Chapter 8
Business Entity
A business entity is defined as a partnership, limited partnership, limited liability company, corporation, or other legal entity other than a sole proprietorship.
Nonrenewal
A homeowners policy cannot be terminated by a insurer by refusal to renew except at the expiration of the stated policy period or term and unless written notice is mailed to the named insured or delivered electronically to the address provided by the named insured.
Acting for Unlicensed Insurer
A person may not sell, solicit, or negotiate contracts of insurance on behalf of any insurer unless they are licensed to transact insurance business. However, nothing prohibits any person from obtaining insurance on their own life or property from an unlicensed insurer.
Cancelled by the Insured
A policy may be cancelled at anytime by the insured by giving the insurer a 5-day notice of cancellation. The insurer must refund excess premium above the customary short rates for the expired time.
Notice and Review
A written notice of cancellation or refusal to renew a policy written to cover owner-occupied dwellings must state the proposed termination date of the policy or contract, which must be a minimum of 30 days after the mailing or delivery of the notice of cancellation or refusal to renew.
Defamation
Act of harming or ruining another's reputation
false advertising
Advertising That Makes Untrue Claims Of Quality Or Effectiveness About Goods Or Services Offered For Sale
Notice of Information Practices
Agents are required to disclose to a prospect the facts about information collection practices, as well as the products they are proposing to sell.
uninsured/underinsured motorist coverage (UM/UIM)
All auto liability insurance policies issued in VA that provide motor vehicle liability coverage, including coverage on motorcycles, must include a provision or endorsement obligating the insurer to pay all sums the insured is legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle. In order for coverage to apply, the uninsured driver must be at fault.
Record Retention
All insurance licenses are required to retain all records of applications for up to 3 calendar years and State Corporation Commission has the authority to examine records at anytime
insurance consultant
An Insurance Consultant is a licensed producer who gives insurance advice for a fee, and can represent anyone in any insurance transaction, both insurer & insured, (as long as disclosure is given). Not insurance consultant: Licensed attorneys acting in their professional capacity Bank trust officers acting in the normal course of their businesses Risk managers who only consult for their employers
proof of residency
An individual is considered a resident of Virginia provided the individual: Maintains a principal place of residence Declares themselves as a Virginia resident on their federal tax return Pays Virginia income tax and personal property tax
Nonresident License
An individual or business entity who is not a resident of Virginia will recieve a nonresident license if: The applicant presents satisfactory proof that are currently licensed as a resident and are in good standing in their home. The applicant has submitted the proper request and paid the required fees The applicants home state issues nonresident agent licenses to residents of Virginia on the same basis
Disclosure Limitations and Conditions
An insurance institution or agent cannot disclose medical-record or privileged information about an individual that was collected or received in connection with an insurance transaction without written authorizations from the individual
Assumed Names
Any individual or business entity conducting business under an assumed or fictitious name must notify the Bureau of Insurance of the name either at the time of application or within 30 days from date the assumed or fictitious name is adopted
Rebating
Any inducement offered in the sale of insurance products that is not specified in the policy.
Notice Regarding Flood Exclusion
Any insurer that issues or delivers a new or renewal fire insurance policy that excludes coverage for damage due to flood, surface water, waves, tidal water, or any other overflow of a body of water must provide written notice that : -Explicitly states that flood insurance is excluded -States that information regarding flood insurance is available from the insurer, agent, or National Flood Insurance Program -Advises the policyholder that contents coverage may be available with the flood policy for an additional premium
Optional Coverages: Ordinance Law
Any insurer that issues or delivers in VA a new or renewal contract or policy for fire insurance, or new or renewal contract or policy of fire insurance in combination with other insurance coverages, must offer in writing as an option a provision that property will be repaired or replaced in accordance with applicable ordiances or laws that regulate construction, repair or demolition.
Optional Coverages: Water Sewer Backup
Any insurer who issues or delivers a new or renewal homeowners insurance policy in VA must offer as an option a provision insuring against loss caused or resulting from water backs up through sewers or drains
Penalties
Any person that knowingly or willfully violates any of Virginias insurance laws or regulations is subject to a penalty up to $5000 for each violation. Unintentional violations are subject to a penalty up to $1000 for each violation and a maximum of $10,000.
