Property & Casualty IL Law, IL Casualty Insurance Practice Test Questions, Casualty Producer IL Exam Questions, Property And Casualty Illinois Law, Property/Casualty Il laws & Regulations
Premium Finance Companies
Allows consumers to pay premiums to a producer in installments. • Generally requires a license if more 10% of premiums aren't paid by consumers within 90 days of being due. • Fees are set by law.
Limited Lines Producers
Allows someone to sell a limited list of insurance products that represent a narrow portion of the market (car rental insurance, credit life insurance, etc.). • Requires "appointment" by an insurer.
Who Doesn't Need a License?
An attorney giving legal advice about insurance laws or an insurance contract. • An accountant giving insurance-related advice as part of his or her job duties. • A public adjuster giving insurance-related opinions or advice as part of his or her job duties. • Officers, directors or employees of insurance businesses who don't receive any type of sales commission and whose jobs are managerial, executive, administrative or clerical in nature and aren't related directly to sales. • Certain people who have insurance-specific careers but don't receive any type of sales compensation (such as insurance employees who evaluate insurance applications, investigate claims or process insurance-related paperwork). • Group benefit administrators who aren't compensated by an insurance business. • Salaried, full-time risk managers who neither sell insurance nor receive insurance-related compensation.
Employers non-ownership liability coverage covers which of the following?
An employers liability caused by an employee driving his or her personal car on company business.
All of the following are automatically covered under an auto liability policy except?
Anyone other than a resident member of the named insured's household using the insured auto without an insured's permission.
Illinois Fair Plan
Available to homeowners and businesses when property insurance has been denied by at least 3 insurers. • Information must be provided to consumers upon cancellation or non-renewal. • All property insurers must participate and help operate it as a non-profit entity.
Which of the following describes insurable interest and indemnity?
Being in the position where you can stand to lose money should damage occur.
Uninsured Motorist Coverage in Illinois
By default, will be offered in amounts equal to the policyholder's liability coverage. • Policyholder must have minimum of $25k for bodily injury to one person and $50k for bodily injury per accident. • Policyholder must be offered property damage coverage but can decline. • If consumer buys uninsured motorist coverage beyond state minimum, underinsured motorist coverage must be included at same amount.
Auto Liability Insurance Minimums in Illinois
$25k for injury to one person. • $50k for injury per accident (regardless of how many people). • $20k for property damage per accident.
Misrepresentations and Fair Market Conduct
Can't misrepresent the type or benefits of an insurance product. • Can't disparage competition to make a sale. • Can't act as if products are affiliated with the state or federal government. • Can't engage in boycott or intimidation to force a sale. • Misrepresentation can result in fines of $200 to $10,000 per occurrence.
Collision or upset coverage covers which of the following?
Damage caused by collision with a fixed object.
Physical damage coverage covers which of the following autos?
Damage to a non-owned auto driven by an insured.
Products and completed operations (products liability) coverage excludes which of the following?
Damage to the product itself.
Physical damage coverage covers a newly acquired or replacement auto if reported within how many days?
30 days.
Proof and Verification of Auto Insurance
Failing to have insurance as found in an audit will result in a $100 fine and a suspended vehicle registration until insurance is obtained (first offense) or for at least 4 months (subsequent offense). • Submit false proof of insurance to the state: $200 fine and six-month suspended vehicle registration. • Illinois traffic stops can't be done solely to verify insurance.
Compensation and Fees
Fees (as opposed to commissions) must be disclosed before coverage is obtained (with records kept for 7 years). • No fee for canceling someone's insurance.
Business Liability
If an insurer or insurance business terminates a relationship with a producer because of a legal violation, it must inform the DOI within 30 days. • Failure to report to the DOI or take preventive action after learning of a producer's violations can lead to business license revocation/suspension.
All of the following are covered by a personal auto policy except?
Injuries sustained by the insured's employee while riding in the insured auto.
Claims Rules
Insurer must confirm or deny liability for a claim within reasonable time. • Insurer must act within 30 days of determining validity of a claim. • Insurers must disclose claims-related information for past three years (five for auto) upon non-renewal or upon request.
