Legal & Regulatory Compliance in Auto Insurance Flashcards
7 cards from real CALA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Legal & Regulatory Compliance in Auto Insurance flashcards as text
Under the Fair Claims Settlement Practices Act, what is the maximum number of days an insurer typically has to acknowledge receipt of a claim after notification?
Answer: 10 days
Most state fair claims settlement regulations require insurers to acknowledge receipt of a claim within 10 days of notification.
Which federal law prohibits insurers from using race, color, religion, or national origin as factors in underwriting or claims handling?
Answer: Civil Rights Act of 1964
The Civil Rights Act of 1964 prohibits discrimination based on race, color, religion, sex, or national origin, which applies to insurance claims handling.
When a claimant alleges bad faith against an auto insurer, which element is typically NOT required to be proven?
Answer: The insurer acted with intent to defraud
Bad faith does not require proof of intent to defraud; unreasonable denial with knowledge of the lack of reasonable basis is sufficient in most jurisdictions.
What does the McCarran-Ferguson Act of 1945 primarily establish regarding insurance regulation?
Answer: State primacy in regulating the insurance industry
McCarran-Ferguson grants states the primary authority to regulate insurance, limiting federal intervention unless state law does not adequately address the matter.
A loss adjuster discovers that a claimant's attorney sent a demand letter but the insurer has not responded within the state's required timeframe. This exposes the insurer to:
Answer: Extra-contractual damages
Failure to respond to settlement demands within required timeframes can expose insurers to extra-contractual damages, including bad faith liability beyond policy limits.
Under most state statutes of limitations, how long does a claimant typically have to file suit for property damage from an auto accident?
Answer: 2–3 years
Most states set a 2–3 year statute of limitations for property damage claims arising from auto accidents, though this varies by state.
Which regulatory body primarily oversees insurance company solvency and market conduct in the United States?
Answer: National Association of Insurance Commissioners (NAIC)
The NAIC coordinates state insurance regulators to establish uniform standards and best practices for solvency and market conduct oversight.