LAW - THIS IS IT
What is the minimum font size allowed for printed premium financing agreements?
8 point size print.
An insurance company has decided to terminate all homeowner policies in Illinois. This company must, with their reasons for doing so, notify the Director at least how many days prior to taking such action?
90 days. A carrier must notify the Director at least 90 days before terminating a line of coverage in Illinois and provide reasons for doing so.
Once an insurer obtains current credit information for an insured, for what period of time may the insurance company then use that credit information, assuming it is not used to take adverse action against a consumer?
Credit information may not be older than 36 months to be considered current for underwriting purposes.
According to Illinois use of credit rules, none of the following factors can be used by an insurer in the calculation of a an insurance score for consumers for underwriting purposes, EXCEPT:
Credit score.
At his license revocation hearing, producer Q is found to have violated fifteen separate causes of conduct each of which is sufficient cause for license revocation. What is the maximum civil penalty that could be imposed on Q for these actions?
$100,000. The maximum civil penalty for violations of a the Director's lawful order under the suspension, revocation and denial of license statutes is $100,000.
Failure to obey subpoena/Refusing to testify after service of subpoena
$2,000 max
Producer E is properly licensed to engage in premium finance and has just made a loan to an insured in the amount of $750. What is the maximum service charge allowable for making this loan?
$30. On premiums loans that are $500 up to $999, the maximum allowable service charge is $30.
All of the following coverage limits are accurate under mine subsidence coverage, EXCEPT:
$300,0000 for a commercial structure. $200,000 is the maximum reinsurance amount for either residential or commercial structures.
What is the total fee a producer must pay to reinstate a lapsed license within the allowed statutory period?
$360. The penalty to reinstate a lapsed license is the requirement of the producer to pay a double license fee which will total $360.
Violation of final order/Cease & Desist
$5,000 max fine, at the rate of $100 dollars per day
Personal lines policies, including auto, fire & extended coverage and others, require the insurer to provide how many days notice of their intent not to renew?
30 days.
A producer who moves from one residential address to another must report this address change within:
30 days. All addresses changes for both residential and business licensees must be reported to the Director within 30 days of he change.
What is the most logical reason for the prohibition against the practice of redlining?
It is unfair to a qualifying residential dwelling owner to not be able to obtain property insurance solely because of where their property is located.
What is the purpose of the Fair Access to Insurance Requirement Plan?
It makes basic property insurance easier to obtain for Illinois real property owners. It is designed to deter insurance industry redlining.
Which of the following entities establishes the premium rates for mine subsidence insurance?
The Illinois Mine Subsidence Insurance Fund. The Fund collects and monitors premiums in claim reserves and establishes all premium rates.
A homeowners policy may be canceled for any of the following reasons, EXCEPT:
The agent who wrote the policy has left the insurer. A property or casualty policy cannot be canceled solely because the writing producer is no longer with the insurance company.
All of the following are requirements of a customer affairs and information department EXCEPT:
The department must be located at the home office of the insurance company. The customer affairs and information department can be located in one of many locations including the home office, or a regional or branch office of the company.
The Slez E insurance agency has their Premium Fund Trust Account audited by the Department of Insurance and $3,000 is missing and unaccounted for. Which of the following is the legal presumption in this scenario?
It is presumed the licensee responsible for the money has misappropriated it. Premium Fund Trust Accounts must balance to the penny at all times and any shortfall is considered theft by the producer responsible for the fund.
A producer is served with a Cease and Desist Order for unfair competition and he violates the Order. The statutory fine for this action is
$1,000. Ref. 5/431 stipulates a $1,000 fine for violating the Cease and Desist Order of the Director relating to unfair marketing practices.
What is the maximum coverage for an outdoor attached sign under the Coverage Extension of the Builder's Risk policy?
$1,000. The maximum coverage afforded through the coverage extensions of a Builder's Risk policy is $1,000 for outdoor attached signs.
At his license revocation hearing, producer Q is found to have violated fifteen separate causes of conduct each of each is sufficient cause for license revocation. What is the maximum civil penalty that could be imposed on Q for these actions?
$100,000. The maximum civil penalty for violations of a the Director's lawful order under the suspension, revocation and denial of license statutes is $100,000.
How much is the fee for reinstating a motor vehicle registration suspended for failing to provide proof of insurance when requested to do so by the Secretary of State.
$100.
All of the following amounts of premiums which are misappropriated by a producer are considered to be a felony violation EXCEPT:
$150. Misappropriating more than $150 is a Class 3 felony.
The resident licensing fee for a Limited Lines Car Rental license is
$180 every two years
Defamation monetary penalty:
$200 to $10,000 fine
What is the smallest dollar civil penalty that will be assessed for a single act of misrepresentation?
$200. Civil fines for misrepresentation can range between $200 and $10,000.
The insured has a DP-2 Broad form and has experienced a loss of $25,000 in cash which was stored in a mattress that was destroyed by fire. If the insured has replacement cost coverage of $200,000, what is the total amount the insurer will pay for the lost money?
$200. The most a Dwelling Policy will pay under Coverage C for lost money including coins, precious metal or bank notes is $200 per occurrence.
The main function of the customer affairs and information department of a property and casualty insurance company is to:
Take care of policyholder questions and complaints. The staff of the customer affairs and information department of a property and casualty insurer are there to answer any questions or complaints brought to the attention of the company by policyholders.
