NJ Property/ Casualty Insurance Exam
Set WITH CORRECT ANSWERS.
Why was the commercial Insurance Deregulation Act Created? - CORRECT
ANSWER To protect the public from the adverse effects of excessive,
inadequate, & unfair discriminatory rates & marketing practices
Which policies issued must follow the provisions of the Commercial Insurance
Deregulation Act? - CORRECT ANSWER Commercial policies
When must rate amendments & policy forms be filed with the commissioner? -
CORRECT ANSWER 30 days before
What losses are excluded from flood insurance? - CORRECT ANSWER -
Landslides
-Sewer backup
-Windblown Rain
-Snow
-Sleet
Who administers the NFIP? - CORRECT ANSWER Federal Insurance
Administration (FIA)
What does the NFIP stand for? - CORRECT ANSWER National Flood
Insurance Program
Why was the National Flood insurance Program constructed? - CORRECT
ANSWER to fill in gaps of flood coverage by the private sector
What are the 3 NFIP requirements for coverage? - CORRECT ANSWER -
community land management & flood control programs must reduce flood losses in
the future
-Flood insurance required in specific flood prone areas as a condition for receiving
loans through/ backed by the federal government
,-Property owners that fail to purchase flood insurance within 1 year after it is
available will not be eligible for full disaster relief funding. It will be reduced by an
amount of insurance that could have been purchased
What is the NFIP max coverage for a single family? - CORRECT ANSWER
Building $250K, Contents $100K
What is the NFIP max coverage for other residential? - CORRECT ANSWER
Building $250K, Contents $100K
What is the NFIP max coverage for small business? - CORRECT ANSWER
Building $500K, Contents $500K
What is the NFIP max coverage for Other Non-Residential? - CORRECT ANSWER
Building $500k, Contents $500K
What is the NFIP subsidized rate for a single family? - CORRECT ANSWER
Building $35K, Contents $10K
What is the NFIP subsidized rate for Other Residential? - CORRECT ANSWER
Building $100K , Contents $100K
What is the NFIP subsidized rate for small businesses? - CORRECT ANSWER
Building $100K, Contents $100K
What is the NFIP subsidized rate for other non-residential? - CORRECT ANSWER
Building $100K, Contents $100K
What is the wait period before flood insurance can be effective? - CORRECT
ANSWER 30 days, no binders issued
What are the exceptions to the 30 day NFIP wait period? - CORRECT ANSWER
-1st 30 days after coverage, community enters standard or emergency program,
coverage will begin at 12:01 am the date after application and premium were mailed
-When an existing policy was assigned to a property purchaser
-At 12:01 am on the 5th day after an endorsement request & premium has been
mailed for existing policy
What was the Supreme Court's decision regarding the Paul v. Virginia case? -
CORRECT ANSWER insurance was NOT interstate commerce and could not
be regulated by the federal govt.
Who heard the Paul v. Virginia case? - CORRECT ANSWER Supreme Court
Who heard the US v Southeastern Underwriting Association case? - CORRECT
ANSWER Supreme Court
What was the decision in the US v Southeastern Underwriting Association Case? -
CORRECT ANSWER Insurance is interstate commerce and should be subject
to federal regulations (currently in effect today)
,What is the McCarran-Ferguson Act? - CORRECT ANSWER The federal govt
won't regulate insurance business as long as states perform an adequate job of
managing their own insurance industries.
