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WASHINGTON STATE PROPERTY AND CASUALTY
INSURANCE EXAM 2025| PRACTICE EXAM
QUESTIONS WITH 100% CORRECT SOLUTIONS|
LATEST UPDATE|STUDY GUIDE QUESTIONS
An insured has a personal auto policy with both comprehensive (other-than- collision) and collision coverage. His car is stolen and recovered five days later. If the insured claims transportation expenses of $20 per day, how much will his policy pay?
a)$
b)$
c)$
d)$
The policy will pay $20 per day after 48 hours, not to exceed 30 days in total. - ANSWER-b)$60.
The policy will pay $20 per day after 48 hours, not to exceed 30 days in total.
Unauthorized Insurer - ANSWER-Is held personally liable. Each violation is separate and can result in suspension, revocation of license, and a min fine of $25,000. (Class B Felony)
When would a commissioner order a replacement policy? - ANSWER-When a unauthorized insurer improperly placed a policy. Would be replaced by a policy with a legal insurer.
Surplus Lines - ANSWER-Insurance that is not available or offered in the regular marketplace from admitted insurers.
Insurance Commissioner (IOC) - ANSWER-State elected term of 4 years.
insurance Commissioner duties - ANSWER--Protects the Public from unfair trade practices
- Examinations/investigations
- Hearings
- Cease and Desist orders
- Public information
- Appoints Dep. Chief Commissioner
- has not had a license denied, suspended, or revoked
- completed Pre-licensing/ exams
- paid fee(s)
- Fingerprinted/ background check
FINRA (Financial Industry Regulatory Authority) - ANSWER-solicits licences for variable life and variable annuity
Temporary Insurance Producers Licence - ANSWER-Commissioner may issue temp. license for a max of 180 days. usually in event of producers recovery, sale of a business, training and licencing of new personal to operate a business.
Non-Resident Producer - ANSWER-a producer who lives (domicile) and conducts business from another state other than Washington. Will receive a non resident producers license.
When is a insurance license exempt? - ANSWER-When they work at a company or themself but do not conduct the solicitation, sale, negotiation of insurance.
Appointing a insurance producer - ANSWER-- notice of appointment within 15 days
- Commissioner will verify within 15 days
- if deemed ineligible commissioner will notify within 10 days
If approved it must e renewed every 2 years, and will receive notice within 60 days of the renewal date.
Business Entity Affiliates - ANSWER-A business must have AT LEAST 1 affiliated individual licence to transact insurance
If business Entity Affiliate is terminated - ANSWER-The commissioner must receive notice within 30 days of termination.
Renewal - ANSWER-The initial licenses are valid from the date that they are issued until the last day of the licensee's birth month.
Renewal Fees for Licences - ANSWER-(Every 2 years)
Producer- $
Convicted of a felony - ANSWER-Commissioner may revoke or refuse insurers licenses immediately. Within 15 days may revoke a ordered licence or by ordering a hearing within 10 days.
Suspended license period - ANSWER-up to 12 months
Guilty of violations - ANSWER-each fine of up to $1,000, must be paid within 15- 30 days
Place of Business Requirements - ANSWER-Must be accessible to the public. Does not apply to life and disability insurance.
Record Retention - ANSWER-Requires insurer to maintain records for 5 years.
(DRPL) Designated Responsible Licensed Person - ANSWER-Responsible for insurers compliance with insurance laws/ rules
Misrepresentation - ANSWER-Materials that are false, misleading, or deceptive of policy benefits, terms, payment of dividends. Also includes oral statements.
Knowingly committing this is considered a gross misdemeanor, and licences can be revoked
False Advertising - ANSWER-Advertising that is misleading, deceptive, and untrue.
Ex: newspaper add with untrue statements about terms and benefits of a policy.
Rebating - ANSWER-the practice of giving an individual a premium reduction or some other financial advantage not stated in the policy as an inducement to purchase the policy.
It May not exceed $100 per person in a 12 month period.
Inducement - ANSWER-illegal action. referring to rebating to have someone purchase a policy for a reward.
Third Party Claimant - ANSWER-the opposite party of the first party claimant.
Ex: James has a policy with Goosehead (first-party) and gets into an accident, hitting Coles car (third party), cole then makes a claim on James's Goosehead policy.