A retired man offers to transport kids to and from functions of his church in his personal vehicle, without charge, to help out his congregation. The man then calls his insurance agent, reveals his plan of volunteer service and learns:
That an insurer cannot refuse to insure or impose an extra charge for being a volunteer driver for a charitable organization.
A producer is advising an insured to cancel an existing dwelling policy and replace it with a policy written by his company. What required information must this producer provide to the insured in this circumstance?
That cancellation by an insured of an existing policy may result in additional cost to the insured.
Cease/Desist Final Order specific to Unfair Competition
$1,000 fine max
A rowboat or canoe is covered up to what maximum dollar amount through Coverage C in a Dwelling policy?
$1,500. Rowboats and canoes have a maximum limit of $1,500 under DP Coverage C.
Selling insurance without a license without misappropriating premium funds is a:
Class A misdemeanor. If no money is collected by an unlicensed person selling insurance which is misappropriated or converted (stolen) the person is guilty of a Class A misdemeanor.
If adverse action is taken against a consumer based on credit information, within what number of days must either a credit report or insurance score calculation be obtained with reference to the date the policy was first written or renewal was issued?
90 days. When adverse action is taken against a consumer based on credit information, the insurer must obtain and use a credit report issued, or an insurance score calculated, within 90 days from the date the policy was written or of the first renewal date of the policy.
Which of the following is a prohibited investment option into which to place Premium Fund Trust Account monies?
A brokerage account in which options futures are traded. PFTA money must be put in safe, secure and conservative accounts as regulated by state law which strictly prohibits placing such monies into accounts where risk to principal is great such as securities options, stock futures or purchasing equities on margin.
Which of the following property coverage does not meet the definition of Basic Property Coverage under the FAIR Plan?
A commercial property policy basic form. The FAIR Plan protects personal dwelling coverage accessibility not commercial property.
Mine subsidence refers to lateral or vertical ground movement caused by:
A failure at the mine level of underground, man-made mines. Mine subsidence refers to failure of man-made underground mines at mine level that causes lateral or vertical ground movement.
Which of the following gifts is not considered a rebate if offered in the purchase of an insurance policy?
An insurance company offering a child passenger restraint system. State law specifically exempts offering child restraint systems or discounts from the purchase price of child passenger restraints to policyholders.
A consumer applies for a property policy but has no credit information on record. According to Illinois law:
An insurer shall not consider an absence of credit information or the inability to calculate an insurance score in underwriting or rating personal insurance, unless the insurer treats the consumer as if the applicant or insured had neutral credit information as defined by the insurer.
For a personal auto policy in effect for 60 days, which of the following reasons for cancellation IS NOT allowed?
An older car barely passed state testing. Age of a functioning vehicle is not a cause for auto policy cancellation under current Illinois law.
If an insurance company issues deceptive statements about its assets, this action is:
An unfair trade practice. It is an unfair trade practice for a carrier to be deceptive in relating financial information through reports to the public.
What organization may provide the service, on behalf of the Director, that will allow insurers to report suspected insurance fraud?
Any organization or agency so designated by the Director. The Director can make the decision which agency or organization is authorized to receive fraud reports on behalf of the Director.
According to Illinois law regarding personal auto insurance, a company:
Before the first renewal the company must notify the insured that a higher deductible for collision and comprehensive is available and if selected would result in a premium savings. The insurer must notify the insured who plans to renew an auto policy for the first time that they can opt for a higher deductible for any part of physical damage coverage and receive a premium savings.
How often does a resident producer license renew in Illinois and what is the fee?
Biennially for $180. A resident producer license renews every two years (biennially) for $180.
An insurer is required to establish a customer affairs and information department if they issue which type of policies?
Both property and casualty. All insurance companies that issue property and casualty contracts must have a customer affairs and information department staffed by knowledgeable personnel.
On March 1 C, who holds an Illinois non-resident license moves from Idaho to Iowa. By which date must C notify the Illinois Director of Insurance about this move?
By March 31. Both resident and non-resident producers must notify the Director within 30 days of any residential move.
In which Illinois city would mine subsidence coverage NOT be available?
Chicago. Mine subsidence coverage is not available in Cook County or any county that borders Cook County in Illinois.
Assume a hate crime has been committed. All of the following actions and property is protected under the law, EXCEPT:
Defacing a painting belonging to the parents of the insured. Actions covered by the hate crimes law include defacing, damaging or destroying real or personal property of a person, not damage to property belonging to the relative of an individual who is insured.
Producer H is spreading vicious rumors about an insurance agency across town intending to hurt this agency's reputation. Producer H is guilty of which of the following unfair practices?
Defamation. Any licensed person who intentionally uses verbal or written communication to harm another licensed entity is guilty of defamation.
Market Conduct Exam - Director Action
Director must give at least 10 days hearing notice
Market Conduct Exam - Director Written Order
Director must issue written order within 90 days of hearing or report file date
Which of the following criminal activities is most likely to lead to the termination of a producer's license?
Embezzlement while employed part-time as a bookkeeper. Embezzlement is a serious crime of theft which will result in a felony conviction while all of the other examples given in the answer section are not severe enough to warrant felony charges.
If a producer, who is required to be premium financed licensed does not possess such a license and is caught misappropriating premiums, that producer is:
Guilty of a Class 4 Felony. Misappropriating premium monies while engaging in premium financing without a license is a Class 4 felony.
J owns a townhouse. Which of the following homeowners forms is best suited to this type of real estate ownership?
HO-6. The HO-6 Condominium form is used by people who own real estate structures in common with other real estate owners such as those with common walls like townhouse and duplex property owners.
