Statutes and Regulations Casualty Insurance (Illinois Property and Casualty IL Law, IL Casualty Insurance Practice Test) Questions and Answers Graded 100% 2023

Statutes and Regulations Casualty Insurance (Illinois Property and Casualty IL Law, IL Casualty Insurance Practice Test) Questions and Answers Graded 100% 2023. When a commercial property insurance policy, in effect for more than 60 days is cancelled for an allowable reason, other than non-payment of premium, the insured must give written notice to the first named insured of at least 60 days A person is in the process of becoming permanently licensed as a producer. A temporary producers license may be issued for a maximum period of 90 days All of the following are correct regarding misrepresentation EXCEPT The fines for misrepresentation range from $50 to $1,000. The director notifies a producer of license termination on March 1. On April 15, the director receives a request to review the charges in a court of law. What is the latest possible court date that can be set for the hearing? The court date will not be established. A state or local government unit or official acting in the course of official duties regarding motor vehicle insurance will not be liable for third party injuries or damage UNLESS they result from Willful misconduct or negligence on the part of that unit or official. Alan has a personal auto policy with Part C limits of $100/$300 Uninsured/Underinsured Motorist. Alan is injured by Ben who has Part A limits of $50/$100. The police determine that Ben is at fault for the accident and Alan's $125,000 of medical expense. How much will Alan's Part C pay? $50,000 Workers Compensation laws provide all of the following types of benefits EXCEPT Compensatory benefits Under the coverage of which of the following liability policies may an insured require the insurer to defend a claim? Professional Liability The McCarran-Ferguson Act • Federal law that allows most insurance regulation to be done at the state level. Illinois Department of Insurance Overseen by governor-appointed "director" who has the power to: • Make reasonable rules and regulations to enforce insurance laws. • Conduct reasonable investigations to determine violations of state insurance requirements. • Issue immediate cease-and-desist orders to halt illegal insurance practices. • Issue subpoenas in order to obtain insurance documents. • Require individuals to testify under oath about insurance matters. • Issue, deny, suspend or revoke insurance licenses for individuals and businesses DOI Director • Failure to comply with director orders can result in $2,000 to $20,000 in additional fines. • Guilty party can be forced to pay for independent investigations. • Cease-and-desist orders generally include the right to a hearing within 30 days. • Investigated parties must receive copies of reports before the public. Who Needs a License? Producer license generally required when doing any of the following for compensation: • Selling insurance. • Encouraging someone to buy insurance. • Negotiating terms of insurance. • Giving insurance advice. • Acting without a license is Class A misdemeanor ($2,500 and 1 year in jail). Unlicensed Persons • An insurer or producer cannot compensate an unlicensed person for selling or negotiating insurance: • Possible exception for a formerly licensed person who is receiving deferred compensation and was licensed at time of transaction. Who Doesn't Need a License? An attorney giving legal advice about insurance laws or an insurance contract. • An accountant giving insurance-related advice as part of his or her job duties. • A public adjuster giving insurance-related opinions or advice as part of his or her job duties. • Officers, directors or employees of insurance businesses who don't receive any type of sales commission and whose jobs are managerial, executive, administrative or clerical in nature and aren't related directly to sales. • Certain people who have insurance-specific careers but don't receive any type of sales compensation (such as insurance employees who evaluate insurance applications, investigate claims or process insurance-related paperwork). • Group benefit administrators who aren't compensated by an insurance business. • Salaried, full-time risk managers who neither sell insurance nor receive insurancerelated compensation. License Qualifications • 18 or older. • Pre-license education. • State exam. • Licensing fee. • Good moral character. • Might not be eligible if : • Committed felony. • Fail to pay child support. • Had a license revoked in another state. What's on a License? • Producer's name. • License number. • Date of issuance. • Date of expiration. • Address. • Line of authority (Life, health, property, casualty, etc.). Lines of Authority • Each line generally requires 20 hours of prelicense education and a state exam. • Life. • Accident and health. • Property (Fire). • Casualty. Other Lines of Authority • Slightly different requirements might exist for the following less common lines of authority: • Personal lines. • Motor vehicle. • Variable contracts. • Limited lines. Limited Lines Producers Allows someone to sell a limited list of insurance products that represent a narrow portion of the market (car rental insurance, credit life insurance, etc.). • Requires "appointment" by an insurer. Pre-License Education Exemptions • State exam but no pre-license education for: • College graduates with a degree in insurance. • People who have earned certain insurance related professional