WA Common Law Practice Exam

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WA Common Law Practice Exam
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WA Common Law Practice Exam 60 questions
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  1. Which of the following is true about how the Insurance Commissioner gets into office?
    A) Elected by the people
    B) Elected by the Governor
    C) Appointed by the Senate
    D) Appointed by the Governor
    A) Elected by the people
    (this multiple choice question has been scrambled)
  2. What is the main duty of the Insurance Commissioner?
    A) Write insurance laws
    B) Encourage unfair discrimination
    C) Set insurance rates
    D) Enforce insurance laws
    • D) Enforce insurance laws
    • The commissioner has the power to make rules and regulations as necessary for the proper enforcement of such laws, He or she does not set rates; insurance companies set their own rates. The commissioner does not write insurance laws, either.
  3. All of the following are duties of the insurance commissioner EXCEPT:
    A) Make rules as necessary
    B) Grant Certificate of Authority
    C) Make rates
    D) Levy fines
    • C) Make rates
    • The insurance commissioner does not set rates; the insurance set their own rates.
  4. All of the following are true regarding the insurance commissioner’s Market conduct Examination authority EXCEPT:
    A) He or she has the power to request statements be made under oath
    B) He or she may only examine admitted companies once every five years
    C) He or she may examine all books and records of an insurance company or producer
    D) He or she must examine all admitted insurers at minimum once every five years
    • B) He or she may only examine admitted companies once every five years
    • The insurance commissioner may examine any person involved in insurance at any time, whenever he or she deems it is necessary. Market conduct examination of all licensed insurers must be held at minimum once every five years.
  5. All of the following persons would be required to be licensed EXCEPT:
    A) A person soliciting insurance
    B) A person negotiating insurance
    C) A person selling insurance
    D) A clerical person that receives premiums but is not paid in any incentive for such receipt
    • D) A clerical person that receives premiums but is not paid in any incentive for such receipt
    • Salaried agency or insurance company clerical staff personnel are not required to be licensed unless they solicit, negotiate, bind or sell insurance.
  6. Producer licenses are good for what period of time before renewal is required?
    A) Two (2) years
    B) Four (4) years
    C) One (1) year
    D) Three (3) years
    • A) Two (2) years
    • Initial individual licenses are renewable on the producer’s next birthday, plus one year, and every two years thereafter.
  7. Upon passing one section of a combines (life and health or property and casualty) licensing examination, the second part must be passed immediately, or no later than within how many days?
    A) one (1) year
    B) That day
    C) Two (2) years
    D) Within 90 days of the first
    • D) Within 90 days of the first
    • If a candidate is taking a combined examination, i.e., Life and Health and fails the law part of the test, the candidate may retake the failed portion again within 90 days. If a candidate is taking a single authority examination i.e., Life only, and fails law, they are required to retake the entire single authority examination.
  8. What minimum age is required for you to be licensed as an insurance producer in this state?
    A) 21 years old
    B) 18 years old
    C) No age requirement
    D) 16 years old
    B) 18 years old
    (this multiple choice question has been scrambled)
  9. All of the following are required in order to hold a WA producer’s license EXCEPT:
    A) Be age 18
    B) Be a WA resident
    C) Be a good person
    D) Be licensed in another state
    • D) Be licensed in another state
    • To become licensed as a WA insurance producer, an individual must be at least 18 years of age, complete the required preliminary training, pay nonrefundable licensing fees, be a trustworthy person of good character, and be a WA resident. Being licensed in any other state is not a requirement to obtain a license.
  10. Pre-licensing training requirements for a major line of insurance, such as Life insurance, require how many hours of pre-licensing training?
    A) 10 hours
    B) 30 hours
    C) 15 hours
    D) 20 hours
    D) 20 hours
    (this multiple choice question has been scrambled)
  11. The requirements to hold a nonresident producer license include all of the following EXCEPT:
    A) Be a part-time resident of WA
    B) Be age 18
    C) Pay licensing fees
    D) Hold same license in home state
    • A) Be a part-time resident of WA
    • Being a part-time resident of WA is NOT required to obtain a non-resident license.
  12. Temporary licenses may be issued by the Commissioner under certain circumstances. How many days are these licensed valid?