Regulatory Exam Producer - Written Order Violation
Max of $20,000; also applied to those who aid or abets
A home whose replacement cost far exceeds its market value is likely to be insured by which homeowner form?
Modified. The modified form is used when the cost to replace a structure is far greater than an amount a willing buyer will pay for the property.
Market Conduct Exam - Examined party member
Must request hearing within 10 days of receipt of report
Regulatory Exam of Producer
Must request hearing within 14 days of receipt of copy of report
An auto insurer must provide at least 30 days prior days notice of policy cancellation to an insured, unless the reason is:
Non-payment of premium (required 10 days)
An auto insurer must provide at least 30 days prior days notice of policy cancellation to an insured, unless the reason is:
Non-payment of premium. All personal lines policies (auto, fire, EC and others) require the insurer to provide at least 30 days prior notice unless the reason for the cancellation is nonpayment of premium which requires only 10 days advance notice.
A personal auto policy which has been continuously in effect for more than five years MAY NOT be non-renewed for which of the following reasons?
On the basis of nonpayment of premiums.
All of the following Premium Fund Trust Account disbursements are allowed, EXCEPT:
Payment to producer's business phone carrier. A producer is not allowed to use PFTA money to pay operating expenses.
Which of the following insurance contracts must have provisions outlining the manner in which policies can be canceled or non-renewed in Illinois?
Property & casualty; All property and casualty policies must have clauses that address the manner in which the policy can be canceled or non-renewed.
The Insurance Claims Fraud Prevention Act gives the Director the power to make reasonable rules that require the insurance companies to:
Report certain instances of suspected or actual insurance or premium fraud after the Director has determined the information is necessary to detect fraud or arson.
Illinois will grant all of the following licensing authorities to non-resident's, EXCEPT:
Securities licensing authority. Securities licensing is only granted through Federal licensing rules and administered through FINRA; Illinois will recognize such authority but has no power to grant such authority.
Under which of the conditions that follow must an insurer send loss information for the previous three years at the same time a cancellation or non-renewal notice is sent?
The insured canceled the policy. Loss information must be included with all cancellation and non-renewal notices except in the cases of nonpayment of premium, material misrepresentation or fraud by the insured.
All of the following are named perils under an HO-2 homeowners policy, EXCEPT:
The insured's house is damaged due to a sudden landslide. Earth movement, including earthquakes, mudslides, landslides and mine subsidence are not covered by any of the homeowner forms but an earthquake endorsement is available.
A group health insurance policy master application must bear the name and signature of which of the following entities?
The licensee who solicited and wrote the application. State law requires certain insurance applications to bear the name and signature of the soliciting producer on the application.
If the policyholder of a property insurance company sends a written inquiry to the customer affairs and information department, how promptly must the insurer provide a written response?
Within 21 days of the receipt of the inquiry. The company is required by law to respond in writing within 21 days from their receipt of the customers written inquiry.
If an insured can demonstrate that a property loss was caused by a hate crime, an insurer may not cancel, refuse to issue or refuse to renew a property policy if such a claim has been paid within which period of time?
Within the past 60 months. Property losses paid due to a hate crime within the last 60 months do not allow an insurer to use the payment of such a claim or claims to cancel, refuse to issue or refuse to renew a policy solely upon such a basis.
How many days is a cease and desist order notice served before a hearing?
20-30 days
Which of the following statements about continuing education requirements for non-resident producers is TRUE?
If the state the non-resident lives in does not require non-resident producers to complete CE requirements, Illinois will not require CE of the non-resident. Illinois is a reciprocal state which means our requirements will match the requirements another state has toward their non-resident producers.
What is the concept behind terminating the producer license of a convicted felon?
Serious criminal activity, as evidenced by a felony conviction, is a indication that the producer is no longer trustworthy and represents a threat to the public which the Director is duty bound to protect against.
Verbal defamation is known as:
Slander. It is slander when unfounded oral statements are made to intentionally injure the reputation of another.
The renewal rates for personal insurance of property and casualty may not be based:
Solely upon credit information. Credit information may be used as a factor in setting the renewal rates of property and casualty insurance but it may not be used as the sole basis to rate or underwrite such risks.
Each of the following is an unfair claims practice by an insurance company, EXCEPT:
Supplying brochures to claimants that indicate a competitor is in a precarious financial position. Writing and distributing that a company has an unsafe financial condition is the unfair trade practice of defamation not an unfair claims practice.
What is the name of the law that gives the Director authorization to compel insurers to report suspected or actual insurance fraud?
The Insurance Claims Fraud Prevention Act.
Commercial Building and Business Personal Property Form coverage extensions are:
Only offered if the policy has an 80% or greater co-insurance requirement. Coverage extensions are provided only in a replacement cost policy where the declarations page indicates there is an 80% or higher co-insurance requirement.
Which of the following statements about federal disaster relief benefits are accurate in relation to flood insurance?
Owning flood insurance is a requirement for eligibility for obtaining national disaster relief benefits for flood loss. Federal law makes owning flood insurance a requirement for eligibility for national disaster relief benefits.
The annual license fee for a certified provider is
$1,000 plus $20 for each certified course renewal
Verbal defamation is known as:
Slander.
What is the fee for a temporary producer license?
$50. All temporary licensing requires an application with a $50 fee for the temporary licensing period.
What is the fire department service charge amount paid by a homeowners policy?
$500 with no deductible required. When fire department service charges are valid, the homeowners policy will pay up to $500 without the requirement of a deductible.
