Insurance Regulation Quiz Cards

Question 1

Who is ultimately responsible for ensuring that proper procedures are in place for claims investigation and settlement?

A.
The arbitrator
B.
The insurance company
C.
The repair shop
D.
The adjuster

Answer 1

B.
The insurance company

The insurance company is ultimately responsible for ensuring that proper procedures are in place for claims investigation and settlement.

Question 2

All of the following are prohibited acts and grounds for license suspension or revocation in California, except:

A.
violating a court order
B.
failing to renew adjuster’s license by the due date
C.
purchasing a tear gas weapon
D.
making a false statement on a license application

Answer 2

B.
failing to renew adjuster’s license by the due date

Failing to renew an adjuster’s license by the due date is not a prohibited act or grounds for license suspension or revocation in California.

Question 3

The California Auto Body Repair Consumer Bill of Rights lists all of the following policyholder’s rights, EXCEPT:

A.
right to choose the repair shop
B.
right to get an independent repair estimate directly from a registered auto body repair shop
C.
right to declare a vehicle as a total loss if not satisfied with repair options or outcomes
D.
right to receive an itemized written estimate and a detailed invoice of repairs

Answer 3

C.
right to declare a vehicle as a total loss if not satisfied with repair options or outcomes

The California Auto Body Repair Consumer Bill of Rights does NOT allow the insured to determine whether the vehicle is a total loss.

Question 4

All of the following are steps that each insurer should take to help the commissioner conduct an examination of claim files, EXCEPT:

A.
maintain all file documentation in electronic format.
B.
maintain files for at least four years.
C.
keep files in a place that allows for quick access.
D.
keep files organized in a way to easily reconstruct events.

Answer 4

A.
maintain all file documentation in electronic format.

An insurer does not need to maintain all file documentation in electronic format.

Question 5

Sam was just hired by XYZ Insurance. He must receive anti-fraud orientation training within ____ of starting his new job.

A.
30 days
B.
14 days
C.
60 days
D.
90 days

Answer 5

D.
90 days

Sam must receive anti-fraud orientation training within 90 days of starting his new job.

Question 6

When a California residential or commercial property policy provides replacement cost coverage, all of the following standards apply, EXCEPT:

A.
The insurer must provide a recommendation for a specific individual or company for repair.
B.
The insured should not pay for depreciation, or any other cost, except the deductible.
C.
The insurer must cover any additional damage caused during replacement or repair.
D.
The insurer must give the claimant a copy of the scope or estimate the settlement is based on.

Answer 6

A.
The insurer must provide a recommendation for a specific individual or company for repair.

The insurer may not suggest a specific individual or company for repair unless the claimant requests a recommendation and has been notified of his right to select a repair person.

Question 7

Danielle is a licensed adjuster in California who would like to begin doing business under the fictitious name “Amiable Adjusting.” What must she do to begin conducting business under this new name?

A.
She must submit a fee and obtain written authorization from the commissioner.
B.
She can begin conducting business under that name whenever she likes.
C.
She must claim rights to that name by notifying the commissioner within ten days of beginning to conduct business under that name.
D.
She must first ensure no one else is doing business under that name and then she is free to use it.

Answer 7

A.
She must submit a fee and obtain written authorization from the commissioner.

If a licensee wishes to conduct business under a fictitious name, he must first obtain the written authorization of the commissioner and pay a fee for that authorization.

Question 8

Which of the following statements about insurance is true?

A.
Insurance is mainly regulated at the federal level.
B.
In an insurance contract, the insurer gives the insured a premium in exchange for peace of mind.
C.
Insurance is the transfer of the right to collect a debt from one entity to another.
D.
For regulatory purposes, insurance code divides lines of insurance into classes based on the coverage each provides.

Answer 8

D.
For regulatory purposes, insurance code divides lines of insurance into classes based on the coverage each provides.

For regulatory purposes, insurance code divides lines of insurance into classes based on the coverage each provides.

Question 9

An insurer must maintain complete files for all claims from the current year and the last:
A.
2 years.
B.
5 years.
C.
4 years.
D.
7 years.

Answer 9

C.
4 years.

An insurer must maintain complete files for all claims from the current year and the last 4 years.

Question 10

When making a claim payment, the insurer should always:

A.
provide information on the arbitration process.
B.
initially deny coverage until an investigation can be completed.
C.
try to settle for a lower amount to save money.
D.
explain the amounts and each coverage providing for them.

Answer 10

D.
explain the amounts and each coverage providing for them.

When making a claim payment, the insurer should always explain the amounts and under which coverage they are being paid.

Question 11

An adjuster must report a change of address to the Insurance Commissioner:

A.
within 60 days.
B.
within 15 days.
C.
within 45 days.
D.
within 30 days.

Answer 11

D.
within 30 days.

An adjuster must report a change of address to the Insurance Commissioner within 30 days.

