CH. 15 Exam State Laws
XYZ Insurance Company intends to nonrenew a commercial automobile policy. The reason for nonrenewal IS NOT nonpayment of premium. How much notice must XYZ provide?
30 days If the nonrenewal is for a reason other than nonpayment, at least 30 days' notice is required.
If an insurer decides to nonrenew an auto policy, how much notice must they give to the insured?
30 days The insurer must give the insured at least 30 days' notice in advance of the nonrenewal.
Which of these persons must be licensed as a producer?
A telemarketer selling personal policies Since the telemarketer is selling policies, they are required to be licensed.
Any written statement that is false or maliciously critical regarding an insurer's financial condition to injure the insurer or any person engaged in the insurance business is known as:
Defamation Any written statement that is false or maliciously critical regarding an insurer's financial condition to injure the insurer or any person engaged in the insurance business is known as defamation.
What is the correct term for a rate that threatens an insurer's solvency?
Inadequate A rate is considered inadequate if it either threatens the solvency of the insurance company, or is insufficient to cover projected losses and expenses.
Which of the following IS NOT one of the classes of insurance in Mississippi?
Mutual Classes of insurance in Mississippi include: Fire and Casualty, Life (includes Accident and Health), Fraternal, and Burial. ("Mutual" is a type of insurer, not a class of insurance.)
A nonresident producer license is automatically revoked if:
The producer's resident license for that line of insurance is terminated in their home state A nonresident producer's license will be terminated automatically when their resident license for that class of insurance is terminated in their home state.
Temporary licenses are meant to be issued in any of the following circumstances, EXCEPT:
When a producer is awaiting reinstatement Active military service, mental/physical disability, and death are all circumstances in which the Commissioner may issue a temporary license. Such licenses are issued to allow someone to conduct business on behalf of the producer, such as a spouse, employee, or personal representative.
Anyone who willfully violates a cease and desist order issued by the Commissioner of Insurance will be subject to a fine of up to $______ for each violation.
$1,000 Anyone who willfully violates a cease and desist order will be subject to a fine of up to $1,000 for each violation.
An insurer cancelling a Mississippi commercial auto policy for underwriting reasons must give at least _______ .
30 days' notice A notice of cancellation of a policy will not be effective unless mailed or delivered by the insurer to the named insured and any named creditor at least 30 days prior to the effective date of cancellation.
Which of the following people would need to be licensed as an adjuster?
A contractor who adjusts only property insurance claims A person who is employed or contracted to adjust losses must be licensed as an adjuster.
Which of the following factors is a property insurance company permitted to consider when setting rates?
Age and/or gender Rates cannot be based on race, color, creed, religion, or national origin, but age and sex/gender may be considered when setting auto insurance rates.
An insurer based in a country outside of the United States is referred to as a(n) ______ insurer.
Alien The term 'alien' is used for insurers based in countries other than the United States.
The Commissioner can only issue a Mississippi nonresident license to a person who:
Already has a valid resident license in their home state To be issued a nonresident license, the applicant must be currently licensed as a resident in good standing in their home state.
Under what circumstances may a producer appointment be terminated?
An insurer can terminate a producer's appointment at any time An insurance producer's appointment can be terminated at any time by the insurance company. An insurer that terminates a producer's appointment, employment, or contract must notify the Commissioner within 30 days following the effective date of the termination.
The Commissioner may issue which of the following to a person who is in violation of an insurance law?
An order The Commissioner may issue a cease and desist order to anyone who is in violation of an insurance law.
The BEST definition of an "illegal inducement" is:
Anything of value that is not specified in the policy The key part of the definition is that the valuable consideration is not written into the policy. Any valuable consideration must be specified in the policy. For example, it's perfectly legal to offer a discount as long as the discount is stated in the policy.
The legal form that permits an insurer to transact insurance business in Mississippi is called a Certificate of:
Authority A Certificate of Authority permits an insurer to transact insurance business in this state.
Which of the following is an Uninsured Motorists coverage part?
Bodily Injury Underinsured Motorists coverage provides damages for bodily injury and property damage.
How does the Guaranty Association protect against insolvency?
By providing payment of claims against an insolvent insurer The Guaranty Association exists to provide payment of claims against an insolvent insurer.
Which of the following statements about Mississippi separate account requirements is FALSE?
Claims must be paid out of the same account into which premiums are deposited All premiums collected for an insurer, and any return of premiums received from that insurer, must be held in a fiduciary capacity. Claims cannot be paid from the fiduciary account in which premiums or charges are deposited.
Producers who hold a Mississippi nonresident producer license must always do which of the following in order to fulfill CE requirements?
Complete the CE hours required by their home state Nonresident licensees who fulfill continuing education requirements in their home state are NOT required to also complete additional CE hours for Mississippi, as long as the home state has a reciprocal policy. A producer must always fulfill the CE requirements of their resident (home state) license.
________ business occurs when during any 24-month period more than 35% of a producer's total commissions is acquired from policies sold to family, relatives, employers, employees or business associates.
Controlled Controlled business occurs when during any 24-month period more than 35% of a producer's total commissions is acquired from policies sold to family, relatives, employers, employees or business associates.
Mississippi's valued policy law applies to which peril?
Fire The valued policy law applies to insured buildings or structures in Mississippi that are totally destroyed by fire. Valued policy law, the full face amount must be paid for a total loss, even if it exceeds the property's true value.
Which statement about premium collection regulations in Mississippi is FALSE?
Premium payment checks can only be made out to licensed insurance producers State law requires that premium checks must be made payable to the company, never to a producer.
What is the minimum limit of property damage that must be carried on a Mississippi personal auto policy?
$25,000 Mississippi law requires a personal auto policy to carry a property damage limit of at least $25,000.
