Florida Statutes, Rules, & Regulations
Common to All Lines Exam Questions
with Verified Answers
Insurance contract - ANSWER-A written contract in which an insurance company
indemnifies an insured. The technical definition is: A contract whereby one
undertakes to indemnify another or pay or allow a specified amount or a
determinable benefit upon determinable contingencies. Translated, you buy
insurance, a loss occurs, the insurance company makes you whole.
Insurance transaction - ANSWER-Transact includes solicitation or inducement;
preliminary negotiations; effectuation of a contract of insurance and transaction of
matters subsequent to effectuation of a contract of insurance and arising out of it.
Huh! Here's what this really says. If you attempt to make a sale or talk someone in to
buying an insurance policy, you are transacting the business of insurance. If you
bind coverage you are transacting the business of insurance. If you work on a policy
once it is sold, you are transacting insurance.
Insurer - ANSWER-Definition includes every person engaged as indemnitor, surety,
or contractor in the business of entering into contracts of insurance or of annuity.
Translated, the insurance company that undertakes to indemnify for losses and
perform other insurance-related operations.
Domestic company - ANSWER-Domiciled in Florida and formed under the laws of
this state.
Foreign company - ANSWER-Domiciled in another state. Formed under the laws of
any state, district, territory, or commonwealth of the United States other than Florida.
Alien company - ANSWER-Domiciled in another country. Canadians are aliens. Our
laws work there but they are not us. New Mexico is us; they are one of the 50 United
States. New Mexico would be a foreign company in Florida. Guam is us too! If you
have to choose between Guam and Canada and the question pertains to
domestic/foreign and alien, Canadians are still aliens.
Fraternals - ANSWER-Provides insurance for members, most only write life and
health. Business is conducted solely for the benefit of its members and their
beneficiaries and not for profit.
Authorized or Admitted Insurer - ANSWER-Authorized to do business in a state-
meets the insurance department's standards.
Unauthorized companies or non-admitted companies - ANSWER-Unauthorized,
does not have a certificate of authority. A non-admitted company is unauthorized and
may only do business in a state under special circumstances. If you aid an
, unauthorized insurer, the state will go after you (the agent) and the insurance
company (insurer).
Stock - ANSWER-For profit, sells stock to stockholders to raise money to operate the
business. Stockholders receive any profits via dividends.
Mutual companies - ANSWER-Owned by and profits are returned to the insured in
the form of a dividend or reduction in future premiums. Insured's elect management.
Required to set money aside to pay claims. A small percentage are assessment
companies which charge members a pro rata share of losses at the end of each
policy period.
Unlicensed entities - ANSWER-No person may be, act as, or advertise or hold
themselves out to be an insurance agent, customer representative or adjuster unless
currently licensed and appointed. May not pay fee or other consideration to an
unlicensed person other than an insurance agency for the referral of prospective
purchasers. The fee or consideration cannot be dependent upon purchase of an
insurance product.
Certificate of authority - ANSWER-One duly authorized by a subsisting certificate of
authority issued by the office to transact insurance in this state. An unauthorized
insurer is one not so authorized.
Licensing - ANSWER-It is in the public interest for general lines agents, personal
lines agents and customer service representatives to be licensed and authorized in
good faith to engage in the insurance business.
Purpose - ANSWER-It is in the public interest for general lines agents, personal lines
agents and customer service representatives to be licensed and authorized in good
faith to engage in the insurance business.
License types - ANSWER-A document issued by the department or office authorizing
a person to be appointed to transact insurance or adjust claims. Includes a general
lines agent, personal lines agent, limited customer rep (auto only); customer rep;
adjuster; public adjuster; Life & Health. Must stay within lines of authority agent is
authorized to transact.
Agent - ANSWER-A licensed person authorized to transact insurance. Sells
insurance, issues & countersigns policies, collects premium & is the link between the
insured & the insurer. An unaffiliated insurance agent is the only licensed agent who
is self-appointed & practices as an independent consultant.
Adjuster - ANSWER-Involved in the investigation, adjustment, negotiation and/or trail
preparation of claims arising under policies of insurance.
Agency - ANSWER-A relationship which exists when one party is authorized to act
on behalf of another. For example an agent acts on behalf of the insurance
company. The insurance company is the principal. Since the agent acts on behalf of
the principal, the principal is now responsible for the actions of the agent.
