Questions and Answers
What is a Physical Hazard?
What does Morale Hazard refer to?
What is Moral Hazard?
What does Aleatory mean in insurance terms?
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What is a Contract of Adhesion?
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What is associated with Class 1-Frame construction?
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What does the term 'Mortgagee/ Loss Payable Condition' specify?
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The renewal notice for a license will be sent in ___ days.
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The max for civil penalty is ___.
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The penalty for a revoked license is ___.
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The cease and desist penalty is ___.
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Notice of investigation must be sent within ___ days of receipt of complaint.
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The commissioner must provide ___ days notice of intent to take testimony.
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Parties are notified within ___ days of completing or closing investigation.
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Investigations must be completed within ___ years.
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Insurers are examined at least once every ___ years.
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The max per violation fine for violations committed unknowingly is ___.
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The max aggregate fine for violations committed unknowingly is ___.
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The max per violation fine for violations committed knowingly is ___.
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The max aggregate fine for violations committed knowingly is ___.
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The insurer must file a notice of appointment within ___ days of the agency contract date.
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If an insurer that terminates an appointment must notify the commissioner within ___ days.
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A change of legal residence must be filed within ___ days.
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A nonresident producer from a reciprocal state applying for a resident license within ___ days if moving to Tennessee is exempt from the licensing examination.
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A license is renewed every ___ months.
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A license may be reinstated within ___ months from renewal date with no exam.
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The association's maximum liability per covered claim is ___ for workers' compensation claims.
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The association's maximum liability per covered claim is ___ for the return of unearned premium.
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The association's maximum liability per covered claim is ___ per claimant for all other covered claims.
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What is the premium reduction for insureds over age 55 who have taken an approved accident prevention course?
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Study Notes
Key Definitions in Property & Casualty
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Physical Hazard: A risk originating from the property itself that can affect its safety or insurability.
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Morale Hazard: Arises when a person's behavior becomes reckless due to having insurance coverage (e.g., driving erratically).
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Moral Hazard: Occurs when someone intentionally creates a situation that will lead to a loss in order to collect insurance money.
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Aleatory: A type of contract where the outcome relies on an uncertain event, leading to unequal value transfer between parties.
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Contract of Adhesion: An agreement where one party holds more power, typically leading to standard form contracts favoring the stronger party.
Building Classes and Materials
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Class 1 - Frame: Structures where exterior support walls, roofs, and floors are primarily wood or comparable combustible materials; typically features a stucco or brick veneer exterior.
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Class 2 - Joist and Masonry: Buildings with non-combustible exterior walls and combustible roofs and floors.
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Combustible Materials: Materials such as wood that ignite easily when exposed to fire.
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Noncombustible Materials: Substances such as concrete, stone, brick, or metal that are resistant to fire.
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Class 3 - Noncombustible: All construction elements are non-combustible.
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Class 4 - Masonry Noncombustible: Features masonry exterior walls and non-combustible roofs and floors.
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Class 5 - Modified Fire Resistive: Made of masonry or fire-resistant materials with a fire rating of 2 hours or less.
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Class 6 - Fire Resistive: Composed entirely of materials rated to resist fire for 2 hours or longer.
Insurance Coverages and Symbols
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Mortgagee/Loss Payable Condition: Defines the roles and responsibilities of the mortgage lender under an insurance policy.
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Personal Property Form: Provides open perils coverage for personal belongings in a residence.
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Personal Effects Form: Coverage for personal belongings while traveling.
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Personal Articles Form: Covers nine selected classes of property, including jewelry and fine arts.
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Symbols in Auto Insurance:
- Symbol 30: Covers customer vehicles left for service.
- Symbol 31: Coverage for auto dealers.
- Symbol 48: For trailers borrowed or leased by the insured.
- Symbol 49: For trailers owned or hired by the insured.
Worker’s Compensation and Employer’s Responsibilities
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Part 1 - Workers Compensation: Commits to paying all required compensation and benefits under the workers' compensation laws.
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Part 2 - Employers Liability: Provides coverage for legal liabilities that the insured may incur.
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Part 3 - Other States Insurance: Lists the states where work will be conducted during the policy period.
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Part 4 - Your Duties if Injury Occurs: Outlines the insured's responsibilities if an injury happens.
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Part 5 - Premium: Explains how the workers' compensation policy cost is determined.
Bonds and Legal Protections
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Fidelity Bond: Guarantees that specific dishonest acts will not occur.
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Surety Bond: Ensures that certain obligations will be fulfilled.
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Bid Bond: Guarantees that if a contractor's bid is successful, they will execute the project as required.
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Public Official Bond: Ensures that public officials will manage public funds appropriately.
Legal and Procedural Requirements in Tennessee
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License Renewal Notice: Sent 45 days before the license expiration.
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Penalties for Violations: Vary up to $1,000 for unknowing violations, reaching $250,000 for knowing violations.
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License Reinstatement: Possible within 12 months without needing to retake an exam.
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Investigative Notices: Must be communicated within specified timeframes after a complaint or investigation takes place.
Insurance Policy Regulations
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Valued Policy Law: Claims are settled at the pre-determined limits of liability.
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Auto Liability Limits: Expressed as 25/50/15 (per person bodily injury, per accident bodily injury, per accident property damage).
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Minimum Combined Limit for Auto Policy: Set at $60,000.
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Financial Responsibility Proof: Demonstrates a person's capacity to cover liabilities stemming from vehicle use.
Adjustments and Non-renewals
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Notice for Rate Increases: Insurers must provide at least 60 days' notice for any premium increase of 25% or more.
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Non-renewal Notifications: Must be communicated 30 days in advance for personal insurance policies.
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Day Requirements for Cancellations: Ranging from 10 to 60 days notice depending on the type and timing of the cancellation.
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Prepare for the Tennessee Property & Casualty Licensing Exam with these flashcards. Each card covers key terms and definitions that are essential for understanding insurance concepts and hazards. Test your knowledge and ensure you're ready for the exam!
