CCP State Insurance Regulations 3 — Questions and Answers
Question 1: Which of the following best describes an 'admitted' insurer under state insurance law?
- An insurer licensed and subject to all state regulations (Correct answer)
- An insurer that has admitted fault in a prior lawsuit
- A surplus lines carrier approved for a single risk
- A captive insurer domiciled in a foreign country
Correct answer: An insurer licensed and subject to all state regulations
An admitted insurer holds a certificate of authority from the state, must comply with all state regulations, and is covered by the state guaranty fund.
Question 2: Under state insurance regulations, what is the primary purpose of a state guaranty association?
- To audit insurer financial statements annually
- To pay claims when a licensed insurer becomes insolvent (Correct answer)
- To set minimum premium rates for all lines
- To arbitrate disputes between claimants and insurers
Correct answer: To pay claims when a licensed insurer becomes insolvent
State guaranty associations protect policyholders by paying covered claims up to statutory limits when an admitted insurer becomes insolvent.
Question 3: A claimant living in State A is injured by a driver insured in State B. Which state's claims regulations generally govern the handling of the liability claim?
- Always the claimant's state of residence
- Always the insured's state of domicile
- Typically the state where the accident occurred (Correct answer)
- The state with the most favorable law for the insurer
Correct answer: Typically the state where the accident occurred
Liability claims are typically governed by the law of the state where the accident or loss occurred (lex loci delicti).
Question 4: Under most state regulations, which type of policy must include a mandatory 'standard fire policy' form or its equivalent?
- Personal auto policies
- Homeowners and dwelling fire policies (Correct answer)
- Commercial liability policies
- Workers' compensation policies
Correct answer: Homeowners and dwelling fire policies
Most states require homeowners and dwelling fire policies to incorporate the standard fire policy provisions or their approved equivalent.
Question 5: What is the significance of a 'consent to rate' filing in state insurance regulation?
- The state consents to the insurer's rate increase request
- The insured agrees to a rate higher than the filed maximum (Correct answer)
- The insurer agrees to match a competitor's lower rate
- The state consents to a rate below the minimum filed rate
Correct answer: The insured agrees to a rate higher than the filed maximum
A consent-to-rate agreement allows an insurer to charge a rate above the maximum filed rate when the insured signs a written consent acknowledging the deviation.
Question 6: Which state regulation concept requires insurers to handle claims consistently regardless of whether the claimant is represented by an attorney?
- Equal protection doctrine
- Good faith and fair dealing obligation (Correct answer)
- Subrogation waiver rule
- Anti-discrimination statute
Correct answer: Good faith and fair dealing obligation
The implied covenant of good faith and fair dealing requires insurers to treat all claimants equitably regardless of legal representation status.
Question 7: Under state regulations, what document must an insurer typically provide within a specified timeframe if it plans to non-renew a personal lines policy?
- A new declarations page with revised premium
- A written notice of non-renewal with the reason stated (Correct answer)
- A reservation of rights letter
- A subrogation demand letter
Correct answer: A written notice of non-renewal with the reason stated
State regulations require insurers to provide advance written notice of non-renewal, typically 30–60 days before policy expiration, stating the reason.
CCP State Insurance Regulations 3
Which of the following best describes an 'admitted' insurer under state insurance law?