Property & Casualty Law Review Questions
The fee for reinstating a lapsed license is a. $200 b. $180 c. $50 d. $100
$180 The penalty fee for reinstating a lapsed license is $180.
After the insured makes a claim, the insurer has how long to open communications with the insured, acknowledge receipt of the claim, and provide necessary claim forms? a. 10 days b. 30 days c. 45 days d. 15 days
15 days After the insured makes a claim, the insurer has 15 days to open communications with the insured, acknowledge receipt of the claim, and provide necessary claim forms.
How many hours of pre-licensing education must be taken to obtain a property insurance license? a. 20 hours b. 14 hours c. 7 1/2 hours d. 13 hours
20 hours 20 hours of pre-licensing must be taken to obtain any single line of authority- Life, Accident/Health, Fire, or Casualty insurance license, of which 7.5 hours must be classroom.
How many hours of Continuing Education are required before renewal of an insurance license? a. 30 hours annually b. 20 hours biennially c. 24 hours biennially d. 12 hours annually
24 hours biennially 24 hours of CE credit are required biennially (every two years) before renewal of the license.
Illinois Motor Vehicle Financial Responsibility Law requires what minimum liability limits? a. 25/50/20 b. 15/30/10 c. 50/100/25 d. 25/50/25
25/50/20 Minimum liability limits are $20,000/person, $40,000/occurrence and $15,000 property damage, or 20/40/15.
Insurance producers in Illinois need to take a ___ hour classroom course in ethics for each renewal period. a. 3 hours b. 7.5 hours c. 15 hours d. 24 hours
3 hours A 3 hour classroom ethics class is required. 7.5 hours is the classroom time for pre-licensing.
L is taking training with an insurer and has a temporary insurance producer license. How long is it good for? a. 90 days b. 60 days c. 120 days d. 30 days
90 days Such a temporary insurance producer license is good for 90 days.
Any licensed insurance producer, limited insurance representative, or temporary insurance producer who is convicted of a felony must report such conviction to the Director within ____ days of the judgment. a. 30 b. 10 c. 20 d. 15
30 Any licensed insurance producer, limited insurance representative, or temporary insurance producer who is convicted of a felony must report such conviction to the Director within 30 days of the judgment. Be careful to remember that it is a conviction, not an indictment.
Which insurance company department analyzes a wide range of statistical data to help predict losses and required income? a. Underwriting b. Marketing c. Actuarial d. Rating
Actuarial The actuarial department analyzes a wide range of statistical data to help predict losses and required income.
T sells insurance on baggage and travel health. What type of producer license does T have? a) Business entity b) Temporary insurance c) Limited lines producer d) Insurance producer
C. T has a limited lines producer license because her line of insurance is very limited to cover just baggage or travel health.
The deductible for Uninsured Motorist Property Damage coverage is: a) $50 b) $100 c) $250 d) $500
C. The deductible for Uninsured Motorist Property Damage coverage is $250.
Which of the following insurers often offer insurance coverage for situations where standard insurers will not offer coverage because of particularly high risk or loss potential? a. Reciprocal companies b. Syndicate insurers c. Mutual insurers d. Federal or state government
Federal or state government Some areas have such high risks that private insurers cannot or will not enter the market. In these cases, the federal or state government may step in to offer the needed coverage. Examples include Social Security, Medicare, flood insurance, and federal crop and crime insurance.
An insurance producer license is required for which type of insurance? a. Trip cancellation insurance b. Fire insurance c. Legal expense insurance d. Industrial life insurance
Fire insurance Fire or Property insurance requires an insurance producer license. A limited insurance representative license is all that is needed for the other types of insurance mentioned.
Which is not a filing method that an insurance company could use to file its rates with the Illinois Department of Insurance? a. Open Approval Rating b. Prior Approval Rating c. Mandatory Rating d. File and Use Rating
Open Approval Rating Open Competition Rating is one of the basic methods of filing insurance rates, but Open Approval is not.
Which commercial rating method uses charges and credits to modify class rates? a. Individuals b. Audit c. Schedule d. Merit
Schedule The schedule rating method uses charges and credits to modify class rates.
What is the period for an insurance producer license? a. Three years b. One year c. Five years d. Two years
Two years An insurance producer license is issued for a two-year period.
All of the following are correct about complaints against insurers EXCEPT: a. Records of all inquiries must be maintained by the insurer. b. Written inquiries by customers to an insurer must be answered within 21 days. c. There must be a 24-hour phone number provided to which customers may call complaints at their own expense. d. Insurers must maintain a Customer Affairs and Information Department.
There must be a 24-hour phone number provided to which customers may call complaints at their own expense. There must be a toll-free number provided for customers to call with questions or complaints, or the insurer must allow the customers to call collect, at the insurer's expense.
Which insurance company department relies on experience and judgment with individuals and classes to help determine rates? a. Marketing b. Actuarial c. Underwriting d. Rating
Underwriting The underwriting department relies on experience and judgment with individuals and classes to help determine rates. It examines the nature of the risk, hazards that are present, outside factors that are present, and past losses. It is responsible for guarding against adverse selection by choosing risks that are in the normal range of expected losses. Agents act as field underwriters, helping the insurer to get a personal witness of the risk.
