NJ PC State Law Exam UPDATED
ACTUAL QUESTIONS AND CORRECT
ANSWERS
Paul vs. Virginia (1869) - CORRECT ANSWER Resulted in a landmark decision establishing
the right of each state to regulate the business of insurance. The Court ruled the insurance industry
was not subject to the commerce clause of the Constitution. This decision stood until reversed in
1944.
U.S. vs. South-Eastern Underwriters Association (1944) - CORRECT ANSWER The South-
Eastern Underwriters Association (SEUA) was found guilty of price fixing and other violations of the
Sherman Anti-trust Act. The Supreme Court ruled insurance was interstate commerce and, when
conducted across state lines, was subject to federal regulations.
McCarran-Ferguson Act (1945) - CORRECT ANSWER The McCarran-Ferguson Act of 1945,
also known as Public Law 15, states the regulation and taxation of the insurance business by
individual states is in the public's best interest. In addition, federal antitrust laws apply only to the
extent that state law does not regulate insurance. With the McCarran-Ferguson Act as public law, state
government—and not the Interstate Commerce Commission—regulates the insurance industry.
Court actions - CORRECT ANSWER are interpretations and rulings by courts of law to settle
dispute. Interpretations are required when a case involves a statute whose meaning is vague or
ambiguous. The judge will use canons of statutory interpretation, or common sense derived from
common law, and legislative history to resolve the meaning of statutes.
The Commissioner - CORRECT ANSWER is the administrator and chief executive office of
the New Jersey Department of Insurance, whose duties include:
-Administering the work of the department
-Appointing officers and other department personnel
-Discharging the functions, powers and duties of the department
-Formulating, issuing, and communicating rules and regulations including regulation of the
companies, agencies, boards, commissions, and other entities within its jurisdiction, including
licensees, officers and employees
-Reporting each year to the Governor and to the Legislature on the operations of the preceding fiscal
year
-Appointing advisory committees
,Whenever someone has engaged in any unfair method of competition or any unfair or deceptive act or
practice, the Commissioner may issue a notice of a hearing, providing how many days notice? -
CORRECT ANSWER 10
What is the Penalty for a deceptive act or practice - CORRECT ANSWER $1,000 per violation.
If the person knew or reasonably should have known he/she was in violation the penalty may be
increased to $5,000 for each violation. In addition the Commissioner may impose a fine of up to
$5,000 for the first violation, and up to $10,000 for any subsequent violation of any provision of New
Jersey insurance law.
Retrocession - CORRECT ANSWER Retrocession is the transfer of risk from one reinsurer to
another reinsurer.
Certificate of Authority - CORRECT ANSWER A certificate issued by the Commissioner
evidencing the authority of an insurer to transact insurance in this State.
Insurance Agent - CORRECT ANSWER is authorized to sell, solicit, or negotiate insurance
contracts, to collect premiums, and to countersign insurance policies on an insurer's behalf.
Insurance Broker - CORRECT ANSWER acts as the representative of an insured or prospective
insured. He/she may places insurance with an insurance company but does not act as its agent.
Insurance Consultant - CORRECT ANSWER offers advice on the benefits, advantages or
disadvantages under any insurance policy or contract. To qualify for an insurance consultant's license,
an individual must be licensed as a producer.
Limited Lines - CORRECT ANSWER Bail bonds, car rental insurance, credit insurance, ticket
insurance, travel insurance, group mortgage cancellation, legal insurance, and self-storage personal
property insurance.
Personal Lines - CORRECT ANSWER Property and casualty coverage sold to individuals and
families for primarily noncommercial purposes.
, Casualty - CORRECT ANSWER Coverage against legal liability, including death, injury or
disability or damage to real or personal property.
Surplus Lines - CORRECT ANSWER Coverage written by unauthorized insurers.
Business Entity - CORRECT ANSWER An organization may seek a New Jersey producer's
license if it is domiciled or has obtained authorization to do business in the state of New Jersey. A
business entity acting as an insurance producer must obtain an producer license, which will be granted
once the business has paid the required fees and designated licensed insurance producer(s) responsible
for compliance with New Jersey insurance laws, rules and regulations.
When does a producer need to notify when they move from one state to another and what are the fees
and application process. - CORRECT ANSWER must file a change of address and provide
certification from the new resident state within 30 days of the change of legal residence. No fee or
license application is required.
Prelicensing Requirements - CORRECT ANSWER -Be at least 18 years of age
-Have not committed any act that is a ground for denial, suspension or revocation
-Complete a prelicensing course of study for the lines of authority for which the individual has
applied
-Pay the fees as required
-Pass, within 1 year of the application date, the examinations for the lines of authority for which the
individual has applied
How many course hours are required for licensing - CORRECT ANSWER 20 course hours
except Bail Bonds is 10 hours plus 6 hours on regulation of the insurance industry
Prelicencing requirements for an applicant previously licensed for the same lines in another state -
CORRECT ANSWER -The person currently is licensed in good standing in that state
-The application is received within 90 days of the cancellation of the applicant's previous license
-Not required any pre education or examination if the above is met
Exemptions - Prelicensing courses may be waived for an applicant who : - CORRECT
ANSWER -Holds a license in another state
-Is a veteran of the United States armed services and has completed a course of veteran's education
ACTUAL QUESTIONS AND CORRECT
ANSWERS
Paul vs. Virginia (1869) - CORRECT ANSWER Resulted in a landmark decision establishing
the right of each state to regulate the business of insurance. The Court ruled the insurance industry
was not subject to the commerce clause of the Constitution. This decision stood until reversed in
1944.