    A) 60 days
    B) 30 days
    C) 180 days
    D) 90 days
    • C) 180 days
    • The Commissioner may issue temporary licenses without exam for up to 180 days (6 months) to the surviving spouse or next of kin of a producer who died.
  13. Of the following persons, which one would be required to hold a producer’s license?
    A) An officer of an insurer who does not receive commissions
    B) A trainer at an insurance who does not sell insurance
    C) Underwriter
    D) Person soliciting policies of insurance
    • D) Person soliciting policies of insurance
    • Trainers or officers of insurers are not required to be licensed unless they solicit negotiate bind or sell insurance. Underwriters are not required to obtain a producer’s license. An individual may solicit, negotiate or sell insurance only when properly licensed for the line of business being transacted.
  14. All of the following are requirements for obtaining a resident producer’s license EXCEPT:
    A) Obtaining a bachelor’s degree
    B) Passing examination with 75% or higher score
    C) Being 18 years of age or older
    D) Completing pre-licensing training
    A) Obtaining a bachelor’s degree
    (this multiple choice question has been scrambled)
  15. All of the following would be exempt from the producer licensing requirements EXCEPT:
    A) An officer of an insurer who does not receive commission
    B) A customer service representative who discusses policies
    C) Agency supervisor whose actions do not include selling insurance
    D) Underwriters
    • B) A customer service representative who discusses policies
    • Customer service representatives who discuss policies must be licensed. Officers of insurers who do not receive commissions, agency supervisors whose actions do not include selling insurance, as well as underwriters are not required to obtain a producer’s license.
  16. All of the following are true about the completion of pre-licensing training EXCEPT:
    A) The completion is good for one year
    B) You must go to a lecture class
    C) You may complete your training through lecture course, home study or online
    D) You must complete 20 hours of pre-licensing per authority, prior to registration for your examination
    • B) You must go to a lecture class
    • Going to a lectured class is not a requirement.
  17. The continuing education requirement for WA is which of the following?
    A) 15 hours per line of authority
    B) 45 hours per person
    C) 24 hours per person, every two years
    D) 15 hours per person, every two years
    • C) 24 hours per person, every two years
    • WA producers must earn 24 hours of continuing education (CE) credits every two years, three of which must be related to ethics.
  18. Producers are required to keep records related to completion of continuing education for how many years?
    A) One (1) year
    B) Two (2) years
    C) Three (3) years
    D) Four (4) years
    • C) Three (3) years
    • Continuing education records must be kept on file by producers for three years.
  19. Which of the following correctly describes controlled business?
    A) Obtaining your license for the purpose of selling to the general public
    B) Obtaining your license for the purpose of selling 20% to yourself and your family, 80% to the public
    C) Any time more than 50% of the total premiums collected by a producer comes from themselves, their family, employer, or own business
    D) Obtaining your license and never selling insurance
    • C) Any time more than 50% of the total premiums collected by a producer comes from themselves, their family, employer, or own business
    • It is unlawful to obtain a producer’s license “principally” for the purpose of writing controlled business, such as business written on yourself or your family members.
  20. All of the following are valid reasons for denial, suspension or revocation of a producer’s license EXCEPT:
    A) Providing inaccurate information on the application
    B) Selling 20% controlled business
    C) Misappropriation of insurance premiums
    D) Financial irresponsibility
    • C) Selling 20% controlled business
    • Controlled business (selling to yourself, family members) is perfectly legal as long as it’s not the primary clientele.
  21. Which of the following is correct regarding the Commissioner’s ability to revoke or suspend a producer’s license?
    A) The Commissioner may revoke or refuse to renew a producer’s license immediately and without hearing, upon sentencing of the licensee for conviction of a felony by final judgment of any court of competent jurisdiction, if the facts giving rise to such conviction demonstrate the licensee to be untrustworthy to maintain any such license
    B) The producer may not lose their license for conviction of any felony
    C) The producer will not lose a license for failure to pay a fine levied by the Commissioner
    D) The producer may lose their license without hearing
    A) The Commissioner may revoke or refuse to renew a producer’s license immediately and without hearing, upon sentencing of the licensee for conviction of a felony by final judgment of any court of competent jurisdiction, if the facts giving rise to such conviction demonstrate the licensee to be untrustworthy to maintain any such license
    (this multiple choice question has been scrambled)
  22. All of the following are true about license denial, suspension or revocation EXCEPT:
    A) A suspended, denied or revoked license must be surrender to the Commissioner
    B) You can lose your license for forging another person’ signature
    C) Failing to pay child support or state income taxes is grounds for loss of license
    D) You may still sell insurance on a suspended license for 180 days
    • D) You may still sell insurance on a suspended license for 180 days
    • Individuals are not allowed to sell insurance if their license application was denied. Same rule applied to producers whose licenses have been suspended or revoked.
