NJ Property Casualty Insurance Exam Set
1. What is the fine for failing to comply with a court-ordered subpoena?: -
$5000
2. If the commissioner decides one has violated the insurance code, what isthe fine for
unintentional acts performed?: $1000
3. If the commissioner decides one has violated the insurance code, what isthe max fine?:
1st offense: $5K, 2nd offense $10K, each additional $15K
4. If the insurance commissioner decides one has violated the insurancecode, what is the
fine for violating a cease & desist?: $5k each violation
5. If the insurance commissioner decides one has violated the insurance code, what is the
fine for unlawful acts with intentional & material thought?: -
$5k
6. What is the fine for not contacting the dept with an address or name changewithin 30 days?:
$250 max if over 60 days
7. What is the fine for if a license fee check is returned for insufficientfunds?: $500
8. What is the fine for if you do not contact the department regarding a changein partners,
owners, officers, or directors?: $250
9. What is the fine for not returning a license to a producer?: $500
10. What is the fine for not maintaining an office address or employmentcontracts on file
with the department?: $100 for each contract
11. What document is required before an insurance company may transactbusiness in a
state?: Certificate of Authority
12. What is a domestic insurer?: An insurer that conducts business in the state inwhich it was
incorporated
13. A producer who is appointed with more than one insurer is considered tobe...: A Licensed
Solicitor
14. Implied authority is defined as...: Ability to act outside the authority specificallygranted in
an agency agreement & extends company's liability
15. What kind of clause relates to this statement: E&N Company issued a policy in
consideration of the representations on an application & the paymentof the 1st premium?:
Consideration
16. An insured's representations and warranties are incorrectly stated inwhich of the
following statements?
a. Statements made by an applicant that are guaranteed true are consideredto be warranties
,b. Statements that an applicant believes to be true, but does not guarantee tobe true, are
considered to be representations
c. An applicant's statements on an application are considered warranties
d. An applicant's statements on an application are considered representa-tions: c. An
applicant's statements on an application are considered warranties
17. What term relates to an agreement without legal effect?: Void
18. An authorized but non-admitted insurer can be represented in this stateonly by which of
the following?: Surplus lines broker
19. In franchise groups, how many master policies will be issued?: None
20. Self-insurance is an example of what kind of risk management?: retention
21. What kind of plan is a Stock life insurance company conducting when itissues
participating and non-participating policies?: Mixed
22. What is this an example of: Doctors pooling their funds to cover theirmalpractice
exposures?: risk sharing
23. Which entity makes an enforceable promise in a unilateral contract?: Insur-er
24. In a court of law, any ambiguity found in a policy will go in favor of the insured because
an insurance policy is what kind of contract?: contract ofadhesion
25. In regard to an informal contract, when will it become binding?: When oneparty makes an
offer and the other party accepts the offer
26. When a risk is insurable, what must be calculable?: chance of loss
27. What is a non-profit provider of insurance that is covered by a uniquesection of the
insurance code called?: Fraternal Life Insurance Organization
28. All of the following are examples of conditions except:
a. Inspections
b. Liberalization clause
c. Return of premium
d. Appraisal: d. Appraisal
29. If a driver had lots of accidents & violations, compared to other driverstheir age, which
rating type would most closely reflect their risk?: Merit
30. Why was the commercial Insurance Deregulation Act Created?: To protect the public
from the adverse effects of excessive, inadequate, & unfair discriminatoryrates & marketing
practices
31. Which policies issued must follow the provisions of the Commercial Insur-ance
,Deregulation Act?: Commercial policies
32. When must rate amendments & policy forms be filed with the commission-er?: 30 days
before
33. What losses are excluded from flood insurance?: -Landslides
-Sewer backup
-Windblown Rain
-Snow
-Sleet
34. Who administers the NFIP?: Federal Insurance Administration (FIA)
35. What does the NFIP stand for?: National Flood Insurance Program
36. Why was the National Flood insurance Program constructed?: to fill in gapsof flood
coverage by the private sector
37. What are the 3 NFIP requirements for coverage?: -community land manage-ment &
flood control programs must reduce flood losses in the future
-Flood insurance required in specific flood prone areas as a condition for receivingloans
through/ backed by the federal government
-Property owners that fail to purchase flood insurance within 1 year after it is available will
not be eligible for full disaster relief funding. It will be reduced by anamount of insurance that
could have been purchased
38. What is the NFIP max coverage for a single family?: Building $250K, Contents
$100K
39. What is the NFIP max coverage for other residential?: Building $250K,Contents $100K
40. What is the NFIP max coverage for small business?: Building $500K, Con-tents $500K
41. What is the NFIP max coverage for Other Non-Residential?: Building $500k,Contents
$500K
42. What is the NFIP subsidized rate for a single family?: Building $35K, Con-tents $10K
43. What is the NFIP subsidized rate for Other Residential?: Building $100K ,Contents
$100K
44. What is the NFIP subsidized rate for small businesses?: Building $100K,Contents $100K
45. What is the NFIP subsidized rate for other non-residential?: Building $100K,Contents
$100K
46. What is the wait period before flood insurance can be effective?: 30 days,no binders
issued
, 47. What are the exceptions to the 30 day NFIP wait period?: -1st 30 days aftercoverage,
community enters standard or emergency program, coverage will beginat 12:01 am the date
after application and premium were mailed
-When an existing policy was assigned to a property purchaser
-At 12:01 am on the 5th day after an endorsement request & premium has beenmailed for
existing policy
48. What was the Supreme Court's decision regarding the Paul v. Virginia case?: insurance
was NOT interstate commerce and could not be regulated by thefederal govt.
