NY Health and Accident
Temp Adjuster license is good for how long?
120 days
Initial fine amount for several offenses within 6 months?
2,500
Suits must be brought within?
24 months after the loss
Leland has two insurance policies covering his home. Indemnify Insurance carries a $120,000 limit of liability on the home, while Binders Keepers, Inc. carries a limit of $80,000. A fire breaks out in Leland's kitchen and causes $40,000 in damage. Remember, when there are two or more policies covering the same risk, the "other insurance clause", determines the method used to calculate each company's share of the claim. Leland's policy states that the pro-rata share method will be used. Which of the following is the correct amount that will be paid by Indemnify Insurance?
24,000- Using the pro-rata share method, where we divide Indemnify Insurance's share of the loss by the total limit of both policies, multiplied by the loss, leaves Indemnify paying 60% of the loss. 60% of the $40,000 loss, is $24,000.
Charlene states on an application for personal automobile insurance, that she has not been involved in any "at-fault" accidents within the past five years. The next day, Charlene later remembers an accident and corrects this statement to include an accident that occurred three years ago. Charlene's original statement can be described as:
A representation
Which of the following terms describes a statement that is guaranteed to be the truth throughout the duration of the policy?
A warranty
Which of the following is NOT one of the three types of hazards?
Accidental Hazard
When can a superintendent revoke a license?
After a hearing is held that allows the licensee to defend themselves
Which of the following people is committing "hard fraud"?
Ally wants her insurer to buy her a new truck, so she pushes her current truck off a cliff and files an auto accident claim
All of the following are part of the "entire contract", EXCEPT:
An agreement made between the insured and the agent stated verbally, that the agent will personally service the insured's policy, and it will not be delegated to a staff member is part of the entire contract.
When an insurer takes no action upon realizing material changes in a contract, this is called:
An implied waiver
In most states, which of the following most accurately describes an "admitted insurer"?
An insurer that can transact insurance in the state under a certificate of authority.
Risk is best defined as:
An uncertainty of loss.
Superintendent of NY is (elected/appointed/nominated)?
Appointed by the governor with state senate consent
The nonrenewal of an insurance policy occurs:
At the end of the policy period
The Gramm-Leach-Bliley Act (GLB Act)- which is a federal law), also known as the:
Financial Modernization Act of 1999
"Ambiguous language" in an insurance policy means language that is all of the following, EXCEPT:
Fortuitous to the insured
An insured has intentionally deceived his insurer in order to a higher settlement amount on a claim. Such an act is known as:
Fraud
Before an insured can bring a lawsuit against their insurer to provide coverage under their policy, the insured must:
Fulfill all of their required duties as outlined in the policy. The "Legal Action Against Insurer" provision in most standard policies requires that the insured complete their required duties before they can bring a lawsuit against the insurer. The insured's required duties are different depending on whether the policy is a property or casualty policy and the type of coverage provided.
Bond requirements
Must be for $1,000 for a 2 year period Bond form must be approved by Attny General Must be purchased by a surety that is approved by the superintendent Must include the faithful performance of any sub-licensees
Which of the following organizations creates and maintains model laws that establish standards for how insurance is offered and delivered in the United States?
NAIC
The agreement between the parties to an insurance contract is known as:
Offer and acceptance
Which of the following is NOT a responsibility of the Insurance Commissioner in any given state?
Setting insurance rates
A risk where both profit and loss are possible is a ____________ risk.
Speculative
Regulation of the insurance industry in the United States is primarily left to:
State governments
An insurance contract is considered to be an aleatory contract. All of the following are characteristics of an aleatory contract, EXCEPT:
The contract allows the insured to receive a return in claims payments that is nearly equal to the amount paid in premium..
If a superintendent resigns immediately, how is the vacancy filled?
The governor will designate a deputy sup until a replacement is found by the governor and approved by senate
The first party to an insurance contract is:
The insured
All of the following are characteristics of an insurable risk, EXCEPT:
The loss must be catastrophic in nature..