Unfair Claims Practices
Insurers can be fined for the following actions: • Not responding to communication from a claimant within a reasonable time. • Not offering fair and prompt settlements when the insurer's liability is reasonably clear. • Frequently prompting claimants to sue in order to receive the full amount owed to them. • Being named in a disproportionately high number of consumer complaints -Denying claims without conducting a reasonable investigation. • Refusing to make a decision about a claim withina reasonable time. • Requiring additional proof of a loss in order to delay payment. • Failing to explain why a claim was denied.
Which of the following is covered by auto liability coverage?
Liability caused by an employee while driving the insured auto on business.
Auto medical payments coverage covers which of the following?
Medical expenses resulting from injuries the insured sustained while driving his/her own car.
Auto Insurance: EMS Services
No adverse action based on auto accidents when acting as a volunteer.
Auto Insurance: Disabled Drivers
No discrimination against disabled drivers (assuming the state says they're safe to drive).
Insurance Discrimination
No discrimination at all based on: • Race. • Religion. • Color. • National origin. • Can't refuse to offer or renew insurance based on: • Gender. • Marital status. • Sexual orientation. • (Price differences for the above three must be based on sound actuarial data.)
Which of the following is or are formalized by the insured filling out the application and paying his initial premium and the insurance company issuing either a receipt of policy?
Offer and acceptance.
Mr. Harold Lloyd bought an employee dishonesty policy for his business. Which of the following applies?
Once a dishonesty is discovered, coverage is cancelled for that employee.
Illinois Department of Insurance
Overseen by governor-appointed "director" who has the power to: • Make reasonable rules and regulations to enforce insurance laws. • Conduct reasonable investigations to determine violations of state insurance requirements. • Issue immediate cease-and-desist orders to halt illegal insurance practices. • Issue subpoenas in order to obtain insurance documents. • Require individuals to testify under oath about insurance matters. • Issue, deny, suspend or revoke insurance licenses for individuals and businesses
Which of the following is not covered under coverage a - bodily injury and property damage of a commercial general liability cgl policy?
Personal and advertising injury liability.
Credit Information
Personal lines P and C insurers can't take negative action based ONLY on bad credit. • Must reevaluate credit upon request. • Must consider reason for bad credit. • Can't take negative action against someone solely for not having a credit card. • "Insurance scores" can't consider gender, race, religion, ethnicity, income, address, marital status or nationality.
Cancellation in Illinois (General)
Policies must include info about cancellation procedures. • Must disclose reason for cancellation. • Cancellation can't occur just because of a claim. • Notice must be sent to the policyholder, the producer of record and any known lienholders. • Common deadlines for cancellation notices: • 10 days for nonpayment of premiums. • 30 days for personal lines insurance (besides nonpayment). • 60 days for commercial lines insurance (besides nonpayment). • Consumers can request a hearing at least 20 days before the effective date. • Residential property and non-auto casualty insurance that has been in force for at least 60 days can only be canceled due to: • Nonpayment. • Misrepresentation or fraud. • A significant increase in the risk.
Who Needs a License?
Producer license generally required when doing any of the following for compensation: • Selling insurance. • Encouraging someone to buy insurance. • Negotiating terms of insurance. • Giving insurance advice. • Acting without a license is Class A misdemeanor ($2,500 and 1 year in jail).
Auto Insurance: Right to Oral Estimates
Producers in municipalities of 500k or more must provide oral estimates upon request without requiring the customer to be physically present.
Assumed Names
Producers must follow the Assumed Business Name Act. • Need to report to DOI if doing business under another name.
All of the following are always excluded under a commercial general liability cgl policy except?
Products and completed operations liability.
Redlining
Refusing to do business in an area (often due to the makeup of the area's population). • DOI can request data based on ZIP code to police redlining.
Which of the following Is not covered under premises burglary coverage?
Robbery of money.
Contractual liability coverage can be written to cover which of the following?
Strict liability.
License Suspension, Revocation or Refusal
The following actions can result in license suspension, revocation or refusal and fines of $10,000 per occurrence (up to $100k maximum): • Being convicted of a felony. • Demonstrating incompetence or untrustworthiness in business. • Having an insurance license disciplined in another state. • Forging an insurance document. • Cheating on an insurance exam. • Knowingly doing business with an unlicensed producer. • Failing to pay child support. • Failing to pay state income taxes. • Making false statements on a licensing application. • Violating laws, rules or orders from the DOI. • Improper handling of funds obtained as part of an insurance transaction. • Misrepresenting facts about an insurance product. • Committing fraud.
