Basics of Common Insurance Law

Insurance Continuing Education law most commonly requires:

24 credit hours every two years regardless of the number of licenses held

Most commonly, the continuing education requirement entails:

24 hours every two years, of which 3 hours must be in ethics

Producers must notify the Director of a change of address within:

30 days

A license for an insurance company is called which of the following?

A certificate of authority

All of the following may examine (audit) an insurer in this state EXCEPT:

A legal representative of the insurer's holding company

A foreign insurer doing business in this state must have which of the following?

A license in this state

Who of the following need(s) to be licensed?

A life and health producer

To whom of the following could a producer pay part of her commission without violating any insurance regulations?

A partnership of which the producer is a member

All are true regarding renewing a producer's license EXCEPT:

A producer may continue to sell for up to 12 months on an expired license

All are true regarding company producer appointments EXCEPT:

A producer may only hold an appointment with one insurer

Which of the following is correct regarding a producer's license?

A producer's license is perpetual, subject to payment of renewal fees and continuing education

The definition of "controlled" business does not include insurance written on:

A producer's parents or children

A person appointed by an insurer to solicit or sell insurance on their behalf in this state is known as a(n):

Agent

In authorizing an insurer to transact business in a state, the Commissioner/Director is:

Allowing that company to legally do business in this state

In which of the following situations is it not unfair to deny a claim?

An excluded claim

Which of the following is true regarding an unauthorized insurer?

An unauthorized insurer will be held liable for all policies sold in this state

All of the following are possible requirements for obtaining a producer's license EXCEPT:

Attaining age 21

All of the following entities fall under the Insurance Commissioner's jurisdiction EXCEPT:

Auto loan companies

Which of the following statements is correct concerning the Commissioner's authority to revoke a license?

Cannot do so without a hearing and order

No insurer shall transact insurance in this state without a:

Certificate of Authority

Rebating is considered to be a:

Class B Misdemeanor

Clark's credit union refused his application for an auto loan unless he agreed to purchase credit life insurance from them. This is an example of:

Coercion

Forcing a client to buy insurance from a particular producer as a condition to a loan is defined as:

Coercion

Refusing to make a loan unless the customer also buys insurance from the lender is an unfair trade practice known as:

Coercion

When a lender requires an applicant for a loan to buy insurance from them as a condition to loan approval, it is an unfair trade practice known as:

Coercion

All of the following are considered to be misuses of fiduciary funds EXCEPT:

Collecting interest on customer balances held in a producer's trust account

Which of the following is not considered an unfair method of competition?

Commingling

A producer who procures a license for the principal purpose of obtaining insurance for herself, her family members or employees is violating the regulations concerning:

Controlled business

A producer who procures a license for the principal purpose of obtaining insurance for herself, relatives or employees is violating the regulation prohibiting:

Controlled business

An agent who procures a license for the principal purpose of obtaining insurance for themselves, for family members or employees, violates the regulations prohibiting:

Controlled business

Making false or malicious statements about an insurer or producer is what type of unfair trade practice?

Defamation

Making false or malicious statements about persons engaged in the business of insurance that are designed to injure their reputation is an unlawful practice known as:

Defamation

Making false or malicious statements about the financial condition of an insurer or agent is what type of Unfair Trade Practice?

Defamation

All could be considered rebates EXCEPT:

Dividends

The main duty of the Insurance Director/Commissioner is to:

Enforce insurance laws

All of the following are true about the insurance continuing education (CE) requirements in this state EXCEPT:

Excess hours may never be carried over

Which of the following would most likely be the first penalty for acting as an "unauthorized entity"?

Fines

All of the following are correct regarding misrepresentation EXCEPT:

Fines for misrepresentation are the same across all states

Which of the following is unlawful?

Giving the insured a rebate

The Commissioner does all of the following EXCEPT:

Grants prior approval of auto insurance rates

Which of the following is a producer's fiduciary duty?

Handling premiums

To obtain a producer's license as a nonresident, you must:

Have a similar license in your home state

If a producer or insurer is found to have violated an insurance law, the Commissioner may do all of the following EXCEPT:

Impose time in jail

As an insurance producer, you represent:

Insurers

All of the following are true regarding warranties and representations EXCEPT:

Insurers require insureds to make warranties on a life and health application

All of the following are true regarding the guarantee of future dividends EXCEPT:

It is considered to be rebating

All of the following are true regarding the principle of indemnity EXCEPT:

Life insurance policies follow this principle

Which of the following is not one of the duties of the Commissioner?

