CALIFORNIA INSURANCE - CODE AND ETHICS EXAM QUESTIONS AND ANSWERS GRADED A+
Representations in insurance contracts qualify as
a)Express warranties.
b)Misrepresentations.
c)Facts.
d)Implied warranties. - Answers d)Implied warranties.
Representations in insurance contracts qualify as implied warranties.
Any person or governmental entity that provides information about an individual to an agent,
insurance company, or insurance-support organization is known as a(n)
a)Investigative source.
b)Institutional source.
c)Affiliate.
d)Underwriting source. - Answers b)Institutional source.
According to CIC 791.02, an "institutional source" means any person or governmental entity that
provides information about an individual to an agent, insurance company or insurance-support
organization.
#9. Insurance policy is
a)A statement of insurable interest.
b)A verbal or written agreement between two parties to transfer risk.
c)Any method used to transfer or avoid catastrophic risk.
d)A written instrument in which a contract of insurance is set forth. - Answers d)A written
instrument in which a contract of insurance is set forth.
,An insurance policy must be in writing to be legally binding. As defined by the California
Insurance Code, "a policy" is a written instrument in which a contract of insurance is set forth.
A deceptive act or practice committed by a person with the intent to secure an unfair advantage
or unlawful gain is known as
a)Transacting without a license.
b)Misinformation.
c)Misrepresentation.
d)Fraud. - Answers d)Fraud.
Fraud occurs when a person intends to benefit from his/her unlawful act or action at the
expense of another person. It may involve a misrepresentation, but could simply result when an
agent takes money from a client and diverts it to personal use, as an example.
When an auto insurance policy is cancelled for nonpayment of premium, how many days' notice
must the insurer provide to the policyowner?
a)10 days
b)15 days
c)20 days
d)30 days - Answers a)10 days
Notice of policy cancellation may be effective only if mailed or delivered by the insurer to the
policyowner at least 20 days prior to the effective date of cancellation, or 10 days' notice when
cancellation is for nonpayment of premium, accompanied by the reason for cancellation.
The key factor of representation that allows the injured party to rescind the contract is
a)That any misrepresentation is considered fraud.
, b)Representations are statements believed to be true and hold no legal consequences.
c)The promise or assurance of the representation.
d)If the representation is false in a material point. - Answers d)If the representation is false in a
material point.
If a representation is false in a material point the injured party is entitled to rescind the contract
from the time the representation becomes false.
What will happen if an agent submits an application to an insurance company to which he is not
appointed?
a)The agent will be found guilty of a misdemeanor.
b)If the insurer accepts the policy, it must appoint the agent.
c)The application will not have to be approved by an underwriter.
d)The insurer will not accept the policy. - Answers b)If the insurer accepts the policy, it must
appoint the agent.
If an insurance company approves an application submitted by a nonappointed agent, the
company must appoint the agent within 14 days. In doing so, the insurer accepts responsibility
for all the actions of the agent as they pertain to that policy as if the agent had been properly
appointed for the insurer.
An independent agent may have contracts with which of the following?
a)More than one insurer
b)The Department of Insurance
c)The Commissioner
d)Brokers - Answers a)More than one insurer
An independent agent may have contracts with more than one insurer.
Representations in insurance contracts qualify as
a)Express warranties.
b)Misrepresentations.
c)Facts.
d)Implied warranties. - Answers d)Implied warranties.
Representations in insurance contracts qualify as implied warranties.
Any person or governmental entity that provides information about an individual to an agent,
insurance company, or insurance-support organization is known as a(n)
a)Investigative source.
b)Institutional source.
c)Affiliate.
d)Underwriting source. - Answers b)Institutional source.
According to CIC 791.02, an "institutional source" means any person or governmental entity that
provides information about an individual to an agent, insurance company or insurance-support
organization.
#9. Insurance policy is
a)A statement of insurable interest.
b)A verbal or written agreement between two parties to transfer risk.
c)Any method used to transfer or avoid catastrophic risk.
d)A written instrument in which a contract of insurance is set forth. - Answers d)A written
instrument in which a contract of insurance is set forth.
,An insurance policy must be in writing to be legally binding. As defined by the California
Insurance Code, "a policy" is a written instrument in which a contract of insurance is set forth.
A deceptive act or practice committed by a person with the intent to secure an unfair advantage
or unlawful gain is known as
a)Transacting without a license.
b)Misinformation.
c)Misrepresentation.
d)Fraud. - Answers d)Fraud.
Fraud occurs when a person intends to benefit from his/her unlawful act or action at the
expense of another person. It may involve a misrepresentation, but could simply result when an
agent takes money from a client and diverts it to personal use, as an example.
When an auto insurance policy is cancelled for nonpayment of premium, how many days' notice
must the insurer provide to the policyowner?
a)10 days
b)15 days
c)20 days
d)30 days - Answers a)10 days
Notice of policy cancellation may be effective only if mailed or delivered by the insurer to the
policyowner at least 20 days prior to the effective date of cancellation, or 10 days' notice when
cancellation is for nonpayment of premium, accompanied by the reason for cancellation.
The key factor of representation that allows the injured party to rescind the contract is
a)That any misrepresentation is considered fraud.
, b)Representations are statements believed to be true and hold no legal consequences.
c)The promise or assurance of the representation.
d)If the representation is false in a material point. - Answers d)If the representation is false in a
material point.
If a representation is false in a material point the injured party is entitled to rescind the contract
from the time the representation becomes false.
What will happen if an agent submits an application to an insurance company to which he is not
appointed?
a)The agent will be found guilty of a misdemeanor.
b)If the insurer accepts the policy, it must appoint the agent.
c)The application will not have to be approved by an underwriter.
d)The insurer will not accept the policy. - Answers b)If the insurer accepts the policy, it must
appoint the agent.
If an insurance company approves an application submitted by a nonappointed agent, the
company must appoint the agent within 14 days. In doing so, the insurer accepts responsibility
for all the actions of the agent as they pertain to that policy as if the agent had been properly
appointed for the insurer.
An independent agent may have contracts with which of the following?
a)More than one insurer
b)The Department of Insurance
c)The Commissioner
d)Brokers - Answers a)More than one insurer
An independent agent may have contracts with more than one insurer.