Which of the following is not a supplemental payment found in most auto policies?
The insured's medical expenses incurred in an auto accident.
Which of the following statements accurately describes the concept of actual cash value coverage?
The purpose of actual cash value coverage is to restore to the insured to the same economic value that he/she had in the property immediately before loss.
Temporary Licenses
Upon Death or Disability • No state exam. • Allows for limited time to settle disabled or deceased producer's business affairs. • Issued for 180 days with one possible 180-day extension. • Can require supervision form licensed producer. • License terminates if business is sold or dissolved. Not Death or Disability • Allows licensing candidates to begin work while completing the licensing process. • Valid for 90 days with no extension. • Must be affiliated with an insurer. • Insurers whose candidates don't complete the licensing process can no longer sponsor temporary licenses.
Which of the following statements about coverage c - medical payments of a commercial general liability cgl policy is not true?
the injured person must prove that the insured is legally liable.
License Qualifications
• 18 or older. • Pre-license education. • State exam. • Licensing fee. • Good moral character. • Might not be eligible if : • Committed felony. • Fail to pay child support. • Had a license revoked in another state.
Continuing Education
• 24 hours every 2 years before license renewal deadline. • At least 3 must be ethics (classroom or webinar). • Hours must be reported (not just completed) prior to renewal deadline.
Passing the Exam
• 70% on each portion. • Must pass the failed portion within 90 days to avoid retaking an entire exam.
Licensing Exams
• Administered by Pearson Vue in English or Spanish. • 1 exam for each line of authority. • 100 questions (60 General, 40 Illinois). • 135 minutes total (80 to 85 for General, 50 to 55 for Illinois). • Cheating on an exam is grounds for discipline by the DOI.
Non-Renewal in Illinois (Auto) continued
• After 5 years, non-renewal can only be due to: • Material misrepresentation. • Violating policy terms/conditions. • Failure to disclose accidents/traffic violations. • Fraudulent claims. • License suspension/revocation. • Susceptibility to heart attack or epilepsy (without doctor's note) Dangerous traffic, criminal or medical record. • Assault or death with a vehicle. • Drunk driving. • Leaving scene of an accident. • Stealing a vehicle. • Unsafe vehicle. • Vehicle is transporting people for a fee.
Cancellation in Illinois (Commercial Property)
• An insurer can cancel commercial property insurance with 10 days' notice because of: • Fire related repairs not being started with 60 days of the fire. • The property has been unoccupied for 60 days. • The building has been deemed unsafe. • Utilities at the property have been turned off for 30 days.
Consumer Complaints
• An insurer must have a toll-free number available during business hours for consumer complaints. • Insurers must respond to al written inquiries and complaints within 21 days.
Unlicensed Persons
• An insurer or producer cannot compensate an unlicensed person for selling or negotiating insurance: • Possible exception for a formerly licensed person who is receiving deferred compensation and was licensed at time of transaction.
Auto Insurance Deductibles
• At first renewal, Illinois insurers must make consumer aware of possible savings with a higher deductible.
Cancellation in Illinois (Auto)
• Auto coverage in force for at least 60 days can't be canceled except for: • Nonpayment. • Material misrepresentation. • Violation of policy terms/conditions. • Failure to disclose traffic violations/accidents. • Making a fraudulent claim. • Suspension or revocation of license • Becoming susceptible to heart attack or epilepsy (without doctor's note). • Dangerous traffic, criminal or medical record. • Drug addiction. • Death or assault with a vehicle. • Leaving scene of an accident. • Stealing a vehicle. • Unsafe vehicle. • Vehicle is transporting people for a fee.
Auto Policy Forms
• Auto insurance coverage forms used by insurers are subject to 30-day approval by the DOI.
Illinois Workers Compensation Assigned Risk Plan
• Available within 60 days of business being denied insurance by two insurers. • All insurers must participate and share a portion of high-risk applicants. • Application must disclose the annual premium or deposit premium.
Insurance Broker Bond Requirements
• Brokers must have a surety bond equal to at least $2,500 or 5% of brokered premiums from previous year (whichever is more). • $50,000 maximum.
