Chapter 5

All of the following are true regarding rebates except

Rebates are allowed if it's in the best interest of the client.

An agent offers a client free tickets to a sporting event in exchange for the purchase of an insurance policy. What is the agent guilty of?

Rebating

When would a misrepresentation on an insurance application be considered fraud?

When it is intentional and material

When is controlled business legal?

When the commissions from controlled business do not exceed the aggregate commissions on all the other business (specific limits may vary from state to state)

When can the Commissioner or Director examine insurers?

Whenever deemed necessary, but at least once every few years (please check your state regulations for specific time requirement)

Which of the following statements regarding coverage for the flood and earthquake perils is true?

a)Flood and earthquake coverage is available only through the government. b) Flood insurance usually is provided in property policies. However, earthquake insurance is available by endorsement only. c) Both are excluded perils in all property policies. ***** d) Flood and earthquake coverage is available in all policies. Flood and earthquake are both excluded perils in all property policies. However, coverage for both or either one usually can be purchased separately for an additional premium (by endorsement).

Liability where proof of fault or negligence is not required is defined as

absolute

What type of licensee represents the insurance company?

agent

Which of the following would be covered under coverage c - personal property of a dwelling policy?

canoes

The requirement that agents must account for and promptly remit all insurance funds collected is known as what type of agent responsibility

Fiduciary

No insurance policy form can be issued, delivered, or used in this state unless it has been?

Filed with and approved by the Office of Insurance Regulation.

According to Florida state law, before demanding litigation, parties may demand mediation for all of the following except

Personal injury claims filed for $15,000 or more

An insured bought three policies from the same insurer. Her benefits have exceeded the maximum allowed by the insurer. Which of the following will happen?

Pro rata

Which of the following refers to the upper limit a liability policy will pay out for all claims that arise from a single accident?

Per occurrence

In which of the following cases is the doctor considered to be an employee of the HMO?

Closed panel

What type of insurance can be obtained through a surplus lines insurer?

Coverage that is unavailable through authorized insurers

Which of the following dwelling policies insures a structure on an actual cash value basis?

DP-1

What type of coverage do umbrella policies provide?

Excess coverage over the primary policy

For cancellation of a commercial property policy during the first 90 days, for a reason other than nonpayment of premium, the insurer must give the insured advance written notice of at least how many days?

20 days

All of the following actions can be described as twisting except

Explaining to client the advantages of permanent insurance over term and suggesting changing policies

Which of the following acts protects consumers against the distribution of incorrect and obsolete personal or financial information?

Fair Credit Reporting Act

Who is an insurance agent?

A person authorized to sell, solicit and negotiate insurance contracts

If an insured changes their name, the change may be reflected on the insurance policy by attaching what to the policy?

A signed endorsement

The Florida automobile joint underwriting association is a market source for persons unable to purchase auto insurance through the standard markets. All of the following statements concerning fajua are true, except

Agents do not have binding authority

Which of the following actions would be considered an offer?

An applicant submitting the application

Under Coverage C of an HO-3 policy, what is the amount of insurance provided for personal property?

At least 50% of the Coverage A limit

If an insurer holds a Certificate of Authority, it is known as what type of insurer?

Authorized or admitted

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?

Authorized or admitted

How are state Insurance Guaranty Associations funded?

By their members - authorized insurers

A state-issued document empowering an insurance company to become an admitted insurer is called what?

Certificate Authority

What document is required for an insurance company to transact insurance?

Certificate Authority

Which of the following must an insurer obtain in order to transact insurance within a given state

Certificate Authority

The agent in charge of an agency must hold which of the following licenses?

General lines

In general, who can be excluded from producer licensing and examination requirements?

Insurance company officers, directors, or any other employees who do not transact insurance and who do not receive commissions for their services (usually, their responsibilities include administrative, executive or clerical)

What is controlled business

Insurance on the producer's own life or property, or the lives or property of the producer's family or business associates

On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. What is the company guilty of?

Misrepresentation

What illegal act does a producer commit when the producer represents a policy in a more favorable light than the policy really is?

Misrepresentation

Who may share in the commission from the sale of an insurance policy?

Only producers properly licensed for the type of insurance transaction

An insured pays her major medical insurance annually on March 1 each year. Last March she forgot to mail her premium to the company. On March 19, she had an accident and broke her leg. Her insurance company said would

Pay claim

Which of the following is an example of a producer being involved in an unfair trade practice of rebating?

Telling a client that his first premium will be waived if he purchases the insurance policy today

In a personal auto policy, which of the following describes the liability coverage?

The

All of the following are characteristics of the dwelling policy except?

The dwelling must be owner-occupied.

A policy with a 31-day grace period implies

The policy remains in force without penalty for 31 days even though the premium due has not been paid.

In insurance, the term loss is defined as

The reduction, decrease, or disappearance of value of the person or property insured in a policy, by a peril insured against.

Which provision states that the insurance company must pay medical expense claims immediately?

Time of Payment of Claims

To whom may a certificate of authority be issued?

To an insurer authorized to transact business in this state

What is the purpose of a cease and desist order?

To prevent a producer or insurer from further violating laws for transacting insurance

Insurers are classified according to their domicile. What are the three types of insurers?

domestic, foreign, alien

Which of the following would be considered a peril?

fire

What type of insurer is formed under the laws of another state?

foreign

Which of the following entities is not an insurer but an organization formed to provide insurance benefits for members of an affiliated lodge or religious organization

fraternal benefit society

Which of the following damages is the most subjective when determining compensation?

general damages

Which of the following perils is excluded in all dwelling policy forms?

government action

An insured has purchased a used car. When does collision coverage for this car begin?

immediately

In a POS plan, benefits for covered services when self-referring are generally

more expensive

Which provision concerns the insureds duty to provide the insurer with reasonable notice in the event of a loss?

notice of claim

Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?

twisting