Property and Casualty Insurance Exam – State Insurance Laws Quiz 07

In California, an individual must complete pre-licensing education, pass the state exam, and submit fingerprints for a background check in order to obtain an insurance license to sell insurance products in the state. These are common requirements across most states to ensure agents are properly qualified.

When an agent moves to a new state, they must obtain a resident license for that state in order to continue selling insurance. Mr. Smith will need to apply and meet the licensing requirements set by the Florida insurance department. He does not need to notify or surrender his NY license.

In Texas, the Texas Department of Insurance regulates insurance advertising, not federal agencies. This is true in most states, where the state DOI sets and enforces advertising rules.

The statement appears exaggerated and misleading, which would be considered misrepresentation under insurance advertising regulations. Claims should be truthful, not overstate benefits, and disclose limitations.

In most states, independent agents must be appointed by each insurance company they wish to sell policies for. This requires submitting paperwork and any other requirements the insurer has. Sharon would need appointment from any new carriers.

If a consumer disagrees with a state insurance department decision on a complaint, their next option is typically to file a lawsuit against the insurance company. Very few states offer an appeals process within the department. Arbitration would only apply if agreed to by both parties.

Providing discounted premiums to a select group would violate rebating laws, which prohibit insurers and agents from offering special incentives to purchase insurance. The other activities described are general advertising and do not qualify as illegal rebating.

Most states limit the specific reasons an insurance policy can be canceled to prevent arbitrary cancellations. Allowing cancellation “at any time for any reason” generally violates state regulations on allowable cancellation reasons. The other options do not relate to cancellation.

An incontestability clause means the insurer cannot deny a claim or void coverage based on application errors or omissions after the stated period (often 2 years). This protects policyholders once the contestability period ends.

Not providing applications and materials in other languages could be considered unfair discrimination based on national origin under state insurance regulations. The agency should make reasonable accommodations to provide materials in languages spoken by significant customer groups.

A pre-existing condition clause allows an insurer to exclude or limit coverage for health conditions diagnosed before the policy effective date for a period of time, usually 6-12 months. Sharon’s diabetes would fall under this provision.

A notice of claim provision requires the policyholder to notify the insurer within a certain number of days after an accident or loss. The time periods listed are typical requirements. This allows the insurer to investigate promptly.

Rejecting applicants simply because they live in lower-income urban neighborhoods would qualify as unfair discrimination based on geographic location. Insurance regulators prohibit such redlining practices.

Most states restrict or prohibit the use of credit information in auto insurance underwriting and rating. Relying primarily on credit scores to set rates would violate these regulations. Insurance companies must use regulated rate factors.

The insurer is entitled to request documents, medical records, and other information as proof when a claim is filed. This is known as the proof of loss provision, which allows the company to validate and investigate the claim.

A warranty is a promise in the policy that the insured will do or not do certain things. Having a burglar alarm would be a warranty provision

Most states prohibit insurers from denying life insurance based solely on genetic test results, as this would constitute unfair discrimination. The other practices described may be allowed under certain circumstances.

Key terms like pre-existing conditions must be clearly defined in the policy definitions section. Not specifically defining this term violates plain language standards and principles.

Agents must disclose they can sell policies from various insurers, and that the client can purchase a Medicare supplement from any insurer. State regulations require this disclosure with senior products.

Insurance companies may classify policyholders into risk classes based on actuarial data. Gender and age are common rating factors allowed by states. But insurers cannot discriminate based on race, nationality, etc.

Providing meals or other inducements to purchase insurance would violate anti-rebating laws. The other practices described would be permissible business activities.

The grace period allows one calendar month after the due date to make the payment before the policy lapses. With a 3/15 due date, the last day of the grace period would be 4/15.

Replacement forms require detailed comparison data, illustrations, premium schedules, and notices of the right to return the new policy within 20-30 days, as mandated by insurance regulators.

The key objective of financial examinations is to verify insurers are financially sound and maintaining sufficient reserves to pay out future claims. Examiners review assets, liabilities, investments, and other indicators.

The deductible provision in a policy allows the insurer to subtract the deductible amount from any covered loss. This is a standard policy term approved by state insurance regulators.

Market conduct exams evaluate insurer practices related to disasters – were claims handled properly, were policy provisions like loss settlement followed, etc. This protects consumers from violations.

The appraisal clause allows either party to demand an independent appraisal if they disagree over the value of a damaged vehicle. This can help settle disputes over claims payments.

Agents must report certain changes like opening a new office location to stay in compliance with their license. Production volume, earning new credentials, etc. would not need to be reported.

Without knowing the amount insured or policy limit, the payment cannot be calculated. The coinsurance percentage is applied to the lesser of the amount insured or the loss value. More data is needed.

Most states prohibit insurers from denying coverage solely due to a pre-existing condition. The other activities described are permitted risk classification and underwriting actions.