Financial Responsibility for Certain Offenses
Department will not issues or reinstate a drivers license or leaners permit to any one person for a period of 3 years w/o proof of financial responsibility that meets no less than DOUBLE the min limits of liability or $50,000/$100,000/$40,000, if such person is 1. Under influence of alcohol (.08% or higher) 2. Under influence of drugs
Transportation Expenses Coverage PP 13 52 01 04
Endorsement expenses incurred due to loss to a covered auto, including temporary transportation expenses, with a required minimum limit of $600. f
An insurer issuing new or renewal fire insurance policies must provide written notice of which of the following exclusions?
Flood and earthquake
Rental Reimbursement Coverage
For any policy providing comprehensive or collision coverage, insurers must also offer the option to purchase rental reimbursement coverage
Aftermarket Parts Regulation
If an insurers repair estimate includes any aftermarket auto part (meaning not made by the original manufacturer), the insurer must include the following written notice within the estimate or in a separate document attached to the estimate: "This estimate has been prepared based on the use of automobile parts not made by the original manufacturer. Parts used in the repair of your vehicle by other than the original manufacturer are required to be at least equal in like kind and quality in terms of fit, quality, and performance to the original manufacturer parts they are replacing".
Information Security Program
Insurance companies and agents must implement an information security program to protect against anticipated threats or hazards to the security or integrity of information, ensure the confidentiality of policyholder information and protect against unauthorized access to or use any of information that could result in substantial harm to policyholders.
Records
Insurers must keep copies of all nonrenewal and cancellation notices they send by mail or delivered electronically. along with evidence of electronic transmittal or proof
Surplus Lines licensees
Licensed individuals or agencies that make placements with surplus lines insurers.
Standard Provisions, Conditions, Stipulations, and Agreements
Must include: -Concealment or Fraud -Uninsurable and expected property -Perils not included -Other insurance -Conditions suspending or restricting insurance -Other perils or subjects -Added provisions -Waiver provisions -Cancellation of policy -Mortgagee interests and obligations -Pro Rata Liability -Requirement in case loss occurs -Appraisal -Company's options -Abandonment -When loss payable -Suit -Subrogation
Commissions, Compensation, and Fees
No person is permitted to charge or receive any fee, compensation, or consideration for insurance or for obtaining insurance unless it is stated in the policy. Written disclosure to an applicant regarding administrative fees or charges must be provided prior to services rendered. The State Commission may suspend a license if an agent shares commission with an unlicensed person.
Twisting
No person may engage in twisting, which is using misrepresentation by making an incomplete comparison to encourage or induce an insured to cancel an existing insurance policy and purchase a new policy, known as replacement.
Unfair Discrimination
Prohibited from showing any type of partiality to individuals in regard to their premium and benefits
Fiduciary Responsibilities
Responsibilities of the person who manages a pension fund. Misappropriating funds held in a fiduciary capacity may result in suspension or revocation of a license.
Duties and Powers of the Association
The Association is required to pay covered claims that existed before insolvency. Claims are covered up to 90 days after the determination of insolvency was made.
Other Powers and Duties
The Association may: -Employ or retain persons necessary to perform its duties -Borrow funds necessary to function in accordance with the plan of operation -Sue or be sued -Negotiate and become a party to insurance contracts covered by the Association -Perform any other necessary and proper acts
Continuing Education Waivers
The Board may waive the requirements for the number of course hours to be completed within a biennium for "good cause", such as a long-term illness, or an emergency that prevents an agent from satisfying requirements. Requests for waivers must be submitted within 90 days before the end of the applicable biennium.
financial responsibility
The policy must cover the named insured listed on policy and any other person using or responsible for the use of vehicle. $25,000 per person for bodily injury or death in any one accident -$50,000 per accident for the total of two or more persons for bodily injury or death in any one accident -$20,000 per accident for all damage or destruction of property
Privacy Protection
These laws are in regards to the collection, use, and disclosure of information collected in connection with insurance transactions in personal lines of insurance.
Towing and Labor Cost Coverage PP 13 55 06 00
This endorsement provides towing and on-site labor coverage for at least $25 per disablement.
Virginia requires auto policies to include Medical Expense or Loss of Income Protection:
Upon request of the insured -Medical Payments will pay up to $100 per week for loss of income if the injured person is usually employed.