Making rates

Circulating deceptive sales material to the public is what type of Unfair Trade Practice?

Misleading advertising

A producer's false statement on an application regarding insurance is:

Misrepresentation

Falsifying an application for insurance is:

Misrepresentation

An example of defamation, which is an unfair trade practice, is:

Misstating the financial condition of an insurer or producer

Which type of insurer may pay dividends to policyholders?

Mutual

Which of the following statements is true concerning clerical and administration personnel who do not solicit or get commission?

Need not be licensed

All of the following would be prohibited EXCEPT:

Offering a client a multi-policy discount

Which of the following would be considered rebating?

Offering a valuable consideration, other than that which is offered in the contract, as an inducement to purchase a policy

Which of the following would be considered to be a rebate?

Offering to give part of the commission to a customer as an inducement to buy

Which of the following correctly defines an "alien" insurer doing business in this state?

One formed under the laws of another country, but holding a Certificate of Authority in this state

Which properly describes an authorized insurer?

One that can legally conduct business in this state

When can a producer keep property or funds of a customer?

Only if state law allows it

Rates may be based upon all of the following factors EXCEPT:

Past lawful travel experiences

Under Unfair Claims Practices regulations, when denying a claim an insurer must do all of the following EXCEPT:

Pay a claim that occurs after the grace period has ended

To renew your producer's license, you must:

Pay your fees and complete the required CE hours

Which of the following is NOT considered an unfair practice?

Paying dividends to policyholders out of a surplus accumulated from participating policies

Which of the following is not a violation?

Paying premiums to insurer from trust account within the time period required by law

Of $10,000 in premiums producer Smith wrote over the past year, $3,000 came from sales to a business which employs Smith's spouse. This is:

Perfectly legal

The Director may deny, suspend or revoke a producer's license for all of the following reasons EXCEPT:

Placing customer or insurer funds in a Premium Fund Trust Account

You need a license to sell all of the following types of policies EXCEPT:

Prepaid legal

You need an insurance license to sell all EXCEPT:

Prepaid legal

When is an insurance producer using an assumed name required to file the name with the Insurance Commissioner?

Prior to use

Discrimination based upon physical handicap is:

Prohibited

All of the following are considered misrepresentation EXCEPT:

Projecting a dividend on a participating policy

Insurers must complete claims investigations:

Promptly

The purpose of insurance regulations is to:

Protect the insurance buying public

Which is not prohibited under unfair trade practice regulations?

Readjusting group premiums based on loss or expense experience

Giving a customer a stock option on the insurer's stock as inducement to buy is considered which one of the following unfair trade practices?

Rebating

Giving a customer an inducement to the sale that is not stated in the policy is an unlawful practice known as:

Rebating

Which of the following would constitute unfair discrimination?

Refusing to make available coverage for persons of the same class

Which of the following would not be considered an unfair claims settlement practice?

Refusing to pay a claim after conducting a proper investigation

Under Unfair Claims Practices regulations, all would be considered violations EXCEPT:

Requiring claimants to submit proof of loss

Which of the following is not one of the duties of the Insurance Commissioner?

Requiring insurers to maintain adequate staffing levels

Which of the following would be prohibited?

Selling insurance for an unauthorized company

Which of the following is not considered controlled business?

Selling insurance to your friends and neighbors

The producer cannot ask about which of these on the application?

Sexual orientation

Which type of government is primarily concerned with regulating insurance?

State

The type of government primarily concerned with the regulation of insurance and insurance companies is:

State government

All of the following are true regarding claims EXCEPT:

The insurer may require the insured to submit to a polygraph test

Which of the following inducements to the sale of insurance is permitted:

The payment of a bonus out of surplus to the policyholders of a participating policy

Which of the following accurately describes the ability of a licensed resident producer to become licensed in other states?

The producer can get a nonresident license in all reciprocal states

All are true about "foreign" insurance companies doing business in this state EXCEPT:

They do not need a Certificate of Authority in this state

An insurer with their home office in another state may do business in this state if:

They obtain a Certificate of Authority in this state

Unfair claims practices will be assumed to be intentional if:

They occur with such frequency as to indicate a general business practice

Which of the following factors would be allowed in setting premiums for insurance?

Tobacco usage

You must be licensed to sell all of the following EXCEPT:

Travel accident

The Commissioner may examine (audit) an authorized insurer:

Whenever necessary

Which of the following persons would be required to hold a producer's license:

Which of the following persons would be required to hold a producer's license:

You represent a large insurer who does business in all 50 states. All of the following are true EXCEPT:

You must obtain a producer's license in all 50 states