What is the current limit of the Guarantee Fund (excluding workers compensation claims)?
$500,000
The actual cash value of a set of dishes is $1,000 before several parts of the set are broken, leaving a value of only $400. How much will the homeowners policy pay under the Loss to a Pair or Set clause?
$600. According to the Loss to a Pair or Set provision, the difference between the ACV of the property before and after the loss will be paid. $1,000 before, minus $400 after the loss equals the covered amount of $600.
Under the NFIP, which of the following is the longer coverage binder allowed?
0 days. No binders are allowed.
For open accounts receivable upon which a balance is due to the insurer, what is the maximum service charge a producer may assess to encourage timely payment within specified periods of 90 days of less?
1.5% per month on the balance due. The maximum service charge allowable in this circumstance may not exceed 1.5% per month.
An insurance card in Illinois must be carried in the vehicle at all times for showing evidence of mandatory auto coverage. An insurance card cannot be issued for a period longer than
12 months.
Once a producer license lapses, how long does the licensee have to seek reinstatement of the producer license?
12 months. From the date of lapse a producer has 1 year to seek reinstatement of a lapsed producer license.
Which of the following is NOT a qualification for producer licensing in Illinois?
18 years of age is the minimum allowed for a producer license.
An insured has applied for dwelling coverage with Company B because they wish to switch from Company A. During underwriting Company B has asked for additional information. Once the insured requests additional information, how many days does Company A have to provide it?
20 days. Once a request for additional information is made by an insured, an existing insurer has 20 days to provide and they must extend existing coverage by the same number of days it takes them to provide the additional information.
How many total course hours are required for Accident and Health insurance prelicensing?
20 hours. 7.5 of them must be in class.
In 2013 a producer is notified that the calendar year records of their Premium Fund Trust Account will be audited. The producer may have to supply records for each calendar year going back to what year?
2006. PFTA annual records for each fiscal or calendar year must be kept for AT LEAST 7 YEARS, In this example the records for 2006 - 2012 would need to be produced for the audit.
Producer Z engaged in an activity that injured a member of the public and the injured party has requested Z to supply the name of the company that issued Z's producer bond and to provide the number of the bond in order to make a claim. According to law, how long does Z have to provide this information upon request to the injured party?
3 working days. The producer must supply the name of the surety and the bond number within 3 working days of the request being made by an injured party.
Under Coverage F of a homeowners policy, a claim must be made to the insurer within what period of time from the date of the accident?
3 years. Coverage F requires that all medical expense claims for personal injury must be made within 3 years from the date of the accident causing the loss.
Once a producer has been notified that her license has been suspended by the Director, how many days does she have in which to request a hearing, in writing, from the date the Director mailed the termination notice?
30 days. A producer has 30 days from the date a suspension, revocation or denial notice is mailed by the Director in which to make a written demand for a hearing on the matter.
An insured has contacted their previous carrier and requested that the carrier provide loss information for the previous three years. This carrier must provide the loss information regarding the insured previous homeowner policy within how many days?
30 days. Except for workers Compensation policies all property and casualty insurers must supply loss information for the previous three years (auto insurance is 5 previous years) within 30 days of an insured's request for such information.
Commercial lines policies require the insurer to provide how many days notice of policy cancellation if the policy has been in force for forty-five days and the reason for cancellation is other than for nonpayment of premium?
30 days. Insurers must supply at least 30 days notice for cancellation of a commercial lines policy during the first 60 days of coverage and the reason for cancellation is other than nonpayment of premium.
How many days prior notice of cancellation must an surety, who has issued a producer surety bond, provide to the principal of the bond?
30 days. The principal (producer who purchased the bond) must receive 30 days notice before a surety may cancel a surety bond.
If an insured requests loss information from an insurance company pertaining to an auto policy, how many previous years of loss information must be provided to the insured?
5 years. Requests for auto loss information must include the previous 5 years, while all other property and casualty policies, other than Workers' Compensation, must provide the previous 3 years of loss information.
Commercial lines policies require the insurer to provide how many days notice of an intent not to renew?
60 days. A notice of intent not to renew a commercial lines policy must be mailed at least 60 days (with specific reasons) to the first named insured.
Under the Volcanic Eruption peril in a homeowners policy, any eruptions occurring within which of the following consecutive periods of time constitutes a single event?
72 hours. All eruptions that occur within a 72 hour period of time is considered a single eruption.
According to a Businessowner Policy, eligibility requirements limit the amount of seating in a restaurant that prepares food cold or heats food that do not require an exhaust system to which total number of seats?
75. Businessowner Policy eligibility requirements limit the amount of seating in a restaurant that prepares food cold or heats food that do not require an exhaust system to 75 person maximum seating.
When does a Builder's Risk policy begin?
A Builder's Risk policy starts the moment construction begins.
Which of the following MAY NOT engage in the business of offering insurance advice for a fee?
A Certified Public Accountant who solicits a client for the sale of an insurance policy. A CPA can offer advice about insurance matters and charge a fee but cannot solicit the sale off insurance without the appropriate producer licensing authority.
A larger business with varied property and casualty insurance needs is likely best served by:
A commercial package policy. Since small to medium sized business is well served by the Business Owner Policy (BOP) and the larger commercial entity is not qualified for its coverage, the method best suited to the larger company is to create a package policy to suit their firm's business needs.
What level of knowledge are staff members of an insurer's customer affairs and information department required to posses?
A knowledge of the affairs and operations of the company. The staff of the customer affairs and information department of a property and casualty insurer must possess a working knowledge of the affairs and operations of the company.
