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Questions NJ Prop and Casualty

Terms in this set (47)

1. State insurance laws are passed by which of the following?
A. State Legislatures

B. The commissioner of insurance

C. Majority vote of NAIC

D. Insurance Companies

A- The state legislature debates and passes state laws.
2. Which court case ruled that federal antitrust laws only apply in certain circumstances?
A. McCarran -Ferguson Act

B. US vs. South Eastern Underwriters Association

C. Ferguson Vs. NAIC

D. Paul Vs. Virginia

A- The McCarran-Ferguson Act of 1945 ruled that federal antitrust laws apply to the extent that state law does not regulate insurance
3. A hearing must be held within how many days after the date the notice of hearing is served.
A. 10 Days

B. 15 Days

C. 30 Days

D. 45 Days

A- If the commissioner believes a person has violated an unfair method of competition or any unfair or deceptive act, a notice will be served upon the person with a statement of charges, and the hearing must be held within 10 days of the serving of the notice.
4. The commissioner may fine a licensed agent for unknowingly violating an unfair method of competition no more than
A. 500

B. 1,000

C. 2,500

D. 5,000

B- The commissioner may order a penalty not to exceed $1,000 for each violation of a method of competition or deceptive act or practice. If the person should have known the act was a violation, the fine may be up to $5,000.
5. Which of the following is not considered an insurance related conduct?
A. Processing Claims

B. Collecting Premiums

C. Binding a policy

D. Underwriting an insurance application

D- Selling, soliciting, and negotiating insurance policies, communicating with insureds regarding policy terms and conditions, and office management affecting insureds are other examples of insurance related conduct.
6. Retrocession is
A. Transfer Risk for investment purposes

B. Transfer of risk from one reinsurer to another reinsurer

C. Transfer of a limited amount of risk

D. Transfer of risk from one insurer to a reinsurer.

B- A reinsurer assumes the risk of the ceding, or primary, insurance company, and retrocession is the transfer of risk from one reinsurer to another reinsurer.
7. An insurance producer may not become licensed in which of the following lines of authority?
A. Limited Lines

B. Variable Annuity

C. Title.

D. Funeral

D- Funeral insurance is a limited line of insurance not requiring a license to transact.
8. Which of the following lines of authority requires 16 hours of classroom instruction in order to be licensed?
A. Title

B. Personal Lines

C. Variable Lines

D. Bail Bonds

D- Limited line producers seeking authority for bail bonds must complete 10 hours of class-room instruction specifically on bail bond authority , and an additional 6 classroom hours on regulation of the insurance industry.
9. A temporary work authority is granted and valid up to how many days after being issued?
A. 30

B. 45

C. 60

D.90

C- The commissioner is authorized to issue a temporary work authority, valid up to 60 days.
10. If a licensed producer hires another producer to write insurance business on behalf of the employer/ producer, the employing prouder may do all of the following except,
A. Sign a contract of employment

B. Examine the employee's credentials

C. Deny culpability if unaware of the employees conduct

D. Supervise the employee

C- An employer is responsible for the insurance-related conduct of an employee, and in any disciplinary proceeding, the existence of the employment contract will be prima facie evidence that the employer knew of the activities of the employee.
11. An Agency appointment terminates
A. on the 60th day after the insurer fails to deliver a contract to the producer.

B. When the insurer notifies the commissioner within 15 days of the appointment

C. When the insurer receives the producer's underwriting guidelines and other marketing materials

D. When the insurer notifies the NAIC

B- When an agency contact is cancelled , within 15 days the insurer must notify the commissioner of the cancellation date and the reason for cancellation.
12. If a producer becomes permanently disabled, the commissioner may issue a temporary producer license to his/her spouse for a period up to how many days in order to service the producer's insurance business
A. 60

B. 90

C. 180

D. 365

C- The commissioner may issue a temporary insurance producer license for a period not to exceed 180 days without requiring an examination if it is determined the temporary license is necessary to sell the insurance business, train and license new personnel, or the producer recovers or returns to the business.
13. Prior to renewal, a licensee must complete how many credit hours of approved continuing education courses? How many must be related to ethics.
A. 12/2