49. Who heard the Paul v. Virginia case?: Supreme Court
50. Who heard the US v Southeastern Underwriting Association case?: -
Supreme Court
51. What was the decision in the US v Southeastern Underwriting AssociationCase?:
Insurance is interstate commerce and should be subject to federal regula-tions (currently in
effect today)
52. What is the McCarran-Ferguson Act?: The federal govt won't regulate insur-ance business
as long as states perform an adequate job of managing their own insurance industries.
53. When was the McCarran-Ferguson Act passed?: March 9, 1945
54. To whom does the insurance commissioner have to provide a report?: -
Governor & Legislature
55. How often must the insurance Commissioner provide a report?: Annually
56. How long before a disciplinary hearing must the insurance commissionernotify interested
parties?: 10 days before
57. What construction class has a 2 hour fire resistance rating?: fire resistive
58. What rating system is the most common approach used in the insuranceindustry?: class
59. A consequential loss is known as what kind of loss?: indirect
60. What is ACV?: Actual cash valueReplacement cost-depreciation= ACV
61. Which kind of penalty does the insured suffer if the insured does NOT carrysufficient
insurance to meet the policy requirement?: coinsurance
62. Which policy part contains the policy's premium & coverage?: declarations
63. The Pro Rata provision is most closely associated with which principle?-
: indemnity
64. Jan rarely cleans her home & often lets trash build up on her steps. Whattype of hazard is
this?: physical
1. What is the fine for failing to comply with a court-ordered subpoena?: -
$5000
2. If the commissioner decides one has violated the insurance code, what isthe fine for
unintentional acts performed?: $1000
3. If the commissioner decides one has violated the insurance code, what isthe max fine?:
1st offense: $5K, 2nd offense $10K, each additional $15K
4. If the insurance commissioner decides one has violated the insurancecode, what is the
fine for violating a cease & desist?: $5k each violation
5. If the insurance commissioner decides one has violated the insurance code, what is the
fine for unlawful acts with intentional & material thought?: -
$5k
6. What is the fine for not contacting the dept with an address or name changewithin 30 days?:
$250 max if over 60 days
7. What is the fine for if a license fee check is returned for insufficientfunds?: $500
8. What is the fine for if you do not contact the department regarding a changein partners,
owners, officers, or directors?: $250
9. What is the fine for not returning a license to a producer?: $500
10. What is the fine for not maintaining an office address or employmentcontracts on file
with the department?: $100 for each contract
11. What document is required before an insurance company may transactbusiness in a
state?: Certificate of Authority
12. What is a domestic insurer?: An insurer that conducts business in the state inwhich it was
incorporated
13. A producer who is appointed with more than one insurer is considered tobe...: A Licensed
Solicitor
14. Implied authority is defined as...: Ability to act outside the authority specificallygranted in
an agency agreement & extends company's liability
15. What kind of clause relates to this statement: E&N Company issued a policy in
consideration of the representations on an application & the paymentof the 1st premium?:
Consideration
16. An insured's representations and warranties are incorrectly stated inwhich of the
following statements?