What is the maximum dollar amount that the Mississippi Insurance Guaranty Association will ever payout per claimant for covered claims other than for Workers' Compensation?
$300,000 The Mississippi Insurance Guaranty Association will not pay out an amount exceeding $300,000 per claimant for covered claims other than for Workers' Compensation.
If single-limit nonstacking Uninsured Motorist coverage is applied to a policy covering 4 vehicles, the single UM limit must be at least:
Equal to the minimum liability limits multiplied by 4 An insured in an automobile policy covering 4 or more vehicles may purchase, and an insurer may offer, single-limit, nonstacking uninsured motorist coverage covering all vehicles listed in the policy for a single amount. The single uninsured motorist coverage limit must be at least equal to the minimum liability limits required by law, for 4 vehicles combined.
The Mississippi State Rating Bureau is made up of:
Fire insurance companies admitted to do business in Mississippi All fire insurance companies organized or admitted to do business in the state of Mississippi must become a member of the Rating Bureau
All of the following are steps in the appointment process and must occur before a producer can represent an insurer, EXCEPT:
Insurer provides a commission schedule for the Commissioner's approval The insurer is not required to provide a commission schedule to the Commissioner.
Which of the following statements about UM/UIM coverage in Mississippi is CORRECT?
Insurers are required to offer this coverage on every auto policy All policies issued in this state are required to offer UM/UIM coverage, but the insured can reject the coverage in writing.
Failing to complete CE requirements results in:
License lapse or suspension A producer license remains in effect unless revoked or suspended as long as renewal fees are paid and education requirements are met by the renewal due date every 2 years.
If an insolvent insurer cannot be rehabilitated, the insurer may be subject to:
Liquidation When further attempts to rehabilitate an insurer would substantially increase the risk of loss to creditors, policyholders, or the public, the Commissioner may petition the court for an order of liquidation.
Deceptive advertising is a form of:
Misrepresentation
What is the definition of "controlled business"?
Policies sold to persons with whom the producer has an insurable interest Controlled business refers to insurance policies sold and issued to a producer, agent, or solicitor, or to their relatives, business associates, employers or employees, or to other persons with whom insurable interest exists.
An agent licensed in another state who moves to Mississippi and applies for licensing in the same line may be excused from:
Prelicensing education Such a person may be excused from prelicensing education and examination requirements, as long as the Mississippi application is received within 90 days of the previous license's cancellation, and the previous license was in good standing.
Every insurer authorized to write _______ insurance on a direct basis in Mississippi is required to be assessed by the Windstorm Underwriting Association as a condition of its continued authority to transact insurance in this state.
Property Every insurer authorized to write property insurance on a direct basis in Mississippi is required to be assessed by the Windstorm Underwriting Association as a condition of its continued authority to transact insurance in this state.
A person whose license application or renewal application has been denied may:
Request a hearing If the Commissioner refuses to issue or renew a license, the applicant must be notified in writing of the reason for denial. The applicant has 10 days to request a hearing to determine the reasonableness of the Commissioner's action. That hearing must be held within 30 days of its request.
When the Commissioner receives notice of a fraudulent claim, what is the FIRST action the Commissioner is authorized to take regarding the producer?
Require the producer to disclose information, such as in a hearing Upon notice of a fraudulent claim, the Commissioner is authorized to require the producer to disclose additional information for an investigation
The Mississippi State Rating Bureau provides professional services to assist the Commissioner in:
The classification of fire insurance risks and setting rates The Mississippi State Rating Bureau provides professional services to assist the Commissioner in the classification of fire insurance risks and setting rates.
Uninsured motorist coverage must be included in every Mississippi auto policy, UNLESS:
The insured declines the coverage, in writing Every policy issued in this state is required to offer UM/UIM coverage by default. However, consumers are not required to carry UM/UIM coverage, and so can reject the coverage in writing.
Uninsured Motorist coverage would cover any of the following, EXCEPT:
The insured's liability UM/UIM coverage pays the insured damages for property damage and bodily injury (including death) caused by the operator of an uninsured or underinsured motor vehicle.
A producer who fails to renew their license will not have to retake the examination, IF:
They reinstate the same license within 1 year of the missed renewal due date An individual insurance producer who allows their license to lapse may, within 1 year (12 months) from the due date of the renewal fee, reinstate the same license without the necessity of passing a written examination.
A rate is considered inadequate if it:
Threatens insurer solvency A rate is considered inadequate if it is insufficient to cover projected losses and expenses and threatens the solvency of the insurance company.
Which one of the following is NOT a stated purpose of the Mississippi Insurance Guaranty Association?
To fund the Mississippi Insurance Department Insurance departments are state agencies funded by the state. All the other options are stated purposes of the Guaranty Association.
If a Mississippi insured is required to file proof of financial responsibility, where do they submit this proof?
To the Department of Public Safety When required, proof of financial responsibility is filed with the Department of Public Safety.
Making an unfair comparison of two policies in order to induce a policyholder to lapse, forfeit, or surrender a policy and purchase a new one is an example of:
Twisting Any misrepresentation specifically designed to induce a policyholder to lapse, forfeit, or surrender a policy is known as twisting.
No automobile liability insurance policy or contract may be issued or delivered in Mississippi without _________ motorist coverage unless the insured rejects such coverage in writing.
Uninsured No automobile liability insurance policy or contract may be issued or delivered in Mississippi without uninsured motorist coverage unless the insured rejects such coverage in writing.
If a license applicant who has been denied license issue or renewal requests a hearing, how soon must the hearing take place?
Within 30 days of the applicant's request for a hearing
The Commissioner of Insurance has the responsibility and authority for all of the following, EXCEPT:
Writing and passing insurance laws The Commissioner can recommend any changes in insurance laws to the Governor, but the Commissioner does not have the power to make or pass legislation.