B. 24/3

C. 24/2

D. 12/3

B- Licenses for life, accident, and sickness, property and casualty personal lines, surplus lines, and title will not be renewed unless the licensee has completed 24 credit hours of approved continuing education courses, 3 of which must be related to professional ethics.
14. A notice of the denial of a license application must include which of the following?
A. right to request a hearing

B. Insurer licensing disclosure

C. Appointment status

D. Return of application fee.

A-
15. In the case of a business entity license cancellation, the department may refuse to accept the cancelled license unless which of the following is provided to the department?
A. Cancellation notice

B. Proof that all licensed officers or partners consent to the cancellation

C. Proof that all designated business entity licensee concurs with the cancellation

D. Cancellation service fee

B-
16. Charging different rates or providing different benefits to insureds of the same actuarial class or hazard category is which of the following?
A. Sliding

B. Unfair discrimination

C. False statements

D. Defamation

B-
17. When a bank or credit union refuses to give a loan unless the borrower buys insurance from a specific company, it is known as
A. Misrepresentation

B. Rebating

C. Churning

D. Coercion

D
18. After the department approves a business name, the business has how many days to submit a license application?
A. 30

B. 60

C. 90

D. 120

C-
19. A request to open a branch office of an insurance company must be submitted to the department within how many days of the office opening date?
A. 30

B. 60

C. 90

D. 120

A-
20. If a licensee moves his/her business location, the notification of this action must be submitted to the commissioner within how many days of the move?
A- 30

B- 60

C- 90

D- 120

A
21. Which statement is false about service fee requirements?
A- a fee must bear a reasonable relationship to the service

B- A fee may not be charged for completing an accident form

C- No service fee for any one policy may exceed $20

D- Two service fees may be charged per year

D-
22. Premium refunds to the insured must be paid or credited to the insured's account within how many days after received by the producer
A- 3 calendar days

B- 5 business days

C- One week

D- 10 calendar days

B-
23. Failure of a producer to respond to a notice of an administrative penalty may result in all of the following actions, except
A. The producer does not contest the allegations

B. A final order will be sent

C. An automatic hearing is scheduled

D. License suspension

C-
24. Which of the following is true regarding NJ's insurance fraud prevention Act.
A. Suspicious information regarding an accident obtained by the state police must be referred to an insurance investigator within 48 hours.

B. Only criminal activities will be litigated by the insurance fraud prosecutor

C. Concealing information requested on an insurance application is a violation of the Act.

D. A claimant will receive twice the damages if the court determines that the defendant violated the act

C-
25. The New Jersey Life and health Insurance guaranty association will assume the contractual obligation of an insolvent insurer up to in death benefits for any one individual
A- 100,000

B- 250,000

C- 350,000

D- 500,000

D
26. Which of the following is not considered ethical behavior for a producer?
A- Influencing a client to buy a policy in order to be the agency's top producer

B- Engaging in active and fair competition

C- providing competent service

D- providing advertising that has fair consent

A-
27. A person is not conducting a pretext interview if he/she:
A. Pretends to be someone else

B. Refuses to give his/her name

C. Misrepresents the purpose of the interview

D. Intends to get an interviewee to replace a policy

D-
28. Under which of the following circumstances can an insurer not use a genetic test?
A. The insurer has informed the applicant that the test is required

B. The applicant has given written consent prior to the test

C. The insurer must promptly provide the physician with a copy of the test results

D. The applicant has given oral consent prior to the test.

D-
29. Which of the following is not a purpose of the New Jersey insurance underwriting association (NJIUA)?
A. To provide an adequate market for fire and extended coverage, except mine subsidence insurance

B. To attract and retain private capital in central city areas and various other areas of the state

C. To provide needed goods and services, job opportunities for community development

D. To provide insurance to enable homeowners to pur

A
30. Which of the following is a false statement about an authorized cancellation of a property insurance policy?
A. The insured's premium will remain the same if the insurer fails to send a notice of nonrenewal

B. Notices of cancellation must be mailed to the insurer no less than 30 or more than 120 days prior to the cancellation effective date.

C. If a policy is cancelled for a moral hazard, the insurer must mail the cancellation notice at least 30 days prior to the effective date of cancellation.

D. A notice for cancellation due to nonpayment of premium is not required to include a statement about the department's complaint process.

