II. Policy Provisions
Auto Financial Responsibility may be achieved by
acquiring adequate Liability Insurance, depositing cash of $85,000 with the State Treasurer or posting a $85,000 Surety Bond.
It is legal to
advertise honest differences in insurance contracts.
It is not unfair to deny a claim that occurred
after coverage terminated.
Rates may vary based upon
age of the applicant.
Misrepresenting facts or policy provisions is an example of
an Unfair Claim Practice.
An individual appointed by an insurer to solicit insurance on their behalf is known as
an agent.
If a license has been expired for one year or more,
an applicant must retake the state exam.
Refusing to pay claims without conducting a reasonable investigation is
an example of an Unfair Claim Practice.
The Commissioner may audit/examine a company's books
as often as necessary.
Non-renewal is
at the normal end of your policy period.
It is a violation of the Unfair Claims Practice Act for an insurer to
attempt to make a claims settlement on the basis of an application that has been altered.
Insurers may deny
"unsubstantiated" claims.
An insured has an automobile policy with limits of 100/300/50. Two persons are struck by the insured's auto and are awarded $15,000 and $90,000 respectively. How much will the insured's automobile policy pay?
$105,000 plus defense costs.
In Texas, the minimum liability limit for an automobile property damage loss as a result of the insured's negligence in an automobile accident is
$25,000.
A PAP may be canceled for certain specified reasons with
10 days' advance written notice to the named insured, along with a pro rata refund.
An insurer must acknowledge receipt of a notice of claim within
10 days.
Insurers must acknowledge receipt of a Notice of Claim within
10 days.
Property insurance companies may cancel or non-renew for poor maintenance as long as they give the insured at least
30 days to remedy the problem.
If a Fire or Homeowners policy is canceled or non-renewed, the company must give the insured
30 days' advance notice.
Property insurance companies may reduce coverage by adding policy limitations at renewal as long as they give the insured at least
30 days' advance notice.
A PAP may be non-renewed with
30 days' advance written notice to the named insured.
Binders must be replaced by an original policy within
30 days.
Insurance companies have a underwriting period of
60 days, during which they may cancel or reject an application for any valid reason.
Proof of loss on fire insurance must be submitted within
60 days.
Temporary licenses are available for up to
90 days without an exam.
Managing General Agent (MGA)
A person who exercises general supervision over the business of an insurance company, including hiring, training and firing agents in a particular territory.
Limited lines licenses are available to sell
AD&D, credit insurance, and funeral insurance.
An insured and insurer will use which of the following when they are unable to agree on the amount of a claim to be paid?
APPRAISAL
Continued Education Credits Requirement
Agents must earn 24 hours of continuing education credits every two years, including two hours of ethics.
Attachments that broaden or amend coverage in a property or casualty policy are known as?
ENDORSEMENTS
Limitations on personal property covered under a homeowners contract include all of the following items EXCEPT?
Furniture and clothing. (others answers are jewelry and furs, money and securities and firearms.)
Placing an insured in the same financial condition in which he existed before a loss occurred best describes?
INDEMITY
Terrorism Risk Insurance Program
Limited to acts of international terrorism occurring within the United States. Domestic terrorism is not covered. The program has an annual cap of $100 billion dollars.
Defamation
Making oral or written statements that are false or maliciously critical of the financial condition of an insurer or agent.
Which of the following statements is CORRECT regarding umbrella liability contracts?
Umbrella contracts provide additional limits with a combined blanket single limit over other existing liability coverages.
Insurance licenses are "conditional" upon
a FBI background check.
Business Day
a day other than a Saturday, Sunday, or holiday recognized by this state.
Liquidated demand
a fire insurance policy, in case of a total loss by fire of property insured, shall be held and considered to be a liquidated demand against the company for the full amount of such policy. This subsection does not apply to personal property.
Claim
a first party claim made by an insured or policyholder under an insurance policy or contract or by a beneficiary named in the policy or contract.
False advertising is
a form of misrepresentation.
Coercion is considered to be
a restraint of trade and is illegal.
On claims, the insurer cannot ask the insured to
pay for the cost of the claim investigation, but can require the insured to pay for the cost of providing proof of loss.
Giving part of your commission to a client as an inducement to a sale is
rebating.
Monies set aside by insurers to honor their future liabilities to their policy holders are known as
reserves.
It is not unlawful to
sell insurance out of state with a nonresident license.
Shareholders might receive dividends from a
stock insurance company.
The Do Not Call list contains
telephone numbers.
Auto Under Insured Motorist (UIM) coverage applies when
the "at-fault" party has liability insurance, but not enough to cover a third party's injuries.
Insurers must file samples of all the policies forms they intend to sell in this state with
the Commissioner to make sure they are fair and in the public interest.
Everyone transacting insurance comes under the jurisdiction of
the Insurance Code (law).
Hearings are held at
the Insurance Department, not in a court of law.