J is found to be representing herself as a licensed insurance producer, when in fact she is not. Which of the following is not one of the penalties that might be assessed? a. Up to a $25,000 fine b. Up to five years in jail c. Up to a $1,000 fine d. Up to one year in jail
Up to five years in jail An unlicensed individual or one acting outside the accepted boundaries is guilty of a Class A misdemeanor (up to a $1,000 fine and one year in jail), or a Class 4 felony (up to a $25,000 fine and three years in jail) if any monies collected along with the violation are misappropriated or converted to personal or some other purpose.
No insurer in Illinois may refuse to provide insurance on the basis of the specific geographic location of the risk to be insured unless the refusal is: a) For a valid business purpose which is not pretext for unfair discrimination b) Based on redlining c) For valid business pretexts d) Because of a higher percentage of risks in that area
A. A refusal because of geographic location is valid if there is a business purpose and it is not pretext for unfair discrimination.
A licensed health producer failed to repay a delinquent student loan from the Illinois Student Assistance Commission. After a hearing, her license was suspended and she was fined $___ for her failure to repay the loans. a) $10,000 b) $100,000 c) $50,000 d) $15,000
A. After a hearing, the licensee may be fined up to $10,000 for each cause for suspension of his license (failure to repay his delinquent student loan's from ISAC).
R is not a licensed producer. Her boss wants to give R a bonus for processing each application above a certain number R: a) Cannot accept the bonus. b) Can accept the bonus, because it is standard compensation practice. c) Can accept the compensation if she actually processed the applications herself. d) Accepts only half of the compensation because as long as it is less than minimum wage, an unlicensed producer accepting compensation is legal.
A. An unlicensed individual or registered firm is not allowed to receive commissions or compensation in any form for services rendered in servicing insurance business.
What piece of equipment inside a vehicle is covered for replacement after an automobile accident? a) Car seats b) Anti-theft devices c) Stereos d) Back support systems
A. Every policy of automobile insurance written in Illinois must cover the replacement of a child restraint systems (car seats) that were in use by a child during an accident which was covered.
In some counties in Illinois, Mine Subsidence coverage may only be omitted from a homeowners policy if the: a) Insured signs a waiver for the coverage b) Insured verbally informs the company c) Insurance company receives written approval from the Mine Subsidence Insurance Fund to omit the coverage d) Municipality elects not to participate in the program
A. If the insured signs a waiver that they do not want Mine Subsidence coverage, it may be omitted from a homeowners policy. Otherwise it is required in counties where there has been mining.
Who determines the rates for the employer who applies to the Worker's Compensation Assigned Risk Pool? a) The Pool b) The insured c) The Association d) AIA
A. In the Worker's Compensation Assigned Risk Pool, the Pool (the insurers) determines eligibility and rates for the employer within 10 days.
Which of the following is not grounds for suspension, revocation, refusal to renew or denial of a license? a) Accepting insurance business from another licensed individual. b) Failing to pay state income tax. c) Withholding money received in the course of doing insurance business. d) Violating any order of the Commissioner of Texas or any state.
A. Knowingly accepting insurance business from an unlicensed individual would be grounds for suspension of a producer license. D is true because the Commissioner of Texas is comparable to the Director of Illinois.
Which of the following must a non-resident agent file with the Director of Insurance to assign him as the non-resident's agent in respect to any lawful process in any action, suit, or legal proceeding against the applicant? a. Non-resident agent appointment agreement b. Bi-lateral agreement c. Affidavit of agency d. Power of attorney
Affidavit of agency A nonresident is required to file an affidavit of agency, appointing the Director as their agent in respect to any lawful process in any action, suit, or legal proceeding against the applicant. Any such process served on the Director will have the same effect as if served personally on the producer. The Director must forward a copy of the process to the producer's address of record via registered or certified mail within 10 days of receipt.
K is injured in an accident with an at-fault driver who has insufficient automobile liability limits to satisfy the judgment against the driver. In this situation, K may seek recovery under which of the following coverages of K's Personal Auto Policy? a) Uninsured Motorists b) Underinsured Motorists c) Bodily injury Liability d) Medical Payments
B. An Underinsured Motorist policy covers an insured who has been in an automobile accident with a vehicle whose policy has less than the required limits of liability.
An automobile insurer may require a physically handicapped person to provide proof that she: a) Regularly renews her license b) Has qualified for a new drivers license since her handicap occurred c) Has disability insurance d) Had surgery done by a licensed physician
B. An automobile insurer may require a physically handicapped person to provide proof that she has qualified for a new drivers license since her handicap occurred. The insurer may not discriminate against the handicapped person in any other way.
Any person who violates a written order of the Director is guilty of a _____ offense. His/her license may be revoked or suspended and he/she may be fined up to $___. a) state; $2,500 b) business; $5,000 c) federal; $4,000 d) violation; $3,000
B. Any person who violates a written order of the Director is guilty of a business offense. His/her license may be revoked or suspended and he/she may be fined up to $5,000.