Question 12

The commissioner does NOT have the power to:

A.
incarcerate an adjuster.
B.
fine an adjuster.
C.
revoke an adjuster’s license.
D.
suspend an adjuster’s license.

Answer 12

A.
incarcerate an adjuster.

The commissioner does not have the power to incarcerate an adjuster, but she can administer a fine and suspend or revoke the adjuster’s license.

Question 13

Every insurer in California is required to submit an SIU report to the Department of Insurance:

A.
every two years.
B.
every five years.
C.
every three years.
D.
every year.

Answer 13

D.
every year.

Every insurer in California is required to submit an SIU report to the Department of Insurance every year.

Question 14

An insurer may not:

A.
charge higher premiums to elderly drivers.
B.
expand coverage without requiring the insured to sign a new, revised policy.
C.
distribute pamphlets or advertisements.
D.
try to settle a claim using an application that was altered without the knowledge of the insured.

Answer 14

D.
try to settle a claim using an application that was altered without the knowledge of the insured.

An insurer may not require an insured to submit a preliminary claim report and then formal proof of loss forms before moving forward on the claim.

Question 15

Before he can be licensed, an adjuster applicant in California must file with the commissioner a surety bond of __________.

A.
$4,000
B.
$5,000
C.
$1,000
D.
$2,000

Answer 15

D.
$2,000

An applicant cannot receive her license unless she files with the commissioner a surety bond of $2,000 conditioned for the faithful and honest conduct of business.

Question 16

Which of the following is NOT an acceptable reason for the Commissioner of Insurance to revoke an insurance professional’s license?

A.
Taking on too many claims at one time
B.
Having been convicted of a felony
C.
Intentionally misrepresenting the terms of a contract
D.
Forging another’s name on an insurance document

Answer 16

A.
Taking on too many claims at one time

The Commissioner would not revoke an adjuster’s license because he took on too many claims at one time.

Question 17

Which of the following insurers is committing an Unfair Claims Settlement Practice?

A.
XYZ Insurance denies a claim because the investigation proved the loss was not covered under the policy.
B.
Acme Insurance tells a first party claimant, who was injured by a third party, that her claim is denied because she must file a claim with the guilty party’s insurer.
C.
An agent of Trust Insurance fails to verbally review each policy provision with an insured before accepting the first premium payment.
D.
When investigating a claim in which arson is suspected, Steadfast Insurance takes 25 days to make a decision on the claim.

Answer 17

B.
Acme Insurance tells a first party claimant, who was injured by a third party, that her claim is denied because she must file a claim with the guilty party’s insurer.

Question 18

Paul is a licensed insurance adjuster in California during a natural disaster. To help with the abundance of claims, Paul employs his friend Billy, who does not have yet have a California license but has done some adjusting in other states. Paul is required to register Billy as an emergency adjuster with the commissioner within ______ days.

A.
5
B.
10
C.
25
D.
15

Answer 18

D.
15

Within 15 days of an emergency adjuster beginning to work, a supervising adjuster must register the emergency adjuster with the commissioner.

Question 19

Which of the following breaks one of the rules for settling auto loss claims?

A.
The insurer informs the insured about a specific car that meets the comparable auto requirements and is available to purchase in the local area.
B.
An insurer tells a repair shop that is can use a non-OEM part to repair an insured car as long as the part is equal to the original manufacturer parts in terms of kind, quality, safety, fit, and performance.
C.
The insurer refuses to reopen a claim file when the insured states, 60 days after the settlement, that he was unable to find a comparable vehicle for the settlement amount.
D.
An insurer tells the insured about a specific repair shop he must go to to get his vehicle repaired.

Answer 19

D.
An insurer tells the insured about a specific repair shop he must go to to get his vehicle repaired.

Question 20

An emergency adjuster license in the State of California is good for ____ days.

A.
180
B.
30
C.
60
D.
90

Answer 20

A.
180

The commissioner can grant temporary licenses to adjust catastrophe-related claims in CA for 180 days, with an 180-day extension possible.

Question 21

It is considered a/an ________________ to knowingly falsify your fingerprints or photographs on your adjuster application.

A.
violation
B.
felony
C.
infraction
D.
misdemeanor

Answer 21

B.
felony

In California, it is considered a felony to knowingly falsify your fingerprints or photographs.

Question 22

An adjuster whose license has been suspended or revoked must:

A.
keep his license in a safe place for use after reinstatement.
B.
destroy his license.
C.
surrender his license to the commissioner.
D.
diagonally strike through his license and fax a copy to the state.

Answer 22

C.
surrender his license to the commissioner.

Any adjuster whose license is revoked or suspended must surrender the license to the commissioner.

Question 23

Who is responsible for examining an insurer’s SIU and related operations to determine compliance with California state law?

A.
The Commissioner of Insurance
B.
The District Attorney
C.
The Attorney General
D.
The Chief of Police

Answer 23

A.
The Commissioner of Insurance

The Commissioner can conduct an examination of an insurer’s SIU and any related operations, including operations under contract with the insurer, as deemed necessary to determine compliance with California state law.