Which of the following provisions must be offered as an option by insurers who issue new or renewal homeowner policies in Virginia?
Water sewer backup
Personal Information
any individually identifiable information collected in connection with an insurance transaction from which judgements can be made about that individuals finances, general reputation, credit, health, and other personal characteristics.
Basic property insurance
insurance that provides coverage for direct loss to covered property if it is caused by the perils defined by the standard fire policy and is extended coverage endorsement approved by the Commission.
Virginia Property and Casualty Insurance Guaranty Association
is a non-profit organization that consists of all licensed P&C insurers in Virginia.
Adverse Underwriting Decision
is any of the following actions taken in response to an insurance transaction for individually underwritten personal lines risk
Assessments
of each member insurer will be based on the ratio of that's insurers net direct written premiums to the net direct written premiums of all member insurers.
unfair trade practices
trading practices that derive a gain at the expense of competition
Virginia Property Insurance Association (FAIR Plan)
was formed to provide basic dwelling and commercial property insurance to individuals and businesses in the Commonwealth who are unable to obtain coverage through the voluntary insurance market.
Licensing Requirements
At least 18 years old Of good character and have a reputation for honesty Compliant with residency and other requirements The application for a license must be completed within 183 calendar days after passing state examination.
Probation, Suspension, Revocation, or Denial
A license remains in force unless terminated, suspended, or revoked. If the Commission refuses to grant or revokes or suspends a license, any appointments of the licensee will also be revoked or suspended. When proposing to deny, suspend, or revoke a license, the Commission must provide at least 10 days' notice. If a license is denied, suspended, or revoked, the applicant or licensee is prohibited from applying for another license for at least 5 years from the date of the Commission's order.
Cancellation
A policy or contract written to insure homeowners (owner-occupied dwellings) cannot be cancelled by an insurer unless written notice is mailed or delivered to the named insurance at the address stated in the policy, or is delivered electronically to the address provided by the name the named insured. Insurers may not cancel an insurance policy unless its for one of the following reasons: 1.Nonpayment of premium 2.Conviction of a crime related to acts that increase the likelihood of loss 3.Fraud or material misrepresentation 4.A physical inspection reveals that willful or reckless acts or omissions increase the likelihood of loss 5.A physical inspection reveals physical changes in the property have rendered it uninsurable 6.The property was sold in foreclosure
Under the FAIR Plan, basic property coverage insurance coverage insures against which perils?
Basic property insurance is insurance that provides coverage for direct loss to covered property if it is caused by the perils defined by the STANDARD FIRE POLICY AND IN THE EXTENDED COVERAGE ENDORSEMENT approved by the Commission. In addition, additional lines of insurance and forms of coverage may be included if recommended by the FAIR Plan and approved by the Commission.
General Powers/Rules and Regulations, Orders
The State Corporation Commission )SCC) may also be referred to as the Commission, State Commission, Or Bureau of Insurance.
Requirement to Report Felony Convictions and Administrative Actions
Each licensed agent convicted of a felony must report the facts and circumstances of the criminal conviction to the Commission within 30 calendar days.
Standard Insuring Agreement for Fire Insurance Policies
Each policy must provide space for listing the amount of insurance, rates, and premiums for coverages provided in the policy and endorsements. Standard fire policies must cover fire, lightning and removal.
Which of the following provisions must be offered in writing as an option by insurers who issue new or renewal fire insurance policies in Virginia?
Ordinance of law
Misrepresentation
A false statement or lie that can render the contract void.
Maintaining a License -Duration and Termination
A license is issued to an individual agent or business entity authorizing them to act as an agent until the license is otherwise terminated, suspended, or revoked. The discontinuance of a partnership, limited liability company, or corporation that formed a business entity will automatically terminate all licenses issued to the business entity within 90 calendar days of notification of the discontinuance.
Activities of Unlicensed Individuals
A license isn't required of a person whose employment responsivities include enrolling individuals under a group insurance policy, provided that the person receives no commission or other valuable consideration for such enrollments, and hat such compensation is not contingent upon the number of individuals enrolled or the amount of premium generated by such enrollments.