Education Providers
• CE courses must be approved by the DOI and be from approved providers
Premium Fund Trust Accounts
• Can't put principal dollars at risk. • Generally can't withdraw from PFTA unless it's a transfer of premiums to an insurer or transfer of earned commissions to producers. • Must be from federal or state bank or savings and loan. • Bank records and checks must indicate it's a PFTA. • Records must be maintained for 7 years. • Can be interest-bearing but can only be kept if authorized by carrier.
Property Insurance Discrimination
• Can't refuse to renew residential property insurance because of: • Property age. • Property location. • Age, sex color, ancestry marital status or occupation of applicant. Can't refuse to issue or renew residential property insurance because: • Property was damaged by a hate crime. • Occupant uses a space heater. • The person was denied or non-renewed for insurance in the past
Change of Address
• Changes to physical and email addresses must be reported within 30 days.
Non-Renewal in Illinois (Auto)
• Different consumer protections exist depending on how long coverage has been in force. Can NEVER be due to: • Age. • Sex. • Race. • Color. • Creed. • Ancestry. • Occupation. • Marital status. • Employer. • Disability. • Sexual orientation. • Claims reported but not covered.
Illinois Automobile Insurance Plan
• Drivers must be given info when coverage is canceled or non-renewed. • Each insurer is assigned high-risk drivers based on market share. • Eligible if denied insurance from three companies.
Anti-Theft Devices
• Drivers with anti-theft devices must get a 5% discount on comprehensive (other-thancollision) coverage.
Lines of Authority
• Each line generally requires 20 hours of prelicense education and a state exam. • Life. • Accident and health. • Property (Fire). • Casualty.
Administration of Exams
• Exam candidates must bring: • Certificate of completion. • Non-expired, government-issued photo ID. • SS card, credit/debit card or another nonexpired government ID
DOI Director
• Failure to comply with director orders can result in $2,000 to $20,000 in additional fines. • Guilty party can be forced to pay for independent investigations. • Cease-and-desist orders generally include the right to a hearing within 30 days. • Investigated parties must receive copies of reports before the public.
The McCarran-Ferguson Act
• Federal law that allows most insurance regulation to be done at the state level.
Illinois Insurance Guaranty Fund
• Funded by insurer fees and is obligated to pay claims up to $500,000 upon insolvency.
Child-Restraint Systems
• If a vehicle is covered for property damage in an accident, the coverage must include replacement of a damaged child restraint system.
Certificates of Insurance in Illinois
• Illegal to misrepresent coverage on a certificate of insurance. • Change to certificate won't change the coverage.
Defensive Driving Discounts
• Illinois drivers who are 55 or older must receive discounts for completing an 8-hour safe-driving course within the past three years.
Damage to Non-Auto Property
• Illinois insurers that want to exclude equipment from auto manufacturers (besides stereos) must do so by endorsement.
Illinois Insurance Privacy Rules
• Information obtained as part of an insurance transaction generally cannot be disclosed without written consent.
Business Licenses
• Insurance agencies and brokerages must be licensed as producers. • Must have one designated producer in charge of compliance.
Auto Liability Limit Disclosure
• Insurer must disclose at-fault driver's liability limits within 30 days upon: • Certified letter from claimant or claimant's attorney AND • Documentation of injuries, medical bills incurred and medical records. • Must remain confidential beyond the attorney, claimant and attorney's office.
PFTA Penalties
• Misappropriating less than $150 in first offense: Class A misdemeanor (1 year of prison and $2,500 fine). • Misappropriating less than $150 in multiple offenses: Class 4 felony (3 years in prison and $25,000 fine). • Misappropriating more than $150: Class 3 felony (5 years in prison and $25,000 fine).
Fiduciary Responsibilities
• Money provided by consumer is generally held in a "fiduciary" capacity by producers and can't be commingled, misappropriated or used for other purposes. • Insurers must continue to cover people when a producer misappropriates their funds, but the producer can face legal action.
Mine Subsidence Coverage
• Must be offered to all property insurance customers. • Premiums go into a state fund until a loss occurs. • Not applicable to counties with populations above 1 million (or that border them). • $100,000 per residential building. • $200,000 per commercial building. • $15,000 per living unit.