Common to All Lines Exam Questions
with Verified Answers
Insurance contract - ANSWER-A written contract in which an insurance company
indemnifies an insured. The technical definition is: A contract whereby one
undertakes to indemnify another or pay or allow a specified amount or a
determinable benefit upon determinable contingencies. Translated, you buy
insurance, a loss occurs, the insurance company makes you whole.
Insurance transaction - ANSWER-Transact includes solicitation or inducement;
preliminary negotiations; effectuation of a contract of insurance and transaction of
matters subsequent to effectuation of a contract of insurance and arising out of it.
Huh! Here's what this really says. If you attempt to make a sale or talk someone in to
buying an insurance policy, you are transacting the business of insurance. If you
bind coverage you are transacting the business of insurance. If you work on a policy
once it is sold, you are transacting insurance.
Insurer - ANSWER-Definition includes every person engaged as indemnitor, surety,
or contractor in the business of entering into contracts of insurance or of annuity.
Translated, the insurance company that undertakes to indemnify for losses and
perform other insurance-related operations.
Domestic company - ANSWER-Domiciled in Florida and formed under the laws of
this state.
Foreign company - ANSWER-Domiciled in another state. Formed under the laws of
any state, district, territory, or commonwealth of the United States other than Florida.
Alien company - ANSWER-Domiciled in another country. Canadians are aliens. Our
laws work there but they are not us. New Mexico is us; they are one of the 50 United
States. New Mexico would be a foreign company in Florida. Guam is us too! If you
have to choose between Guam and Canada and the question pertains to
domestic/foreign and alien, Canadians are still aliens.
Fraternals - ANSWER-Provides insurance for members, most only write life and
health. Business is conducted solely for the benefit of its members and their
beneficiaries and not for profit.
Authorized or Admitted Insurer - ANSWER-Authorized to do business in a state-
meets the insurance department's standards.
Unauthorized companies or non-admitted companies - ANSWER-Unauthorized,
does not have a certificate of authority. A non-admitted company is unauthorized and
may only do business in a state under special circumstances. If you aid an
, unauthorized insurer, the state will go after you (the agent) and the insurance
company (insurer).
Stock - ANSWER-For profit, sells stock to stockholders to raise money to operate the
business. Stockholders receive any profits via dividends.
Mutual companies - ANSWER-Owned by and profits are returned to the insured in
the form of a dividend or reduction in future premiums. Insured's elect management.
Required to set money aside to pay claims. A small percentage are assessment
companies which charge members a pro rata share of losses at the end of each
policy period.
Unlicensed entities - ANSWER-No person may be, act as, or advertise or hold
themselves out to be an insurance agent, customer representative or adjuster unless
currently licensed and appointed. May not pay fee or other consideration to an
unlicensed person other than an insurance agency for the referral of prospective
purchasers. The fee or consideration cannot be dependent upon purchase of an
insurance product.
Certificate of authority - ANSWER-One duly authorized by a subsisting certificate of
authority issued by the office to transact insurance in this state. An unauthorized
insurer is one not so authorized.
Licensing - ANSWER-It is in the public interest for general lines agents, personal
lines agents and customer service representatives to be licensed and authorized in
good faith to engage in the insurance business.
Purpose - ANSWER-It is in the public interest for general lines agents, personal lines
agents and customer service representatives to be licensed and authorized in good
faith to engage in the insurance business.
License types - ANSWER-A document issued by the department or office authorizing
a person to be appointed to transact insurance or adjust claims. Includes a general
lines agent, personal lines agent, limited customer rep (auto only); customer rep;
adjuster; public adjuster; Life & Health. Must stay within lines of authority agent is
authorized to transact.
Agent - ANSWER-A licensed person authorized to transact insurance. Sells
insurance, issues & countersigns policies, collects premium & is the link between the
insured & the insurer. An unaffiliated insurance agent is the only licensed agent who
is self-appointed & practices as an independent consultant.
Adjuster - ANSWER-Involved in the investigation, adjustment, negotiation and/or trail
preparation of claims arising under policies of insurance.
Agency - ANSWER-A relationship which exists when one party is authorized to act
on behalf of another. For example an agent acts on behalf of the insurance
company. The insurance company is the principal. Since the agent acts on behalf of
the principal, the principal is now responsible for the actions of the agent.