designations. • Example: For property and casualty producers: AAI, ARM, CIC, CPCU Pre-License Education AND Exam Exemptions • No state exam and no pre-license education for: • Limited lines producers. • Producers moving to Illinois who are already licensed in same line of authority. • Must be in good standing and complete paperwork within 90 days of residency. • Non-residents of Illinois who are already licensed in the same line of authority in their home state. • Must be in good standing and obtain "non-resident" Illinois license before insuring property in Illinois or insuring anyone in Illinois. Licensing Exams • Administered by Pearson Vue in English or Spanish. • 1 exam for each line of authority. • 100 questions (60 General, 40 Illinois). • 135 minutes total (80 to 85 for General, 50 to 55 for Illinois). • Cheating on an exam is grounds for discipline by the DOI. Passing the Exam • 70% on each portion. • Must pass the failed portion within 90 days to avoid retaking an entire exam. Administration of Exams • Exam candidates must bring: • Certificate of completion. • Non-expired, government-issued photo ID. • SS card, credit/debit card or another nonexpired government ID After the Exam • No numeric score (or maybe 70% by default) upon passing. • Wait 5 days before applying for license Temporary Licenses Upon Death or Disability • No state exam. • Allows for limited time to settle disabled or deceased producer's business affairs. • Issued for 180 days with one possible 180-day extension. • Can require supervision form licensed producer. • License terminates if business is sold or dissolved. Not Death or Disability • Allows licensing candidates to begin work while completing the licensing process. • Valid for 90 days with no extension. • Must be affiliated with an insurer. • Insurers whose candidates don't complete the licensing process can no longer sponsor temporary licenses. DOI Fees • The following fees are generally nonrefundable: • Resident producer license: $180 every two years. • Non-resident producer license: $250 every two years. • Temporary producer license: $50. • Insurance business license: $150 every two years. • Limited Lines producer license: $50 every year. • Licensing exam: $50 (in addition to other fees charged by the testing vendor). • Operating as a pre-license or continuing education provider: $1,000 every year. • Approval of a pre-license or continuing education course: $50 initial fee, then $20 every year. Insurance Broker Bond Requirements • Brokers must have a surety bond equal to at least $2,500 or 5% of brokered premiums from previous year (whichever is more). • $50,000 maximum. License Terms and Renewals • Producer license is generally valid for two years. • Renewal requires fees and continuing education. License Reinstatement • One year to reinstate license by paying double the licensing fee and completing remaining CE hours. Continuing Education • 24 hours every 2 years before license renewal deadline. • At least 3 must be ethics (classroom or webinar). • Hours must be reported (not just completed) prior to renewal deadline. Education Providers • CE courses must be approved by the DOI and be from approved providers Change of Address • Changes to physical and email addresses must be reported within 30 days. Assumed Names Producers must follow the Assumed Business Name Act. • Need to report to DOI if doing business under another name. Business Licenses • Insurance agencies and brokerages must be licensed as producers. • Must have one designated producer in charge of compliance. Felony Convictions • Must be reported within 30 days to DOI. • DOI can use some discretion regarding what to do next License Suspension, Revocation or Refusal The following actions can result in license suspension, revocation or refusal and fines of $10,000 per occurrence (up to $100k maximum): • Being convicted of a felony. • Demonstrating incompetence or untrustworthiness in business. • Having an insurance license disciplined in another state. • Forging an insurance document. • Cheating on an insurance exam. • Knowingly doing business with an unlicensed producer. • Failing to pay child support. • Failing to pay state income taxes. • Making false statements on a licensing application. • Violating laws, rules or orders from the DOI. • Improper handling of funds obtained as part of an insurance transaction. • Misrepresenting facts about an insurance product. • Committing fraud. Suspension, Revocation or Refusal Process • Suspensions might be temporary. • Revocations are expected to be permanent. • Producers who've been denied or revoked can reapply after three years but can still be refused. • Disciplinary action requires written notice and right to request a hearing within 30 days. Business Liability If an insurer or insurance business terminates a relationship with a producer because of a legal violation, it must inform the DOI within 30 days. • Failure to report to the DOI or take preventive action after learning of a producer's violations can lead to business license revocation/suspension. Misrepresentations and Fair Market Conduct Can't misrepresent the type or benefits of an insurance product. • Can't disparage competition to make a sale. • Can't act as if products are affiliated with the state or federal government. • Can't engage in boycott or intimidation to force a sale. • Misrepresentation can result in fines of $200 to $10,000 per occurrence. Compensation and Fees Fees (as opposed to commissions) must be disclosed before coverage is obtained (with records kept for 7 years). • No fee for canceling someone's insurance. Rebating • Sharing commission in order to induce a sale. • Things of value provided to consumers must be disclosed in the insurance contract. • Class B misdemeanor: 6 months in jail and $1,500 fine. Controlled Business • No more than half of business can be from insurance for yourself, your spouse, your business or your employer. Fiduciary Responsibilities • Money provided by consumer is generally held in a "fiduciary" capacity by producers and can't be commingled, misappropriated or used for other purposes. • Insurers must continue to cover people when a producer misappropriates their funds, but the producer can face legal action. Premium Fund Trust Accounts • Can't put principal dollars at risk. • Generally can't withdraw from PFTA unless it's a transfer of premiums to an insurer or transfer of earned commissions to producers. • Must be from federal or state bank or savings and loan. • Bank records and checks must indicate it's a PFTA. • Records must be maintained for 7 years. • Can be interest-bearing but can only be kept if authorized by carrier. PFTA Penalties • Misappropriating less than $150 in first offense: Class A misdemeanor (1 year of prison and $2,500 fine). • Misappropriating less than $150 in multiple offenses: Class 4 felony (3 years in prison and $25,000 fine). • Misappropriating more than $150: Class 3 felony (5 years in prison and $25,000 fine). Premium Finance Companies Allows consumers to pay premiums to a producer in installments. • Generally requires a license if more 10% of premiums aren't paid by consumers within 90 days of being due. • Fees are set by law. Policy Disclosure • Policy must list the producer or firm that sold it Illinois Insurance Privacy Rules • Information obtained as part of an insurance transaction generally cannot be disclosed without written consent. Consumer Complaints • An insurer must have a toll-free number available during business hours for consumer complaints. • Insurers must respond to al written inquiries and complaints within 21 days. Certificates of Insurance in Illinois • Illegal to misrepresent coverage on a certificate of insurance. • Change to certificate won't change the coverage. Auto Certificates of Insurance • No fees for certificates of insurance. Insurance Discrimination No discrimination at all based on: • Race. • Religion. • Color. • National origin. • Can't refuse to offer or renew insurance based on: • Gender. • Marital status. • Sexual orientation. • (Price differences for the above three must be based on sound actuarial data.) Redlining Refusing to do business in an area (often due to the makeup of the area's population). • DOI can request data based on ZIP code to police redlining. Credit Information Personal lines P and C insurers can't take negative action based ONLY on bad credit. • Must reevaluate credit upon request. • Must consider reason for bad credit. • Can't take negative action against someone solely for not having a credit card. • "Insurance scores" can't consider gender, race, religion, ethnicity, income, address, marital status or nationality. Property Insurance Discrimination • Can't refuse to renew residential property insurance because of: • Property age. • Property location. • Age, sex color, ancestry marital status or occupation of applicant. Can't refuse to issue or renew residential property insurance because: • Property was damaged by a hate crime. • Occupant uses a space heater. • The person was denied or non-renewed for insurance in the past Property in Disrepair • Property owners facing cancellation or nonrenewal must be given reasonable time for repairs. Auto Insurance: Right to Oral Estimates Producers in municipalities of 500k or more must provide oral estimates upon request without requiring the customer to be physically present. Auto Insurance: Previous Insurance • No discrimination based on identity of previous auto insurer unless loss history isn't provided within 21 days. Auto Insurance: Disabled Drivers No discrimination against disabled drivers (assuming the state says they're safe to drive). Auto Insurance: EMS Services No adverse action based on auto accidents when acting as a volunteer. Illinois Fair Plan Available to homeowners and businesses when property insurance has been denied by at least 3 insurers. • Information must be provided to consumers upon cancellation or non-renewal. • All property insurers must participate and help operate it as a non-profit entity. Illinois Automobile Insurance Plan • Drivers must be given info when coverage is canceled or non-renewed. • Each insurer is assigned high-risk drivers based on market share. • Eligible if denied insurance from three companies. Illinois Workers Compensation Assigned Risk Plan • Available within 60 days of business being denied insurance by two insurers. • All insurers must participate and share a portion of high-risk applicants. • Application must disclose the annual premium or deposit premium. Mine Subsidence Coverage • Must be offered to all property insurance customers. • Premiums go into a state fund until a loss occurs. • Not applicable to counties with populations above 1 million (or that border them). • $100,000 per residential building. • $200,000 per commercial building. • $15,000 per living unit. Earthquake Insurance • Property insurance applicants living within the New Madrid Seismic Zone must be made aware of the option to buy earthquake insurance. • Generally includes parts of Southern Illinois.