Which of the following is most likely to be uninsurable?
The purchaser of a new home wants to protect herself from a possible drop in housing prices.
Dynamic Risk
The risk that arises from the continual change in the business environment and therefore dynamic risk cannot be transferred to an insurer.
Defined violation
a violation of insurance laws and/or unfair practices
The Gramm-Leach-Bliley Act (GLB Act)/Financial Modernization Act of 1999's purpose is to
govern the handling of consumers private info (must provide privacy notices and explain how info is handled and shared)
If the 5 reputable citizens don't answer truthfully and read thoroughly, they can be:
penalized for perjury
When can an exam be waived?
-License renewal -A person who was actively engaged in IA activities for at least 5 yrs before being sent off on active duty and it must be applied for within 1 year of return -License has been terminated/expired for less than 2 years
Acceptance or denial of a claim must be made within:
30 days
Address changes must be reported within
30 days
How long is given to accept or deny a claim after a properly executed PoL is received?
30 working days
A document that temporarily obligates an insurance company to provide coverage while the issuance of a policy is pending is known as:
A binder
Which of the following is a "general summary" of a policy?
A certificate of insurance
Which of the following phrases best describes a "hazard?"
A condition that increases the chances of a loss
The Insurance Commissioner/Director/Superintendent of a given state would refer to an insurance company formed under the laws of a different state as:
A foreign insurer
Any intentional misinformation provided by an applicant for an insurance policy that would have kept the insurance company from issuing the policy had that information been known is:
A material misrepresentation
Margaret is a co-owner of a business. She purchases an insurance policy to cover the property of the business and lists Charlie, the other co-owner, on the policy. There are others covered by the policy that are referred to as employees. For the purposes of this policy, Charlie is considered to be:
A named insured
Which of the following statements best describes the term "fiduciary".
A person who is entrusted with the assets of another
All of the following statements are TRUE regarding a proof of loss statement, EXCEPT:
A proof of loss is also known as a loss notice
Which of the following best demonstrates a morale hazard?
A recent purchaser of auto insurance drives less carefully, knowing that the insurer will cover any losses that occur
Which of the following statements best describes "the law of agency"?
A relationship in which someone is authorized by contract to represent another party
If an ins company shares non-public info about a CONSUMER they must provide 4 things:
An opt-out option A reasonable opt-out method A reasonable opt-out time Annual notice NOTE: THESE THINGS MUST BE PROVIDED TO A CUSTOMER WHETHER THE INS COMPANY IS SHARING INFO OR NOT
Adverse selection occurs when:
Applicants are accepted by the insurer with little or no attention given to underwriting.
Which of the following is the BEST explanation as to the reason insurance policies are called "unilateral contracts"?
Because the insurance company is the only party to the contract that can be sued if they do not meet the terms..
Chris is insured through Binders Keepers Insurance Company and his policy period ends in 12 months. However, Chris has decided that he wants to cancel his policy in order to purchase another one from a company that advertises with cute commercials on television. Chris calls his agent to cancel the policy and is informed that the unearned premium (UEP) on the cancelled policy will be returned to him by mail in a couple of weeks. When Chris receives the check, he is surprised to find that it's made out for less than the amount of unearned premium he should have received. What is the most likely reason for this?
Chris' policy had a provision stating that UEP must be returned on a short-rate basis- Many policies require that UEP be returned on a short-rate basis if the insured cancels the policy mid-term. This allows the insurer to keep a greater percentage of the UEP, than if the insured cancelled after the policy period or if the UEP was returned on a pro-rata basis.
An applicant fails to disclose known facts when completing an application for insurance. This act is known as:
Concealment
If the "other insurance" clause in a policy specifies that more than one policy will share equally in the loss until the lowest policy limit is exhausted and continue in that fashion until all policy limits are exhausted. This is known as:
Contribution by equal shares
Not a duty of the NY superintendent?
