Texas Property and Casualty Law Supplement

Question 1

When faced with a known violation of insurance law, the Commissioner likely would:

A) issue a cease and desist order.
B) order the case to federal court.
C) cite the violator for a felony.
D) automatically suspend the violator’s license for 120 days.

Answer 1

Answer: A

The Insurance Commissioner must follow due process in pursuing an action against a violator, which includes holding hearings on the matter. The initial action of the Commissioner is to require that the violator cease and desist from committing the act in the future if there is danger to the public safety.

Question 2

The Commissioner has the power to:

A) issue certificates of authority to insurers.
B) appoint a stock insurance company board of directors.
C) authorize a mutual insurance company sale of stock.
D) write and enact new legislation and statutes affecting the business of insurance.

Answer 2

Answer: A

The Commissioner has no power to affect the management of an insurance company nor to enact law, which is the responsibility of the state legislature. The Commissioner is empowered to issue certificates of authority to approved insurers.

Question 3

Following the date of issue, an agent license expires in:

A) five years.
B) two years.
C) one year.
D) three years.

Answer 3

Answer: B

When issued, an agent’s license expires two years after the date of issue, unless it has been suspended or revoked by the Commissioner.

Question 4

In Texas, insurance laws and regulations are administered by the:

A) State Senate Finance Committee.
B) Governor.
C) Commissioner of Insurance.
D) Legislature.

Answer 4

Answer: C

The head of the Texas Department of Insurance is the Commissioner of Insurance. Although the Governor makes the appointment and the state senate must confirm the nominee, regulatory power rests with the Commissioner.

Question 5

An insurance company domiciled in New Jersey and conducting business in Texas is a (n):

A) foreign company.
B) alien company.
C) domestic company.
D) interstate company.

Answer 5

Answer: A

Domestic companies are those domiciled in Texas, foreign companies are domiciled in another state, and alien companies are domiciled outside the United States. An interstate company is just a reference to a company who does business in multiple states, without any particular state as a point of reference.

Question 6

A person who examines and assesses risks for persons seeking or renewing property and casualty insurance is a (n):

A) surplus lines agent.
B) insurance counselor.
C) risk manager.
D) reinsurer.

Answer 6

Answer: C

Risk managers are persons who, for compensation, examine, assess, or evaluate risks for (and provide advice for reducing risk to) a person who seeks to obtain or renew property and casualty coverage in Texas. A person must be licensed as a risk manager.

Question 7

Insurance issued to Texas residents by companies not licensed to do business in Texas would be classified as:

A) unlicensed insurance.
B) unlisted insurance.
C) alien insurance.
D) unauthorized insurance.

Answer 7

Answer: D

Insurers must be authorized to conduct business in Texas. An unauthorized insurer is any insurer that does not have a certificate of authority from the Department of Insurance and is therefore prohibited from writing business in the state. Technically, insurers are not licensed or unlicensed, but authorized or unauthorized. Alien insurers may operate under a certificate of authority.

Question 8

Agents who solicit and procure insurance for themselves, their families, and their business associates (and not for the general public) are said to engage in:

A) surplus lines insurance.
B) unauthorized insurance.
C) controlled business.
D) rebating.

Answer 8

Answer: C

Controlled business is the soliciting or procuring of insurance by an agent for the agent or the agent’s family or business associates and not for the general public. Texas requires that an applicant for a new license intend to place at least 25% of business in any year in noncontrolled business.

Question 9

The Commissioner of Insurance is appointed by the:

A) legislature.
B) State Guaranty Association.
C) governor.
D) state attorney general.

Answer 9

Answer: C

The Commissioner is appointed by the governor to a 2-year term ending February 1 of each odd-numbered year.

Question 10

If an agent’s insurance license has been revoked, how long must he wait before applying for another license?

A) One year.
B) Two years.
C) Five years.
D) Six months.

Answer 10

Answer: C

An applicant or licensee whose license has been denied, refused, or revoked cannot file another license application for five years. The Commissioner may still deny an application after that time if the applicant has not shown good cause why the previous denial, refusal, or revocation should not bar issuance of a new license.