C-
31. A process by which a surplus lines producer places coverage after a risk has been declined is called:
A. Exempt coverage

B. Diligent Effort

C. Exempt commercial purchaser

D. Surplus lines insurer

B-
32. Choose the correct statement about the exportable list
A. An insurer may present evidence at the hearing that conditions have changed.

B. The commissioner holds a quarterly meeting of insurers to update the list

C. it is a list of risks developed by an insurer of all the surplus lines business written

D. The commissioner may take classes of insurance on or off the list only during the hearing.

A-
33. To which insurance would the commercial insurance deregulation act of 1982 apply?
A. Ocean Marine

B. Mortgage Guarantee

C. Medical Malpractice

D. Business owners

D
34. It is not in the public interest for the fair act to:
A. Allow automobile insurance to make an adequate profit

B. Charge temporary assessments for practicing certain professions.

C. Mandate an auto policy to be the primary source for paying medical costs from auto accidents

D. continue merit rating surcharges
35. The minimum coverage limits for bodily injury or death and property damage liability are:
A. 10/20/5

B. 15/30/5

C. 20/40/15

D.25/50/15

B-
36. Which of the following is false about uninsured motorist coverage?
A. It is optional for the insured, but must be offered by the insurer

B. The limits must be for $500K combined single limit, or 250/500/100 split limits

C. Stacking of limits is acceptable

D. Rates for UM coverage cannot be based on the insured's territory.

C-
37. Which of the following is covered under PIP Coverage?
A. No limitation on lawsuit option applies for a non-economic loss

B. the tort exemption is optional

C. limitation on lawsuit applies only to death

D. the tort option only applies to the named insured.

A-
38. Which of the following is not accurate regarding the NJ automobile residual market for the personal automobile insurance plan PAIP?
A. As long as the applicant is a nj resident , an out of state car registration is not acceptable

B. Military personnel stationed in NJ qualify if the owned auto is registered in another state

C. The applicant must provide claims history for the previous 3 years

D. The PAIP must insure no more than 10% of the NJ personal auto insurance market.

A-
39. Which of the following is correct about choosing a tort exemption?
A. No limitation on lawsuit option applies for a non economic loss

B. The tort exemption is optional

C. Limitation on lawsuit applies only to death

D. The tort only applies to the names insured

A-
40. An applicant who cannot obtain automobile insurance in the voluntary market is qualified for the commercial automobile insurance plan if his/her automobile
A. is valued no more than 100,000

B. Has been in 3 accidents in the past 3 years

C. Is registered in NJ, or will be within 60 days.

D. is part of an uninsured fleet.

C-
41. $250,000 personal injury protection coverage is available for medical expense benefits in the basic auto insurance policy for all but which of the following?
A. Disfigurement

B. Permanent injury at an acute care hospital

C. Spinal cord injury

D. cuts and bruises.

D
42. Special automobile insurance policies are not available to which of the following?
A. Covered by government subsidy programs

B. Excess physical damage

C. Low Income vehicle owner

D. Emergency care

B-
43. Automobile insurance cannot be cancelled by the insurer for which of the following reasons?
A. No liability insurance

B. Excessive at fault accidents within 5 previous years

C. Suspending driver's license

D. Tailgating

B-
44. Workers compensation will provide financial compensation to an employee who incurs which of the following injuries?
A. An injury that is self-inflicted

B. An injury that occurs when the employee is intoxicated

C. An injury that arises from the employee's willful negligence

D. An injury where the employer is not negligent.

D-
45. Which of the following is not considered an eligible employee to be covered under workers compensation?
A. Independent contractor

B. Company officer

C. fireman or policeman

D. Salesperson while driving

A-
46. The Compensation rating and inspection bureau (CRIB) does not have the authority to:
A. Approve classification system or risks and premiums

B. Establish rules for member assessment

C. Sue or be sued regarding recovery of assessments

D. Prepare Policy forms.

A-
47. Which of the following is not considered a financed automobile?
A. Titles is retained by seller until purchase price is paid in full.

B. Vehicle is pledged as security for the repayment of a loan

C. Purchase price is not paid in full at the time of the purchase

D. Seller extends credit to the purchaser for the unpaid balance of the purchase price.

B-
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