Notice Regarding Earthquake Exclusion
All insurers issuing new or renewal fire insurance policies or fire insurance in combination with other coverages, which exclude coverage for damage to earthquake, must provide written notice that: -Explicitly states that earthquake coverage is "excluded unless purchased by endorsement" -States that information regarding earthquake insurance is available from the insurer or agent, if that is the case
Appointment Procedures
An appointment issues to an agent by and insurer, unless terminated, suspended, or revoked, authorizes the appointee to act as an agent for that insurer and to be compensated by an insurer. Within 5 calendar days of receiving the notice of appointment, the Commission must notify the insurer whether the appointment is valid or invalid. A penalty of $50 per day will be charged to each insurer for overdue appointment fees Commission within 30 calendar days following the effective date of the termination if the reason for termination is grounds for probation, refusal to renew, suspension, or revocation of license. The agent or agency must immediately cease selling or soliciting on behalf of an insurer no later than 10 calendar days after notice of termination, suspension, or revocation of appointment.
Referrals
Any person who refers a customer who seeks to purchase any insurance product to a licensed agent and receives compensation for the referral of a customer is exempt from licensing, provided that: The referral doesn't include a discussion of specific insurance policy term and conditions The compensation is in the form of a one-time nominal fee of a fixed dollar amount for each referral The compensation does not depend on whether the referrals results in the purchase of insurance by the customer
Address/name change
Each agent must report any change in residence or name to the Commission and every insurer for which they are appointed within 30 calendar days of the change.
Resident Insurance Agent (Producer)
Each applicant must pass the examination prescribed by the Commission unless otherwise exempted. Applicant shall be required to wait 3 times if test is failed 3 times If the applicant fails to take the examination within 90 calendar days from the date their registration for the examination is accepted, the examination fee will be forfeited and the registration considered withdrawn.
An insurer may cancel a private passenger auto policy for nonpayment of premium by giving notice of how many days?
In order to be valid, cancellation and nonrenewal notices issued under motor vehicle liability insurance policies must: provide at least 15 days advance notice if the policy is being cancelled or nonrenewed for nonpayment of premium, and at least 45 days advance written notice for all other reasons.
Continuing Education
In order to maintain and renew an insurance license, life/health/property/and casualty agents, insurance consultants, and title agents must complete continuing education courses, related to their licensed class of insurance, on a biennial basis, or every 2 years. Agents holding one license, such as life and annuities and/or health, OR personal lines or property and casualty, OR title, must complete 16 hours of approved continuing education courses. Agents who holds licenses from more than one category are required to complete 24 hours of relevant continuing education, with a minimum of 8 hours in each class of insurance .Of the total required credits, 3 hours of continuing education in each biennium must address the topic of ethics
Privileged Information
Individually identifiable information related to an insurance claim or legal proceeding that is collected in connection with an individual if a reasonable expectation exists that a future claim or legal proceeding will involve that individual
Exceptions to licensing
Insurance employees and officers are not required to be licensed as insurance agents if they do not sell, negotiate, or solicit insurance, and do not receive commissions. Example: -Officers, directors -Employment that relates to underwriting -Employers who act as special agents or agency supervisors -Any person who secures and furnishes information for group insurance purpose -Any persons who performs administrative services -Employer or association engaged in the administration of its own employee benefits plan -Nonresident who sells, solicits, or negotiates commercial lines insurance
Which of the following is not a valid reason to cancel a policy on an owner-occupied dwelling?
Insurers may not cancel an insurance policy insuring an owner-occupied dwelling unless it is for Nonpayment of premium, Conviction of a crime related to acts that increase the likelihood of loss, Fraud or material misrepresentation, Discovery during a physical inspection of willful or reckless acts or omissions that increase the likelihood of loss, or that physical changes in the property have rendered it uninsurable, or sale of property in foreclosure.
An insurance company may cancel a property policy for nonpayment by giving notice of how many days?
Insurers may not nonrenewal or cancel an insurance policy insuring an owner-occupied dwelling located in Virginia unless it first provides at least 10 days' notice (if the policy is being cancelled for nonpayment of premium) or at least 30 days' notice (for all other cancellations).
Uninsured Private Watercraft Coverage
Insurers selling liability policies for private pleasure watercraft must, on each policy, offer the option to buy coverage for loss caused by uninsured pleasure watercrafts, up to liability limits.