  23. Fiduciary responsibility apply in which of the following situations
    A) Handling client premiums
    B) Selling insurance
    C) Soliciting insurance
    D) Binding coverage
    • A) Handling client premiums
    • Producers have a fiduciary responsibility when it comes to handling other’s money. Premiums received from clients and unearned premiums received from insurers must not be combined with producer’s personal funds
  24. A producer is required to maintain a separate account for which of the following monies?
    A) Administrative expenses
    B) Clerical staff salaries
    C) Client monies
    D) Rent check deposits
    • C) Client monies
    • Client monies, such as premiums, must be kept in a fiduciary capacity. A separate trust account must be maintained for client’s as well as insurance companies’ monies.
  25. When are producer’s required to forward client premiums to the insurer?
    A) Promptly
    B) Within 30 days
    C) Within 15 days
    D) Within 45 days
    • A) Promptly
    • The entire premium received must be paid promptly to the insurer.
  26. Allowable disbursements from a separate account include all of the following EXCEPT:
    A) Payments of premium directly to insurers
    B) Commissions
    C) Claims Payments
    D) Bank Charges
    • C) Claims Payments
    • Disbursements from a separate account are allowed for bank charges, payments of premiums, payments of return premiums, payments of commissions, or transfer of fiduciary funds. Monies in a separate account are not designated for claims payments.
  27. Records related to the Premium Fund Trust Account must be kept for how long?
    A) 7 years
    B) 5 years
    C) 2 years
    D) 3 years
    • B) 5 years
    • Producers must maintain records and an appropriate accounting system for all premiums and return premiums received, and must make such records available for inspection by the Commissioner upon demand during the five years immediately after the date of the transaction.
  28. In which of the following situations would you be allowed to split your commission with someone else?
    A) If they receive their license before the policy is issued
    B) If they are properly licensed at the time of the sale
    C) If they receive their producer license within 30 days of the sale
    D) If they receive their producer license within 1 year
    • B) If they are properly license at the time of the sale
    • Sharing commission with someone else is only allowed with persons properly licensed at the time of the sale.
  29. All of the following would be considered unfair marketing practices EXCEPT:
    A) Offering a claimant less than they are owed or would win in a court of law
    B) Engaging in activities that result in excessive complaints filed by consumers
    C) Failing to provide claimant necessary claims forms within 15 working days of request
    D) Stating which section the payment or denial of a claim is based upon
    • D) Stating which section the payment or denial of a claim is based upon
    • Stating which section the payment or denial of a claim is based upon is a requirement insurers must comply with.
  30. Which of the following properly describes a rebate?
    A) Requiring an insured to buy insurance from you as a condition to a loan
    B) Selling insurance primarily to yourself, you family and you friends
    C) Returning part of your commission to your client, as an inducement to buy
    D) Misrepresenting policy provisions or coverage at issue
    • C) Returning part of your commission to your client, as an inducement to buy
    • Returning part of your commission to your client, as an inducement to buy would be considered a rebate. Requiring an insured to buy insurance from you as a condition to a loan is known as coercion. Selling insurance primarily to yourself, your family and/or a business you own or work for is known as controlled business. Misrepresenting policy provisions or coverage at issue is one of the unfair trade practices.
  31. All of the following are true regarding rebates EXCEPT:
    A) Rebating can be anything of economic value, given as an inducement to buy
    B) Dividends are not considered to be rebates
    C) Rebates are always allowed
    D) Rebates are only allowed if specifically stated in the policy
    • C) Rebates are always allowed
    • Rebating is paying anything of value (such as a return of the commission) to a client as an inducement to purchase. Giving a client anything of value is only allowed if specifically stated in the policy. Dividends are not considered to be rebates since it is stated in the policy that the client might receive one.
