A premium finance agreement provides that the premium finance company will forward premiums to the insurer to be repaid by the insured

C. The service charge allowed for a premium finance company is the same as the service charge allowed for an agent. The service charge allowed for a premium finance company is up to a maximum of $12 per $100 per year plus a nonrefundable additional charge up to $20, whereas the service charge allowed for an agent or agency cannot exceed $3 per installment, or $36 per year.

The Florida Motorcycle Safety Education Program establishes and administers motorcycle safety courses for a minimum of _____ hours of instruction with at least _____ hours of actual motorcycle operation. a. 8/4 b. 9/4 c. 10/5 d. 12/6

D. 12/6 Every first-time applicant for a license to operate a motorcycle who is under age 21 must complete a motorcycle education course and Florida has a waiver for completing a state testing requirement as long as the rider is over 21 and has completed a rider education course.

If the settlement of a claim has been agreed to by the insurer and claimant, the insurer must pay no later than how long after the settlement is reached? a. 24 hours b. 48 hours c. 10 days d. 20 days

D. 20 Days If a person and an insurer have agreed in writing to the settlement of a claim, the insurer must pay according to the terms of the agreement no later than 20 days after the settlement is reached.

The insurer must offer alternative deductible amount applicable to hurricane losses equal to which of the following? a. $250 b. $1,000 c. 3% d. 5%

D. 5% Prior to issuing a personal lines residential property insurance policy, the insurer must offer alternative deductible amounts applicable to hurricane losses equal to $500, 2%, 5%, or 10% of the policy dwelling limits.

A proof of loss must be provided to the insurer within _____ days of a homeowner loss. a. 10 b. 30 c. 60 d. 90

D. 90 A written proof must be given within 90 days after the loss except for a continuing loss.

A notice explaining the reason for the denial of insurance coverage applies in which of the following? a. Automobile nonrenewal b. Homeowner rejection c. Life insurance cancellation d. All notices of denials require a reason

D. All notices of denials require a reason The denial of an application for an insurance policy and each notice of nonrenewal or cancellation must be accompanied by the specific reasons for denial, including the specific underwriting reasons.

Which of the following is true about an insurance agency? a. An agent working out of his home must be licensed as an agency b. An agency license must be renewed annually c. If an agency fails to file a license application, a fine of $5,000 will be levied d. An agency must have a licensed and appointed full-time agent in charge

D. An agency must have a licensed and appointed full-time agent in charge An insurance agency is a business location at which an individual, firm, partnership, corporation, association, or other entity that employs individuals to engage in any activity which by law may be performed only by a licensed insurance agent.

A bank or credit union will not give a loan unless the borrower buys insurance from a specific company. This is known as ___________. a. Misrepresentation b. Rebating c. Churning d. Coercion

D. Coercion It is an unfair trade practice to enter into any agreement to commit, any act of boycott, coercion, or intimidation resulting in an unreasonable restraint of, or monopoly in, the business of insurance.

A homeowners insurance agent may only share a commission or any valuable consideration with one who: A. Has a license to only sell life insurance B. Has a license to sell homeowner insurance C. Does not have an appointment to sell homeowner insurance D. Has an appointment and license to sell homeowner insurance

D. Has an appointment and license to sell homeowner insurance Commissions may be shared with a person who is licensed and appointed in the same line of business.

When operating a motor vehicle, the holder of a learner's permit: A. Must be accompanied by any driver with a valid license and who is sitting in the passenger seat B. May practice driving alone only during daylight hours C. May practice driving alone only during daylight hours after 3 months D. Must be accompanied by a driver with a valid license and who is at least age 21 and sitting in the passenger seat

D. Must be accompanied by a driver with a valid license and who is at least age 21 and sitting in the passenger seat A holder of a learner's permit may not practice driving alone at any time. A holder of a learner's permit must be accompanied by a driver with a valid license and who is at least age 21 and sitting in the passenger seat.