Qualified property
Is all real property, such as a home or building, and tangible personal property, the property: -Cannot be used for manufacturing purposes -Must comply with state laws and regulations, and local building codes and ordinances -Cannot be commonly owned or controlled, or combinable with property insured elsewhere -Automobiles and other vehicles are not considered real property
Examinations and Investigations
The Commission has the authority to conduct and examination of insures and investigate any person licensed to transact insurance business in Virginia to determine if the person is or has engaged in any prohibited unfair method of competition or unfair or deceptive act or practice.
Standards for Content of Fire Policies
The Commission may establish standards for the content of any policy, rider, endorsement, supplemental agreement, or provision used in connection with any policy written to insure owner-occupied dwellings in Virginia.
Powers of the Commission
The State Corporation Commission will make reasonable regulations for the assignment of risks to insurance carriers. The Commission will establish rate classifications, rating schedules, rates, and regulations to be used by insurance carriers issuing assigned risk policies.
Virginia Automobile Insurance Plan (Assigned Risk Pool)
The VAIP is an assigned risk pool that offers automobile insurance through the residual market. It was formed to provide auto insurance to consumers in the Commonwealth who are unable to obtain coverage through the voluntary insurance market.
Operating Accounts
The association uses three seperate operating accounts: -Workers Compensation insurance account -Automobile Insurance account -Account for all other insurance
Limits of Coverage
The requirement to pay is satisfied when the Association pays the full amount of a Workers Compensation claim, or up to $300,000 per claimant for all other covered claims.
Exemptions
These laws concerning renewal, nonrenewal, and cancellation do not apply to: -Any policy covering owner-occupied dwelling that was force for fewer than 90 days on the date of nonrenewal or cancellation notice was sent -Any policy for which the insurer has issued a renewal policy, certificate of insurance, or other written offer to renew -Any policy for which: -The insured has requested, verbally or in writing, that it can be cancelled or nonrenewed -The insured refuses to accept the insurers offer to renewal -Any policy written by the VA property insurance association or any residual market facility in VA -Any policy for which an affiliate of the insurer is willing to provide coverage at a lower premium for the same coverages In Virginia, all personal lines property policies must contain, at the least, the precise provisions of the standard 165-line fire policy.
Medical Expense and Loss of Income Benefits
VA auto insurers must have two types of coverage for the occupants of an insured vehicle available for purchase: medical expense coverage and loss of income coverage. These coverages are available by endorsement on both commercial and personal auto policies. 1. Up to $2,000 per person for all reasonable and nessary medical, chiropratctic, hospital, dental, surgical, ambulance, prosthetic and rehabilitation services, including funeral costs -Coverage only applies where services are incurred within 3 years of the accident -Insured may choose to purchase a different limit coverage 2. Up to $100 per week for loss of income if the injured person is usually employed -Coverage begins on the first date of lost work and continues for 1 year, or until the injured person resumes their usual occupation, or dies.
Which of the following is provided by the Omnibus clause?
Virginia insurance law requires all liability policies insuring private passenger motor vehicles to contain an OMNIBUS CLAUSE, extending coverage to all any driver having the express or implied consent of the named insured to use the insured auto.
Cancellation and Nonrenewal of Personal Auto Policies
When cancelling a personal auto policy, insurers must give written notice of at least: -10 days for a new policy in effect for 60 days or less (not a renewal) -15 days if for nonpayment of premium on policy in effect for over 60 days -45 days notice in all other cases After a PAP has been in effect for 60 days, insurer can only cancel if: - Nonpayment of premium -The insured moves to another state -During the policy period, or in case of renewal, during the last 90 days of the prior period, the license of any of the following persons is revoked or suspended: -The insured -Any driver who lives with the insured -Any customary driver of the auto An insurer who cancels must refund pro rata unearned premium. If insurer cancels, the insurer is only required to refund 90% of the pro rata unearned premium. Nonrenewal requires insurer to provide 45 days before the end of the policy period.
Residential market facility
means any Commission-approved organization that distributes fairly the responsibility to provide basic property insurance on qualified property among licensed insurers (i.e., the Virginia Property Insurance Association/FAIR Plan).
Omnibus Clause
requires all liability policies insuring private passenger motor vehicles, aircraft, or private pleasure watercraft to contain a omnibus clause, extending coverage as a result of negligence of any operator with permission (expressed or implied) of the names insured to use the insured auto.
