Practice Questions: State Laws Flashcards
A limited lines producer license will remain in effect as long as what is done?
As long as the appointing insurance company pays the required fee January 1st of every year (unless the license is revoked or supsended)
After the hearing, what must the Director do?
Issue a written order based on the examination report within 90 days
Who can terminate a limited lines producer license?
The licensee and the insurance company
For how much is the Illinois Insurance Guaranty Fund liable for?
Up to $500,00
- except for worker’s compensation claims
- no more than the face amount of the policy
What must a producer do if they move to a new address?
Inform the Director within 30 days
What type of crime is it if a person with no insurance license does things requiring a license?
a Class 4 Felony
What is one exception to rebating law?
offering a child passenger seat or discount on purchase of such system
Within what amount of time must an insurer affirm or deny liability and offer payment?
- Must affirm or deny within a reasonable time
- Must offer payment within 30 days of affirmation
- If not solved within 45 days of report, the company must provide insured and/or beneficiary with written explanation of delay.
What is rebating and is it allowed?
Rebating: giving prospective insurance applicant something to induce them to purchase a policy
It is NOT allowed; it is a class B misdemeanor
For how long can an insurance company hold premiums after authorizing a producer to collect them?
90 days
Within what time after a license lapses can a producer recieve a new license without having to retake an examination and what is the penalty?
12 months
Double the unpaid renewal fee
How many hours of continuing education are required to renew a license?
24 hours, of which 3 hours in classroom ethics courses
For how much must a producer be bonded?
-$2500
-5% of premiums brokered in previous year
whichever is higher(agents acting solely for insurer typically exempt)
Where do fees paid to the Director go?
The Insurance Producer Administration Fund
What can happen to a person who does not submit to an examination by the Director?
- supension
- refusal
- nonrenewal
of the individual’s license or authority
How many hours of study must be done for each line of insurance?
20 hours, of which 7.5 hours in classroom
How much is a limited line producer’s license fee?
$50 a year
How much is a temporary producer’s license fee?
$50
How much is an insurance producer’s license fee?
$180/2 years
How much is a nonresident producer’s license fee?
$250/2 years
What powers does the Director have?
- make reasonable laws
- conduct investigations
- enforce laws
- issue cease and desist orders
- revoke or suspend any license
- fine up to $1000 for marketing violation
If the Director issues a cease and desist order, when is the hearing and what is the maximum fine?
Hearing: between 20 and 30 days from the date of notice
Fine: up to $100 a day, to a maxium of $5,000
If a company doesn’t comply with an order from the Director concerning unfair claim practices, what is the maxium penalty?
- revocation of certificate of authority for 6 months
- $250,000 fine
- both 1 and 2
Who enforces the insurance laws of Illinois, and how are they appointed?
The Director of Insurance
Appointed by the Governor
If an insurance company no longer employs a given producer, can the company cancel policies written by the producer?
No
Who can the Director examine?
- any compnay authorized to do business in IL
- any person involved in the formation of a company
- any licensed producer/firm
- any person or firm seeking a license
- any person engaged in the business of adjusting losses or financing premiums
For how long is a temporary license for non-producers valid?
up to 180 days
What’s a temporary license for non-producers used for?
surviving spouse or court appointed representatives of a licensed producer who dies/becomes disabled to allow for the sale of producer’s business, recovery of the producer, and/or training and licensing of new personnel to operate the producer’s business
What is defemation and what is the fine for it?
definition: written/oral statments that are false, maliciously critical, or derogatory to financial condition of insurer, or intended to injure any person engaged in the insurance business
fine: $200-$1000
For what classes of insurance is a limited lines producer license available?
- baggage, travel health, accident or trip cancellation insurance
- industrial life, accident, and health insurance
- credit health and credit accident insurance
- legal expense insurance
- enrollment for recipients of public aid
- insurance issued by a company organized under the Farm Mutual Insurance Company Act of 1986
- limited healthcare plans issued by organization with a certificate of authority under the Limited Health Service Organization Act
What is the maxium amount of business a producer can have with their own friends and family?
50%
What are the penalties if money held in a fidicuary capacity is misappropriated?
less than $150: Class A Misdemeanor, up to Class 4 Felony for repeat offenses
more than $150: Class 3 Felony
What might cause a business license to be suspended, revoked, or refused by the Director?
If the business is found after a hearing that an individual licensee’s violation was or should have been known by the partners or managers, and was not reported or corrected
For how long is an insurance license valid?
2 years
What class of offense is if a person violates a written order issued by the Director and what is the maximum fine?
A business offense
up to $5000
What is “twisting” and what is the fine for doing it?
definition: misleading representation or comparison between companies or policies to induce insured to change insurance
fine: between $200-$1000
In addition to any fines, what punishment is applicable to an individual found guilty of rebating?
may not recieve commission on policies sold using rebating
How much time can pass between taking each part of the producer exam?
90 days
What are the qualification required for a limited lines producer license?
- 18 years old
- must be considered competent, trustworthy, and of good business reputation by the Director
What are some examples of unfair claims practices?
- failing to adopt and implement reasonable standards for settling claims
- not attempting to settle claims promptly and fairly when insurer’s liability is reasonable clear
- delaying an investigation
- failing to offer reasonable and accurate reason for denying a claim
- refusing to pay claims without conducting reasonable investigation based on all available information
What must a producer convicted of a felony do, and how long do they have to do it?
report conviction of Director and submit a copy of judgement, probation, or other court documents within 30 days of judgement
Where must funds from applicants or policyholders go if they will be held longer than 15 days?