  32. Which of the following would not be considered a rebate under WA law?
    A) Returning part of your commission to you client
    B) Offering a good student discount on their auto insurance
    C) Giving your client tickets to a sporting event if they buy a policy from you
    D) Taking your client to lunch only if they buy a policy from you
    • B) Offering a good student discount on their auto insurance
    • It is perfectly legal to give an insured a discount on the premium. Common discounts include multi-policy discounts, good driver discounts, and good student discounts.
  33. All of the following are correct regarding misrepresentation EXCEPT:
    A) Misrepresentation includes the guarantee of dividends
    B) Misleading advertisements are considered misrepresentations
    C) The fines for misrepresentation may not be more than $100
    D) The fines for misrepresentation may not be less than $10 nor more than $1,000
    • C) The fines for misrepresentation may not be more than $100
    • Misrepresentation includes guaranteeing dividends and misleading advertisements. The fines for misrepresentation may not be less than $10 nor more than $1,000.
  34. Which of the following correctly defines defamation?
    A) Offering an inducement to buy
    B) False or malicious statements made about an insurance company or producer, circulated to injure their reputation.
    C) Misrepresenting policy provisions
    D) Basing denial of a claim upon an application which was altered
    • B) False or malicious statements made about an insurance company or producer, circulated to injure their reputation.
    • It is considered to be defamation for a producer to state or publish information that is false or maliciously critical that is designed to injure the reputation of an insurer or raise questions about the character of another producer.
  35. All of the following are prohibited practices EXCEPT:
    A) Boycott
    B) Coercion
    C) Denial of a claim after a reasonable investigation
    D) Intimidation
    • C) Denial of a claim after a reasonable investigation
    • Denial of claim after reasonable investigation would not be considered a prohibited practice as some claims may not be covered, such as one that occurred before the effective date of the policy.
  36. What is the continuing education requirement for the state of WA?
    A) 24 hours annually
    B) 24 hours every two years
    C) 24 hours for each authority
    D) 36 hours every three years
    • B) 24 hours every two years
    • WA producers must earn 24 hours of CE credits every two years, three of which must be related to ethics.
  37. How often is the insurance commissioner required to examine all domestic insurance companies?
    A) Annually
    B) Every two years
    C) Every three years
    D) Every five years
    • C) Every five years
    • The Insurance Commissioners is require3d to examine all domestic insurance companies once every five years. This is known as market conduct examination and is done at the expense of the insurer being examined.
  38. Which of the following is correct about the insurance Commissioner’s ability to levy fines for violation of insurance laws?
    A) Fines shall be no less than $10 nor more than $1,000 and/or one year in prison in addition to any other penalty allowed by law
    B) The Insurance Commissioner may not impose fines
    C) Fines may be no more than $500 per violation
    D) Fines may be unlimited
    A) Fines shall be no less than $10 nor more than $1,000 and/or one year in prison in addition to any other penalty allowed by law
    (this multiple choice question has been scrambled)
  39. A person aggrieved by a written order of the Commissioner may demand a hearing. The hearing must be requested within how many days of receiving the order?
    A) 60 days
    B) 90 days
    C) 45 days
    D) 30 days
    B) 90 days
    (this multiple choice question has been scrambled)
  40. A licensee has had their license temporarily suspended, and demanded a hearing with the Commissioner. The Commissioner must hold the hearing within how many days?
    A) 90 days
    B) 30 days
    C) 60 days
    D) 45 days
    • B) 30 days
    • If a hearing is requested by a licensee whose license has been suspended, Commissioner must hold the hearing within 30 days.
  41. Which of the following is true regarding rate filings in the state of WA?
    A) Rates may be used immediately upon filing
    B) Rates must be filed for all lines of insurance
    C) Rates must be approved prior to use
    D) Rates must be filed for life insurance
    • C) Rates must be approved prior to use
    • All policy forms and rates must be filed with the Insurance Commissioner. Prior approval before use is required. Life Insurance, disability insurance, reinsurance, aviation, title insurance, and ocean marine are exceptions to this rule – those do not have to file rates.
