Free Tennessee Property practice questions

Answer: D. December 31 of the year before the insurer becomes insolvent

The Act's definition of an affiliate measures the control relationship as of December 31 of the year immediately preceding the date the insurer becomes insolvent. The definition does not use the date of the liquidation order, the date of the insured event, or the date a claim is filed with the association; it fixes one date tied to the year before insolvency.

Answer: D. Misrepresenting the policy as being shares of the insurer's stock

The misrepresentation list in Tennessee's unfair trade practices statute includes representing a policy as being shares of stock, which is what the producer did. The stock operations provision concerns actually issuing or delivering stock or similar securities as an inducement to buy insurance, and here no stock changed hands. Unfair discrimination concerns unequal treatment of individuals of the same class, which the facts do not describe. Defamation concerns false or maliciously critical statements about an insurer's financial condition meant to injure it, and the producer said nothing against any insurer.

Answer: B. May 13

For a renewal policy, the statutory cancellation grounds apply from the first day, and nonpayment of premium is one of them. When a cancellation rests on one of those grounds, Tennessee requires that it take effect at least ten days after the notice is mailed, so May 13 is the earliest permissible date. May 3 would make the cancellation effective on the mailing date itself with no notice period. June 2 and July 2 are later than the statute requires, so neither is the earliest date.

Answer: D. Promptly notifying the commissioner of the newly discovered information

Tennessee imposes an ongoing duty: if further review or investigation turns up information that would have been reportable as a for-cause termination had the insurer known it when it first notified the commissioner, the insurer must promptly notify the commissioner in an acceptable format. The first report does not end that duty, and waiting for a request from the commissioner is not prompt notice. The duty runs to the commissioner, so passing the information only to the producer does not satisfy it.

Answer: D. Notice and an opportunity for a contested case hearing under the Uniform Administrative Procedures Act

The statute allows the commissioner to order a cease and desist, a monetary penalty, or suspension or revocation of the license only after giving notice and the opportunity for a contested case hearing under the Uniform Administrative Procedures Act, and then finding that a statute, rule or order was violated. No criminal conviction is required. The orders are issued at the commissioner's discretion, so the insurer's consent is not a precondition. An NAIC finding plays no part in the procedure.

Answer: B. When it has paid the policy limit, by a settlement releasing the insured or on a judgment

Under Tenn. Code Ann. Sec. 56-12-107(a)(1)(C)(i), the association's duty to defend ends once it pays, through a settlement that releases the insured or on a judgment, an amount equal to whichever figure is lower: its covered claim obligation limit or the applicable policy limit. Here the policy limit is the lower figure, so paying it ends the defense. Waiting for the full association limit ignores the 'lesser of' test. A partial payment toward a judgment reaches neither figure. The six-month stay under Sec. 56-12-117(a) pauses pending proceedings to permit a proper defense; it is not the event this provision names for ending the duty to defend.

Answer: D. At least 30 days before the date it is proposed to take effect

Tennessee requires every insurer of personal risk insurance to file its rates, supporting information, policy forms, and endorsements, along with supplementary rate information, with the commissioner no later than 30 days before the proposed effective date. A new homeowners endorsement is therefore filed at least 30 days ahead of the date it is meant to take effect. Filing after first use reverses the required order, 60 days overstates the period, and the duty to file applies without any request from the commissioner.

Answer: C. is defamation, which includes encouraging others to circulate the statement

Tennessee's defamation provision covers making or circulating a false or maliciously critical statement about an insurer's financial condition that is calculated to injure it, and it expressly extends to aiding, abetting or encouraging that circulation. Lee's encouragement is therefore enough, and authorship is not required. The boycott, coercion and intimidation provision concerns acts of boycott, coercion or intimidation that restrain or monopolize the business of insurance, which handing out a flyer is not. The unfair claims practice list concerns how an insurer handles claims, and Lee was not handling any claim.

Answer: D. Within 30 days after the final disposition of the matter, with a copy of the consent order

A Tennessee producer must report to the commissioner any administrative action taken against her in another jurisdiction, or by another governmental agency in Tennessee, within 30 days after the final disposition of the matter, and the report must include a copy of the order or consent order or other relevant legal documents. The trigger is the end of the matter, not the date the action was first brought. The event that starts the clock for a criminal matter, the initial pretrial hearing date, belongs to a separate duty. The deadline runs from the matter, not from the producer's renewal cycle.

Answer: C. Within 90 days of the cancellation, if Ohio certifies good standing or the NAIC database shows it

Tenn. Code Ann. Sec. 56-6-109(a) excuses an applicant previously licensed for the same lines in another state from the examination. Where the other license is no longer current, the exemption is available only if Tennessee receives the application within 90 days of the cancellation and good standing at the time of cancellation is shown, either by the prior state's certification or by the NAIC-maintained producer database records. So the exemption does not last indefinitely, does not run for a year, does not dispense with proof of good standing, and contains no minimum period of prior licensure.