Which statement pertaining to license suspension, revocation or denial is NOT TRUE?
A license suspension cannot be less than six months nor longer than two years in duration. A producer license suspension is for a period of time deemed appropriate by the Director; there is no statutory minimum or maximum suspension period.
Which of the following risks would not likely be eligible for coverage under a Business Owner Policy?
A manufacturer with potential for large product liability claims should a manufactured product be defective. Most manufacturing risks are not acceptable for the BOP, especially those that could result in large product liability losses.
Of the following statements regarding a producer hearing to determine whether or not rebating was occurring, which is FALSE?
A participant in such a hearing is immune from perjury charges even if perjury is committed in the hearing. Perjury by a participant in a rebate hearing is not immune for prosecution for perjury.
What is a permissive driver and what, if any, coverage rights are they entitled to under a personal lines auto policy?
A permissive driver has permission to use the car of another and they have identical coverage granted to any insured under the policy while using the vehicle. A permissive driver has the same limits and coverage parts of any other insured under a personal line auto policy in Illinois.
Which of these statements referring to a Premium Fund Trust Account (PFTA) is FALSE?
A producer may keep a credit balance due to an insured past 15 days without written authorization to do so. A producer retaining any insured's credit balances past 15 days must have written authorization to do so.
Which of the following activities on the part of an insurance producer would likely be construed as rebating?
A producer offers two tickets to the Super Bowl game in exchange for the purchase of a large life insurance policy. Rebating is exchanging something of value to help close the deal on an insurance purchase and the something of value is not part of the insurance contract. Super Bowl tickets would be considered as rebating in this case.
Which of the following sales is classified as controlled business?
A producer places a one million dollar life policy on the life of his employer. Controlled business pertains to insurance written on the life, property or risks of the producer, their spouse or their employer.
All of the following are excluded from coverage under mine subsidence, EXCEPT:
A single-family dwelling. Only certain specified structures are covered under mine subsidence, including dwellings, buildings and permanently attached fixtures.
Which of the following losses is covered under the Special Form of the BOP?
Acts by employees which cause destruction to the property of the insured are covered under the BOP.
Each of the following is a requirement for a Life, Health, Property and Casualty prelicensing course, EXCEPT:
An exam proctored by a course provider must be successfully passed before a pre-licensing course is successfully completed. Each of the four main lines of licensing authority: Life, Health, Property and casualty require 20 total course hours of which 7.5 must be classroom hours.
If an insurance company issues deceptive statements about its assets, this action is:
An unfair trade practice.
People working with insurers who belong to the following organizations are exempt from licensing, EXCEPT:
Any person who is paid by commission directly from the sale of an insurance contract must hold the appropriate producer licensing authority.
If insurance Company X place funds into a producer D's Premium Fund Trust Account on April 1 to refund to an insured, by which of the following dates must these funds be credited to the account of the insured?
April 16th. All credit balances from returned premiums must be credited to the insured's account within 15 days of receipt by a producer from an insurer.
The additional coverage found in a homeowners policy:
Are considered to be supplementary and there is no additional cost for their inclusion in coverage. Additional coverage automatically are included in the homeowner policy at no additional cost.
Which of the following is accurate concerning the rights of an insurance company to cancel or refuse to renew if the insured is operating a licensed day care on the insured premises?
As long as the day care is properly licensed, it violates Illinois law for an insurer to nonrenew or cancel a personal fire policy solely on the basis that the insured is operating a day care or group day care home.
Under which of the following circumstance can the Director cancel the right of an insurance company to hire producers under the temporary License for Producer Application authority?
At least 50% of 90 day temp licensees must continue to become fully licensed (pass the sate exam, pay the fee and have the producer license in hand) within the 90 day period or the Director may cancel this authority of an company.
Why should a builder purchase a Builder's Risk policy?
Because a builder is financially responsible for a structure and all elements that are, or will, become part of the structure until the project is completed. The concept of Builder's Risk is to pay direct physical loss of or damage to covered property while a building is under construction because during this period the builder is otherwise financially responsible for such loss.
The best explanation of when Business Income coverage normally begins and ends is which of the following?
Business Income coverage begins 72 hours (waiting period) after a covered lost happens and runs until that point in time when the loss should have been repaired or rebuilt to the same quality as before in within a time reasonable to accomplish such repair or rebuilding.
All of the following personal property losses are excluded under Converge C of a homeowners policy, EXCEPT:
Business computer he breaks. The loss of portable electronic apparatus used for business purposes away from the premises is covered up to $1,500. Excluded are animals, birds, fish, business data and records, tapes and discs while in a motor vehicle, to name a few.
What is the Dwelling Policy rule with respect to operating a business in an insured structure?
Businesses that are incidental to the occupancy such as a studio, beauty salon or home office are allowed.
Which of the following is a requirement for qualification as an Illinois insurance producer.
Candidates must take and pass their state exam, both part one and part two, of the line of authority for which they seek licensing.What is the fee for a temporary producer license?
Under the Flood Program which personal property is covered for loss under contents?
Carpeting installed on a finished floor. Contents are insured under a flood policy only if they are inside a fully enclosed or sheltered building on the premises at the time of a loss. Also, only personal property which is incidental to the occupancy of the dwelling are covered.
If the local police refuse to let a business owner gain access to his business due to safety concerns for a couple of weeks, the owner is entitled to Business income because of which additional expense coverage?
