TEST #1 LAW
Which of the following would be required to be licensed as an agent: A. A person with the CLU or CPCU designation who sells insurance on a commission basis B. A person who provides administrative services in connection with group insurance plans C. A salaried insurance underwriter who works at the home office of the insurer D. A person who receives a one-time nominal finder's fee from an agent for a referral
A. A person with the CLU or CPCU designation who sells insurance on a commission basis
Which of the following is incorrect regarding Virginia's Continuing Insurance Education law: A. Agents need 24 credit hours every 2 years for each license held B. Of the required credits for any license, 2 credits must be in Virginia law & regulations C. The law applies to both resident and non-resident agents D. A multi-line agent must earn at least 8 hours of credit for each license type
A. Agents need 24 credit hours every 2 years for each license held
Insurers must renew their agent appointments every: A. Year B. Other year C. 3 years D. Appointments are perpetual
A. Year
You represent a large insurer who does business in all 50 states. All of the following are true EXCEPT: A. You must obtain an agent's license in all 50 states B. The insurer must obtain a Certificate of Authority in all 50 states C. You must obtain an agent's license only in the states you sell in D. If the insurer's home office is in Illinois, the insurer would be considered a "foreign" insurer in Virginia
A. You must obtain an agent's license in all 50 states
By December 31st every 2nd year, agents who hold licenses for 2 lines of authority must earn ____ hours of CE credits: A. 12 B. 24 C. 36 D. 48
B. 24
An insurer advertises that their agent is an expert in certain types of insurance, when in fact the agent is not licensed to sell that type of insurance. The insurer may be guilty of: A. Misrepresentation B. False advertising C. Defamation D. Twisting
B. False advertising
All of the following are violations of the insurance code EXCEPT: A. Commingling premiums of clients with your own funds B. Replacing insurance C. Paying or sharing a commission with someone who is not licensed D. Returning part of the premium or commission to the customer
B. Replacing insurance
A multi-line agent must complete ____ hours of CE on a biennial basis: A. 12 B. 18 C. 24 D. 36
C. 24
Upon request, agents must furnish copies of their records to the Commissioner: A. Within 10 days B. Within 30 days C. Promptly D. Within 3 years
C. Promptly
All are true about "foreign" insurance companies EXCEPT: A. They are domiciled in another state B. They need a Certificate of Authority in their home state C. They do not need a Certificate of Authority in Virginia D. They are not domiciled in Virginia
C. They do not need a Certificate of Authority in Virginia
An agent must remit monies received from customers to the insurer: A. Within 3 months of receipt B. Within 6 months of receipt C. At their discretion D. In the ordinary course of business
D. In the ordinary course of business
Which of the following correctly defines an "alien" insurer doing business in Virginia: A. One formed under the laws of another country B. One formed under the laws of another state C. One formed under the laws of the State of Virginia D. One formed under the laws of another country, but holding a Certificate of Authority in Virginia
D. One formed under the laws of another country, but holding a Certificate of Authority in Virginia
Which type of insurer may pay dividends to policyholders: A. Stock B. Mutual C. Fraternal D. Reciprocal
D. Reciprocal
Which of the following would be considered to be a rebate: A. Basing group insurance rates on claims experience B. Paying dividends out of surplus as stated in the policy C. Offering to give part of the commission to a customer as an inducement to buy D. Paying another licensed agent for a referral
C. Offering to give part of the commission to a customer as an inducement to buy
Under the Insurance Information and Privacy Protection Act, insurers must give customers a Privacy Protection Notice: A. At the time of application B. No later than the time a new policy is delivered C. No later than the time the application is approved by the underwriter D. No later than the time a new policy is delivered and annually thereafter
A. At the time of application
When an agent representing a financial institution advises a client that his application for a loan will not be approved unless the client buys insurance from him, the agent is guilty of: A. Coercion B. Rebating C. Misrepresentation D. Twisting
A. Coercion
Insurers must file their audited financial statements with the Commissioner: A. Each year by March 1st C. Every 6 months B. Every month D. Each year by December 31st
A. Each year by March 1st
An agent's license may be denied, suspended or revoked for which of the following: A. Failure to provide criminal records B. Selling insurance with a non-resident license C. Minor traffic law violation D. Conviction of a misdemeanor
A. Failure to provide criminal records
To obtain a Virginia agent's license as a nonresident, you must: A. Have a similar license in your home state B. Take both parts 1 and 2 of the Virginia licensing examination C. Have a part-time residence in Virginia D. Have attained the professional designation of either CLU or CPCU
A. Have a similar license in your home state
