Free Wisconsin Casualty practice questions

Answer: C. Presumed to exceed occasional exchange, because more than 5 risks went to Insurer B

Wis. Admin. Code Ins Sec. 6.66(5)(a) presumes, unless evidence shows otherwise, that an agent has gone beyond occasional exchange of business if the agent places more than 5 risks in a calendar year with any single insurer that does not list the agent, or exchanges more than 25 risks in total in a year. The two tests are alternatives, so either one is enough. The 6 risks with Insurer B trip the single-insurer test even though the 13-risk total is well under 25. The rule does not require both tests to be met, and it sets no limit on how many different insurers receive exchanged business.

Answer: D. 60 days after written notice is given to the insured employer and the department

Wis. Stat. Sec. 102.31(2)(a) provides that an insurer's nonrenewal of a worker's compensation policy does not take effect until 60 days after the insurer gives written notice of it to the insured employer and to the department. The 30-day period in the same paragraph governs a cancellation or termination for a reason other than nonrenewal, so both 30-day options describe the wrong kind of termination. Notice to the employer alone is also insufficient, because the statute requires that the department be notified as well.

Answer: A. Bankruptcy does not reduce the insurer's liability to the customer, who may sue the insurer up to the covered amount

Wis. Stat. Sec. 632.22 requires every liability policy to state two things: the insured's bankruptcy or insolvency does not reduce the insurer's liability to third parties, and when execution against the insured comes back unsatisfied, the injured party may bring an action against the insurer to the extent the policy covers the liability. So the customer can pursue the insurer up to the covered amount. Ending the insurer's obligation on the insured's bankruptcy is the result the required provision prevents. Making the customer recover first from the bankruptcy estate would cut the insurer's liability because of the bankruptcy, which the provision also forbids. The section does not condition the action on the insured's written consent.

Answer: B. A county employee driving a truck that the county owns, with the county's permission to operate it

Wis. Stat. Sec. 344.63(1) lists the exceptions to the liability insurance requirement in Sec. 344.62. One of them covers a vehicle owned by or leased to the United States, a state, or a county or municipality, when it is operated with the owner's or lessee's permission, so the county employee is exempt. A pending application is not on the list; the requirement turns on a policy actually in effect. Confidence in the ability to pay judgments is not an exception either: the self-insurer exception requires a valid certificate of self-insurance under Sec. 344.16 and an agreement described in Sec. 344.30(4). Limited mileage or rural use appears nowhere among the exceptions.

Answer: D. They are exempt from filing for every class of inland marine insurance

Wis. Admin. Code Ins Sec. 4.08(3) exempts both insurers and rate service organizations from Wis. Stat. Sec. 625.13 as to filing rates and supplementary rate information for all classes of inland marine insurance, and Sec. 4.08(1) states that the exemption is made under the commissioner's exemption power in Wis. Stat. Sec. 625.04. The 30-days-after-effectiveness filing is the general Sec. 625.13(1) requirement, which is exactly what this rule lifts for inland marine. The rule sets no advance filing period. It does not limit the exemption to rate service organizations; insurers are named alongside them.

Answer: D. The person's driving record

Wis. Stat. Sec. 632.35 bars an insurer from canceling, or refusing to issue or renew, an automobile policy wholly or partly because of a listed characteristic of any person. The listed characteristics are age, sex, residence, race, color, creed, religion, national origin, ancestry, marital status and occupation. National origin, occupation and marital status all appear on that list. A driving record is not one of the listed characteristics, so this section does not bar an insurer from considering it.

Answer: A. The insurer is estopped from using the friend's lack of permission as a defense to its liability

Under Wis. Stat. Sec. 344.15(4), once the secretary mails the insurer the part of the accident report about its policy, the secretary assumes the policy was in effect for both the owner and the operator unless the insurer says otherwise within 30 days. A correction about permission requires an affidavit signed by the owner and filed within that same 30-day period. Sec. 344.15(5) then provides that if no correction is made within 30 days, the insurer, except in a case of fraud, is estopped from defending on the ground that the operator lacked permission. The affidavit option fails twice: the affidavit must be the owner's, and it must be filed within the 30 days, not any time before trial. The void-policy option reverses the statute, which presumes the policy applied. The no-effect option reads only the first half of sub. (5) and ignores the exception it writes into its own rule.

Answer: D. It must show the procuring agent's name and address and a stamped notice that the insurer lacks a Wisconsin certificate of authority.

Every new or renewal surplus lines policy must carry the name and address of the agent or broker who procured it, and must have stamped or affixed on it a notice that the insurer has not obtained a certificate of authority in Wisconsin and that the coverage is issued as surplus lines. The statute does the opposite of promising equal regulation: the policyholder must be told the insurer is not regulated in Wisconsin except as the section provides. The required notice makes no promise of Wisconsin Insurance Security Fund protection, and for a domestic surplus lines insurer the stamp must say insureds will not be eligible for it. No countersignature is required; where more than one insurer takes the direct risk, the policy must name each and the portion each assumed.

Answer: B. A rate clearly insufficient, once the investment income attributable to it is counted, to sustain projected losses and expenses in its class

Wisconsin measures inadequacy by asking whether a rate is clearly insufficient to sustain projected losses and expenses in its class, counting the investment income attributable to that rate. A rate that comes up short only when investment income is ignored therefore does not fail this test, because the statute includes that income. A profit that looks low next to competitors is not the measure; the profit comparison in this section is used to find rates excessive, where long-run profit is unreasonably high in relation to the riskiness of the class. Being below a rate service organization's figure is also not the test, which looks at whether the rate itself can sustain the projected losses and expenses.

Answer: A. The national origin of the person applying for coverage

Wisconsin lets insurers classify risks in any reasonable way for setting rates and minimum premiums, but no classification may be based on race, color, creed or national origin, so national origin is barred. The other choices are things the same statute expects insurers to weigh: catastrophe hazards and loss experience both within and outside Wisconsin are among the basic factors that must be given due consideration, and an insurer's expense provisions may reflect its own operating methods and, so far as credible, its own expense experience.