Question 11

Which of the following is a requirement for a temporary insurance license?

A) The applicant must demonstrate high ethical standards.
B) The applicant must complete a prelicensing course.
C) The applicant must successfully pass a licensing examination.
D) The applicant must have a sponsoring company.

Answer 11

Answer: B

A temporary insurance license can be obtained before the applicant passes the licensing exam for a permanent license. The applicant must complete a 40-hour course before applying for the license or within 14 days after application. A sponsoring company is not required, and the Commissioner does not investigate the applicant’s character before the license is issued.

Question 12

How many hours of continuing education is an agent responsible to complete in any 2-year license period?

A) 15
B) None if licensed less than 5 years.
C) It depends on the agent’s birth date.
D) 30

Answer 12

Answer: D

Most agents are required to complete 30 hours of approved continuing education in a 2-year license period.

Question 13

Which one of the following is an example of misrepresentation?

A) An insurer advertises a life insurance policy without mentioning that premiums may be paid quarterly instead of annually.
B) An agent offers a housewarming present to anyone who purchases homeowners’ insurance from him.
C) An agent leads a buyer of an auto policy to believe that she will be covered when driving others’ cars when she will not.
D) An agent convinces a prospect to replace his existing homeowner’s policy with a new, more expensive policy that provides more coverage.

Answer 13

Answer: C

A misrepresentation occurs when an agent intentionally misstates the terms, benefits, or dividends of any insurance policy. Selling a more expensive policy with better benefits does not necessarily misstate those benefits. Failure to disclose alternative premium finance arrangements is also not a misstatement. Offer a gift in exchange for writing a person’s insurance is an example of unlawful rebating, not misrepresentation.

Question 14

Under the Texas Insurance Code, which of the following factors may an insurer use to determine a rate for insurance?

A) Race.
B) Garaging location.
C) Sex.
D) Age.

Answer 14

Answer: B

It is illegal to treat two people of equal risk to the insurer differently from either a sales or underwriting perspective. This is an example of unfair discrimination. Treating two people of the same sex, age, race, or religion differently from an underwriting standpoint because of differences in their risk characteristics is not an unfair discrimination. The location of the garage in which an insured vehicle is kept may result in a higher risk to one insured than another.

Question 15

When asked about the payment of dividends by a prospect, an agent states that policy dividends are guaranteed, even though this guarantee is not included in the policy. This is an example of:

A) defamation.
B) unlawful inducement.
C) twisting.
D) misrepresentation.

Answer 15

Answer: B

Insurance advertising may not use the word dividend or similar words in a manner to imply that future dividends are guaranteed unless the guarantee is stated within the policy or required by law.

Question 16

An unauthorized insurer may operate in Texas:

A) under no circumstances.
B) if it has been authorized in a state adjoining Texas.
C) if it has been authorized in a state that has a reciprocal agreement with Texas.
D) if at least 50% of its agents are licensed to sell insurance in Texas.

Answer 16

Answer: A

An unauthorized insurer has not received a certificate of authority from the Department of Insurance and is prohibited from transacting insurance in Texas under any circumstances and using any means.

Question 17

Which one of the following acts is considered an unfair or deceptive act or practice?

A) Issuing policies at a higher premium rate for higher risk insureds.
B) Providing for the payment of part of the agent’s commission to the insured.
C) Representing a binder as evidence of insurance.
D) Encouraging an agent to sell only one type of businessowners’ policy.

Answer 17

Answer: B

Rebating part of an agent’s commission to an insured is an unlawful rebate and constitutes a violation of the state’s unfair trade practices act. A binder is temporary evidence of insurance. Companies may encourage agents to sell only their policies and it is a lawful discrimination to charge different prices based on different levels of risk.

Question 18

Which one of the following acts constitutes an unfair practice involving false advertising?

A) Quoting the high school football coach’s statements about his new car in your agency’s advertisement.
B) Using statistics about vehicle accidents in an advertisement for car insurance.
C) Hinting that a competing insurer is suffering a financial crisis.
D) Accepting an applicant’s signed application without collecting an initial premium.