Civil authority. If local authorities do not allow a business owner access to their business premises due to problems to a nearby property, BI will pay loss after the 72 hour waiting period for a short period of time depending upon which BI form is used (was 3 weeks but more recent forms pay for 4 weeks).
If an insurance company fails to provide loss information in a timely manner too frequently, such behavior will:
Constitute an unfair trade practice.
From most expensive to least expensive premium, what is the correct order of Dwelling forms, all coverage amounts being as equal as possible?
DP-3, DP-2, DP-1. The most expensive form is Special with open perils followed by the named perils policy insuring against the most perils, DP-2 the Broad form and the least expensive with the fewer covered perils is the Basic form, DP-1.
Which of the following perils is not a Basic Form (DP-1) peril?
Explosion.
In the Flood Program, which entity specifies the flood control measure that certain communities must adopt to be eligible for flood insurance?
FEMA. The Federal Emergency Management Agency sets the flood control measures that must be adopted for eligibility in the flood program.
All of the following actions by a producer could lead to license suspension, revocation or denial, EXCEPT:
Failure to pay federal income taxes. A producer can have a license terminated for failure to pay Illinois state income taxes; there is no mention in the code of failure to pay federal income taxes.
Under a Commercial Property policy, all of the following are considered as real property and not as personal property, EXCEPT:
Fixtures. Only permanent fixtures are real property and all others are personal property; ladders are considered real estate in this case because all property used to service the premises meets the real property definition.
Which of the following Dwelling Program policies insures against loss to dwelling on an open perils basis?
HO-3: Special. In the dwelling program DP-3 the Special form insures dwellings against lost on an open perils basis.
All of the following Homeowners forms offer replacement cost coverage for a detached garage, EXCEPT:
HO-4. HO-4, the Tenant Broad form is a renter's policy which does not provide coverages for either the dwelling or other structures (no Coverage A or Coverage B is included in the renters policy).
All of the following homeowners forms pay covered loss to an insured structure on a replacement cost basis, EXCEPT:
HO-8. HO-8, the Modified form, does not pay dwelling loss on a replacement cost basis but instead pays the LESSER amount of either the policy limit or the actual amount spent to repair or replace loss to the structure using common construction materials for functionality as opposed t the far more costly materials needed to restore to the original grandeur of the structure.
Which of the following policy types most resemble the Farm Policy?
Homeowners. The Farm Policy closely resembles the homeowners policy because of the two sections of coverage and the coverage parts.
The trust officer of a bank, while performing the incidental duties of his employment, advises bank customers from time to time about maters related to insurance policies. This trust officer:
Is exempted from any producer licensing requirements based on these activates. Illinois allows specific occupations to be exempt from licensing if the duties they perform relating to insurance are incidental and no direct payment of income derives from any insurance product.
A producer is found guilty of rebating. Under what circumstance would this be held against the insurance carrier?
If the carrier was aware of the producer and their rebating activities and did not report or try to prevent it.
Deferred or renewal commissions may be paid under which of the following conditions?
If the producer was licensed at the time of sale they are entitled to receive deferred compensation even if not licensed at the time renewal commissions are paid. Any producer who was properly licensed at the time of an insurance sale may be paid renewal commissions or deferred compensation without holding a license at the time of renewal commission payment.
All of the following are general powers of the Director, EXCEPT:
Impose a jail sentence on a producer who has been found guilty of a criminal act relating to insurance. The director cannot impose a jail sentence but can request that the Attorney General prosecute those who engage in illegal actions involving the sale of insurance.
Which of the following losses will not be paid under the terms of a HO-2 Broad Form?
Insured who damage their structures, whether accidental or not, is not a named peril under the HO-2 form.
Commercial lines policies require the insurer to provide how many days notice of policy cancellation if the policy has been in force for more than 60 days and the reason for cancellation is other than for nonpayment of premium?
Insurers must supply at least 60 days notice for cancellation of a commercial lines policy that has been in effect for more than 60 days and the reason for cancellation is other than non-payment of premium.
If behavior suggests a company is engaging in conduct that is hazardous to its financial wellbeing and insolvency may be at issue, the Director has the power to
Issue a Cease and Desist Order before a hearing has been held on the matter. The Director has the power to issue C&D orders without warning.
Which item of personal property is not excluded under Coverage C of the Dwelling Program?
Manuscripts. Manuscripts are covered under Coverage C for up to $1,500 along with other valuable papers such as securities, accounts and deeds.
An insured has recently joined the Marine Corp and their insurance company has indicated to the insured that an increase in premium will result from this action. The insurance company:
May face action by the Director because this is an example of unfair discrimination. An insured cannot be charge on a higher premium basis for insurance coverage solely based on the fact they have joined any branch of the US military.
A twenty hour prelicensing course requirement applies to all of the following lines of authority EXCEPT
Motor vehicle only 12.5 hours while the others are 20 hours.
If a man or woman explains the difference of one type of life insurance compared with another to a person interested in purchasing insurance, this activity is known as:
Negotiating. "Negotiate" means to confer directly with or to offer advice directly to a purchaser or prospective purchaser of a particular policy of insurance concerning any of the substantive benefits terms or conditions of the policy.
If a producer demands a hearing to challenge the reasonableness of a license suspension, when will the hearing take place?
No less than 30 nor more than 30 days from the mailing of the notice by the Director to the producer of the hearing.
The Guarantee Fund applies to all of the following insurance companies, EXCEPT:
Non-admitted companies, also known as unauthorized insurers. The Illinois Guarantee Fund does not extend any protection involving non-admitted (unauthorized) insurers because such firms are not licensed to transact insurance business in the state.
