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WASHINGTON STATE PROPERTY &
CASUALTY INSURANCE EXAM 2025
LATEST REAL QUESTIONS AND
CORRECT ANSWERS GRADE A
Authorized Insurer - CORRECT An insurer that has qualified and received a Certificate of Authority from the Department of Insurance to transact insurance in the state. Contact adhesion - CORRECT the accepter of the contract must "adhere" to the written contract inducement - CORRECT An action aimed at persuading insolvent - CORRECT Bankrupt; unable to pay debts. Transacting Insurance - CORRECT Conducting insurance business, such as soliciting or negotiating to buy or sell an insurance policy. Unauthorized Insurer - CORRECT 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? - CORRECT When a unauthorized insurer improperly placed a policy. Would be replaced by a policy with a legal insurer. Surplus Lines - CORRECT Insurance that is not available or offered in the regular marketplace from admitted insurers. Insurance Commissioner (IOC) - CORRECT State elected term of 4 years.
insurance Commissioner duties - CORRECT - Protects the Public from unfair trade practices
- Examinations/investigations
- Hearings
- Cease and Desist orders
- Public information
- Appoints Dep. Chief Commissioner
How often must the Insurance Commissioner examine companies? - CORRECT As often as deemed necessary, but MUST be done every 5 years Receiving Written Notice from Commissioner - CORRECT the person must respond within 90 days. if not made the request is considered waved. Notice of Hearing - CORRECT - must state grounds of hearing (can be written demand by aggrieved person)
- Right to request administrative law judge Licence Suspension Hearing - CORRECT Commissioner must hold a hearing within 90 days. Insurance Producer - CORRECT A person required to be licensed under the laws of this state to sell, solicit, or negotiate insurance.
- Must be 18+
- has not had a license denied, suspended, or revoked
- completed Pre-licensing/ exams
- paid fee(s)
- Fingerprinted/ background check FINRA (Financial Industry Regulatory Authority) - CORRECT solicits licences for variable life and variable annuity
Late Fees: 30 days: 50% of renewal 31 - 60 days: 100% 61 - 12 months 200% (12+ months must restart licensing process) Continuing Education (CE) - CORRECT Every 2 years. 24 hours total, 3 hours in ethics. must hold on to certificate for 3 years Change of Address - CORRECT Must contact commissioner within 30 days. this includes a change of residence, mailing, business, or email Reporting of Actions - CORRECT You must report to the commissioner within 30 days of any administrative action taken on them by another jurisdiction or governmental agency Convicted of a felony - CORRECT 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 - CORRECT up to 12 months Guilty of violations - CORRECT each fine of up to $1,000, must be paid within 15-30 days Place of Business Requirements - CORRECT Must be accessible to the public. Does not apply to life and disability insurance. Record Retention - CORRECT Requires insurer to maintain records for 5 years. (DRPL) Designated Responsible Licensed Person - CORRECT Responsible for insurers compliance with insurance laws/ rules Misrepresentation - CORRECT 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 - CORRECT Advertising that is misleading, deceptive, and untrue. Ex: newspaper add with untrue statements about terms and benefits of a policy. Rebating - CORRECT 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 - CORRECT illegal action. referring to rebating to have someone purchase a policy for a reward. Twisting - CORRECT Misrepresentation for the purpose of inducing a person to purchase, lapse, forfeit, surrender or change an insurance policy. Twisting is an unfair trade practice. Deformation - CORRECT An oral or written statement of insurance policies that persuades a person to engage in insurance. including financial conditions of people or another company. Excess Charge - CORRECT allowing insurers to charge a reduction fee, overall charges must be reasonable to the value of work. Claimant - CORRECT either the first party, third party or both. can include immediate family members designated by client First Party Claimant - CORRECT The insured is the first party claimant. Ex: Making a claim to your own insurance company
Display of license - CORRECT each broker and salesperson must display their license customarily where the public can see it Federal Regulations: Fair Credit Reporting Act - CORRECT Purpose is to protect the public. Reports fall into two categories:
- Consumer
- Investigative consumer Consumer Reports - CORRECT Written and /or oral statements regarding a consumer's credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports, and other public sources. investigative consumer reports - CORRECT A report similar to a consumer report, but one that also provides information on the consumer's character, reputation, and habits. (insurer must share report within 5 days) The customer has a right to know what was in the report Individual unknowingly violates the Fair Credit Report Act - CORRECT is liable for the amount equal to the loss as well as any legal fees Individual knowingly (willfully) violates the Fair Credit Reporting act - CORRECT Agent: 2 years in prison individual: a $2,500 fine Fair Credit Act: Prohibited Info - CORRECT - 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 - CORRECT 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 - CORRECT a personal convicted of a felony may apply for a ____ to transact insurance business. cannot be 50k+ for each violation. Unilateral Contract - CORRECT promise in exchange for an act (NFIP) National Flood Insurance Program - CORRECT 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 - CORRECT the same insurance you would receive in the NFIP...non risk baring though the FIA NFIP National Flood Insurance Program Limits - CORRECT Single Family: Building-$250,000. Contents- $100, Other Residential: Building- $250,000. Contents- $100, Small Businesses: Building- $500,000 Contents: $500, Other Non Residential: Building- $500,000 Contents- $500, *if a community has NFIP they must purchase flood insurance as part of the mortgage process. Federal EMERGENCY Flood Program - CORRECT *in effect after all NFIP criteria has been met.