R Insurance uses credit information to rate risks. Which of the following uses for the credit information is acceptable? a) Use of 40 month old credit information b) Use of credit inquiries initiated by the consumer for his/her own information as a negative factor in the scoring methodology c) Deny a personal insurance policy because of credit information along with being a higher risk d) Take a negative action against a consumer solely because he/she does not have a credit card account
B. Credit inquiries not initiated by the consumer or the consumer's own information cannot be used, but those initiated by the consumer can be used.
Under the Uninsured Motorist provisions of the Illinois Insurance Code, disputes over coverage may be resolved by the: a) Automobile Insurance Plan b) American Arbitration Association c) Department of Insurance d) Inter-company Arbitration Society
B. Disputes over uninsured coverage may be resolved by the American Arbitration Association.
An insurance producer knowingly gives a prospective insured a false statement of the projected dividends for a life policy. He is guilty of: a) Defamation b) Misrepresentation c) Alteration d) Boycotting
B. He is guilty of misrepresentation because he knowingly gave false statements and misrepresented the provisions in an insurance policy.
Misrepresentation and defamation are _____ offenses. The fines can be up to $___. a) Unfair trade; $5,000 b) Business; $10,000 c) Unfair trade; $10,000 d) Business; $15,000
B. Misrepresentation and defamation are business offenses. The fines can be up to $10,000.
No cancellation is valid unless mailed by the insurer to the named insured. A proof of _____ from the mail delivery service must be obtained by the insurer. a) cancellation b) mailing c) delivery d) E&O coverage
B. The company must obtain proof of mailing from the mail delivery service.
Which of the following would a temporary producer license not be issued to? a) The surviving spouse of a licensed producer who has become physically disabled b) The surviving parent of a licensed producer who has died instead of the personal representative c) A member of a business entity when a member who was designated in the business entity license dies d) The designee of a producer who has entered into active service in the US Navy
B. The surviving spouse or personal representative of a licensed producer who has died or become mentally or physically disabled may receive a temporary license. But if the parent is not the personal representative, he/she could not receive the temporary license.
Which of the following might be required to deposit a security bond with the Secretary of State following an automobile accident? a) Self-insurers b) The owner of the car who has a liability policy c) The at-fault driver who does not have liability insurance d) A driver who is not the owner but has a liability policy which covers cars not owned
C. An at-fault driver who does not have liability insurance may be required to deposit a security bond to the Secretary of State if there were bodily injuries, death or property damage that exceeds $500 after an accident.
An auto policy may be non-renewed for which of the following reasons? a) Sex b) Race c) Suspended driver's license d) Religion
C. An insurer will cancel an insured's policy if the insured has his/ her license suspended.
How long do agents have to notify the Commissioner of a felony conviction? a) 5 business days b) 15 days c) 30 days d) 1 month
C. Any licensed producer who is convicted of a felony must report such conviction to the Director within 30 days
M is a limited insurance representative. He wrote and solicited a policy to the D family. How must he identify himself on the policy? a) By name and SSN b) By SSN and Insurer PIN c) By name and signature d) By signature
C. Any policy solicited by a limited insurance representative must identify the solicitor and writer of the application by name and signature.
All of the following statements about Uninsured Motorists Property Damage are correct except: a) Property damage losses are restricted to losses arising from physical contact of the uninsured auto and the insured auto. b) There is no coverage for loss of use of the insured auto. c) Eligible losses are paid in full up to $25,000. d) There is no coverage for personal property in the insured auto.
C. Eligible losses for Uninsured Motorists Property Damage are paid in full up to $15,000 or the actual cash value of the vehicle.
E did not commit any unfair claims practices during his 30 years of work for N Insurance. E did which of the following during claim settlements? a) Required policyholders to sue N Insurance to receive reasonable, higher claim amounts b) Provided forms necessary for policyholders to present claims within 1 month c) Had good faith settlement of claims with clear liability. d) Failed to verify that a repairer of a vehicle was duly licensed under Illinois Vehicle Code
C. Good faith settlement of claims with clear liability is not an unfair claim practice. B is not true, because the time limit for giving necessary forms to policyholders after a claim is 15 working days.
Illinois regulation on termination of agents only applies to contracts between agents and insurers which have been in effect for more than: a) 5 years b) 2 years c) 1 year d) 61 days
C. Illinois regulation on termination of agents only applies to contracts between agents and insurers which have been in effect for more than 1 year.
An individual applying for an agent's license does not need to: a) pay a nonrefundable fee b) be over age 18 c) wait more than 2 years if he/she committed an act that was grounds for denial of a license in the past. d) pass a written examination.
C. It needs to have been at least 3 years since the person committed an act that is grounds for denial of a license before he can be eligible to apply for a license again.
