Free Maryland Casualty practice questions

Answer: D. each unlicensed clerical worker in its offices

Md. Code Ann., Ins. Sec. 10-111(b)(2) requires a business entity applicant to identify the licensed producer designated as its principal contact with the Administration, and to list the name and address of each licensed producer it employs, each individual with direct control over its fiscal management, each owner, member or manager, and, for a corporation, each director. Unlicensed clerical staff are absent from that list, so their names and addresses are the one item here the provision does not demand. Licensed producers, directors and those who control fiscal management all appear in the statute's list.

Answer: D. Soliciting and negotiating policies with prospective insureds

A commission-free insurer employee acting as a special agent or agency supervisor is exempt from licensing only while the work is limited to technical advice and assistance to licensed producers and does not include selling, soliciting or negotiating insurance. Soliciting and negotiating policies with prospective insureds goes beyond that limit. Advising producers on technical matters is the activity the exemption describes. A separate category of the same exemption covers commission-free employees whose function relates to underwriting or to processing, adjusting, investigating or settling claims, so those duties do not by themselves require a license under this exemption.

Answer: C. The kind or subdivision of insurance for which the license is sought

For licenses other than life insurance, health insurance or annuities, the applicant proves competence by passing a written examination tied to the kind or subdivision of insurance the applicant wants to be licensed in. A casualty applicant is therefore examined on casualty insurance. The provision does not require an examination covering other lines or lines the applicant might sell later, and it does not confine the examination to state law in place of the line being licensed.

Answer: D. The insurer is insolvent, or its assets are inadequate to carry on its business

Section 4-113(a) uses the word shall: when one of its listed conditions exists, the Commissioner must deny, refuse to renew, suspend, or revoke the certificate of authority. Insolvency, or assets insufficient to carry on the business, is one of those mandatory conditions, at subsection (a)(4). Refusing or delaying payment to claimants without just cause, failing to pay a final judgment within 30 days after it becomes final, and having a certificate suspended by another state's regulator are all listed instead in subsection (b), where the statute says the Commissioner may act.

Answer: D. When the producer receives the appropriate premium set by the Board's binding policies

Under Sec. 20-509(a)(2), a fund producer's binding takes effect only when the producer has been paid the appropriate premium that the Board of Trustees' binding policies call for. A promise to pay on Friday is not payment, so the application alone binds nothing on Monday. The producer, not the Fund, binds coverage: under subsection (d) the Fund is liable from the date the producer binds, and the Fund's review comes afterward, when it may cancel within 60 days after coverage takes effect. The section gives the Commissioner no role in approving an individual binder.

Answer: C. A withdrawal plan approved by the Commissioner, plus 45 days' tracked notice to each insured

Sec. 27-613(b)(2)(ii) takes a nonrenewal out of the section's requirements when it happens under a plan of withdrawal that the Commissioner has approved under Sec. 27-606. The plan must provide for each affected insured to receive, by first-class mail tracking method and at least 45 days before nonrenewal, a written notice giving the nonrenewal date and stating that it results from the insurer's market withdrawal. Notice to the Commissioner alone lacks both the approved plan and the notice to insureds. The provision asks for no consent from insureds. The 10-day period is the one subsection (d) sets for cancellation for nonpayment of premium, not for a market withdrawal.

Answer: D. Hull coverage on a 40-foot sailboat that its owner uses only for pleasure

Section 4-201(b)(4) excludes insurance against perils of navigation, transit, or transportation, including goods in the course of export or import, but carves out coverage that stays within the subtitle: bridges and tunnels; pleasure craft under 60 feet that are owned and used only for pleasure rather than commercial purposes; and fishing vessels, or charter or head boats, under 50 gross tons and outside any fleet of three or more vessels. A 40-foot sailboat used only for pleasure is under the 60-foot limit, so it stays within the subtitle. A 75-foot yacht exceeds that limit, a fishing vessel in a fleet of four fails the fleet condition, and export cargo falls inside the exclusion itself.

Answer: A. An unfair claim practice, because the offers fall below what the brochure leads a reasonable reader to expect.

When done with the frequency of a general business practice, Maryland treats as an unfair claim settlement practice an attempt to settle a claim for less than a reasonable person would expect after studying written or printed advertising material that accompanied or was made part of the application. The brochure attached to each application is that kind of material, so the policy wording is not the only measure the statute uses. The provision does not condition the violation on the Commissioner having approved the brochure. What the insurer paid on other claims is not the benchmark; the statute measures against the expectation the advertising creates.

Answer: C. Include a reasonable estimate of what the renewal policy premium is expected to be

Sec. 27-608 reaches workers' compensation policies as well as commercial insurance. Under Sec. 27-608(d)(1), when the insurer's rating methodology needs information from the insured to calculate the renewal premium, and the insurer has asked for that information without receiving it, the insurer must provide a reasonable estimate of the renewal premium. The section contains no rule that pauses the notice deadline while information is outstanding, and a notice showing only the expiring premium leaves out the renewal figure the notice is meant to carry. The section does not make missing payroll data a ground for nonrenewal.

Answer: C. The policyholder has since obtained other substantially equivalent homeowner's coverage

Under Sec. 27-612(a)(1), an insurer that fails to comply with Sec. 27-602 or the other listed sections is liable for the coverage that would have stayed in effect but for the failure, unless the person seeking coverage no longer wants it, has obtained other substantially equivalent coverage, or fails to pay the premium after a reasonable demand. Replacement coverage is therefore a defense. Sec. 27-612(a)(2) makes this liability additional to any other penalty under law, so a prior penalty does not end it. The section lists no exception for an unintentional error, and including the replacement-rights notice does not cure a notice that was sent too late.