When was the McCarran-Ferguson Act passed? - CORRECT ANSWER
March 9, 1945
To whom does the insurance commissioner have to provide a report? - CORRECT
ANSWER Governor & Legislature
How often must the insurance Commissioner provide a report? - CORRECT
ANSWER Annually
How long before a disciplinary hearing must the insurance commissioner notify
interested parties? - CORRECT ANSWER 10 days before
What is the fine for failing to comply with a court-ordered subpoena? - CORRECT
ANSWER $5000
If the commissioner decides one has violated the insurance code, what is the fine for
unintentional acts performed? - CORRECT ANSWER $1000
If the commissioner decides one has violated the insurance code, what is the max
fine? - CORRECT ANSWER 1st offense: $5K, 2nd offense $10K, each
additional $15K
If the insurance commissioner decides one has violated the insurance code, what is
the fine for violating a cease & desist? - CORRECT ANSWER $5k each
violation
If the insurance commissioner decides one has violated the insurance code, what is
the fine for unlawful acts with intentional & material thought? - CORRECT ANSWER
$5k
What is the fine for not contacting the dept with an address or name change within
30 days? - CORRECT ANSWER $250 max if over 60 days
What is the fine for if a license fee check is returned for insufficient funds? -
CORRECT ANSWER $500
What is the fine for if you do not contact the department regarding a change in
partners, owners, officers, or directors? - CORRECT ANSWER $250
What is the fine for not returning a license to a producer? - CORRECT ANSWER
$500
What is the fine for not maintaining an office address or employment contracts on file
with the department? - CORRECT ANSWER $100 for each contract
, What document is required before an insurance company may transact business in a
state? - CORRECT ANSWER Certificate of Authority
What is a domestic insurer? - CORRECT ANSWER An insurer that conducts
business in the state in which it was incorporated
A producer who is appointed with more than one insurer is considered to be... -
CORRECT ANSWER A Licensed Solicitor
Implied authority is defined as... - CORRECT ANSWER Ability to act outside
the authority specifically granted in an agency agreement & extends company's
liability
What kind of clause relates to this statement: E&N Company issued a policy in
consideration of the representations on an application & the payment of the 1st
premium? - CORRECT ANSWER Consideration
An insured's representations and warranties are incorrectly stated in which of the
following statements?
a. Statements made by an applicant that are guaranteed true are considered to be
warranties
b. Statements that an applicant believes to be true, but does not guarantee to be
true, are considered to be representations
c. An applicant's statements on an application are considered warranties
d. An applicant's statements on an application are considered representations -
CORRECT ANSWER c. An applicant's statements on an application are
considered warranties
What term relates to an agreement without legal effect? - CORRECT ANSWER
Void
An authorized but non-admitted insurer can be represented in this state only by
which of the following? - CORRECT ANSWER Surplus lines broker
In franchise groups, how many master policies will be issued? - CORRECT
ANSWER None
Self-insurance is an example of what kind of risk management? - CORRECT
ANSWER retention
What kind of plan is a Stock life insurance company conducting when it issues
participating and non-participating policies? - CORRECT ANSWER Mixed
What is the fine for if you do not contact the department regarding a change in
partners, owners, officers, or directors? - CORRECT ANSWER $250
What is this an example of: Doctors pooling their funds to cover their malpractice
exposures? - CORRECT ANSWER risk sharing
Set WITH CORRECT ANSWERS.
Why was the commercial Insurance Deregulation Act Created? - CORRECT
ANSWER To protect the public from the adverse effects of excessive,
inadequate, & unfair discriminatory rates & marketing practices
Which policies issued must follow the provisions of the Commercial Insurance
Deregulation Act? - CORRECT ANSWER Commercial policies
When must rate amendments & policy forms be filed with the commissioner? -
CORRECT ANSWER 30 days before
What losses are excluded from flood insurance? - CORRECT ANSWER -
Landslides
-Sewer backup
-Windblown Rain
-Snow
-Sleet
Who administers the NFIP? - CORRECT ANSWER Federal Insurance
Administration (FIA)
What does the NFIP stand for? - CORRECT ANSWER National Flood
Insurance Program
Why was the National Flood insurance Program constructed? - CORRECT
ANSWER to fill in gaps of flood coverage by the private sector
What are the 3 NFIP requirements for coverage? - CORRECT ANSWER -
community land management & flood control programs must reduce flood losses in
the future
-Flood insurance required in specific flood prone areas as a condition for receiving
loans through/ backed by the federal government
,-Property owners that fail to purchase flood insurance within 1 year after it is
available will not be eligible for full disaster relief funding. It will be reduced by an
amount of insurance that could have been purchased
What is the NFIP max coverage for a single family? - CORRECT ANSWER
Building $250K, Contents $100K
What is the NFIP max coverage for other residential? - CORRECT ANSWER
Building $250K, Contents $100K
What is the NFIP max coverage for small business? - CORRECT ANSWER
Building $500K, Contents $500K
What is the NFIP max coverage for Other Non-Residential? - CORRECT ANSWER
Building $500k, Contents $500K
What is the NFIP subsidized rate for a single family? - CORRECT ANSWER
Building $35K, Contents $10K
What is the NFIP subsidized rate for Other Residential? - CORRECT ANSWER
Building $100K , Contents $100K
What is the NFIP subsidized rate for small businesses? - CORRECT ANSWER
Building $100K, Contents $100K
What is the NFIP subsidized rate for other non-residential? - CORRECT ANSWER
Building $100K, Contents $100K
What is the wait period before flood insurance can be effective? - CORRECT
ANSWER 30 days, no binders issued
What are the exceptions to the 30 day NFIP wait period? - CORRECT ANSWER
-1st 30 days after coverage, community enters standard or emergency program,
coverage will begin at 12:01 am the date after application and premium were mailed
-When an existing policy was assigned to a property purchaser
-At 12:01 am on the 5th day after an endorsement request & premium has been
mailed for existing policy
What was the Supreme Court's decision regarding the Paul v. Virginia case? -
CORRECT ANSWER insurance was NOT interstate commerce and could not
be regulated by the federal govt.