Which of the following is correct with regard to surplus lines? A. The premium rate at which the coverage is exported may be lower than the rate in actual and current use by a majority of the authorized insurers for the same coverage on a similar risk B. Applicants for surplus lines coverage must verify that a diligent effort has been made to procure the full amount of required insurance from an authorized insurer before pursuing surplus lines coverage C. The policy form under which the insurance is exported may be more favorable in coverage or rates to the insured than similar contracts in actual current use in Florida by the majority of authorized insurers D. Residential and multi-peril residential policies are subject to the diligent effort requirements

D. Residential and multi-peril residential policies are subject to the diligent effort requirements. The surplus lines agent, not the applicant, must verify that a diligent effort has been made to procure the full amount of required insurance from an authorized insurer. Premiums at which the coverage is exported must not be lower than that rate in actual and current use by a majority of the authorized insurers for the same coverage. The policy form under which the insurance is exported must not be more favorable in coverage or rates to the insured than similar contracts in actual current use.

Which of the following forms does not require approval from the Office of Insurance Regulation? a. Agent report b. Group certificate c. Renewal certificate d. Application

a. Agent report Other forms that do require approval include the insurance policy, annuity contract form, and printed riders or endorsements.

The Department of Financial Services can impose which of the following penalties? a. Fine for violation of a cease and desist order up to $50,000 b. Imprisonment up to 2 years for churning c. $10,000 fine for failure to answer a subpoena d. $100,000 fine for a willful violation for submitting fraudulent signatures

a. Fine for violation of a cease and desist order up to $50,000. A willful violation for submitting fraudulent signatures is $75,000 per violation and $5,000 per violation for a non-willful violation.

Wind mitigation credits do not apply to which of the following? a. Foundation b. Opening protection c. Roof Shape d. Secondary water resistance

a. Foundation The credits also apply to the Roof Covering, Roof Deck Attachment, and Roof-Wall Connection.

The agent's fiduciary responsibility is to turn that money over to the insurer _____________. a. Immediately b. Within 24 hours c. Within 3 days d. Within 5 days

a. Immediately As a fiduciary on behalf of the insurer, the payment of premiums to the agent by the insured is the same as giving the money directly to the insurer.

Which renewable option provides the greatest degree of protection for the insured? a. Noncancellable b. Guaranteed c. Conditional d. Optional

a. Noncancellable Noncancellable provides the greatest degree of protection as the insurer cannot cancel the policy, change the benefits, or increase the premium, and must renew the policy, at the option of the insured.

A contract between the agent and the party paying the negotiated fee must be signed by both parties and retained by the agent for how many years? a. 1 b. 3 c. 4 d. As many years as the agent receives the negotiated fee

b. 3 A written contract between the agent and the party paying the negotiated fee must be signed by both parties and include the promise that any commissions paid by the insurer will refund the amount paid by the party within 30 days. The contract must be ratined by the agent for 3 years.

All insurance carriers authorized in Florida must be audited by the Office of Financial Regulation once every __________. a. Year b. 3 years c. 5 years d. 7 years

b. 3 years The Office of Financial Regulation protects the public against unauthorized behavior by audited insurance companies at least once every 3 years, and more frequently if warranted.

Under disability income insurance, a monthly benefit will be ________ of the insured's monthly income. a. 50 3/4% b. 66 2/3% c. 70 2/3% d. 80 1/2%

b. 66 2/3% To avoid over-insurance and possible moral hazards, a disability income insurance benefit will not be 100% of monthly income, but rather 66 2/3%.

Choose the statement that is false regarding the Citizens Property Insurance Corporation: a. Property insurers may make agreements to insure applicants unable to procure windstorm insurance through ordinary methods b. Mobile homes are not eligible for coverage even if used as dwellings c. The association provides for windstorm coverage on residential properties up to $1 million for personal lines residential risks d. The Department requires all insurers holding a certificate of authority, other than joint underwriting associations, to provide windstorm coverage to eligible applicants

b. Mobile homes are not eligible for coverage even if used as dwellings Mobile homes are eligible for coverage if they are used as dwellings and are tied down in compliance with state requirements.

Unlicensed entities is a regulatory concern due to which of the following issues? a. Rates are higher b. Potential for criminal activity c. State insurance department has minimal oversight over unlicensed entities d. Federal funds will pay unpaid claims

b. Potential for criminal activity Unlicensed entities also have an adverse economic impact on authorized insurers, potential for unpaid claims due to dishonesty and lack of sound actuarial decisions and the state and federal guaranty funds do not pay for those unpaid claims.

An insured placed with the FAJUA must be notified in writing that the insurance coverage is not through the private market within _________ of placement. a. 36 hours b. 3 days c. 10 days d. 14 days

c. 10 days Any insured placed with the plan must be notified in writing that insurance coverage is being afforded through the plan and not through the private market, within 10 days of placement.