A Premium Fund Trust Account(PFTA) with an Illinois based financial insitution
What is the Illinois Insurance Guaranty Fund?
association of insurers to guarantee payment of policy benefits and continuation of coverage
member companies provide funds
How many days notice must a person participating in a hearing be given?
10 days
What must be true for a nonresident to recieve a nonresidence license?
- their home state must submit the proper request
- the individual must pay a license fee
- their home state must reciprocate in awarding noresidence licenses to Illinois residents
For how long must memoranda regarding service fees be kept on file?
7 years
The insured must sign memoranda regarding service fees if the fees exceed what percentage of the premium?
10%
What are the requirements to obtain a temporary license for producer applicants?
- must be enrolled in training courses and in the process of fulfilling pre-licensing requriemtns
- their appointing insurer must have submitted the application form and fee to the Director
What can a person NOT do without an insurance license?
- sell, solicit, or negotiate insurance
- charge a fee or offer advice
For how long is a temporary license for producer applicants valid?
90 days
(once in the individual’s life)
After what amount of time can a contract between a company and an independent insurance agent be terminated, and how is this done?
1 year; by signed mutual agreement at time of termination OR by the company with 180 days written notice. (No new business can be written or bound by the agent during the 180 days)
What are valid ground for cancellation of a policy?
Nonpayment of premium; misrepresentation of application; violation of policy terms or conditions; fraudulent claims; auto is unfit for use.
What is the process by which an insured can appeal a cancellation or non-renewal?
Written request for hearing at least 20 days prior to effective date of cancellation/non-renewal; within 10 days of receipt, Director calls hearing; w/in 20 days of hearing, Director issues findings; cost of hearing assessed against losing party up to $100
What must an insurer do with unearned premium after cancelling an auto policy, and within what time?
Refund unearned premium on a pro-rated basis within 30 days of notice of cancellation, without using short rate table or being influenced by prior claims
How much time is an insurer obligated to give an insured to repair defects in property so that it becomes an insurable risk?
A reasonable period up to 90 days
How much advance notice must be given before non-renewing a policy for nonpayment of premium?
10 days
How much advance notice must be given before non-renewing a policy for a reason other than nonpayment of premium?
30 days
How much advance notice must be given before non-renewing a policy for a reason other than nonpayment of premium?
not less than 30 days from the expiration date of the policy
at least 60 days before the nonrenewal date
For how long can premiums collected by agents or brokers be held before being remitted to insurer, and where are they held?
90 days, Premium Fund Trust Account
In order for an insured to purchase an insurance policy on a payment plan, what document must be in place?
A premium financing agreement, dated & signed by insured, with a copy left in their possession
What information must a premium financing agreement include?
Total amount of premiums; Amount of down payment; policy/binder number; Finance charge in both dollars and as an annual percentage rate; number of installments with each amount expressed in dollars, due date of each installment
What is the FAIR plan?
Fair Access to Insurance Requirements are federally mandated programs to make property insurance available to urban property owners unable to obtain coverage through regular channels
What four things does the FAIR plan do?
Require immediate binding of eligible risks; make use of premium installment plans; establish reasonable service standards (as judged by Director); distribute losses & expenses of plan proportionately among members (carriers)
Who is eligible for coverage under FAIR?
Any urban property owner who, after 3 attempts, has been unable to get coverage through normal channels
What is covered under a FAIR insurance plan?
Fire and Extended Coverage
What is Mine Subsidence?
Ground movement caused by failure at mine level of man-made underground mines
What is excluded from Mine Subsidence insurance?
Earthquake, landslide, volcano, collapse of drains & transit tunnels, soil erosion, root damage; damage to sidewalks, driveways, parking lots, plants, crops, agricultural drainage equipment
What does the Mine Subsidence Insurance Fund do?
Establish rates of coverage & amounts of reinsured loss per building; Makes coverage available, collects, sets, & monitors premiums & claims reserves
Under what conditions can a property not be covered by subsidence insurance?
The county has or shares a border with another county with a population of greater than 1 million; the county is excepted by the Director; the insured waives in writing their right to subsidence insurance
What is Uninsured Motorist insurance?
Allows named insured, resident relative, & passengers in covered auto to collect sums another driver would be legally liable to pay for Bodily Injury
In Illinois, what is the basic UM coverage?
25/50 (i.e. $25,000 for bodily injury or death of one person, and $50,000 for two people)
If an insured is injured by an uninsured motorist while walking, does their auto policy cover bodily injury liability?
Yes, if they have UM coverage (which is required)
In Illinois what is the basic Underinsured Motorist Coverage?
25/50, same as UM
What is a Defensive driving discount, and who is eligible for it?
Motorists over 55 must be offered reductions in their auto policy premiums after successfully completing an 8+ hr course such as the National Safety Council’s Defensive Driving Course
Premiums on auto insurance must offer a discount for insured autos equipped with what?
Anti-theft mechanisms
What is IL mandatory auto coverage?
25/50/20 - $25,000 for injury/death per person, $50,000 total for all injury/death, $20,000 for damage to property
What are the penalties for driving without insurance?
$500 minimum fine; $1000 minimum if vehicle already suspended
What are the reinstatement fees and mandatory suspension periods for lack of insurance?
$100 & suspension until payment for first offense; $100 and 4 months’ suspension for 2nd offense within 4 yrs; $200 & 6 months’ suspension for false proof of insurance.
What item inside a car must an auto insurance policy include coverage for replacement?
A car seat which was in use by a child during an accident in which coverage is applicable
What is the penalty for providing a fraudulent residential address?
$1001 - $1200
How far in advance must workers’ compensation rates be submitted, and to whom?
30 days before effective date, to the Director