What action must the Director take toward the subject of a completed market conduct examination?
Notify the person examined of the contents of a verified report before it is made public. All subjects of a market conduct examination must be notified of the contents of a written report and afforded the opportunity for hearing on the matter to object to the contents therein.
Which of the following causes of loss is not automatically included in a homeowners policy?
Personal injury, which is nonphysical injury, is offered as an endorsement to Section II at additional premium cost.
If a producer is convicted of a felony in what manner is the Director informed?
Producer. A producer has a duty under law to report any felony conviction to the Director within 30 days of the entry date of the judgment of the felony conviction.
Which of the following is true with regard to the additional coverage of Preservation of Property found in a Builder's Risk policy?
Property removed from the described premises to protect it is covered for up to 30 days.
Which structure type requires that either at least 80% of its replacement value or the maximum coverage amount must be insured under the Flood Program?
Single family. All buildings except single family dwellings are insured under the NFIP on an actual cash value basis. Single family is the only structure that offer replacement cost coverage if at least 80% of the replacement value or the maximum amount available ($250,000 in this case) is insured.
If the Director discovers a person has violated the controlled business statute, which of the following may happen as a result?
The Director may not grant a renewal of producer license.
When an insurance company suspects that an insured has engaged in a fraudulent act, that insurer is required to:
The Director. An insurance company must report to the Director factual information pertinent to suspected or actual insurance or premium fraud.
The regulation that requires a producer to sign their name on an individual or group life or accident and health insurance application is called:
The Disclosure Rule. The disclosure rule requires a producer to sign their name on an individual or group life or accident and health insurance application.
What happens when an insurer suffers loss when paying a covered mine subsidence claim?
The Illinois Mine Subsidence Fund re-insures loss up to $200,000 per residential or commercial structure and up to $15,000 per living unit. The Fund is designed to re-insure mine subsidence loss up to the amounts indicated in the private insurance market.
Under the Insurance Claims Fraud Prevention Act all of the following are privileges or responsibilities insurance companies have, EXCEPT:
The ability to object to the use of information compiled under the Act. Relevance of information under the Act is determined by the Director and insurers have no right of objection under this law to any such determination made by the Director.
An attorney solicits a client for the sale of an insurance product but the attorney does not hold any type of insurance producer license. Which of the following statements is most accurate?
The attorney is guilty of a Class misdemeanor, a criminal offense. An attorney licensed to practice law may only advise about incidental insurance matters for a fee but is not allowed to perform the functions of a licensed producer without obtaining the property producer licensing authority.
A commercial fire policy can be cancelled by an insurance company with ten days notice if the property insured is found to have consisted of any of the following conditions, EXCEPT:
The building is unoccupied for more than 60 days due to required construction repairs.
What action is required of a life insurance company when a death claim is submitted?
The carrier is required to search their records for other possible policies that may be in force and payable on the same life. Once a death claim is submitted to a life insurer, they must diligently search for any other policies that may also exist with that same insurer under the name of the insured as well as any other name by which the insured may have been known.
The civil penalty amount for engaging in premium financing without the appropriate license is:
The civil penalty for engaging in premium financing without a license is $2,000 per violation.
Under Regulation 919, what is the length of time an insurance company is required to keep detailed claims records?
The current and past two years. Regulation 919 requires claim records must be maintained by an insurer for the current and two previous years.
For which of the following causes of loss would a common carrier be liable for the property loss of goods they are transporting that are owned by another party?
The driver for the carrier takes a dinner break and does not lock the truck door allowing thieves to steal the property during the driver's dinner break. The common carrier is liable for the loss of goods due to the negligence of their driver while all the other losses described are exclusions of liability for a common carrier.
If a producer demands a hearing to challenge the reasonableness of a license suspension, when will the hearing take place?
The hearing takes place within 20 to 30 days from the date the Director's mailing of the hearing notification.
A neighbor hurts his arm while attending a party at the home of the insured. Which of the following statement about Coverage F, Medical Payments is NOT true?
The injured neighbor may not bring a claim on his own for medical expense payments which may be available to him under Coverage F of the insured's policy. Coverage F allows the insured party to file a claim on their own to collect any benefits due and they do not need any permission of the insured to do so.
In a HO-2 homeowners policy, which of the following acts of theft loss is covered?
The insured's canoe is stolen from his detached garage. All of the acts are excluded under a homeowner HO-2 policy except the canoe stolen from the premises of the insured (up to $1,500). The canoe would not be covered, however, if it had been stolen while away from the insured premises.
Which of the following may be an allowed reason for an insurer to cancel a property policy?
The insurer who wrote the policy has lost their re-insurer and the policy cancelled has been in force for less than one year and more than 60 days. It is a valid reason to cancel or non-renew if the re-insurer of the insurance company is certified as being lost to the writing carrier and the policy has been in force at least 30 days but less than one year.
If an insured has a homeowner policy and moves personal property from a house which was recently sold to the insured's new home, what coverage would the insured enjoy with respect to this moved personal property?
The moved property is covered for the full Coverage C limits but only for the first 30 days. Personal property that is moved to a newly purchased residence is covered for the first 30 days and the 10% limit on Coverage C for property kept elsewhere does not apply.
Which of the flowing activities on the part of a producer will not likely lead to a suspension, revocation or denial of license?
The producer pleads guilty to misdemeanor shoplifting. Illinois currently requires the commission of a felony to lead to license termination from the view point of criminal activity.