Fire Policy Cancelation - CORRECT 5 days prior notice needed medical malpractice insurance - CORRECT a type of liability insurance that covers physicians and other health care professionals for liability claims arising from patient treatment. medical malpractice insurance cancelation - CORRECT 90 days notice of cancelation Notice of Cancellation - CORRECT To cancel your policy, your insurance company must mail notice or be delivered "unsured" portion of premium - CORRECT money must be returned to the insured no later then 45 days after date of cancelation. Cannot deny based on - CORRECT gender sex age credit score Binder - CORRECT A temporary written or oral agreement to provide insurance coverage until a formal written policy is issued.
- may not extend more then 90 days
- premium can only differ $10 from actual policy Insurer terminates independent agents contract - CORRECT Must give 120days written notice unless:
- Abandonment of agency
- gross and willful misconduct
- loss of licences via commissioner
- change of ownership/ sale of agency
- Fraud or material misrepresentation
- default in payments due to insurer After insurer termination of independent agent they must: - CORRECT permit renewal of all polices in insurance book for 1 year.
- rate of commissions transfers
- must assign policy to nearest located insurer Guaranteed Association - CORRECT 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 - CORRECT the degree to which terms are similar Obsolescence - CORRECT depreciation in value of the property due to becoming outdated 3 Elements of insurable risk - CORRECT 1. Financial (a monetary interest)
- Blood (a relative)
- Business (a business partner) Accident - CORRECT An unexpected happening that may result in injury, loss, or damage. Occurrence - CORRECT A loss that occurs at a specific time and place or over a period of time. proximate cause of loss - CORRECT An unbroken chain of events leading from the negligent act to damage sustained.
- Merit Rating Judgment Rating - CORRECT Used when credible statistics are lacking or when the exposure units are so varied that it is impossible to construct a class. Schedule Rating - CORRECT Rates are developed by applying a schedule of charges and credits to some base rate to determine the appropriate rate for an individual exposure. Experience Rating - CORRECT The insured's own past loss experience enters into the determination of the final premium. Retrospective rating - CORRECT A self-rating plan under which the actual losses during the policy period determine the final premium (subject to a minimum and maximum premium). Merit Rating - CORRECT base on not having an actual loss record but other factors that indicate the probability loss will occur. Ex: Bad driving record, but no at fault accidents loss costs - CORRECT A rating method developed by ISO that provides an insurer with that portion of a rate that does not include provisions of expenses or profit and are based on historical aggregate loss and loss adjustment expenses projected through development to their ultimate value and through trending to a future point in time Components - CORRECT factors that determine rates, including loss reserves, loss adjusting expenses, operating expenses and profits Waiver - CORRECT the voluntary relinquishment of a known legal right, claim or privilege Estoppel - CORRECT is a legal process that can be used to prevent a party to a contract from re- asserting a right or privilege after or after that right or privilege has been waved. The legal consequence of waiver
Policy Structure - CORRECT 1. Declarations
- Definitions
- Insuring Agreement
- Additional Coverage
- Conditions
- Endorsements
- Exclusions and Policy Limits Declarations - CORRECT Contains the basic information about the policy: names, legal reps, premise info, policy effective dates, limits, coverage, deductible, premium. Definitions - CORRECT sections that describes the essence, precise meaning, or scope of a word or phrase Insuring Agreement - CORRECT The section of an insurance policy containing the insurer's promise to pay, the description of coverage provided and perils insured against. Additional/Supplementary Coverage - CORRECT A provision in an insurance policy that provides an additional amount of coverage for specific loss expense, at no additional premium. Conditions - CORRECT The section of an insurance policy that indicates the general rules or procedures that the insurer and insured agree to follow under the terms of the policy. Examples of Conditions - CORRECT - Inspections
- Changes to the policy
- Liberalization clause
- Return of premium Exclusions - CORRECT Section of an insurance policy that lists property, perils, persons, or situations that are not covered under the policy.
