quiz 2 prep for fire casualty

1. In which of the following marketing distribution systems does the agent represent more than one insurer and more than one company?
Direct mailing system
Direct writing system
Exclusive agency
Independent agency

D- An independent agency operates with a broker or brokers with several appointments at different companies. This broker is able to `shop` for the best prices and coverage.

2. Which of the following is a responsibility of the insured in an insurance contract?
Complete the application.
Give true statements and information on the application.
Send the application to the underwriting department.
Fully explain the policy to the client.

B-The insured`s responsibilities are to give true statements and information to the agent so a proper and complete application can be sent to the company.

3. Which of the following is NOT a type of authority given to agents?
Express authority
Implied authority
Customary authority
Apparent authority

C - There is no such thing as customary authority.

4. In a legal relationship, which authority does a principal (company) give the agent in writing?
Express authority
Implied authority
Customary authority
Apparent authority

A- Express authority is the specific authority a principal gives to the agent in writing.

5. Which of the following is NOT a source of information an underwriter might use to investigate an application in order to approve or reject it? application for approval or rejection?
Medical Information Bureau
Department of Industrial Relations
Department of Motor Vehicles
Financial Reports

B- The DIR is a department used to monitor labor, health, workers compensation, etc.

6. A broker can transact all of the following EXCEPT:
Life insurance
Property insurance
Casualty insurance
Disability insurance

A- A broker is any person who transacts insurance, other than life insurance, with insurance companies on behalf of clients.

7. Which of the following is NOT an action a person performs when transacting insurance?
Calling an insurer for a price quote
Solicitation of insurance
The actual execution of a contract
Any transactions that later result from the operation of the contract

A- When a person performs any of the following actions, he/she is transacting insurance: actual execution of a contract; negotiations preliminary to the execution of a contract; solicitation of insurance.

8. A person licensed as a broker/agent shall be deemed to be:
responsible for deciding if an application should be approved or rejected
acting as an insurance agent in the transaction of insurance placed with those for whom a notice of appointment has been filed with the Commissioner
involved in the business of financing the purchase of real estate
acting with the same authority granted a managing general agent

B- A person licensed as a broker-agent shall be deemed to be acting as an insurance agent in the transaction of insurance placed with those insurers for whom a notice of appointment has been filed with the Commissioner.

9. Which of the following is not true about the relationship between an agent and a solicitor?
An agent represents the company, whereas the solicitor is an assistant to an agent and has no binding authority.
A solicitor cannot be employed by more than one fire and casualty broker/agent at the same time.
An agent or broker cannot transact as a solicitor, but a solicitor can transact as a broker or agent.
A solicitor my give premium quotes over the phone, just like an agent.

C- An agent or broker cannot transact as a solicitor and a solicitor cannot transact as a broker or agent.

10. The application is the document that:
states the name of the insured, the premium, and other facts that help the insurer decide whether to accept or reject it.
is a temporary contract that usually lasts 30 days.
shows the insured has coverage currently in force.
shows proof of insurance.

A- The application is the document on which the applicant states facts and answers questions regarding the insurance he wants to purchase.

11. If an agent gives incorrect advice or unknowingly provides incorrect information to the client, which of the following liability insurance policies for nonmedical professionals is available to pay for losses or defend lawsuits that might be filed against him?
Liability insurance
Errors and Omissions
Medical Insurance
Nonadmitted

B- Errors and omissions is a type of liability insurance for non-medical professionals. It will pay for losses or the defense of lawsuits that might be filed against them.

12. Errors and omissions is a type of liability insurance:
for insured`s to use to protect themselves against a claim loss.
that agents use to protect themselves if they give incorrect advice or information to a client.
that indemnifies a client.
for protection against misrepresentation when filing a declaration page.

B- Errors and omissions is a type of coverage of liability insurance for nonmedical professionals that pays for losses or the defense of suits that might be filed against them.

13. The following acts are unlawful and are misdemeanors in California except when performed by a surplus lines broker EXCEPT:
In any manner, advertising for a nonadmitted insurer in this state.
In any manner, advertising for an admitted insurer in this state.
In any other manner, aiding a nonadmitted insurer to transact insurance business in this state.
Acting as agent for a nonadmitted insurer in the transaction of insurance business in this state.

B- Advertising for an admitted carrier is acceptable for anyone appointed with that carrier.

14. Which of the following statements about insurance in connection with sales or loans is TRUE?
No person involved in the business of financing the purchase of real estate may require the purchase of insurance through a specific agent as part of the requirements in the purchase.
No person involved in the business of financing the purchase of real estate may require the purchase of insurance through a specific agent as part of the requirements in the purchase, except an agent licensed with the state of California.
A person involved in the business of financing the purchase of real estate may require the purchase of insurance through a specific agent if the agent is employed by that company.
A person approved by the Commissioner may be required to be involved in the business of financing the purchase of real estate. This person would act as the agent in purchasing insurance for the real estate.

A- No person involved in the business of financing the purchase of real estate or personal property may require the purchase of insurance through a specific agent as part of the requirements in the purchase.

15. When dealing with insurance in connection with sales or loans, violating the legal provisions specified by California law is considered a:
felony
misdemeanor
fine
penalty

B- This violation is a misdemeanor.

16. It is against the law for an insurance licensee to offer free insurance to:
anyone, regardless the reason.
those who cannot afford it.
family and other relatives.
anyone as an incentive to acquire some other type of business.

D- It is against the law for an insurance licensee to offer free insurance to anyone as an incentive to acquire some other type of business.

17. Which of the following is NOT a valid reason for the Commissioner to deny the use of a name when filing with the Insurance Commissioner?
The names gives the impression the licensee is authorized to conduct a type of business which it cannot legally conduct.
The name would lead the public in the wrong direction.
The name would interfere or is too similar to the name of another agency already licensed by the Commission.
The name is politically connected to the government.

D-Some companies take a political stand and are still granted the use of a name.

18. All Fire and Casualty Broker/Agents are required by law to display to the public:
The institution of education where they received their degree.
Their license to sell insurance displayed in their training room.
The types of insurance they are licensed to sell displayed in their personal office.
Their license to sell insurance, displayed in a place where it can be easily seen.

D- All Fire and Casualty Broker-Agents are required by law to display licenses in a place where the license can be clearly seen and inspected by everyone to determine whether it is valid.

19. Agents must keep good records and make them available to the DOI for a period of:
1 year
2 years
3 years
5 years

D- All this information must be kept on file for a period of five years from the application date, following policy delivery.

20. When should a licensee notify the Commissioner of a change in address?
within the 30 day grace period
within the 10 day grace period
after notifying the company the licensee is employed with
immediately

D- Always immediately! Never as soon as possible, etc. as that would indicate a lack of importance.