Answer 18

Answer: C

The Insurance Code prohibits an agent or insurer from making disparaging remarks about any insurer, including false or critical statements regarding the financial condition or business method of any other insurer.

Question 19

All of the following constitute the transaction of insurance EXCEPT:

A) purchasing an insurance policy.
B) receiving a policy application.
C) collecting insurance premiums.
D) receiving insurance commissions.

Answer 19

Answer: A

Conducting or transacting insurance applies to the activities of an insurer or its agents. The term does not include purchasing an insurance policy since this activity is engaged in by a policyholder or potential policyholder.

Question 20

All of the following are grounds for revoking an agent’s license EXCEPT:

A) defrauding a policyholder.
B) defrauding an applicant.
C) failing to remit premiums to the insurer.
D) failing to compare his or her policies with a competitor’s policies.

Answer 20

Answer: D

An agent’s license may be refused, suspended, or revoked for a variety of reasons including defrauding an applicant or policyholder, or failing to remit premiums to an insurer when due. A comparison of a proposed contract to a competitor’s policy is not required nor is failure to do so a violation.

Question 21

Which one of the following is NOT an example of an unfair claim settlement practice?

A) Failing to examine a claimant under oath.
B) Knowingly misrepresenting pertinent facts to claimants.
C) Refusing to pay a claim without conducting an investigation.
D) Not attempting in good faith to promptly settle a claim when liability is clear.

Answer 21

Answer: A

The right to examine policyholders under oath, in the case of questionable claims or potential fraud, is a right of an insurer during a claim investigation and is part of the contractual agreement between the insurer and insured. Failing to do so does not constitute a violation of the state’s unfair claims settlement practices.

Question 22

While personal injury protection (PIP) benefits under an auto policy are paid without regard to fault, an insurer may not pay benefits for any injury:

A) under $1,500.
B) caused to the insured by the insured.
C) caused by a public vehicle.
D) caused by an underinsured driver.

Answer 22

Answer: B

Personal Injury Protection (PIP) is required under all auto policies issued in Texas unless rejected by the insured in writing. Coverage does not apply, however, if the insured caused the injury to himself or if the injury occurred while committing a felony or while trying to evade lawful arrest.

Question 23

An insurer may refuse to renew a commercial auto liability policy if the insurer gives written notice to the insured at least how many days before the policy expires?

A) 7
B) 10
C) 30
D) 60

Answer 23

Answer: D

Commercial automobile policies may be nonrenewed by giving 60 days advance notice to the policyholder.

Question 24

An insurer who cancels a personal auto policy for nonpayment of premium must give how many days notice to the insured?

A) 30
B) 60
C) 10
D) 7

Answer 24

Answer: C

Cancellation of any policy for nonpayment of premium requires that the insurer give ten days advance notice to the policyholder.

Question 25

Which of the following statements regarding automobile liability insurance is CORRECT?

A) All insurers must offer policyowners the option of buying insurance for losses resulting from accidents involving both uninsured and underinsured motorists.
B) Not all insurers offer personal injury protection with automobile liability coverage.
C) Only owners of automobiles that are between one and five years old are required to carry automobile insurance.
D) The financial responsibility law protects automobile owners from drivers who obtain insurance from foreign insurers.

Answer 25

Answer: A

All automobile policies issued in the state must contain uninsured and underinsured motorists coverage unless it has been rejected by the applicant in writing.

Question 26

A personal auto insurer may cancel a policy for all of the following reasons EXCEPT:

A) submission of a fraudulent claim.
B) the continuance of the policy would violate the law.
C) the age of the insured.
D) nonpayment of premium.

Answer 26

Answer: C

It is unlawful to decline to renew a personal automobile policy solely on the basis of the age of the covered person.

Question 27

An insurer may cancel a personal automobile policy on its 12-month anniversary by providing how many days’ advance notice of its intent?

A) 20
B) 30
C) 5
D) 10

Answer 27

Answer: B

An insurer may cancel or refuse to renew a personal automobile insurance policy on its 12-month anniversary by providing advance notice of at least 30 days.