Coinsurance Penalty - CORRECT the amount of insurance carried over the amount of insurance should have had, multiplied by loss, which equals the reduced payment of loss. Example: for a $100K building insured at 80% coinsurance. the insured would carry at least $80K ($100K x.80) to meet the insurance requirement. Example 2: only carried $40K of insurance and had a 10K loss, they would bear 50% of the loss due to deficiency, or 5K and any deductible Other Insurance - CORRECT a provision in an insurance policy that defines how the policy will respond if there is other valid insurance written on the same risk Nonconcurrency - CORRECT A situation in which other insurance is written on the same risk, but not on the same coverage basis. Primary Policy - CORRECT A policy that pays first in the event of a covered loss or, in a layered program of insurance, the policy that covers the first layer of loss. Excess Policy - CORRECT A policy that only pays for loss after the primary policy has paid its limit. Pro Rata - CORRECT A provision found in some property insurance policies that provides for the sharing of loss with other insurance that may be written on the same risk in the same proportion as their limits of insurance bear to the total of coverage of all policies covering the risk, whether collectible or not. Limits of Liability - CORRECT The insurer's liability for payment as stated in the policy Per Occurrence (Accident) - CORRECT A sublimit in a liability policy that puts a ceiling on the payment for all claims that arise from a single accident/occurrence Aggregate Limit - CORRECT The maximum amount an insurer will pay for all covered losses during the covered policy year.
Split Limits - CORRECT the limits of liability for different coverages. The limits my be stated per person, per occurrence, or per period basis. (many auto polices) Example: 25/50/ 25k for single person 50k for bodily injury to 2+ people 25k for damaged property of others Combined Single - CORRECT A single dollar limit of liability applying to the total of damages for bodily injury and property damage combined, resulting from one accident or occurrence. vacancy - CORRECT refers to an insured structure in which no people have been living or working, and no property has been stored for the period of time required as stated in the policy (usually 60 days) Unoccupied - CORRECT A property that has contents or furnishings in it, but is not being used or lived in. Vacant vs Unoccupied - CORRECT if someone moves completely out it is considered vacant. if they go on vacation for two weeks it would be considered unoccupied. Duties after a loss - CORRECT - Protect the damaged property from further damage
- Prepare an inventory of damaged property
- Cooperate with the insurer in settling the loss
- Notify the police in case of a theft loss
- Submit to the insurer a signed sworn proof of loss within an allotted amount of time after being requested to do so.
No Benefit to Bailee - CORRECT A provision that excludes any assignment or granting of any policy provision to any person or organization holding, storing, repairing, or moving insured property for a fee. Tort - CORRECT a wrongful act or the violation of someone's right that leads to legal liability Intentional Tort - CORRECT any deliberate act that causes harm to another person Unintentional tort - CORRECT The result of acting without proper care, generally referred to as negligence. Elements of Negligence Act - CORRECT 1. Legal Duty
- Standard of care
- Unbroken chain of events
- actual loss or damage Proximate Cause - CORRECT Legal cause; exists when the connection between an act and an injury is strong enough to justify imposing liability. Intervening Cause - CORRECT bars or reduces recovery to an injured person if an intervening cause interrupted the chain of events and sets in motion a new chain of events. Strict Liability - CORRECT an implied warranty that the product is safe. businesses are liable for defective products, regardless of fault or negligence. Vicarious Liability - CORRECT when one person is liable for the torts of another(usually acts of children) Personal Auto Policy (PAP) - CORRECT An insurance policy for the owners of private passenger vehicles. combines physcal damage insurance on the auto. PAP Parts - CORRECT Part A- Liability Coverage
Part B- Medical Payments Coverage Part C- Uninsured Motorist Coverage Part D- Coverage for Damage to your auto Part E- Duties after an Accident or Loss Part F- General Provisions Coverage will be extended to newly required auto for replacement vehicles as follows - CORRECT - coverage will be broadest offered on the existing vehicles on dec page
- if the vehicle is in addition to the listed vehicles the policy will grant coverage only if insured is notified within 14 days of becoming the owner Auto Symbol 1 - CORRECT any auto - any auto covered for liability arising out of maintenance, use or ownership of Auto symbol 2 - CORRECT owned only - owned by the insured auto symbol 3 - CORRECT owned private passenger - only owned private passenger autos covered Auto symbol 4 - CORRECT owned other than private passenger - only owned nonprivate passenger autos covered Auto symbol 5 - CORRECT owned autos subject to no fault - select personal injury protection coverage, applies only to those owned vehicles subject to no fault laws auto symbol 6 - CORRECT owned subject to compulsory uninsured motorist law - covers designed vehicles subject to a compulsory uninsured motorist law to ensure there will be some degree of protection for victim of uninsured motorist auto symbol 7 - CORRECT specifically described auto - limits coverage to autos owned by the insured that are listed & described in the policy declaration auto symbol 8 - CORRECT hired auto only - protection for vechiles hired, leased, rented or borrowed
