State-Specific Laws and Rules Flashcards
6 cards from real P&C 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-Specific Laws and Rules flashcards as text
Most states require P&C producers to disclose which of the following to clients?
Answer: Material conflicts of interest and compensation arrangements that could influence their recommendations
Disclosure of material conflicts of interest — such as contingent commissions or financial incentives tied to placing business with certain insurers — is required in most states to ensure producers act in the client's best interest.
The 'NAIC Insurance Information and Privacy Protection Model Act' is designed to:
Answer: Govern how insurers collect, use, and disclose personal information about insurance applicants and policyholders
The NAIC model privacy act establishes standards for insurers' collection and use of personal information, giving individuals the right to access their records, challenge inaccurate information, and limit disclosure.
Under state law, a property and casualty insurance policy may be cancelled by the insurer for non-payment of premium with a minimum notice of:
Answer: 10 days (most states)
Most states require a minimum of 10 days written advance notice to the insured for cancellation due to non-payment of premium, though some states require longer notice periods.
Which of the following best describes the role of the NAIC's Financial Regulation Standards and Accreditation Program?
Answer: It evaluates and accredits state insurance departments that meet minimum financial regulatory standards, facilitating reliance by other states
The NAIC accreditation program certifies that a state insurance department meets minimum standards for financial solvency regulation; accredited states have their financial examinations recognized by other states, reducing duplicative multi-state examinations.
State 'anti-rebating' laws generally prohibit insurance producers from:
Answer: Offering or giving any inducement to purchase insurance that is not specified in the policy, including sharing commissions with the insured
Anti-rebating statutes prohibit producers from offering anything of value — cash, gifts, free services, premium discounts — as an inducement to purchase insurance, unless it is explicitly provided for in the policy.
Under the 'valued policy laws' that exist in many states, an insurer that insures real property for a stated amount must pay:
Answer: The full policy amount in the event of a total loss, regardless of the actual replacement cost at the time of loss
Valued policy laws require the insurer to pay the full face amount of the policy upon a total loss of real property — the insured amount becomes conclusive evidence of value, and the insurer cannot argue the property was worth less.