U.S. vs. South-Eastern Underwriters Association (1944) - CORRECT ANSWER The South-
Eastern Underwriters Association (SEUA) was found guilty of price fixing and other violations of the
Sherman Anti-trust Act. The Supreme Court ruled insurance was interstate commerce and, when
conducted across state lines, was subject to federal regulations.
McCarran-Ferguson Act (1945) - CORRECT ANSWER The McCarran-Ferguson Act of 1945,
also known as Public Law 15, states the regulation and taxation of the insurance business by
individual states is in the public's best interest. In addition, federal antitrust laws apply only to the
extent that state law does not regulate insurance. With the McCarran-Ferguson Act as public law, state
government—and not the Interstate Commerce Commission—regulates the insurance industry.
Court actions - CORRECT ANSWER are interpretations and rulings by courts of law to settle
dispute. Interpretations are required when a case involves a statute whose meaning is vague or
ambiguous. The judge will use canons of statutory interpretation, or common sense derived from
common law, and legislative history to resolve the meaning of statutes.
The Commissioner - CORRECT ANSWER is the administrator and chief executive office of
the New Jersey Department of Insurance, whose duties include:
-Administering the work of the department
-Appointing officers and other department personnel
-Discharging the functions, powers and duties of the department
-Formulating, issuing, and communicating rules and regulations including regulation of the
companies, agencies, boards, commissions, and other entities within its jurisdiction, including
licensees, officers and employees
-Reporting each year to the Governor and to the Legislature on the operations of the preceding fiscal
year
-Appointing advisory committees
,Whenever someone has engaged in any unfair method of competition or any unfair or deceptive act or
practice, the Commissioner may issue a notice of a hearing, providing how many days notice? -
CORRECT ANSWER 10
What is the Penalty for a deceptive act or practice - CORRECT ANSWER $1,000 per violation.
If the person knew or reasonably should have known he/she was in violation the penalty may be
increased to $5,000 for each violation. In addition the Commissioner may impose a fine of up to
$5,000 for the first violation, and up to $10,000 for any subsequent violation of any provision of New
Jersey insurance law.
Retrocession - CORRECT ANSWER Retrocession is the transfer of risk from one reinsurer to
another reinsurer.
Certificate of Authority - CORRECT ANSWER A certificate issued by the Commissioner
evidencing the authority of an insurer to transact insurance in this State.
Insurance Agent - CORRECT ANSWER is authorized to sell, solicit, or negotiate insurance
contracts, to collect premiums, and to countersign insurance policies on an insurer's behalf.
Insurance Broker - CORRECT ANSWER acts as the representative of an insured or prospective
insured. He/she may places insurance with an insurance company but does not act as its agent.
Insurance Consultant - CORRECT ANSWER offers advice on the benefits, advantages or
disadvantages under any insurance policy or contract. To qualify for an insurance consultant's license,
an individual must be licensed as a producer.
Limited Lines - CORRECT ANSWER Bail bonds, car rental insurance, credit insurance, ticket
insurance, travel insurance, group mortgage cancellation, legal insurance, and self-storage personal
property insurance.
Personal Lines - CORRECT ANSWER Property and casualty coverage sold to individuals and
families for primarily noncommercial purposes.
, Casualty - CORRECT ANSWER Coverage against legal liability, including death, injury or
disability or damage to real or personal property.
Surplus Lines - CORRECT ANSWER Coverage written by unauthorized insurers.
Business Entity - CORRECT ANSWER An organization may seek a New Jersey producer's
license if it is domiciled or has obtained authorization to do business in the state of New Jersey. A
business entity acting as an insurance producer must obtain an producer license, which will be granted
once the business has paid the required fees and designated licensed insurance producer(s) responsible
for compliance with New Jersey insurance laws, rules and regulations.
When does a producer need to notify when they move from one state to another and what are the fees
and application process. - CORRECT ANSWER must file a change of address and provide
certification from the new resident state within 30 days of the change of legal residence. No fee or
license application is required.
Prelicensing Requirements - CORRECT ANSWER -Be at least 18 years of age
-Have not committed any act that is a ground for denial, suspension or revocation
-Complete a prelicensing course of study for the lines of authority for which the individual has
applied
-Pay the fees as required
-Pass, within 1 year of the application date, the examinations for the lines of authority for which the
individual has applied
How many course hours are required for licensing - CORRECT ANSWER 20 course hours
except Bail Bonds is 10 hours plus 6 hours on regulation of the insurance industry
Prelicencing requirements for an applicant previously licensed for the same lines in another state -
CORRECT ANSWER -The person currently is licensed in good standing in that state
-The application is received within 90 days of the cancellation of the applicant's previous license
-Not required any pre education or examination if the above is met
Exemptions - Prelicensing courses may be waived for an applicant who : - CORRECT
ANSWER -Holds a license in another state
-Is a veteran of the United States armed services and has completed a course of veteran's education