The term "insurance producer" includes: a) an officer, director or employee of an insurer who does not receive commissions. b) employees who activities are limited to advertising. c) an employee who duties are mainly managerial or clerical. d) a business entity
D. A business entity could be an insurance producer; A, B, and C are not.
Which of the following is required of every insurer consumer complaint department? a) A telephone number for consumers to call with complaints b) Insurers must provide all information and services requested by the policyholders c) Insurers must maintain records of all telephone numbers of complainants d) Insureds must receive a written response from the insurer to all written inquiries within 21
D. A toll free number or a number at the insurer's expense is required, insurers must provide reasonable information and services requested by the policyholders, and insureds must receive a written response from the insurer to all written inquiries and complaints within 21 days of the insurer receiving them.
After receiving a report alleging violations after an examination, a licensee may demand: a) A written copy of the report b) A surety bond c) The name of the authorized examiner d) A hearing within 10 days of receiving the report
D. After receiving a report alleging violations after an examination, a licensee has the right to demand a hearing within 10 days of receiving the report.
Which of the following statements is correct about continuing insurance education requirements? a) Each limited insurance representative must complete continuing education courses. b) All courses must have a written exam. c) The insurance producer must submit proof of completion of a course to the Director of Insurance when extension of a license is requested. d) An insurance producer is required to have 24 hours of continuing education biennially, but it can be in any line of insurance, even one in which he/she is not licensed.
D. An insurance producer is required to have 24 hours of continuing education every two years and it can be in any line of insurance, even one in which he/she is not licensed.
D is the claims supervisor for an insurer and he has evidence of arson on a claim. D is required by law to: a) Deny the claim b) Notify his supervisor c) Burn the evidence d) Notify the Director of Insurance
D. D should notify the Director so a fraud investigation can be started.
After 60 days of being in force, a Family Auto policy may be canceled in which of the following situations? a) The insured moves into a new rating territory. b) The insured joins a car pool. c) The insured files two claims in one year. d) The driver's license of the insured is revoked.
D. If the driver's license of an insured is revoked or suspended, the auto policy may be canceled. If the insured moves into a new rating territory, the premium may change but the policy cannot be canceled. Joining a car pool and filing claims are not valid reasons to cancel a policy
Insurance Companies must provide premium reductions to Illinois policyholders who have which of the following qualified equipment on their automobiles? a) Power steering b) Safety belts c) Air bags d) Anti-theft mechanisms
D. Policyholders that install anti-theft mechanisms on their cars are entitled to a premium discount on their comprehensive coverage.
Which of the following is not rebating? a) Giving a customer a job in your agency if they buy an insurance policy from you. b) Buying a side of beef from a prospect if they buy a life insurance policy from you. c) Offering a mobile phone to anyone who buys an insurance policy from you. d) Reducing premiums because of accumulated surplus amounts.
D. Premiums are reduced in this case because they have already been paid, not for rebating to get a client to buy a policy.
The Illinois FAIR Plan may take all of the following actions except: a) Accept applications from any licensed property producer b) Provide an installment premium-payment plan c) Provide immediate binding of coverage d) Provide insurance on farm property
D. The FAIR Plan is for urban areas and does not include farm property.
The Mine Subsidence Fund does not pays losses in the amount of: a) $750,000 per residence b) $750,000 per commercial building c) $15,000 per living unit d) $200,000 per commercial property
D. The Mine Subsidence Fund will pay losses up to $750,000 per residence, $750,000 per commercial property and $15,000 per living unit.
A limited lines producer, circulates false statements about the financial condition of a competitor and is therefore guilty of: a) Discrimination b) Solicitation c) Coercion d) Defamation
D. The agent is guilty of defamation: His false statements were intended to harm the business of another insurer.
The minimum limit of liability for automobile insurance in the state of Illinois is: a) 20/30/20 b) 15/40/15 c) 20/35/15 d) 25/50/20
D. The minimum limit of liability for automobile insurance in the state of Illinois is 25/50/20.
The right of an agent representative of an insurance company to have business cards with the company logo made is what? a. Apparent directive b. Optional directive c. Implied directive d. Express directive
Implied directive Implied directive is unwritten authority to perform incidental acts which the public assumes the agent to have, such as have business cards made with the company logo on them.
Limited Representatives in Illinois can sell all of the following EXCEPT: a. Mortgage Insurance. b. Legal Expense Insurance. c. Travel Accident Insurance. d. Industrial Life Insurance.
Mortgage Insurance. A limited insurance representative license is required for selling 1) Baggage or limited travel health, accident or trip cancellation insurance sold in connection with transportation on a common carrier, 2) Industrial life, accident or health insurance, 3) Insurance issued by a company under "an Act relating to local mutual district, county and township insurance companies" and approved March 13, 1936, 3) Legal expense insurance and 4) Enrollment of recipients of public aid or Medicare in a health maintenance organization.
Which of the following is NOT an allowable disbursement from a PFTA? a. Commission payments to the agency. b. Return premiums to insureds. c. Premium remittances to insurers. d. Small claims payments that the producer believes will be reimbursed.