Unfair Practices - ANSWER-Illegal business practices that exploit the unequal bargaining position of consumers
Unreasonable Denial of Claim - ANSWER-May be taken to supreme court, if determined the claim denial was unfair insurer could pay 3x the amount of claim
first party must submit claim within 20 days prior to filing for action
Insurance Code: Remedies & Penalties - ANSWER-- Cease and desist order form commissioner
- if not followed within 10 days of order a max fine of $250 will be issued for each violation
Can you keep or retain a policy for safekeeping? - ANSWER-No, not under any circumstance
Fiduciary Capacity - ANSWER-When the business a person transacts or the money or property which he handles is not for his own benefit but for another person
-Agent/producer represents the insurance company
- Any diversion of funds is considered larceny by embezzlement and will be prosecuted accordingly
Separate Account Requirement - ANSWER-Withing Fiduciary Capacity: all premium or returned premiums must be accounted for and in a seperate account.
(may be intrest barring accounts and held by producer to help with bank fees/charges)
Reply to the Insurance Commissioner - ANSWER-must be done within 15 days
Individual unknowingly violates the Fair Credit Report Act - ANSWER-is liable for the amount equal to the loss as well as any legal fees
Individual knowingly (willfully) violates the Fair Credit Reporting act - ANSWER- Agent: 2 years in prison
individual: a $2,500 fine
Fair Credit Act: Prohibited Info - ANSWER-- Bankruptcy more then 10 years
- 150,000 or less in credit transactions
- civil suits, records of arrest/convictions/crimes
- any negative information older that 7 years
Unlawful Insurance Fraud - ANSWER-May be fined, imprisoned for up to 10 years or both. if they endanger a accompanied insurer up to 15 years.
- if the embezzlement amount is less then $5,000 prison time may be reduced to 1 year.
1033 waiver - ANSWER-a personal convicted of a felony may apply for a ____ to transact insurance business. cannot be 50k+ for each violation.
Unilateral Contract - ANSWER-promise in exchange for an act
(NFIP)
National Flood Insurance Program - ANSWER-Identifies floodplains and maps thru FEMA. the community must meet the federal requirements and must purchase within 1 year after becoming available.
*- structures must have two solid walls and a roof. be partially above ground, and not entirely over water.
(WYO) Write Your Own insurance program - ANSWER-the same insurance you would receive in the NFIP...non risk baring though the FIA
NFIP
National Flood Insurance Program Limits - ANSWER-Single Family: Building- $250,000. Contents- $100,
Other Residential: Building- $250,000. Contents- $100,
Single-family dwelling are automatically provided with replacement cost insurance to ___% of the replacement value maximum allowed under FIP. - ANSWER-
There is a 30 day waiting period after the applicant has been accepted before the coverage goes into effect except under the following conditions: - ANSWER--first 30 days of a community enters emergency or normal programs. the coverage is applied 12:01am the day after
- when existing policy is assigned to the property purchaser and at 12:01am after the 5th day the endorsement requests and premium has been mailed for policy.
Overinsurance - ANSWER-An excessive amount of insurance that would result in overpayment to the insured in the event of a loss.
- it is prohibited as it violates the principle of indemnity
Overinsurance Provision (property insurance) - ANSWER-the use of the special provision to cover the cost of repair or replacement of property
If an insurer cancels a contract, written notice must be provided to the insured within what a certain period of time. - ANSWER-45 days prior to cancelation
*unless from non paid premiums (10 days)
Fire Policy Cancelation - ANSWER-5 days prior notice needed
medical malpractice insurance - ANSWER-a type of liability insurance that covers physicians and other health care professionals for liability claims arising from patient treatment.
medical malpractice insurance cancelation - ANSWER-90 days notice of cancelation
Notice of Cancellation - ANSWER-To cancel your policy, your insurance company must mail notice or be delivered
-Fraud or material misrepresentation
- default in payments due to insurer
After insurer termination of independent agent they must: - ANSWER-permit renewal of all polices in insurance book for 1 year.
- rate of commissions transfers
- must assign policy to nearest located insurer
Guaranteed Association - ANSWER-Non Profit that protects insured claim payments and avoid financial losses if insurer becomes insolvent. within 30 days of liquidation.
-claims in excess of $100 but not more then $300,
- should never be claimed as guaranteed backing to insurance (unfair trade practice)
Homogeneity - ANSWER-the degree to which terms are similar
Obsolescence - ANSWER-depreciation in value of the property due to becoming outdated
3 Elements of insurable risk - ANSWER-1. Financial (a monetary interest)
- Blood (a relative)
- Business (a business partner)
Accident - ANSWER-An unexpected happening that may result in injury, loss, or damage.
Occurrence - ANSWER-A loss that occurs at a specific time and place or over a period of time.
proximate cause of loss - ANSWER-An unbroken chain of events leading from the negligent act to damage sustained.
Ex: Building catches fire, due to the fire department putting out the flames the walls and floors have water damage. An incident creating another loss