Felony Convictions
• Must be reported within 30 days to DOI. • DOI can use some discretion regarding what to do next
Auto Insurance: Previous Insurance
• No discrimination based on identity of previous auto insurer unless loss history isn't provided within 21 days.
Auto Certificates of Insurance
• No fees for certificates of insurance.
Controlled Business
• No more than half of business can be from insurance for yourself, your spouse, your business or your employer.
After the Exam
• No numeric score (or maybe 70% by default) upon passing. • Wait 5 days before applying for license
Pre-License Education AND Exam Exemptions
• No state exam and no pre-license education for: • Limited lines producers. • Producers moving to Illinois who are already licensed in same line of authority. • Must be in good standing and complete paperwork within 90 days of residency. • Non-residents of Illinois who are already licensed in the same line of authority in their home state. • Must be in good standing and obtain "non-resident" Illinois license before insuring property in Illinois or insuring anyone in Illinois.
Rescission in Illinois
• No voiding insurance based on misrepresentations or a false warranty unless: • False warranty was made on purpose OR • Misrepresentation relates to a material fact. • In personal lines property and casualty insurance, coverage cannot be rescinded based on warranties or misrepresentations on applications after one year or one policy period (whichever is less).
License Reinstatement
• One year to reinstate license by paying double the licensing fee and completing remaining CE hours.
Policy Disclosure
• Policy must list the producer or firm that sold it
License Terms and Renewals
• Producer license is generally valid for two years. • Renewal requires fees and continuing education.
What's on a License?
• Producer's name. • License number. • Date of issuance. • Date of expiration. • Address. • Line of authority (Life, health, property, casualty, etc.).
Earthquake Insurance
• Property insurance applicants living within the New Madrid Seismic Zone must be made aware of the option to buy earthquake insurance. • Generally includes parts of Southern Illinois.
Property in Disrepair
• Property owners facing cancellation or nonrenewal must be given reasonable time for repairs.
Claims Fraud Prevention Act
• Protects people from civil liability when they report suspected insurance fraud.
False Addresses
• Providing a false address to an auto insurer is a business offense with a fine of $1,001 to $1,200.
Non-Renewal in Illinois (General)
• Require mailed notice of reason to the producer, owner and lienholders. • Usually 30-day (personal lines other than auto) or 60-day (commercial lines and personal auto) notice. • Consumer has until 20 days prior to nonrenewal to request a hearing. • Must alert DOI if non-renewal will impact a significant population of consumers. • Renewal with increased premium generally requires written notice. If the increase is more than 30% or there's a material change in coverage, 60-day notice is required.
A Coverage-Ending Review
• Rescission: Insurance is ended and treated as if it never existed. • Cancellation: Insurance is ended prior to the end of the policy period. • Cancellations recommended by producer must include disclosure of likely loss of premiums(short-rate cancellation). • Non-renewal: Insurance is ended upon conclusion of the policy period without an offer to extend.
Rebating
• Sharing commission in order to induce a sale. • Things of value provided to consumers must be disclosed in the insurance contract. • Class B misdemeanor: 6 months in jail and $1,500 fine.
Other Lines of Authority
• Slightly different requirements might exist for the following less common lines of authority: • Personal lines. • Motor vehicle. • Variable contracts. • Limited lines.
Pre-License Education Exemptions
• State exam but no pre-license education for: • College graduates with a degree in insurance. • People who have earned certain insurance related professional designations. • Example: For property and casualty producers: AAI, ARM, CIC, CPCU
Suspension, Revocation or Refusal Process
• Suspensions might be temporary. • Revocations are expected to be permanent. • Producers who've been denied or revoked can reapply after three years but can still be refused. • Disciplinary action requires written notice and right to request a hearing within 30 days.
DOI Fees
• The following fees are generally nonrefundable: • Resident producer license: $180 every two years. • Non-resident producer license: $250 every two years. • Temporary producer license: $50. • Insurance business license: $150 every two years. • Limited Lines producer license: $50 every year. • Licensing exam: $50 (in addition to other fees charged by the testing vendor). • Operating as a pre-license or continuing education provider: $1,000 every year. • Approval of a pre-license or continuing education course: $50 initial fee, then $20 every year.