As an insurance agent, you represent: A. Insurers C. The public B. Insureds D. The state
A. Insurers
An agent's false statement on an application regarding insurance is: A. Misrepresentation B. Twisting C. Defamation D. Coercion
A. Misrepresentation
If an agent misstates projected dividends to be paid, he may be guilty of: A. Misrepresentation B. Rebating C. Defamation D. Unfair discrimination
A. Misrepresentation
An example of Defamation, which is an unfair trade practice, is: A. Misstating the financial condition of an insurer or agent B. An agent using a trade name that implies he is an insurer C. Sharing commissions with someone who is not licensed D. Paying part of your commission back to the client as an inducement
A. Misstating the financial condition of an insurer or agent
The purpose of insurance rules and regulations are to: A. Protect the insurance buying public B. Protect insurance companies C. Protect insurance agents D. Achieve uniformity with the regulations of other states
A. Protect the insurance buying public
Which type of government is primarily concerned with regulating insurance: A. State B. Federal C. County D. City
A. State
All of the following are true about the Insurance Commissioner's powers EXCEPT: A. The Commissioner requires Virginia laws to be uniform with neighboring states B. The Commissioner administers insurance laws C. The Commissioner has "order" making power D. The Commissioner may not revoke your license without a hearing
A. The Commissioner requires Virginia laws to be uniform with neighboring states
An agent who willfully violates a single provision of an unfair trade practice regulation may be fined: A. $1,000 B. $5,000 C. $10,000 D. $50,000
B. $5,000
Agents must keep records for ____ calendar years following an insurance transaction: A. 2 B. 3 C. 4 D. 5
B. 3
All of the following are requirements for obtaining an agent's license EXCEPT: A. Passing the state exam B. Attaining age 21 C. Being competent and trustworthy D. Paying the appropriate licensing fees
B. Attaining age 21
A client may challenge the validity or accuracy of a consumer investigative report under the: A. Consumer Protection Act of 1974 B. Fair Credit Reporting Act C. Employees Retirement Income Security Act D. Privacy Protection Act
B. Fair Credit Reporting Act
Agents may charge customers service fees in addition to the premium charged: A. With the consent of the insurer B. If disclosed to the customer in advance C. Only with the prior consent of the Commissioner D. At their discretion
B. If disclosed to the customer in advance
An insurer who is domiciled in another state may do business in Virginia: A. If they register as a domestic company in Virginia B. If they obtain a Certificate of Authority in Virginia C. If they are granted an exemption by the Insurance Commissioner D. Under no circumstances
B. If they obtain a Certificate of Authority in Virginia
How many hours of law and regulation CE does an agent have to earn on a biennial basis: A. One B. Two C. Three D. Four
B. Two
If, after a hearing, the Commissioner finds that an agent unintentionally violated an insurance law several times, he may impose a maximum total fine of: A. $1,000 B. $5,000 C. $10,000 D. $50,000
C. $10,000
An agent may earn a maximum of ____% of their required CE credits from company or agency sponsored courses: A. 25% B. 50% C. 75% D. 100%
C. 75%
In authorizing an insurer to transact business in Virginia, the Commissioner is: A. Approving that company B. Setting rates of that company's products C. Allowing that company to legally do business in this state D. Designing products for that company to sell in Virginia
C. Allowing that company to legally do business in this state
To which of the following could an agent pay part of her commission without violating any insurance regulations: A. A relative who bought insurance from her B. An employee who bought insurance from her C. An agent with a like license D. Any client who buys insurance from her
C. An agent with a like license
All of the following are considered to be misuses of fiduciary funds EXCEPT: A. Remitting a premium to an insurer at the agent's discretion B. Reflecting a premium received as a business asset on the agent's financial statement C. Collecting interest on customer balances held in an agent's trust account D. Using balances in customer accounts as collateral for a loan to an agent
C. Collecting interest on customer balances held in an agent's trust account
All are true regarding agent appointments EXCEPT: A. The agent must be appointed at the time business is placed with an insurer B. An agent may be appointed by more than one insurer C. Company's may appoint either individual agents or agencies D. Only an insurer may terminate an agent's appointment
C. Company's may appoint either individual agents or agencies
A Business Entity (agency) license is required for which of the following: A. Agencies located in towns with a population of less than 5,000 B. Agent/owners C. Corporations, partnerships and LLCs D. Sole proprietors
C. Corporations, partnerships and LLCs
Which of the following is considered to be an agent's fiduciary duty: A. Selling insurance B. Making a commission C. Handling premiums D. Signing applications
C. Handling premiums
An employee of an insurance company needs to be licensed as an agent: A. If they are involved in risk classification B. If they process enrollments under group insurance plans C. If they receive commissions for selling policies D. If their activities are limited to settling claims