Question 28

In order to nonrenew a personal auto policy, an insurer must provide how many days’ advance notice to the policyholder?

A) 45
B) 30
C) 10
D) 20

Answer 28

Answer: B

The same rule for providing notice of cancellation applies to nonrenewal. A notice must be sent to the insured no less than 30 days in advance of the nonrenewal date.

Question 29

The minimum limits under the Texas Motor Vehicle Safety Responsibility Law are:

A) $20,000 per person, $40,000 per accident for Bodily Injury, and $25,000 for Property Damage.
B) $25,000 per person, $50,000 per accident for Bodily Injury, and $20,000 for Property Damage.
C) $30,000 per person, $60,000 per accident for Bodily Injury, and $15,000 for Property Damage.
D) $30,000 per person, $60,000 per accident for Bodily Injury, and $25,000 for Property Damage.

Answer 29

Answer: D

The Texas Motor Vehicle Safety Responsibility Law requires automobile insurance limits at least equal to $30,000 per person and $60,000 per accident for bodily injury, and $25,000 per accident for property damage. The minimum combined single limit in Texas is $85,000.

Question 30

All of the following vehicles are exempt from the compulsory insurance law EXCEPT:

A) vehicles for which a bond has been filed with the Department of Insurance.
B) vehicles for which a cash deposit has been made with the state treasurer.
C) vehicles that are used exclusively on public highways.
D) vehicles that are self-insured.

Answer 30

Answer: C

The only vehicles that are exempt from compliance with the state’s compulsory automobile insurance law are those that are self-insured, those for which a bond has been filed with the Department of Insurance, and those for which a cash deposit of $55,000 has been made to the state treasurer.

Question 31

Operating a motor vehicle without the required insurance is a misdemeanor punishable by a fine of between:

A) $175 and $350 for the first offense.
B) $175 and $350 for subsequent offenses.
C) $350 and $1,000 for the first offense.
D) $1,000 and $3,000 for subsequent offenses.

Answer 31

Answer: A

Operating a motor vehicle without the required insurance is a misdemeanor punishable by a fine of between $175 and $350 for the first offense. Subsequent offenses may result in a fine of between $350 and $1,000 and suspension of a driver’s license or vehicle registration.

Question 32

Under Texas law, an insured may do which of the following with regard to the provision of uninsured motorists property damage?

A) Elect coverage for the same amount as the policy’s liability limit.
B) Double the amount of the coverage upon written request to the insurer.
C) Reject the coverage by notifying the insurer of his intention to do so.
D) Reduce the coverage below the liability limit of the policy.

Answer 32

Answer: A

The requirement under law is that coverage for uninsured motorists property damage be provided at a limit at least equal to the state financial responsibility limit. Insurers may provide higher limits, but only up to the liability limit contained in the policy.

Question 33

An insurer may cancel a commercial auto policy for any of the following reasons EXCEPT:

A) an increase in the hazard insured against.
B) inability of the insurer to renew a reinsurance agreement.
C) failure to pay parking fines when due.
D) fraud in obtaining the policy.

Answer 33

Answer: C

An insurer may cancel a commercial auto policy at any time for the following reasons: fraud in obtaining the policy, failure to pay premiums when due, increase in the hazard insured against, loss of a reinsurance agreement, or insolvency of the insurer.

Question 34

Under workers’ compensation law in Texas, income benefits may not be paid for an injury unless the injury results in disability that lasts longer than:

A) two year.
B) one week.
C) 48 hours.
D) one month.

Answer 34

Answer: B

Texas law imposes a mandatory waiting period of 1 week for income benefits as a result of a work-related disability.

Question 35

Under Texas workers compensation law, lifetime income benefits are paid at what percentage of the employee’s average weekly wage?

A) 25%.
B) 50%.
C) 100%.
D) 75%.

Answer 35

Answer: D

Lifetime income benefits are paid to individuals who suffer serious and permanent injury in the course of his employment. The benefits are paid at 75% of the employee’s average weekly wage.

Question 36

Which one of the following statements regarding worker’s compensation insurance is NOT correct?