Small claims payments that the producer believes will be reimbursed. The four allowable disbursements from a Premium Fund Trust Account include 1) Premium remittances to insurers, 2) Commission Payments, 3) Claim payments at the insurer's direction, and in writing, and 4) Return premiums to an insured (must be made within 15 days of receipt by the producer).
For which of the following workers would Workers Compensation be elective in Illinois? a. Factory worker b. Sole Proprietor c. Construction worker d. Firefighter
Sole Proprietor Workers Comp is required for hazardous employment and elective for non-hazardous employment in Illinois. Sole proprietors, partners, and corporate officers of small businesses may elect to accept or reject coverage for themselves.
A corporation, partnership, or limited liability company which transacts the business of insurance as an insurance agency is known as a/an: a. registered firm. b. intermediate firm. c. operational firm. d. limited insurance representative.
registered firm. A registered firm is a corporation, partnership, or limited liability company which transacts the business of insurance as an insurance agency.
An insurance company which fails to comply with the proper termination notice procedure of a limited insurance representative's appointment will be fined _____ for each violation. a. $2,000 b. $500 c. $1,500 d. $1,000
$1,000 Any insurance company which fails to comply with the proper termination notice procedure of a limited insurance representative's appointment will be fined $1,000 for each violation, and any other penalties which may be assessed.
G, an insurance producer, has been found guilty of misrepresentation. What possible fines may be assessed? a. $250 to $1,000 b. $100 to $5,000 c. $250 to $5,000 d. $100 to $1,000
$100 to $5,000 Possible fines for misrepresentation are from $100 to $5,000.
The penalty fee for reinstating a license that has lapsed because the agent did not pay the renewal fee before the license lapsed is: a. $25 b. $50 c. $180 d. $100
$180 The reinstatement fee for a lapsed license due to late or non-payment of the fee by the due date is $180.
If an agent sells insurance for an insurer with whom he does not hold an agency contract, what is the minimum bond the agent must file with the Director? a. 5% of premiums brokered in the previous year b. $2,500 c. $1,000 d. $5,000
$2,500 A producer or registered firm that brokers insurance for a company with which it does not have an agency contract must maintain a continuous surety bond in favor of the people of the state of Illinois. The bond must be at least $2,500 or 5% of the premiums brokered in the previous year, whichever is greater, not to exceed $50,000.
An insurance producer or registered firm which brokers insurance with a company with which it does not have an agency contract, must maintain what bond amount? a. $10,000 b. $50,000 c. $2,500 or 5% of the premiums brokered in the previous year, whichever is greater. d. $5,000 or 5% of the premiums brokered in the previous year, whichever is greater.
$2,500 or 5% of the premiums brokered in the previous year, whichever is greater. The bond must be at least $2,500 or 5% of the premiums brokered in the previous year, whichever is greater, not to exceed $50,000.
What is the reinstatement fee amount for a producer who has put his license on inactive status with the Director because of a conflict of interest situation? a. $25 b. $50 c. $150 d. $100
$50 If an agent puts his license on inactive status because it puts him in a position of a conflict of interest, active status may later be restored by submitting the proper form and paying a $50 fee along with the applicable license fee.
Within how many days of receipt must the Director forward a legal process to a non-registered agent's address of record? a. 20 days b. 15 days c. 10 days d. 5 days
10 days The Director must forward a copy of the process to the producer's address of record via registered or certified mail within 10 days of receipt.
How many hours of pre-licensing education are required to obtain a license for motor vehicle insurance? a. 10 hours b. 5 hours c. 12.5 hours d. 7.5 hours
12.5 hours of pre-license study are required to obtain a license for Motor Vehicle insurance, 5 of which must be a classroom course.
If a registered insurance agency moves across town, how long does the agency have to notify the Director of the move? a. 30 days b. 90 days c. 45 days d. 60 days
30 days Any licensed insurance producer or registered firm must report a change of home address and/or place of business to the Director within 30 days of the move.
P is an insurance producer and was convicted of a felony today. How long does he have to notify the Director of his conviction? a. 15 days b. 60 days c. 30 days d. 10 days
30 days Any licensed insurance producer, limited insurance representative, or temporary insurance producer who is convicted of a felony must report such conviction to the Director within 30 days of the judgment.
If a limited insurance representative's appointment is terminated, the terminating company has how many days to notify the Director of the date and reason for the termination? a. 30 days b. 10 days c. 120 days d. 60 days
30 days The terminating company must notify the Director within 30 days of the date and reason for the termination of a limited insurance representative's appointment, and the Director will terminate the license.
E's license has been on inactive status for one year. How much longer can E's license remain inactive before she needs to meet all the standards of a new applicant to be restored to active status? a. 24 months b. 12 months c. 36 months d. 6 months
36 months The inactive status is good for two years, and can be extended for two more years. Beyond this 4 year period the licensee must meet all the standards of a new applicant before being restored to active status.
For how long must a producer keep financial records available for audit purposes? a. 10 years b. 3 years c. 5 years d. 7 years
7 years Records must be kept 7 years and made available to the Director in case of examination/audit.
