Free Maryland Property & Casualty practice questions

Answer: C. A deposit a buyer entrusts to a licensed title insurance producer for a closing on Maryland property

Trust money is money, including a deposit or payment, that someone places with a licensed title insurance producer for escrow, closing, or settlement services involving property in Maryland. A deposit for a closing on Virginia property falls outside the definition because the property is not in the State. Premiums paid to a property insurer are not placed with a title insurance producer for settlement services, and commissions a title insurer pays its producer are not money entrusted to the producer for escrow, closing, or settlement services.

Answer: B. When cooperation is subject to a legal privilege asserted by the producer or entity

The designated producer must, on request, cooperate with any investigation the Administration conducts. The only exception in the provision is cooperation that is subject to a legal privilege asserted by the designated producer or by the business entity. The duty covers any investigation, so it does not matter whose conduct is under review, and the provision sets no writing requirement for the request. Compiling the list of record locations is a separate duty of the designated producer and does not replace cooperation.

Answer: D. Proof of at least 8 CE hours and an affidavit of 25 straight years licensed and selling in Maryland

Md. Code Ann., Ins. Sec. 10-116(a)(4)(ii) lets a producer meet the requirement by submitting evidence of at least 8 CE hours for the renewal period together with an affidavit that, for the previous 25 consecutive years, the producer has continuously held a Maryland license and been employed selling insurance in Maryland. The option still requires at least 8 hours, so an affidavit alone falls short. The years must be spent licensed and selling in this State, so licensing elsewhere in the country does not count. The provision calls for the producer's own affidavit and 8 hours, not 16 hours and a letter from an insurer.

Answer: D. A disclosure informing the policyholder that the policy is being transferred

Sec. 27-610(a)(2) requires notice of renewal premium due for personal insurance and for private passenger auto liability policies subject to Sec. 27-613. Sec. 27-610(a)(3) adds that when the policyholder is being transferred between admitted insurers in the same insurance holding company system, that notice must disclose the transfer. The paragraph does not call for a statement of actual reason, a notice of replacement rights through a residual market plan, or the Commissioner's consent to the transfer.

Answer: B. The ban on misrepresenting the financial condition of an insurer

Section 27-202(3) bars any misleading representation or misrepresentation concerning an insurer's financial condition, and calling a financially sound rival nearly insolvent is such a misrepresentation. The other choices describe different paragraphs of the same section: paragraph (4) concerns a policy name or title that misrepresents the policy's true nature, paragraph (2) concerns false or misleading statements about dividends or surplus previously paid on similar policies, and paragraph (1) concerns misrepresenting a policy's terms or promised benefits. The producer's statement is about the rival's finances, which none of those paragraphs addresses.

Answer: C. Yes, because two member insurers refused coverage for a reason other than nonpayment of premium

Sec. 20-502(a)(3)(i) treats an applicant as meeting this condition after a good-faith attempt to obtain the required security from at least two Association members, followed by rejection or refusal by two members for any reason except nonpayment of premiums. A refusal based on driving record is a reason other than nonpayment, so two such refusals qualify. Refusals for nonpayment are the ones that do not count, and the threshold is two refusals, not three. The 12-month uninsured period in paragraph (3)(iii) is a separate route joined by the word or, not an added requirement.

Answer: A. Lee's adult son, who lives in his own apartment across town, hurt while riding in a friend's car

Sec. 19-505(a) extends required PIP to these groups: the first named insured and family members who reside in that person's household, injured in any motor vehicle accident, including one with an unidentified vehicle; anyone hurt while using the insured vehicle with the named insured's permission; guests or passengers in the insured vehicle; and pedestrians, or people on animal- or muscle-powered vehicles, injured in an accident involving the insured vehicle. Lee's son lives elsewhere, so he is outside the household group, and he was hurt in someone else's car, so the insured vehicle groups do not reach him either. The resident spouse fits the household group even though the other driver was never identified, the coworker was a passenger in the insured car, and the pedestrian was struck by it.

Answer: B. It is an unfair claim practice if done often enough to indicate a general business practice.

Sec. 27-304 lists, as an unfair claim settlement practice when committed often enough to indicate a general business practice, delaying the investigation or payment of a claim by requiring a preliminary claim report followed by formal proof of loss forms containing substantially the same information. A standard procedure applied to every claimant meets that frequency test. The provision applies whether the duplicate paperwork is demanded from the claimant or from the claimant's licensed health care provider, so it is not limited to providers. The provision does not let an insurer cure the practice by paying interest, and the problem it targets is the duplication, not whether proof of loss may be requested at all.

Answer: A. Offer to renew with all coverage excluded while the son, as a named excluded driver, drives

Sec. 27-609(b)(1) applies to a private passenger motor vehicle liability policy under which more than one individual is insured. Where the insurer could cancel, nonrenew or raise the premium because of the claim experience or driving record of some but not all of those insureds, Sec. 27-609(b)(1)(ii) says the insurer shall instead offer to continue or renew the policy with all coverage excluded when the specifically named excluded driver operates a vehicle. Nonrenewing the entire policy is the step the paragraph replaces, whatever notice is given. The paragraph does not require every insured's record to justify the action, and a premium increase is one of the actions the excluded-driver offer stands in place of.

Answer: D. A first-party claim made by the insured under a property and casualty policy.

Sec. 27-303(9) names failing to act in good faith, as Sec. 27-1001 defines that term, in settling a first-party claim under a property and casualty insurance policy. A third-party claim by someone the insured injured is not a first-party claim. A life insurance death claim does not arise under a property and casualty policy. Sec. 27-303 does not require a general business practice, and the good faith item is limited to first-party property and casualty claims rather than extending to any claim.