  42. Which of the following accurately describes the certificate requirement for policy forms?
    A) A lawyer must attest to the form being legally correct
    B) The producer must certify that the form is legal
    C) The CEO or an actuary of the insurer must certify that the policy form complies with the laws of the state of WA
    D) If the certification is not found on a policy form, the policy form may be used immediately
    • C) The CEO or an actuary of the insurer must certify that the policy form complies with the laws of the state of WA
    • All policy forms must contain a certification by either the CEO of the insurer or an actuary of the insurer attesting that the form complies with the laws of the state.
  43. If an insurance company’s policy form contain a certification by the CEO, which of the following is true regarding those forms?
    A) The forms must still be approved by the Insurance Commissioner
    B) The forms may be used immediately after filing with the Insurance Commissioner
    C) The forms must be filed and may be used after 30 days
    D) The forms with certification do not have to be filed with the insurance commissioner
    • B) The forms may be used immediately after filing with the Insurance Commissioner
    • All policy forms must contain a certification by either the CEO of the insurer or an actuary of the insurer attesting that the form complies with the laws of the state. If such certification is found on a policy form, the form may be used immediately after filing with the commissioner.
  44. All of the following are reasons why the insurance Commissioner may suspend, revoke, or refuse, to issue an insurance producer’s license EXCEPT:
    A) The licensee willfully violates any provision of WA insurance code
    B) If the licensee has been guilty of twisting
    C) If the licensee has been guilty of a misdemeanor
    D) If the licensee has been convicted of a felony
    • C) If the licensee has been guilty of a misdemeanor
    • A producer’s license may be suspended or revoked for being convicted of a felony, but not for a misdemeanor.
  45. Which of the following correctly describes the requirement for form and rate filing for malpractice insurance?
    A) Forms and rates must be filed after first use
    B) Forms and rates must be filed prior to use
    C) Forms and rates must be filed within 30 days of first use
    D) Forms and rates do not have to be filed
    • B) Forms and rates must be filed prior to use
    • Medical malpractice insurance forms and rates must be filed prior to use
  46. Producers may receive compensation from:
    A) Insurers only
    B) Insureds only
    C) Either insurer or insureds
    D) Either insurers or from both
    • D) Either insurers or from both
    • An insurance producer may be paid by a commission paid by the insurer, or a fee paid by the insured, or a combination of commission paid by the insurer and a fee paid by the insured from which an insurance producer may offset or reimburse the insured all or part of the fee.
  47. Which of the following is a duty of the commissioner?
    A) Making laws
    B) Making rates
    C) Writing policy forms
    D) Making rules
    • D) Making rules
    • The commissioner has the power to make necessary rules and regulations as essential for the proper enforcement of such laws. Insurers make their rates and write policy forms. The Commissioners does not write insurance laws; laws are passed by the legislature.
  48. All of the following are true regarding Premium Trust Fund Accounts EXCEPT:
    A) Producers must keep related records for five (5) years
    B) Producers may earn interest on premium deposit
    C) Funds must be held in a federally insured financial institution in this state
    D) All premiums checks received by a producer must be deposited
    • D) All premiums checks received by a producer must be deposited
    • If an applicant makes their initial premium check payable directly to the insurer the producer represents, it need not be deposited in the producer’s premium trust account.
  49. All of the following are true when a producer receives a fee from an applicant as well as a commission from an insurer EXCEPT:
    A) The amount of the fee may be offset by the amount of commission received
    B) The producer and the client must both sign a compensation disclosure form
    C) The receipt of a fee and a commission on the same transaction is unlawful
    D) Producers must keep compensation disclosure form for five (5) years
    • C) The receipt of a fee and a commission on the same transaction is unlawful
    • The receipt of a fee and a commission on the same transaction is permitted by law. A compensation disclosure form signed by the client must be collected if a producer receives an “excess fee,” which is a fee paid by the client in excess of the commission paid by the insurer.
  50. Producers without any insurer appointments who represent clients only:
    A) Are in violation of the Insurance Code
    B) Must post a surety bond in favor of the residents of this state
    C) May not receive commissions
    D) May only charge fees
    • B) Must post a surety bond in favor of the residents of this state
    • A producer who represent clients without any appointments is considered to be engaged in “brokerage” and must post a surety bond in favor of the people of this state.