L, an insurance producer, has been called to active duty in the National Guard. When he renews his license, for how long will L's license be renewed? a. 90 days b. 60 days c. 45 days d. 100 days
90 days Renewal licenses may be issued for 90 day periods to any person serving in the armed forces of the USA, but no one so licensed may solicit, negotiate, or procure new insurance. Licenses will be restored upon honorable discharge.
Which of the following would be sufficient to provide proof of financial responsibility in the state of Illinois? a. An auto insurance policy covering the insured vehicle for $50,000 collision damage. b. A letter signed by the motor vehicle owner and submitted to the Secretary of State stating that the vehicle owner will personally cover any damage caused by anyone operating the vehicle, up to the state minimum liability requirements. c. A personal checking account in the amount of the minimum liability required by the state. d. A CD in the amount of the minimum liability required by the state.
A CD in the amount of the minimum liability required by the state. Proof of financial responsibility may be shown by 1) a certificate of insurance, 2) a surety bond covering the minimum required liability amount, or 3) a certificate of deposit in the amount of the state's minimum required liability amount.
A person who successfully completes a qualified defensive driving course is entitled to receive a premium discount: a) If they are over age 55 b) On a commercial vehicles c) If the insured has not had their drivers license suspended in the past year d) For a group policy with averaged premiums
A. A person over the age of 55 who successfully completes a qualified defensive driving course is entitled to receive a premium discount.
Which of the following situations reflects a violation of the Illinois insurance law on rebating? a) An insurance producer offers a prospective insured free data processing services as an incentive to purchase a policy. b) An insurance producer promises to review an insured's policies on a quarterly basis to determine if the insured needs additional insurance. c) An insurance producer gives an insured a geographically closer address to send premiums to. d) An insurance company notifies a policy owner that the policy owner will receive an unusually large dividend on the policy anniversary date.
A. The free data processing service is the offer of incentives in return for buying a policy, which is a form of rebating and a misdemeanor.
G is allowed to charge a fee to offer advice regarding insurance. Which of the following is not a possible occupation for G? a. A professor of business management performing duties incidental to that position. b. A trust officer in a bank performing duties incidental to his position. c. A CPA employed in a consulting capacity and performing duties incidental to that position. d. An agent e. A licensed attorney engaged in the practice of law.
An agent The classes of individuals who may charge a fee to offer any advice, counsel, opinion, or service with respect to the benefits, advantages, or disadvantages of any insurance policy issued in Illinois are: 1) a licensed attorney engaged in the practice of law; 2) a licensed producer, limited rep or temporary producer in regards to the specific classes of insurance for which he is licensed; 3) a trust officer in a bank performing duties incidental to his position; 4) an actuary or CPA engaged or employed in a consulting capacity and performing duties incidental to that position; and 5) a licensed public adjustor.
What is an operational item on a licensing exam? a. A policy offered by an insurance company that is available to the general public. b. A piece of working office equipment. c. A corporation which transacts the business of insurance as an insurance company. d. An exam question which will be considered in determining an examinee's score.
An exam question which will be considered in determining an examinee's score. An operational item is an exam question which will be considered in determining an examinee's score.
Illinois disclosure rules require that: a. Any policy solicited by an insurance producer must identify the producer by name and must be signed by the licensed individual who solicited and wrote the application. b. An insurance company must notify a second insurer if the first insurer is replacing an insurance policy of the existing insurer. c. The producer must disclose to a prospect the commission the producer will earn from a sale. d. The producer must represent all aspects of a policy he is selling truthfully and accurately.
Any policy solicited by an insurance producer must identify the producer by name and must be signed by the licensed individual who solicited and wrote the application. Disclosure rules require that any policy solicited by an insurance producer, limited insurance representative, temporary insurance producer or registered firm must identify such by name and signature of the licensed individual who solicited and wrote the application.
E wants to apply for an insurance license. How old does he need to be? a. At least 20 b. At least 25 c. At least 22 d. At least 18
At least 18 All applicants for an insurance license must be at least 18 years old.
Which commercial rating method finalizes premiums at the end of the term after a review of actual losses and collected premiums? a. Schedule b. Individuals c. Merit d. Audit
Audit With the audit method, probable premiums are used at the beginning of the policy term, and then finalized at the end of the term after a review of actual losses and collected premiums. An insured may owe more money, or get money back, based on the review.
An agent placed $66,000 of insurance last year with an insurer that he did not have agent contract with. The agent needs to take out a bond in the amount of: a) $2,500 b) 5% ($3,300) of the premiums he brokered during the previous calendar year c) 10% of the premiums he brokered during the previous calendar year. d) He does not need to take out a bond.
B. 5% of the previous year's premium of $66,000 is $3,300.
An agent who knowingly misappropriates $500 of premium is guilty of a a) Class 5 misdemeanor b) Class 1 felony c) Class 3 felony d) Class 4 felony
C If the amount of money exceeds $150 (in this case, the amount of $500), the agent is guilty of a Class 3 felony.