a. Statements made by an applicant that are guaranteed true are consideredto be warranties
,b. Statements that an applicant believes to be true, but does not guarantee tobe true, are
considered to be representations
c. An applicant's statements on an application are considered warranties
d. An applicant's statements on an application are considered representa-tions: c. An
applicant's statements on an application are considered warranties
17. What term relates to an agreement without legal effect?: Void
18. An authorized but non-admitted insurer can be represented in this stateonly by which of
the following?: Surplus lines broker
19. In franchise groups, how many master policies will be issued?: None
20. Self-insurance is an example of what kind of risk management?: retention
21. What kind of plan is a Stock life insurance company conducting when itissues
participating and non-participating policies?: Mixed
22. What is this an example of: Doctors pooling their funds to cover theirmalpractice
exposures?: risk sharing
23. Which entity makes an enforceable promise in a unilateral contract?: Insur-er
24. In a court of law, any ambiguity found in a policy will go in favor of the insured because
an insurance policy is what kind of contract?: contract ofadhesion
25. In regard to an informal contract, when will it become binding?: When oneparty makes an
offer and the other party accepts the offer
26. When a risk is insurable, what must be calculable?: chance of loss
27. What is a non-profit provider of insurance that is covered by a uniquesection of the
insurance code called?: Fraternal Life Insurance Organization
28. All of the following are examples of conditions except:
a. Inspections
b. Liberalization clause
c. Return of premium
d. Appraisal: d. Appraisal
29. If a driver had lots of accidents & violations, compared to other driverstheir age, which
rating type would most closely reflect their risk?: Merit
30. Why was the commercial Insurance Deregulation Act Created?: To protect the public
from the adverse effects of excessive, inadequate, & unfair discriminatoryrates & marketing
practices
31. Which policies issued must follow the provisions of the Commercial Insur-ance
,Deregulation Act?: Commercial policies
32. When must rate amendments & policy forms be filed with the commission-er?: 30 days
before
33. What losses are excluded from flood insurance?: -Landslides
-Sewer backup
-Windblown Rain
-Snow
-Sleet
34. Who administers the NFIP?: Federal Insurance Administration (FIA)
35. What does the NFIP stand for?: National Flood Insurance Program
36. Why was the National Flood insurance Program constructed?: to fill in gapsof flood
coverage by the private sector
37. What are the 3 NFIP requirements for coverage?: -community land manage-ment &
flood control programs must reduce flood losses in the future
-Flood insurance required in specific flood prone areas as a condition for receivingloans
through/ backed by the federal government
-Property owners that fail to purchase flood insurance within 1 year after it is available will
not be eligible for full disaster relief funding. It will be reduced by anamount of insurance that
could have been purchased
38. What is the NFIP max coverage for a single family?: Building $250K, Contents
$100K
39. What is the NFIP max coverage for other residential?: Building $250K,Contents $100K
40. What is the NFIP max coverage for small business?: Building $500K, Con-tents $500K
41. What is the NFIP max coverage for Other Non-Residential?: Building $500k,Contents
$500K
42. What is the NFIP subsidized rate for a single family?: Building $35K, Con-tents $10K
43. What is the NFIP subsidized rate for Other Residential?: Building $100K ,Contents
$100K
44. What is the NFIP subsidized rate for small businesses?: Building $100K,Contents $100K
45. What is the NFIP subsidized rate for other non-residential?: Building $100K,Contents
$100K
46. What is the wait period before flood insurance can be effective?: 30 days,no binders
issued
, 47. What are the exceptions to the 30 day NFIP wait period?: -1st 30 days aftercoverage,
community enters standard or emergency program, coverage will beginat 12:01 am the date
after application and premium were mailed
-When an existing policy was assigned to a property purchaser
-At 12:01 am on the 5th day after an endorsement request & premium has beenmailed for
existing policy
48. What was the Supreme Court's decision regarding the Paul v. Virginia case?: insurance
was NOT interstate commerce and could not be regulated by thefederal govt.
49. Who heard the Paul v. Virginia case?: Supreme Court
50. Who heard the US v Southeastern Underwriting Association case?: -
Supreme Court
51. What was the decision in the US v Southeastern Underwriting AssociationCase?:
Insurance is interstate commerce and should be subject to federal regula-tions (currently in
effect today)
52. What is the McCarran-Ferguson Act?: The federal govt won't regulate insur-ance business
as long as states perform an adequate job of managing their own insurance industries.
53. When was the McCarran-Ferguson Act passed?: March 9, 1945
54. To whom does the insurance commissioner have to provide a report?: -
Governor & Legislature
55. How often must the insurance Commissioner provide a report?: Annually
56. How long before a disciplinary hearing must the insurance commissionernotify interested
parties?: 10 days before
57. What construction class has a 2 hour fire resistance rating?: fire resistive
58. What rating system is the most common approach used in the insuranceindustry?: class
59. A consequential loss is known as what kind of loss?: indirect
60. What is ACV?: Actual cash valueReplacement cost-depreciation= ACV
61. Which kind of penalty does the insured suffer if the insured does NOT carrysufficient
insurance to meet the policy requirement?: coinsurance
62. Which policy part contains the policy's premium & coverage?: declarations
63. The Pro Rata provision is most closely associated with which principle?-
: indemnity
64. Jan rarely cleans her home & often lets trash build up on her steps. Whattype of hazard is
this?: physical