  51. If an insurer revokes a producer’s appointment for cause, they must notify the Commissioner within ____ days.
    A) 30
    B) 60
    C) 90
    D) 120
    • A) 30
    • When an insurer revokes a producer’s appointment, they must notify the Commissioner within 30 days.
  52. If an insurer revokes the appointment of an independent producer, they must give the producer ____ day’s advanced notice.
    A) 30
    B) 60
    C) 90
    D) 120
    • D) 120
    • When an insurer revokes the appointment of an independent producer they must give the producer 120 days’ advance notice.
  53. Producers are not required to deliver a premium receipt to an insured when:
    A) The payment is made in cash
    B) The payment is made by check payable to the insurer
    C) The payment is made by money order payable to the Producer
    D) The payment is made by a check payable to the Producer
    • B) The payment is made by check payable to the insurer
    • In a case where a premium payment is made by a check payable to the insurer, producers are not required to deliver a premium receipt to an insured. When an applicant makes a premium check payable to the producer, the producer must deliver a signed premium receipt as soon as possible stating the name of the client, the insurer, the amount paid, and a description of the coverage purchased.
  54. All of the following are true about the Commissioner EXCEPT:
    A) Insurers may contribute to his or her election campaign
    B) He or she is elected for a 4-year term
    C) He or she must post a $25,000 surety bond
    D) He or she may appoint a Chief Deputy Commissioner
    • A) Insurers may contribute to his or her election campaign
    • It is unlawful for an insurer to make contributions to a person who is campaigning to be elected Insurance Commissioners.
  55. A producer who represents insureds without any appointments is required to post a bond in favor of the people of this state in the amount of $2,500 or 5% of premiums brokered in the prior calendar year, whichever is more, up to a maximum of:
    A) $25,000
    B) $50,000
    C) $75,000
    D) $100,000
    • D) $100,000
    • The amount of the surety bond that must be posted by an independent producer engaged in brokerage is at minimum $,2,500 or 5% of the premium brokered by the producer in the previous calendar year, whichever is greater, up to a maximum of a $100,000.
  56. It is unlawful to induce a person to purchase insurance by offering any of the following EXCEPT:
    A) Prizes, goods and merchandise with a total value of over $25
    B) Dividends, as stated in the policy
    C) Special contracts that provide for special return of profits
    D) Share of stock
    • B) Dividends, as stated in the policy
    • It is unlawful to induce a person to purchase insurance by offering anything of value that is not stated in the policy. This act is known as rebating. Dividends are not considered to be rebates since it is stated in the policy that the client might receive one.
  57. The Commissioner may do which of the following?
    A) Be an officer or director of an insurer
    B) Be a policyholder of an insurer
    C) Invest in an insurer’s stock
    D) Recommend a specific insurer
    • B) Be a policyholder of an insurer
    • It is perfectly legal for an insurance Commissioner to buy an insurance policy (become a policy holder)
  58. If the Commissioner notifies a licensee that a hearing will be held to suspend or revoke a producer’s license, the producer may instead request a hearing before:
    A) The National Association of Insurance Commissioners (NAIC)
    B) An administrative law judge
    C) The National Association of Insurance Agents
    D) His peers
    • B) An administrative law judge
    • A producers whose license is being suspended or revoked is entitled to a hearing held either by the Commissioner or an administrative law judge.
  59. All of the following are true regarding independent insurance producers EXCEPT:
    A) They may be required to post a surety bond in favor of the people of this state
    B) They may represent multiple insurers
    C) They may receive a commission, a fee, or both
    D) They cannot engage in brokerage
    • D) They cannot engage in brokerage
    • A producer who represents client without any appointments is considered to be engaged in brokerage and must post a surety bond in favor of the people of this state.
  60. All of the following are prohibited under WA law EXCEPT:
    A) Failing to provide claimants necessary claims forms within 15 working days of request
    B) Engaging in activities that result in excessive complaints filed by consumers
    C) Stating which section the payment or denial of a claim is based on
    D) Offering claimant less than they are owed or would win in a court of law
    C) Stating which section the payment or denial of a claim is based on
    (this multiple choice question has been scrambled)

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