The Market Investigation division includes 4 sections with unique duties. Which of the following is not one of those 4 sections? a. Special Investigation Unit b. Property and Casualty c. Approval d. Market Analysis

c. Approval The Property and Casualty section conducts exams and investigates business practices of authorized P&C insurers; the Special Investigation unit investigates illegal activity; and the Market Analysis section identifies trends and date relating to the insurance industry.

Which of the following is false about Major Medical coverage? a. Deductibles apply up to 10% of maximum limit b. High maximum limits from $10,000 to $1 million c. Coinsurance percentages of 10% d. Internal limits for room charges and surgical services

c. Coinsurance percentages of 10% Major Medical insurance cover catastrophic losses and charges coinsurance to the insured of 20% or 25%.

Choose the false statement about the Contributory Negligence Law. a. Negligence is a duty that was breached causing an injury to another person b. Medical expenses are an example of economic damages c. Contributory fault bars recovery in any other means d. Comparative fault is determined by charging liability proportionately

c. Contributory fault bars recovery in any other means The amount awarded as economic and noneconomic damages for an injury is attributable to the claimant's contributory fault and does not bar recovery.

Which of the following is not a duty of the Department of Financial Services? a. Investigate fraud b. Supervise methods of obtaining business c. Enforces the Insurance Code by administering criminal penalties d. Liquidate insurance companies

c. Enforces the Insurance Code by administering criminal penalties. The Department of Financial Services also handles unclaimed property, licensing insurance companies, and investigates applicants for an insurance license.

Which state entity is responsible for approving a Certificate of Authority for an insurance company? a. State legislature b. State judicial system c. Office of Insurance Regulation d. Department of Financial Services Division

c. Office of Insurance Regulation The Commissioner of the Office of Insurance Regulation also regulates insurance licensing, rates, policy forms, market conduct, claims, and company solvency.

Choose the limit of benefits that is incorrect. a. Florida currently has a partial requirement stating a helmet is required for riders who carry less than $10,000 in medical coverage for motorcycle-related injuries b. Death benefits of $5,000 per individual are in addition to the medical and disability benefits provided under the PIP c. The minimum financial responsibility limits of liability for automobile insurance in Florida for the owner of a motor vehicle are 15/30/10 d. The minimum PIP limit for medical and disability benefits is $10,000

c. The minimum financial responsibility limits of liability for automobile insurance in Florida for the owner of a motor vehicle are 15/30/10 The minimum financial responsibility limits of liability are 10/20/10.

Which of the following is not a duty of the Florida Surplus Lines Service Office? a. Receive all surplus lines insurance policies or documents b. Prepare and send surplus lines records and reports to the service office c. Collect and remit the surplus lines tax to the department d. Collect a service fee of up to 3.0% of the total gross premium of each surplus lines policy for the cost of operation of the service office

d. Collect a service fee of up to 3.0% of the total gross premium of each surplus lines policy for the cost of operation of the service office The Service Office also collects a service fee of up to .3% of the total gross premium of each surplus lines policy from each surplus lines agent for the cost of operation of the service office, facilitates and encourages compliance with the surplus lines, and prepares and delivers quarterly business reports to each surplus lines agent.

A homeowner agent may share a commission or any valuable consideration with anyone who: a. Does not have an appointment to sell homeowner insurance b. Has a license to sell homeowner insurance c. Has a license to only sell life insurance d. Has an appointment and license to sell homeowner insurance

d. Has an appointment and license to sell homeowner insurance Commissions may be shared with a person who is licensed and appointed in the same line of business.

Choose the true statement about the state insurance fraud department. a. The Bureau of Insurance Investigations is responsible for conducting investigations b. The investigators are former police officers c. The Bureau only conducts investigations within the borders of Florida d. If a criminal law has been violated, the office will refer it to the appropriate law enforcement agency

d. If a criminal law has been violated, the office will refer it to the appropriate law enforcement agency. The Bureau of Financial Investigations functions as a criminal justice agency within DFS, may conduct investigations within or outside Florida, and will refer records to the appropriate state or federal agency and provide assistance as required.

An insurance license may not be suspended for which of the following? a. Cheating on the license exam b. Twisting c. Violating the code of ethics d. Over-insuring a health insurance risk

d. Over-insuring a health insurance risk. An agent's license will not be suspended for over-insuring a health insurance risk unless the agent willfully over-insured it.