Creating insurance laws
Customer vs consumer under GLB Act
Customer has ongoing business with a company such as auto ins paid monthly. Consumer has a one-time transaction with company such as travel insurance for one trip or the beneficiary paid from a life insurance policy
An insurance contract must comply with the "Principle of Indemnity". Jarron's friend Nick, accidentally destroys Jarron's laptop computer. Nick pays Jarron for the damage, but Jarron also submits a claim to his insurance company for the laptop. The claim will be:
Denied because Jarron has already been paid for the damage.
Willie's Widgets has been earning a large portion of their market share for 10 years. During Willie's 11th year in business, Wynonna's Widgets opens and her superior marketing practices leaves Willie unable to continue in business. Which of the following types of risk caused Willie's loss?
Dynamic risk
Which of the following is used to bring a standardized insurance form into compliance with state laws?
Endorsements
Daniel has paid a premium to an insurance company for a Homeowners policy, and the policy was issued. Later, a fire occurred, and Daniel's home suffered damage. In this situation, both Daniel and his insurance company are required to perform certain duties because an insurance policy is a(n) ______ contract.
Executory
Insurance law recognizes two types of waivers. They are:
Express / Implied
A church has had the woodwork in the building refinished and new stain and varnish has been applied. The workers placed the rags and brushes that were used to apply the varnish in a small closet and closed the door, creating the possibility of spontaneous combustion. Which of the following terms best describes this condition?
Hazard
Rick has three insurance policies covering his small commercial building for $700,000. Insurer 1: Carries $400,000 of the coverage. Insurer 2: Carries $200,000 of the coverage. Insurer 3: Carries $100,000 of the coverage. According to the provisions of the policies, the loss will be settled using the contribution by equal shares method. When Rick's building suffers a $500,000 covered loss, which of the following statements is correct on the amount each insurer will pay?
Insurers 1 and 2 will each pay $200,000 and Insurer 3 will pay $100,000- all insurers pay an equal amount until the loss is paid or one of the policy limits is exhausted. Because Insurer 3 has the lowest policy limit of $100,000, all three insurers will each pay equal shares of $100,000. This takes care of $300,000 of the $500,000 loss and exhausts the policy limit of Insurer 3. This leaves Insurers 1 & 2 left to pay $200,000.
It has been reported to the Insurance Department in a given state that Callie, a licensee in that state, has violated an insurance law. The Insurance Commissioner will hold a hearing to determine the nature of Callie's behavior. After the hearing, the Commissioner is convinced that Callie has engaged in behavior that violates insurance law. Which of the following is the next step the Commissioner will take?
Issuing a cease and desist order; The first step the Commissioner in any state would take is to issue a cease and desist order. This prevents the offender from engaging in the behavior until the Department can determine all the facts of the case, including whether or not members of the public were damaged financially by the offenses committed.
Which of the following best describes the purpose of the "insuring agreement(s)" contained in an insurance policy?
It contains the insurer's promise to pay in case of a loss
The state sent a letter on 1/2 with intent to not renew a license. When will licensee no longer be licensed?
January 7th
Milton agrees to steal and wreck Albert's car for $4,000, so that Albert can collect $8,000 under his auto insurance policy. Which of the elements of a valid contract are missing in this agreement?
Legal purpose
Which of the following describes a "peril"?
Lightning that strikes a house and destroys electronic equipment inside.
Static Risk
Losses that have historical factors and don't tend to change. Static risks are pure risks.
For a misrepresentation to void an insurance policy, it must be:
Material
Not true about the NY Superintendent?
May advise the state legislature on writing and passing laws affecting the insurance and financial services industry in the state
Which of the following is NOT a common risk management technique?
Multiply the risk by engaging in hazardous activities.
