State Regulations and Ethics Flashcards
6 cards from real Property And Casualty Insurance License practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 State Regulations and Ethics flashcards as text
What is the 'grace period' in an insurance policy?
Answer: A specified time after the premium due date during which the policy remains in force even though premium has not been paid
The grace period (commonly 30 or 31 days for most P&C policies) allows the insured extra time to pay the premium without the policy lapsing.
What must an agent do when they have a conflict of interest with a client?
Answer: Disclose the conflict of interest to the client and obtain informed consent
Insurance agents owe a fiduciary or duty-of-care obligation to clients and must disclose any conflict of interest so the client can make an informed decision.
What is the purpose of the 'NAIC Insurance Fraud Prevention Model Act'?
Answer: To set standards for insurer anti-fraud programs, reporting requirements, and penalties for insurance fraud
The model act requires insurers to establish anti-fraud plans, train employees, and report fraud to state regulators, creating a framework for detecting and preventing insurance fraud.
What is 'premium finance' in insurance?
Answer: A loan made to the insured by a third-party premium finance company to pay the insurance premium
Premium financing allows insureds to obtain a loan from a finance company to pay the entire annual premium upfront, then repay the loan in installments, often used for large commercial policies.
Under the 'concurrent causation' doctrine, when two perils combine to cause a loss where one is covered and one is excluded, how is the loss typically treated?
Answer: The entire loss is covered because a covered peril was involved
Under the concurrent causation doctrine, if a covered peril and an excluded peril combine to cause a loss, the entire loss may be covered because a covered cause was a contributing factor.
What is a 'surplus contribution' requirement in an insurance guaranty fund assessment?
Answer: A mandatory assessment charged to solvent admitted insurers to fund claim payments of insolvent insurers
When an admitted insurer becomes insolvent, the state guaranty fund assesses solvent admitted insurers proportional to their premium volume to cover the insolvent insurer's outstanding claims.