Which of the following actions on the part of a producer could lead to license denial?
The producer signed an insurance application on behalf of the applicant with the applicant's full knowledge and verbal permission to do so. A producer is never allowed to sign an insurance application on behalf of an applicant or proposed insured because such an action constitutes forgery, punishable by termination of license plus a fine.
The party who is responsible for assuring that a producer surety bond is effect as required and for the correct amount is
The producer. It is the responsibility of the individual producer to maintain the proper amount of a surety bond in effect as required.
Which coverage limits shown is accurate for Flood Insurance?
The regular program limits for single family homes is $250,000 for structures but only $100,000 for contents with a deductible as stated in the declarations that applies to separately to both coverage.
All of the following statements regarding cancellation of a personal fire policy are true, EXCEPT:
The sole reason for cancellation may be that payment of a claim or claims was made by the insurance company. A personal fire policy may not be canceled solely on the basis of the company having made a payment of a claim or claims against the policy.
A tenant buys an HO-4 policy, with $50,000 of limit on Coverage C, and spends their own money to install several more expensive light fixtures in her apartment then the landlord provided. A building fire destroyed these fixtures. Can the tenant collect any money on her HO-4 for these losses to the fixtures she purchased and installed in her apartment?
The tenant can collect up to 10% of the Coverage C amount for betterment she added to her leased space. Building additions are included in homeowner policies as an additional coverage and includes up to 10% of the Coverage C amount for tenant betterment to the leased property.
All of the following are valid reasons for an insurer to non-renew a personal fire policy that has been in effect for sixty days, EXCEPT:
The use of a space heater in a single family or 2 to 4 unit residential dwelling is not grounds for a company to use to refuse to insure or to non-renew an existing policy.
A producer is violating the rule against controlled business if they write too much insurance business on the risks of all of the following persons, EXCEPT:
Their parents. Controlled business pertains to insurance written on the life, property or risks of the producer, their spouse or their employer.
How many different forms of temporary producer licensing authority exist in Illinois?
There are two types of temp license: the Temporary License and the Temporary License for Producer Application.
Which statement most accurately reflects why an insurer can refuse to issue real property coverage to a dwelling that is located in a blighted urban area?
There is a legitimate business reason for the refusal. An insurer must advance a sound business reason for refusing to insure real property and it is not allowed to refuse coverage simply based on geographic location.
Once an person makes application to the FAIR Plan and the property has been inspected, any of the following actions may take place, EXCEPT:
There is no opportunity for a re-inspection if the property is rejected. If a property is rejected under the FAIR Plan, the applicant has rights to request a re-inspection under certain conditions and to have the application reconsidered.
If an insured, who is covered by a Dwelling Program form, noticed a couple of shingles blew off the roof during a windstorm and does nothing to fix the roof, will the policy pay for any resulting loss?
There is no payment because this is considered neglect by the insured. There is no payment because this is considered neglect by the insured and it violates the duty of the insured to preserve or protect their property under reasonable conditions.
All of the following statements pertaining to a temporary license are true, EXCEPT:
They survive the transfer of ownership of an insurance company who sponsored the licensee. Temporary licenses automatically terminate upon the change of ownership of any company or agency that sponsors the temporary licensee.
The Industry Placement Facility (IPF or Facility) has all of the following duties under the FAIR Plan, EXCEPT:
To approve a specific community's qualification as an urban area. It is not within the authority of the Facility to designate a community as an urban area because that authority lies with either the approval of the Director or the Secretary of HUD.
What is the main purpose of the National Flood Insurance Program?
To make flood insurance available to business and individuals who otherwise would be unable to procure such coverage. Private insurers stopped writing flood insurance in the early 1950's after suffering huge financial loss. If not for the NFIP business and individuals would be unable to secure flood insurance on their real property and contents.
If an insolvent property or casualty insurer had unearned premiums at the time of bankruptcy, what is the responsibility of the Guarantee Fund concerning these unearned premiums?
To pay all unearned premium, except the first $1,000 to $10,000.
In a homeowner policy the Vandalism and Malicious Mischief peril will not cover loss if the residence dwelling is:
Vacant for 60 or more consecutive days.
Which of the following is a requirement for qualification as an Illinois insurance producer.
Which of the following is a requirement for qualification as an Illinois insurance producer.
If a business intends to claim debris removal under a Commercial Building and Business Personal Property Form, it must be reported to the insurer:
Within 180 days from the date of physical loss. If a business intends to claim debris removal under a Commercial Building and Business Personal Property Form, it must be reported to the insurer within 180 days from the physical loss date and loss is limited to the actual expense of the debris removal or a maximum 25% paid for the direct loss plus the amount of the deductible.
Which of the following coverage parts are not offered through a Commercial Package Policy (CPP)?
Workers Compensation insurance. It's its own separate thing.
An item of equipment is defined as
any standard or optional equipment available from the manufacturer of the auto for the specific make, model and year.
The trust officer of a bank, while performing the incidental duties of his employment, advises bank customers from time to time about maters related to insurance policies. This trust officer
is exempted from any producer licensing requirements based on these activates. Illinois allows specific occupations to be exempt from licensing if the duties they perform relating to insurance are incidental and no direct payment of income derives from any insurance product.
The Guarantee Fund has the duty to investigate claims brought against the Fund and to then
deny all claims for which the Fund is not obligated to pay loss. The Fund must adjust, settle and pay covered claims to the extent of the Fund's obligation and to deny all other claims.