Pro-rata vs contribution by equal shares
Pro-rata is based on what percentage of the risk the company covers (example: ins 1 has 100,000 and ins 2 has 50,000 and ins 3 has 25,000 so ins 1 is 60% of the value and pays that and 2 has 30% and 3 has 10%) and contribution by equal shares is when each ins pays equal portions up to exhaustion of policy limits
When the insurer pays the proportion that its policy limit bears to the limits of all policies, this is known as:
Pro-rata share
Horatio is a business owner who is part of a business owners group that are buying old commercial buildings in their small city and refurbishing them. Horatio has bought a beautiful historical building made mostly of wood. He installs a sprinkler system right away to prevent a fire. What risk management strategy is Horatio using?
Risk reduction
Meg has been in very good health in the past 3 years. She has been exercising, her blood pressure is at a perfect level and her cholesterol is the envy of all her friends. Because Meg is feeling so healthy, she decides to cancel her health insurance policy. This is an example of which of the following risk management methods?
Risk retention.
Surplus lines insurers must pay a premium tax. ________________ sets the amount of the premium tax.
State law
The "liberalization clause" of an insurance policy:
States that if an insurer decides to broaden its standard policy coverages, then all outstanding policies issued prior to that decision will automatically receive those new coverages at no additional premium.
A 100-year flood is an example of which of the following types of risk?
Static risk
Using a name other than legal name?
Superintendent must approve the assumed name
Which of the following types of insurance companies must charge a premium tax to be remitted to the state each time a policy is sold?
Surplus Lines company
The doctrine that states an insured's policy should provide the coverage that an average prudent person would expect is:
The "Reasonable Expectation" doctrine
Which of the following sections of an insurance policy contains language to assist an insurance company in managing moral and morale hazards?
The Exclusions by excluding losses cause by "intentional acts" and "breach of duty", among others, from coverage.
The most widely used property and casualty insurance forms used in the United States today are published by:
The Insurance Services Office, Inc. (ISO)..
Which of the following is the PRIMARY source of information used by insurance companies during the underwriting process?
The application for insurance
Which of the following statements is NOT true concerning the Law of Large numbers?
The size of the sample group is not relevant to the accuracy of the results
The purpose of licensing surplus lines brokers in a given state is:
To allow them to place business with nonadmitted insurers; Nonadmitted insurers are known as "surplus" or "excess" lines companies. An agent must hold a surplus lines brokers license to transact business with a nonadmitted insurer and only then if the line of insurance is not readily available within the state from admitted insurers.
What is the purpose of an Insurance Guaranty Association?
To pay covered claims of admitted insolvent insurers..
What is the main purpose of government regulation of the insurance industry?
To protect the insurance consuming public
CISO (chief information security officer)
Typically the job title of the person with overall responsibility for information assurance and systems security. Sometimes referred to as Chief Information Officer (CIO).
All of the following statements are true regarding Public Law 15 (The McCarren-Ferguson Act), EXCEPT:
Under the law, the federal government retains the right to approve insurance form ; federal government does not approve insurance forms, this is left to the state insurance departments
Libby completed an application for a new residential policy to cover her home, stating that she does not use the dwelling for business purposes. However, Libby has been conducting business operations from the home and has hired several employees who work out of the home. She also has several clients per day coming to the home for business purposes. When Libby's insurer finds out about the additional business exposures, they decide to take action. Which of the following actions is Libby's insurer most likely going to take?
Void her policy to inception
Which of the following most accurately describes reinsurance?
When an insurance company buys insurance for some of the risks for which it has issued coverage.
When can an insured assign his or her insurance policy over to another party?
When the insurer provides written consent
Pure Risk
a risk that presents the chance of loss but no opportunity for gain
Speculative Risk
a situation in which either profit or loss is possible
Fundamental Risk
affects large segments of society -examples: widespread unemployment, nuclear accident, viruses, inflation, war, flood
NY Privacy regulation 169 requires privacy notices to customers how often?
annually, during the course of the relationship
Discrimination is prohibited except on the basis of
religious affiliation
Particular Risk
risk that affects particular individuals (robbery, vandalism)
