Mixed Deck — All DC Topics Flashcards

What is the 'appraisal clause' in a DC property insurance policy used for?

Answer: Resolving disputes about the amount of loss when the insured and insurer disagree

The appraisal clause provides a mechanism to resolve disputes about the dollar amount of a covered loss without going to court.

Which DC LTC insurance policy feature increases the daily or monthly benefit amount over time to help keep pace with inflation?

Answer: Compound inflation protection rider

A compound inflation protection rider automatically increases LTC benefits each year (typically 3–5% compounded), helping benefits keep pace with rising long-term care costs.

Which section of a standard homeowners policy (HO-3) covers the policyholder's personal property worldwide?

Answer: Coverage C – Personal Property

Coverage C in the HO-3 form covers the insured's personal property anywhere in the world, subject to policy limits.

Under DC property insurance rules, what is 'subrogation'?

Answer: The insurer's right to recover from a negligent third party after paying the insured's claim

Subrogation allows the insurer, after paying a claim, to step into the insured's shoes and recover the loss from the responsible third party.

Which homeowners policy form provides the broadest coverage and is typically used for owner-occupied dwellings?

Answer: HO-3 (Special Form)

HO-3 is the most commonly sold homeowners policy and provides the broadest coverage—open perils on the dwelling and named perils on personal property.

What is the purpose of the DC Second Injury Fund (also called the Special Fund)?

Answer: To encourage hiring of workers with pre-existing disabilities by limiting employers' liability for subsequent combined injuries

The Second Injury Fund limits the employer/insurer's liability when a pre-existing condition combines with a new work injury to create a greater disability, encouraging employers to hire workers with prior disabilities.

A DC disability income policy's 'any occupation' definition of disability is generally considered:

Answer: Less favorable to the insured than own-occupation because benefits only pay if the insured cannot work in any occupation

The 'any occupation' definition is more restrictive for the insured—benefits are only payable if the insured cannot work in any occupation for which they are reasonably suited by education, training, or experience.

What does 'Commercial General Liability' (CGL) insurance cover for DC businesses?

Answer: Third-party bodily injury and property damage arising from the business's operations, products, or premises

CGL covers the business's legal liability for bodily injury and property damage to third parties from its operations, completed products, and premises.

A DC employer that fails to secure required workers' compensation coverage is subject to:

Answer: Civil fines and potential criminal penalties, and remains liable for any employee injuries

Uninsured DC employers face significant civil fines, possible criminal liability, and remain personally responsible for paying workers' compensation benefits to injured employees.

What is the 'doctrine of utmost good faith' (uberrimae fidei) as applied to DC insurance contracts?

Answer: Both parties must disclose all material facts relevant to the insurance contract, even without being asked

Uberrimae fidei requires both the insured and insurer to disclose all material facts—even those not specifically requested—because insurance contracts are based on trust.

A DC technology firm wants coverage for losses from a data breach exposing customer records. Which policy should it purchase?

Answer: Cyber liability insurance

Cyber liability insurance covers costs associated with data breaches, including notification, credit monitoring, legal defense, and regulatory fines.

What does Medicare Part A cover for DC beneficiaries?

Answer: Hospital inpatient care, skilled nursing facility care, and hospice

Medicare Part A covers inpatient hospital care, skilled nursing facility (SNF) care following a qualifying hospital stay, hospice, and some home health care.

What is the maximum civil penalty DISB may impose on a licensed producer for a single violation of DC insurance law?

Answer: $10,000

DISB may impose civil penalties of up to $10,000 per violation of DC insurance law for licensed producers.

Under FINRA rules applicable to DC producers, what is the 'suitability' standard for variable annuity sales?

Answer: The product must be reasonably suitable based on the customer's financial situation, needs, investment objectives, and risk tolerance

FINRA's suitability rule requires producers to have a reasonable basis to believe the variable annuity is suitable for the specific customer based on their financial profile.

In DC, which organization provides a safety net for annuity contract holders if a licensed life insurer becomes insolvent?

Answer: The DC Life and Health Insurance Guaranty Association

The DC Life and Health Insurance Guaranty Association covers eligible annuity contracts up to statutory limits if a member insurer becomes insolvent.

In DC, professional liability insurance (errors and omissions) is designed to protect:

Answer: Professionals from claims of negligence or mistakes in rendering professional services

E&O insurance covers claims alleging that a professional caused financial harm to a client through errors, omissions, or negligent advice.

The aggregate limit in a CGL policy represents:

Answer: The total maximum the insurer will pay for all covered losses during the entire policy period

The aggregate limit is the ceiling on all payments made under the policy over the entire policy period, applying across all occurrences combined.

A DC resident purchases an annuity that begins making income payments immediately after a lump-sum premium is paid. This is called a(n):

Answer: Immediate annuity

An immediate annuity converts a lump-sum payment into an income stream that begins within one payment period (usually within a year) of the single premium payment.

A DC resident newly eligible for Medicare at age 65 has a guaranteed issue right during which period?

Answer: The first 6 months after enrolling in Medicare Part B

The Medigap open enrollment period is the 6-month window beginning the month a beneficiary is both age 65 or older AND enrolled in Medicare Part B, during which guaranteed issue applies.

What is a 'mortgagee clause' and why is it important in DC property insurance?

Answer: A clause protecting the lender's interest even if the insured voids coverage through their own acts

The mortgagee (lender's loss payable) clause protects the lender's financial interest—the lender receives its share of claim proceeds even if the insured's coverage is voided due to the insured's acts.