Company A discovered that Agent Q was embezzling premium money. What is Company A's responsibility once it terminates Q's agency contract? a. Company A must publish a list of all terminated agents so that the Director can have the information available to him. b. Company A must notify the Director of the termination within 30 days and give the Director copies of any evidence they have of the embezzlement. c. Company A must contact all policyholders and let them know Q is no longer a representative of the company. d. Company A may not make any public statements about the situation because of the risk of a defamation lawsuit that Q might bring against the company.
Company A must notify the Director of the termination within 30 days and give the Director copies of any evidence they have of the embezzlement. If an insurance company terminates an agency contract or agreement for a cause which would also cause the termination or suspension of his producer license, the must notify the Director within 30 days of such termination.
What is it called if an agent writes an application on his own life or personal property? a. Controlled business b. Self insuring c. Rebating d. Redlining
Controlled business Business which is procured by a licensee on his own life, person property or risks, or those of his spouse, or upon those of his employer or his own business is considered "controlled business." An insurance producer license will not be renewed if during the previous 2-year period the premiums on insurance represented by controlled business exceeds that of other business, or if during the next 12 months it is likely to do so.
An insurance company is prohibited from charging a higher premium on an automobile policy solely because of an insured's: a) Place of residence b) Age c) Gender d) Physical handicap
D. Insurers can charge higher premiums because of place of residence (living in areas with higher traffic levels), age (older drivers are more responsible), and gender (males may drive more aggressively). It is illegal to charge a higher premium because of a physical handicap.
Within what period of time must agents notify the Director once they move their residential or business address? a) Immediately b) 5 business days c) 15 days d) 30 days
D. The Director must be informed of any change of address within 30 days of the change.
An Illinois producer must maintain a PFTA if the producer: a. Deposits $300 collected premium into his bank and the same day sends a check to the insurer for the full premium amount. b. Has three or more salaried employees. c. Pays claims for the insurer that are subsequently reimbursed by the insurer. d. Holds premiums 5 or more days before remitting to an insurer.
Deposits $300 collected premium into his bank and the same day sends a check to the insurer for the full premium amount. A Premium Fund Trust Account must be maintained if a producer holds premiums 15 days or more before remitting to an insurer or other producer, or if the producer deposits any collected premiums into a financial institution, regardless of duration.
Which of the following individuals would need to take a written examination in order to obtain an insurance producers license? a. J was licensed for 15 months in his state before moving to Illinois. b. T surrendered his license last year because of a conflict of interest which no longer exists. c. M has been licensed since May of 1983. d. E has been widowed for four years, and her husband was licensed.
E has been widowed for four years, and her husband was licensed. Applicants exempt from a written examination to obtain an insurance producers license are 1) those holding a valid license issued prior to 1 January 1985, 2) an insurance producer licensed for at least 12 months in another state needs only take the portion of the exam regarding IL state law or for those classes of insurance for which he is applying and is not licensed in, and 3) anyone who surrendered to the Director his license due to the determination of the Director that they would have a conflict of interest.
All of the following are correct about the Illinois Workers Compensation Assigned Risk Pool except: a. Coverage is bound as of 12:01 a.m. on the day after the application is mailed to the Pool and postmarked. b. Employers turned down by three or more private insurers may apply for coverage. c. All insurers that sell Workers Compensation n the state must participate in the program. d. Applicants may apply for coverage through any licensed Casualty broker in the state.
Employers turned down by three or more private insurers may apply for coverage. Employers must be turned down by a minimum of two private insurers, not three.
T's insurance license was revoked. Which of the following is NOT one of the possible reasons? a. T knowingly accepted insurance business from an unlicensed individual. b. T failed to file a tax return last year. c. T failed to make satisfactory repayment of a defaulted student loan to the Illinois Student Assistance Commission. d. It is discovered that T was indicted on felony charges five years ago.
It is discovered that T was indicted on felony charges five years ago. Conviction (not indictment) of a felony at any time in the past unless sufficient rehabilitation can be shown, would be cause for denial or revocation of license.
M's insurance license has not been in force for seven months due to non-payment of the necessary fees. How long does M have to reinstate her license through payment of the necessary fees before she will need to retake the insurance exam? a. M will never need to take a second licensing exam. She will just need to pay necessary fees and show proof a bond is in force. b. M would need to reinstate her license before the end of the second year if she does not want to retake the exam. c. Too late! M had six months to renew before needing to retake the exam. d. M needs to reinstate her license within the next 5 months.
M needs to reinstate her license within the next 5 months. If an insurance license is not maintained due to nonpayment of fees, it may be restored without the need of another examination within 12 months of cancellation if the required fees are paid and proof a bond is in force accompanies the application.
The Illinois Director of Insurance can do all of the following EXCEPT: a. Investigate claims complaints against an insurance company. b. Conduct unannounced agency audits. c. Make necessary laws to cover the regulation of insurance business within the state. d. Enforce state insurance regulations with the assistance of the state attorney general.
Make necessary laws to cover the regulation of insurance business within the state. The Director makes necessary rules and regulations to make the state's insurance laws effective, but does not have authority to make laws.