Question 24

When a California residential or commercial property policy provides replacement cost coverage, but a replacement item does not match others like it in size, kind, or quality, the insurer must:

A.
replace all of the items in the damaged area so that they are consistent.
B.
pay the insured the ACV of the damaged items instead.
C.
bring the settlement to arbitration.
D.
offer to buy from the claimant the undamaged items that are unlike the replacement items.

Answer 24

A.
replace all of the items in the damaged area so that they are consistent.

If a replacement item does not match others like it in size, kind, or quality, the insurer must replace all of the items in the damaged area to be consistent.

Question 25

The insurance commissioner, or his appointee, may examine an insurer’s claim files:

A.
every year.
B.
every four years.
C.
at any time.
D.
every two years.

Answer 25

C.
at any time.

The insurance commissioner, or his appointee, may examine an insurer’s claim files at any time.

Question 26

Which of the following is NOT a legitimate option for insurers regarding total loss auto claims?

A.
Pay the claimant the money needed to buy a comparable new car, minus the deductible.
B.
Offer the claimant a “comparable automobile” to replace the totalled vehicle.
C.
Allow the claimant to keep the totalled car and deduct the salvage value from the settlement amount.
D.
Sell the totalled vehicle’s parts and pay the claimant twice the amount made in the sale.

Answer 26

D.
Sell the totalled vehicle’s parts and pay the claimant twice the amount made in the sale.

When settling total loss auto claims, the insurer can offer a replacement vehicle or a cash settlement based on the value of the vehicle before the loss. There is no option to offer the claimant twice the amount of the salvage value of the totalled vehicle.

Question 27

Which of the following conditions is NOT included in the definition of “comparable automobile”?

A.
A “comparable auto” should be of the same or newer model year as the insured car.
B.
A “comparable auto” should have similar mileage to the original insured car.
C.
A “comparable auto” should be the same color as the original insured car.
D.
A “comparable auto” should be made by the same manufacturer as the insured car.

Answer 27

C.
A “comparable auto” should be the same color as the original insured car.

A “comparable auto” should be of like kind and quality, made by the same manufacturer, of the same or newer model year, with similar options and mileage to the original insured car.

Question 28

If a willful act of violation by an SIU department is detected, the Commissioner can charge a penalty up to _______________ per act of non-compliance.

A.
$10,000
B.
$5,000
C.
$15,000
D.
$2,500

Answer 28

A.
$10,000

If a willful act of violation is detected, the Commissioner can charge an SIU department up to $10,000 per act of non-compliance.

Question 29

All insurers in California must do all of the following, EXCEPT:

A.
establish written procedures for employees to detect, identify, document, and refer suspected fraud to SIU and the Fraud Division.
B.
maintain an ongoing anti-fraud training program to develop and improve the anti-fraud awareness skills of the insurer’s employees.
C.
submit annual reports to the Department of Insurance.
D.
meet with the commissioner monthly to go over any detected or suspected fraud.

Answer 29

D.
meet with the commissioner monthly to go over any detected or suspected fraud.

All insurers in CA must have a Special Investigative Unit, must establish written procedures for employees to detect, identify, document, and refer suspected fraud to the SIU and Fraud Division, must maintain an ongoing anti-fraud training program, and must submit annual reports to the Department of Insurance.

Question 30

If someone has a past misdemeanor that has been expunged, does she still need to bring it up when applying for an adjuster license in California?

A.
Yes
B.
Not unless asked specifically about expunged convictions
C.
No
D.
Only if she wants to

Answer 30

A.
Yes

According to the California Penal Code, you are required to report a conviction that has been expunged if you are asked about any past convictions.

Question 31

Which of the following is not a requirement to be eligible for an adjuster license in California?

A.
Complete the required application
B.
Be 21 or older
C.
Pass the required exam
D.
Not have done anything that would get a license denied under Section 480 of the Business and Professions Code

Answer 31

B.
Be 21 or older

The age requirement for an adjuster license in California is 18 or older.

Question 32

All of the following are steps in the process of investigating possible insurance fraud, EXCEPT:

A.
Preserve documents and other evidence
B.
Identify and interview witnesses
C.
Refer the investigation to the Attorney General
D.
Utilize industry-recognized databases

Answer 32

C.
Refer the investigation to the Attorney General

Question 33

All newly hired SIU employees should receive an anti-fraud orientation within ____ days of beginning their jobs.

A.
20
B.
90
C.
30
D.
60

Answer 33

B.
90

All newly hired employees should receive an anti-fraud orientation within 90 days of beginning their jobs.

Question 34

For surety insurance claims in California, the insurer should accept or deny the claim within ____ of receiving proof of loss.

A.
30 days
B.
60 days
C.
15 days
D.
40 days

Answer 34

D.
40 days

The insurer should accept or deny the claim within 40 days of receiving proof of loss, unless the claim is in litigation or arbitration.