Applicants can still obtain a new license without exam if
the license has been expired for less than one year.
An endorsement is added to a Property and Casualty policy to change
the policy's provisions.
Privacy protection notices must be given out no later than
the time a new policy is delivered and annually thereafter.
An insurer may not appoint any person to act as their agent unless
they are licensed.
The Do Not Call list was created
to help prevent calls from telemarketers.
Rates cannot be
too high, too low, or unfairly discriminatory.
Licenses must be renewed every
two years.
The Commissioner is appointed by the Governor for
two years.
Surplus lines insurance is written by
unauthorized insurers, like Lloyds of London.
Surplus lines insurers are
unauthorized, non-admitted, and unregulated.
Insurance laws are not required to be
uniform from one state to another.
If an insurer find that an insured is guilty of material misrepresentation, they can
void or rescind coverage.
The express authority of an agent is
written into their agent's contract.
Even though you pass your exam,
you cannot sell insurance until your license is actually issued.
Telemarketing solicitations may only occur
between the hours of 8 am and 9 pm in the time zone where the customer is located.
After an auto policy has been in effect for 60 days, the company may not
cancel except for certain reasons such as driver's license suspension.
Regardless of the type of policy, insurers need only give 10 days' advance notice when
canceling for nonpayment of premium.
Fire policies may be canceled after 60 days in force only for
certain things, such as a substantial change in the risk assumed by the company since the policy was issued.
Forcing a client to buy insurance from a certain Agent as a condition to granting a loan is
coercion (Unfair Trade Practice).
On claims, insurers must
conduct a reasonable investigation prior to claim denial.
If an agent's contract is terminated by an insurer, his or her accounts
continue in force.
A homeowners insurance contract provides coverage for which of the following?
An insured's personal liability. (not medical expenses of an insured, mortgage disability payments and damage to property caused by an earthquake.)
Which of the following individuals would NOT be considered a family member covered by a personal auto policy?
Brother living out of state. (Is part of blood relation, foster child and resident member of the household.)
All the following are required elements of a legal contract EXCEPT?
COUNTERSIGNATURE (other answers are consideration, competent parties and agreement.)
Negligence has all of the following as essential elements EXCEPT?
CRIMINAL ACT (others answers are legal duty, proximate cause, and actual injury.)
Which of the following best describes the braid form, HO-2 policy?
It is a specified peril policy. (Not it is a all risk policy or it provides all risk coverage on real property.)
Surplus lines insurers write mostly
Property and Casualty, not Life and Health.
The definition of bodily injury includes all the following EXCEPT?
SLANDER (others answers are death, sickness and loss of income.)
In contract law, the mutual agreement of the parties is called
offer and acceptance.
The Commissioner is responsible for
determining if an insurance company is insolvent.
Insurance licenses expire
every two years, on the licensee's birthday.
Farm tractors are
exempt from the auto Financial Responsibility Law.
Insurable interest in Property and Casualty insurance must
exist at the time of loss.
The Commissioner must audit all authorized insurers no less frequently than once every
five years.
The Commissioner will suspend an agent's license if he does not
have at least one valid appointment.
Texas has an Automobile Insurance Plan for
high-risk drivers.
Notice of Claim on property insurance is required
immediately.
Texas Auto Insurance Plan
is the Assigned Risk Pool for auto insurance, where all authorized auto insurance companies take turns insuring high risk clients.
The availability or amount of coverage may not be denied or reduced based upon
marital status.
After a claim, an insured
may not "abandon" property to the insurer, without their consent.
Cancellation is
midterm.
Policyholders might receive dividends from a
mutual insurer.
On claims, attempting a compromise is
not an Unfair Claims Practice.
Notice required
not later than the 10th day after the date an initial offer to settle a claim against a named insured under a casualty insurance policy issued to the insured is made, the insurer shall notify the insured in writing of the offer. Not later than the 30th day after the date a claim against a named insured under a casualty insurance policy issued to the insured is settled, the insurer shall notify the insured in writing of the settlement.
Loss Settlement Provisions
not later than the 15th day or if eligible surplus lines, the 30th business day after notice of a claim. Insurer shall: Acknowledge receipt, commence investigation, request items, statements, forms reasonable from claimant. Must accept or reject claim not later than 15th business day after all items, statement, forms required to secure final proof of loss. Must notify need for additional time (no more than 45th day) if unable to accept or reject. Prompt payment of insurance claims, not later than 5th business day after date of notice. If eligible surplus lines, not later than 20th business day. If weather related catastrophe or major natural disaster deadline extended for an additional 15 days.
Auto Uninsured Motorist coverage is
not mandatory in the state of Texas.
Readjusting group premiums based on loss/expense experience is
not prohibited.
Ocean marine is
not regulated by state law.
Misrepresentation, fraud, concealment in connection with a new application or claim may have the effect
of "rescinding" or voiding the contract.