A) Workers compensation protects the employer from tort liability.
B) Workers compensation provides compensation to employees who are injured on the job, regardless of fault or negligence on the part of either the employer or employee.
C) All employers domiciled in Texas are required to obtain workers compensation insurance coverage for their employees.
D) Workers compensation’s primary advantage for the injured employee is that it provides a quick and certain means of compensation.

Answer 36

Answer: C

Texas is an elective state with respect to workers compensation coverage. Employers may elect to provide workers compensation insurance but are not required to do so. If they do not, they may be sued by employees for work-related injuries and occupational diseases.

Question 37

Which one of the following is NOT an injury that would be covered by workers compensation?

A) An employee who returns from lunch intoxicated cuts his hand with an electric saw.
B) An accident occurs while an employee is driving a forklift from a truck to the warehouse.
C) The injury occurs when an employee slips on a wet floor while changing clothes in the employee locker room.
D) Several workers are injured when the hydraulic lift that moves automobile parts collapses

Answer 37

Answer: A

An insurance carrier is not liable for compensation if the employee’s injury was caused while the employee was intoxicated.

Question 38

An employee who suffers an injury covered by workers compensation is entitled to all of the following health care services EXCEPT:

A) rehabilitation therapy.
B) emergency treatment.
C) vocational training.
D) cosmetic surgery for aesthetic reasons.

Answer 38

Answer: D

Medical benefits include health care that cures or relieves the effects resulting from a injury, promotes recovery, or enhances the ability of the employee to return to work. Elective surgery performed for aesthetic as opposed to medically necessary reasons is not covered.

Question 39

Lifetime income benefits are paid until the covered employee’s death for all of the following EXCEPT:

A) loss of both hands at or above the wrist.
B) loss of one finger.
C) total and permanent loss of sight in both eyes.
D) loss of both feet at or above the ankle.

Answer 39

Answer: B

Lifetime income benefits are paid for extremely serious injuries including loss of sight or loss of both feet or hands. Loss of one finger is not considered a serious enough injury to provide lifetime benefits since the disablement may not result in any job restriction or permanent disability.

Question 40

An injury that occurs to an employee who is traveling to and from work is NOT covered under workers compensation when the:

A) transportation is paid for by the employer.
B) transportation is provided in the employer’s vehicles.
C) employee is directed to proceed from one place to another as a condition of employment.
D) employee is traveling on personal errands.

Answer 40

Answer: D

Employees are generally not covered undered workers compensation while traveling to and from work, except under certain limited circumstances as outlined in the other answer choices. When an employee is traveling strictly on personal or private affairs, the employee is not covered under workers compensation.

Question 41

An insurer will consider an injured worker to have reached maximum medical improvement when:

A) 2 years have passed since the date income benefits were first due.
B) the employee’s impairment rating is less than 50%.
C) the condition can only be remedied by surgery.
D) 3 years have passed since the injury occurred.

Answer 41

Answer: A

The date of maximum medical improvement is considered to be the earlier of the date, based on medical probability, that further medical improvement to an injury can no longer reasonably be anticipated or 104 weeks (two years) from the date that income benefits begin to accrue.

Question 42

What is the minimum weekly income benefit payable under the Texas workers compensation law?

A) 25% of the average weekly wage.
B) 15% of the employee’s pre-tax earnings.
C) 25% of the employee’s pre-tax earnings.
D) 15% of the average weekly wage.

Answer 42

Answer: D

The minimum amount an employee may be compensated for loss of income is 15% of the average weekly wage.

Question 43

When a disability continues for longer than 28 days, disability income benefits are paid:

A) monthly until the sixth month.
B) from the time of the original injury.
C) weekly from the first day of the disability.
D) from the eighth day of the disability.

Answer 43

Answer: C

When a disability continues for more than 28 days, disability income compensation is computed from the date the disability began.

Question 44

Employees are entitled to receive income benefits equal to what percentage of their average weekly wage following an injury?

A) 75%.
B) 100%.
C) 70%.
D) 50%.

