Free South Carolina Property practice questions

Answer: B. Up to 180 days

South Carolina allows the director or his designee to grant a temporary producer license, with no examination, when it is needed to service an insurance business. One listed case is the surviving spouse of a producer who has died, so the business can be sold. The term of such a license is capped at one hundred eighty days. A 90-day term would be permitted but is not the longest period available, while a 365-day or two-year term goes beyond the 180-day ceiling.

Answer: C. The insured has failed to pay the premium that is due on the policy

South Carolina allows an insurer to cancel a policy before the end of its stated term only for one of five reasons: nonpayment of premium; a material misrepresentation that would have kept the insurer from issuing the policy; a substantial change in the risk that the insurer did not know of or reasonably foresee; substantial breaches of contractual duties, conditions, or warranties; or loss of reinsurance, or a situation where continuing the policy would endanger the insurer's solvency or put it in violation of state insurance law. Nonpayment of premium is the first reason on that list. A single claim, a change in the insurer's own guidelines, and a change of agency are not among the five, so none of them supports a mid-term cancellation. Because this policy is a renewal, the separate rule for new policies in their first 120 days, which permits cancellation for any reason, does not reach it.

Answer: A. The person made it with intent to deceive.

Sec. 38-57-80(1) prohibits filing with a supervisory or other public official, or otherwise circulating or delivering, a false statement of an insurer's financial condition when it is made with intent to deceive. Intent to deceive is the required mental element. Injuring a competitor is not an element of this subsection, the text does not require that anyone lose money, and filing with an official is itself covered without any publication in print.

Answer: C. It acts as a residual market for coastal wind and hail cover

The statute creating the association says it functions as a residual market mechanism. It provides wind and hail insurance on residential and commercial property in the coastal area to applicants who are unable to obtain that coverage. Reinsuring member insurers, lending money for repairs, and filing rates that other insurers must charge are not the function the section assigns to it.

Answer: B. An appointed producer of the insurer for which she acts

Sec. 38-43-10(A) lists producer acts that include delivering a policy and receiving or collecting premium, and it requires a person who does them to be an appointed producer of the insurer involved, unless Sec. 38-43-20 provides otherwise. The subsection applies that requirement even when the acts are done by an insurer's employee or at the insurer's request, so her employment does not remove it. Collecting premium is one of the listed producer acts rather than a claim task, and the status the subsection requires is appointment as the insurer's producer, not adjuster licensing or a clerical designation.

Answer: A. Property and casualty coverage sold to individuals and families for mainly noncommercial purposes

South Carolina's list of lines for which a producer may qualify includes a personal lines property and casualty line, defined as coverage sold to individuals and families for primarily noncommercial purposes. Coverage sold to businesses for commercial operations falls outside that definition. Coverage for direct or consequential loss to property of every kind describes the separate property line, and coverage against legal liability describes the separate casualty line; neither of those definitions is confined to individuals and families buying for noncommercial purposes.

Answer: C. The insurer's producer, for the purpose of receiving the premium

South Carolina law provides that a producer who negotiates an insurance contract on another person's behalf is treated as the insurer's producer when it comes to receiving the premium. Acting for the client during negotiation does not make the producer solely the applicant's agent for this purpose. The statute assigns the producer to the insurer for premium receipt, so it gives the producer no neutral status and no role as a holder of funds for the department or the director.

Answer: A. The director, or one or more of the director's duly authorized assistants or agents

Section 38-3-150 provides that examinations and investigations under Title 38, unless another insurance law provides otherwise, may be carried out by the director or by one or more of the director's duly authorized assistants or agents. The section therefore does not confine the work to the director personally. It also does not hand examinations to the Attorney General's office or to a hearing officer of the Administrative Law Court; it names the director and the director's authorized assistants or agents.

Answer: B. It may never be counted as a cost of the insurer for that rate adjustment decision

Under Section 38-59-30, when the director or designee finds after notice and hearing that an insurer has engaged in improper claim practices, the insurer is ordered to cease and desist and may be penalized under the administrative penalty section. The section then states that an imposed penalty may not be treated as a cost of the insurer when deciding whether its rates warrant adjustment. The section attaches no condition to that bar, so it does not turn on obeying the order, on advance written approval by the director, or on spreading the penalty across later filings.

Answer: B. Policies enacted by the General Assembly

The statute on the director's powers and duties requires the director or designee to follow the general policies and broad objectives that the General Assembly has enacted for the operation of the insurance industry in South Carolina. It names the General Assembly, not the Governor, the Attorney General or the National Association of Insurance Commissioners, as the source of those policies.