Who heard the Paul v. Virginia case? - CORRECT ANSWER Supreme Court
Who heard the US v Southeastern Underwriting Association case? - CORRECT
ANSWER Supreme Court
What was the decision in the US v Southeastern Underwriting Association Case? -
CORRECT ANSWER Insurance is interstate commerce and should be subject
to federal regulations (currently in effect today)
,What is the McCarran-Ferguson Act? - CORRECT ANSWER The federal govt
won't regulate insurance business as long as states perform an adequate job of
managing their own insurance industries.
When was the McCarran-Ferguson Act passed? - CORRECT ANSWER
March 9, 1945
To whom does the insurance commissioner have to provide a report? - CORRECT
ANSWER Governor & Legislature
How often must the insurance Commissioner provide a report? - CORRECT
ANSWER Annually
How long before a disciplinary hearing must the insurance commissioner notify
interested parties? - CORRECT ANSWER 10 days before
What is the fine for failing to comply with a court-ordered subpoena? - CORRECT
ANSWER $5000
If the commissioner decides one has violated the insurance code, what is the fine for
unintentional acts performed? - CORRECT ANSWER $1000
If the commissioner decides one has violated the insurance code, what is the max
fine? - CORRECT ANSWER 1st offense: $5K, 2nd offense $10K, each
additional $15K
If the insurance commissioner decides one has violated the insurance code, what is
the fine for violating a cease & desist? - CORRECT ANSWER $5k each
violation
If the insurance commissioner decides one has violated the insurance code, what is
the fine for unlawful acts with intentional & material thought? - CORRECT ANSWER
$5k
What is the fine for not contacting the dept with an address or name change within
30 days? - CORRECT ANSWER $250 max if over 60 days
What is the fine for if a license fee check is returned for insufficient funds? -
CORRECT ANSWER $500
What is the fine for if you do not contact the department regarding a change in
partners, owners, officers, or directors? - CORRECT ANSWER $250
What is the fine for not returning a license to a producer? - CORRECT ANSWER
$500
What is the fine for not maintaining an office address or employment contracts on file
with the department? - CORRECT ANSWER $100 for each contract
, What document is required before an insurance company may transact business in a
state? - CORRECT ANSWER Certificate of Authority
What is a domestic insurer? - CORRECT ANSWER An insurer that conducts
business in the state in which it was incorporated
A producer who is appointed with more than one insurer is considered to be... -
CORRECT ANSWER A Licensed Solicitor
Implied authority is defined as... - CORRECT ANSWER Ability to act outside
the authority specifically granted in an agency agreement & extends company's
liability
What kind of clause relates to this statement: E&N Company issued a policy in
consideration of the representations on an application & the payment of the 1st
premium? - CORRECT ANSWER Consideration
An insured's representations and warranties are incorrectly stated in which of the
following statements?
a. Statements made by an applicant that are guaranteed true are considered to be
warranties
b. Statements that an applicant believes to be true, but does not guarantee to be
true, are considered to be representations
c. An applicant's statements on an application are considered warranties
d. An applicant's statements on an application are considered representations -
CORRECT ANSWER c. An applicant's statements on an application are
considered warranties
What term relates to an agreement without legal effect? - CORRECT ANSWER
Void
An authorized but non-admitted insurer can be represented in this state only by
which of the following? - CORRECT ANSWER Surplus lines broker
In franchise groups, how many master policies will be issued? - CORRECT
ANSWER None
Self-insurance is an example of what kind of risk management? - CORRECT
ANSWER retention
What kind of plan is a Stock life insurance company conducting when it issues
participating and non-participating policies? - CORRECT ANSWER Mixed
What is the fine for if you do not contact the department regarding a change in
partners, owners, officers, or directors? - CORRECT ANSWER $250
What is this an example of: Doctors pooling their funds to cover their malpractice
exposures? - CORRECT ANSWER risk sharing