Answer 44

Answer: C

An employee is entitled to impairment income benefits beginning the day after she reaches maximum medical improvement. The amount of the benefit is 70% of the employee’s average weekly wage and continues for a length of time based on the employee’s impairment rating.

Question 45

Texas Property and Casualty Law Supplement
Question ID: 199761
If an employee refuses to accept benefits provided by the Texas Rehabilitation Commission, the employee must forfeit:

A) compensation for any future injuries.
B) death benefits that would be payable during rehabilitation.
C) the supplemental income benefits that would have been payable.
D) all workers compensation benefits paid to date.

Answer 45

Answer: C

When an employee is receiving supplemental income benefits, the commission will refer him to the Texas Rehabilitation Commission for treatment or training required to get the employee back to work. If an employee refuses services or refuses to cooperate with the services provided, the employee loses entitlement to supplemental income benefits.

Question 46

When a workers compensation injury results in death of the employee, the employee’s beneficiaries are entitled to:

A) nothing since the employee is the only person entitled to benefits.
B) 75% of the employee’s average weekly wage.
C) a lump sum of $100,000.
D) a lifetime income equal to 70% of the employee’s wages.

Answer 46

Answer: B

The death benefit provided under law is 75% of the employee’s average weekly wage payable to the employee’s beneficiary(ies).

Question 47

The Commissioner of Insurance is:

A) elected by Texas citizens to a 4-year term.
B) appointed by the governor to a 2-year term.
C) appointed by the governor to a 4-year term.
D) elected by Texas citizens to a 2-year term.

Answer 47

Answer: B

The governor appoints the Commissioner to a 2-year term ending on February 1 of each odd-numbered year.

Question 48

All of the following are grounds for a license application to be denied EXCEPT:

A) conviction of any misdemeanor.
B) intentionally making a material misstatement on the application.
C) obtaining a license to write controlled business.
D) misappropriation of money belonging to an insured

Answer 48

Answer: A

Conviction of a felony and violating state insurance laws are grounds for a license application to be denied. Not all misdemeanor convictions are grounds for license denial.

Question 49

An individual whose insurance license has been revoked may not file another licensing application for:

A) five years after the effective date of revocation.
B) one year after the effective date of revocation.
C) three years after the effective date of revocation.
D) eight years after the effective date of revocation.

Answer 49

Answer: A

An applicant or licensee whose license has been denied, refused, or revoked must wait 5 years before applying for a new license.

Question 50

Which of the following statements concerning Texas’ continuing education law is NOT correct?

A) Licensees who fail to complete the required number of hours may be fined $50 per credit hour not completed.
B) Agents who have been continuously licensed for at least 10 years are exempt.
C) An agent who has a general lines property and casualty license must complete 30 hours of continuing education, including two hours of ethics or consumer protection.
D) At least half of the required hours must be earned in a classroom or equivalent setting.

Answer 50

Answer: B

An agent must be continuously licensed for at least 20 years to be exempt from the continuing education requirement.

Question 51

Insurance companies that advertise in Texas must keep copies of advertisements on file for at least:

A) 3 years.
B) 1 year.
C) 5 years.
D) 10 years.

Answer 51

Answer: A

Insurance companies that advertise in Texas must keep copies of advertisements on file for at least 3 years.

Question 52

Texas insurance code stipulates that the maximum amount of controlled business an agent can write during any calendar year is:

A) 10% of the total premium volume written.
B) 50% of the total premium volume written.
C) 25% of the total premium volume written.
D) 75% of the total premium volume written.

Answer 52

Answer: D

Texas insurance code stipulates that in any calendar year, at least 25 percent of the total volume of premiums an agent writes must be derived from business other than what is considered to be controlled business, which in turn means that a maximum of 75% of the total premiums written in any calendar year can be controlled business. Controlled business is considered any business where the premiums are derived from the agent and from property the agent controls the placing of insurance through ownership, mortgage, sale, family relationship, or employment.

Question 53

Crystal’s home, which is located in Dallas, is destroyed in a fire. The home is insured for $100,000 under a fire insurance policy. After the loss, it is determined that the home’s actual cash value is $75,000 and its replacement cost is $125,000. How much would the insurance company pay for this loss?