An insurance company owned by policyholders who can attend and vote at company meetings is known as a: a. Mutual company b. Stock company c. Reciprocal company d. Syndicate insurer
Mutual company Mutual companies are owned by policyholders who can attend and vote at company meetings.
While conducting an agency audit, which of the following does the Director or his designees NOT have authority to do? a. Administer oaths and examine anyone under oath relating to the business of the agent being examined. b. Require the individual to indefinitely suspend operating the agency on the date of the audit as the result of improprieties found in the examination. c. Require the agent being audited to provide the Director convenient and free access to all books, records, documents and other papers relating to their insurance business affairs. d. Require the agent to assist the Director in the examination as much as possible.
Require the individual to indefinitely suspend operating the agency on the date of the audit as the result of improprieties found in the examination. An agent may request a hearing within 14 days of receiving the results of an agency audit. Only after the hearing can the Director impose the restrictions, including the possible suspension of the agent's license. If a hearing is not requested, the Director's findings will automatically go into affect.
Which of the following is not one of the possible penalties that may be assessed if T violates a written order issued by the Director regarding the audit of an insurance agency? a. T's insurance licensed may be revoked or suspended. b. T may be guilty of a business offense. c. T may be fined up to $5,000. d. T may face up to one year in jail.
T may face up to one year in jail. Any person who violates or aids and abets any violation of a written order issued regarding the examination or audit of an insurance producer, limited insurance representative, temporary insurance producer, or any registered firm is guilty of a business offense, his license may be revoked or suspended, and he may be fined up to $5,000.
What may the Director do if an insurance producer writes more insurance on his own family and business than for other people? a. The Director will do nothing as long as the producer has paid the required licensing fees. b. The Director may fine the producer up to $500. c. The Director may non-renew the producer's license. d. The Director may suspend the producer's ability to write more insurance for himself until the amount written on others exceeds that written on himself.
The Director may non-renew the producer's license. An insurance producer license will not be renewed if during the previous 2-year period the premiums on insurance represented by controlled business exceeds that of other business, or if during the next 12 months it is likely to do so.
All of the following are correct about the Illinois FAIR Plan EXCEPT: a. The Plan makes basic property insurance available to educational institutions. b. The Plan makes basic property insurance available in high risk urban areas c. The Plan is administered by the Illinois Department of Insurance. d. All insurers that offer property insurance in the state are required to participate in proportion to their market share of gross premium written in the state.
The Plan is administered by the Illinois Department of Insurance. The Illinois FAIR Plan is administered through the Industry Placement Facility and a Joint Reinsurance Association.
How are Workers Compensation Assigned Risk Pool eligibility and rates determined? a. The Pool determines eligibility and administers the insurance, assessing insurers for the cost of the program. b. The Pool determines eligibility and assigns the risks to private insurers who the determine rates based from their own internal tables. c. The Pool determines an employer's eligibility and rates. d. Insurers determine eligibility and the follow rates determined by the Pool.
The Pool determines an employer's eligibility and rates. Once an employer is turned down by two or more private insurers they may apply to the Pool for coverage. The Pool then determines eligibility and assigns the risk to one of the admitted WC insurers in the state, in proportion to the insurers' premium market share. The Pool also determines what premium may be charged for the assigned risk.
Which of the following statements about limited insurance representative licensing fees is correct? a. The appointing company of a limited rep must pay a $150 biennial fee. b. The limited lines rep must pay a $75 annual fee. c. The appointing company of a limited rep must pay a $25 annual fee. d. The limited lines representative must pay a $25 annual fee.
The appointing company of a limited rep must pay a $25 annual fee. The insurance company or organization appointing the limited insurance representative is responsible for submitting the forms and paying the annual required fee of $25.
S has been an agent with the same insurance company for 15 years. What will be the result if S has taken 20 hours of continuing education when his license comes up for renewal? a. S will have 30 days to make up the additional required hours or his license will lapse. b. S's license will be issued as long as he has paid the required renewal fees. c. The insurer will not pay commissions to S. d. S will be able to roll 5 CE hours forward into his next license period.
The insurer will not pay commissions to S. The continuing education requirement is 30 hours, and if this requirement is not met, the producer's license will not be renewed. A non-licensed individual or registered firm is not allowed to receive commission or compensation in any form for services rendered in procuring or servicing insurance business. At the same time, no company or person is to pay the unlicensed person commissions or compensation for such services.
An insurance broker who pays the insurer the customer premium and then allows the customer to pay the premium to the broker up to five months later: a. is guilty of rebating. b. may charge the customer up to an additional 1.5% per month on any unpaid premium balance after 90 days. c. may charge the customer up to an additional 1% per month on any unpaid premium balance after 30 days. d. is guilty of a class A misdemeanor.
may charge the customer up to an additional 1.5% per month on any unpaid premium balance after 90 days. An insurance producer may charge up to an additional 1.5% per month on any unpaid premium balance after 90 days to encourage premium payment.