C. If they receive commissions for selling policies
Which of the following need to be licensed: A. An insurance company officer B. A third party administrator C. Insurance consultants D. Salaried employees of agents
C. Insurance consultants
All of the following are true regarding warranties and representations EXCEPT: A. Warranties are guaranteed to be true B. Representations are the truth to the best of your knowledge C. Insurers require insureds to make warranties on the application D. Insurers require insureds to make representations of the application
C. Insurers require insureds to make warranties on the application
All of the following are true regarding the Virginia Insurance Guaranty Association EXCEPT: A. All insurers must become members B. The Association may levy assessments on members to pay covered claims C. It protects customers of insolvent (bankrupt) insurers D. Coverage is limited
C. It protects customers of insolvent (bankrupt) insurers
Which of the following is not one of the duties of the Commissioner: A. Enforcing provisions of the insurance code B.Examining and licensing individual agents and agencies C. Making rates D. Holding hearings and issuing administrative "orders"
C. Making rates
An agent may withdraw funds from his trust account to pay for all of the following EXCEPT: A. Refunds of unearned premium B. Commissions to other agents C. Personal medical bills D. Premiums due insurers
C. Personal medical bills
Which is not prohibited under unfair trade practice regulations: A. Misleading or false statements about dividends previously paid out B. False statements about the financial condition of an insurer C. Readjusting group premiums based on loss or expense experience D. Discriminating between individuals of the same class
C. Readjusting group premiums based on loss or expense experience
12. Which of the following would NOT be considered an unfair claims settlement practice: A. Failure to respond promptly to claims communications B. Offering a claimant a much lower settlement than they are later able to win in court C. Refusing to pay a claim after conducting a proper investigation D. Requiring a claimant submit to arbitration
C. Refusing to pay a claim after conducting a proper investigation
Under Virginia's Unfair Claims Practices regulations, all would be considered violations EXCEPT: A. Failing to settle when liability is clear B. Offering claimants lower settlements than they could win in court C. Requiring claimants to submit proof of loss D. Attempting to base settlements on altered applications
C. Requiring claimants to submit proof of loss
All of the following are true about agent appointments EXCEPT: A. They must be renewed every year B. They may be terminated by the insurer at any time C. Agents must have a separate appointment from each insurer they represent D. Agents may only be appointed by one insurer
D. Agents may only be appointed by one insurer
Who may be the Insurance Commissioner: A. Any qualified person appointed by the governor B. Any Virginia resident chosen by the legislature C. Anyone elected to the position by popular vote D. Any qualified person appointed by a panel of 3 judges from the Corporation Commission
D. Any qualified person appointed by a panel of 3 judges from the Corporation Commission
No insurer shall transact insurance in this state without a(n): A. Agent's license B. Surplus lines license C. Agency license D. Certificate of Authority
D. Certificate of Authority
The authority to regulate consumer investigative reports is contained in the: A. Insurance code B. Privacy Protection Act C. Consumer Credit Protection Act D. Fair Credit Reporting Act
D. Fair Credit Reporting Act
The Commissioner may examine (audit) all of the following EXCEPT: A. Agents B. Consultants C. Business entities (agencies) D. Health insurance master policyholders
D. Health insurance master policyholders
If an agent or insurer is found to have violated an insurance law, the Commissioner may do all of the following EXCEPT: A. Notify the district or county attorney B. Impose a monetary fine C. Revoke the violator's license D. Impose time in jail
D. Impose time in jail
Under Virginia's Unfair Claims Practices regulations, when denying a claim an insurer must do all of the following EXCEPT: A. Indicate to the claimant which section of the policy they are relying upon B . Respond promptly to claims communications C. Conduct a reasonable investigation D. Pay a claim that occurs after the grace period has ended
D. Pay a claim that occurs after the grace period has ended
A client of a Virginia non-resident producer wants to sue her. Who should the client have the "Service of Process" served on: A. The agent in his home state B. The appointing insurer's home office C. The Secretary of State in his home state D. The Virginia Insurance Commissioner
D. The Virginia Insurance Commissioner
An agent makes an inaccurate or unfair comparison of policies in order to induce a customer to cancel or surrender their existing policy and buy a new one from him. This is an example of: A. Defamation B. Unfair discrimination C. Coercion D. Twisting
D. Twisting
The Commissioner may examine (audit) an authorized insurer: A. Every 3 years B. Every 5 years C. Every 7 years D. Whenever necessary
D. Whenever necessary