A) $125,000.00
B) $175,000.00
C) $100,000.00
D) $75,000.00

Answer 53

Answer: C

In Texas, when real property is destroyed by fire, a fire insurance policy is considered to be a liquidated demand against the company for the full amount of the policy, regardless of the actual cash value of the property. This provision must be included in all fire insurance policies that cover real property.

Question 54

To meet Texas’ financial responsibility law, personal auto policies must be written with minimum limits of:

A) $15,000/$30,000/$15,000.
B) $25,000/$50,000/$20,000.
C) $30,000/$60,000/$25,000.
D) $20,000/$40,000/$25,000.

Answer 54

Answer: C

The minimum limits to meet the state’s financial responsibility law are $30,000 bodily injury (BI) per person, $60,000 BI per accident, and $25,000 property damage (PD). The minimum combined single limit in Texas is $85,000.

Question 55

In Texas, a personal auto policy may be canceled for any of the following reasons EXCEPT:

A) nonpayment of premium.
B) the insured submits a fraudulent claim.
C) the member of the insured’s household has his driver’s license revoked.
D) the insured is age 55 or older.

Answer 55

Answer: D

A personal auto policy may not be canceled or nonrenewed solely on the basis of the insured’s age.

Question 56

Which of the following claims would most likely be covered under Texas’ workers’ compensation law?

A) Jerry broke his ankle playing softball at his employer’s annual picnic. He was not required to attend the picnic as a condition of his employment.
B) Beatrice sustained a head injury when she fell down the stairs at her workplace. It is later determined that Beatrice was legally intoxicated when the injury occurred.
C) Gertrude and her husband argued before she left for work. Later that day, her husband stormed into the restaurant where Gertrude works and punched her in the face.
D) Mark was struck by lightning while attempting to finish a roof repair for his employer.

Answer 56

Answer: D

Injuries that arise out of an act of God are generally excluded. However, an exception is made if the employment exposes the employee to a greater risk of injury from an act of God than the general public faces.

Question 57

Which of the following actions would NOT be considered an unfair claim settlement practice in Texas?

A) Failing to provide an explanation of the basis in the policy for denying a claim.
B) Failing to affirm or deny coverage of claims within 10 days.
C) Failing to implement guidelines for claim investigations.
D) Requiring insureds to provide federal income tax statements as part of the investigation of workers’ compensation claims.

Answer 57

Answer: B

Insurers are required to affirm or deny coverage within a reasonable time. There is no specific period indicated in the law.

Question 58

A producer whose license has expired will be required to retake the licensing exam if the license has been expired for more than:

A) 30 days.
B) 60 days.
C) 6 months.
D) 1 year.

Answer 58

Answer: D

If a license has been expired for more than 1 year, the applicant must meet all requirements for a new license, which includes retaking the licensing exam.

Question 59

Unless a greater penalty is specified by law, an administrative penalty for a violation of the Texas Insurance Code may not exceed:

A) $15,000.00
B) $50,000.00
C) $25,000.00
D) $5,000.00

Answer 59

Answer: C

The Commissioner may impose an administrative penalty on a licensee who violates the Texas Insurance Code. The penalty may not exceed $25,000 unless a greater penalty is specified by law.

Question 60

An emergency insurance license is valid for:

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

Answer 60

Answer: A

If an agent dies, becomes disabled, or is found to be insolvent and unable to pay for premiums due, the Commissioner may issue an emergency license to preserve the agent’s agency assets. An emergency license is valid for 90 days and may be renewed for an additional 90 days.

Question 61

Which of the following is NOT one of the requirements for a claim to be covered by the Texas Property and Casualty Insurance Guaranty Association?

A) The total amount of the claim does not exceed $500,000.
B) The policy under which the claim was filed is covered by the Association.
C) The policy was issued by an insurer licensed to do business in Texas.
D) The claimant was a Texas resident when the loss occurred.

Answer 61

Answer: A

With the exception of workers’ compensation claims, the maximum amount payable on a covered claim is $300,000. This does not mean that claims for greater amounts cannot be filed with the Association.