Indiana Personal Lines Insurance License Exam — All Questions

Under the liberalization clause, when an insurer broadens its form without charging more, an existing insured:

• a.Must ask the insurer for an endorsement
• b.Pays a pro rata additional premium
• c.Receives the broader coverage automatically✓
• d.Gets the broader form only at renewal

The liberalization clause gives the insured the benefit of a broadening the insurer adopts at no additional premium, without any endorsement, request or new policy. It keeps insureds from being penalized for buying before an improvement was filed and saves the insurer from reissuing every policy in force. Waiting for renewal or paying extra describes what the clause exists to avoid.

The entire contract provision means the agreement between insurer and insured consists of:

• a.The declarations page and nothing else
• b.The policy and the underwriting file
• c.Whatever the producer told the applicant
• d.The policy, application and endorsements✓

The entire contract is the printed policy together with the application and any endorsements attached to it, and nothing outside those documents changes the deal. That is why a producer's spoken assurance about coverage does not bind the insurer once the policy is delivered, and why an insured should read the attached forms. The underwriting file is the insurer's internal work, not part of the contract.

An applicant deliberately hides a history of arson losses. Under the concealment, misrepresentation and fraud condition, the insurer may:

• a.Deny only the losses caused by arson
• b.Cut the payment by the hidden amount
• c.Raise the premium at the next renewal
• d.Void the coverage for that insured✓

The condition lets the insurer treat coverage as void where an insured intentionally conceals or misrepresents a material fact, engages in fraudulent conduct or makes false statements, whether that happens in the application or after a loss. Materiality is the test: a fact that would have changed the underwriting decision. Repricing at renewal is an underwriting response, not the remedy this condition provides.

Immediately after a kitchen fire, the duties after loss condition requires the insured to:

• a.Sue the responsible party without delay
• b.Begin permanent repairs before giving notice
• c.Protect the property from further damage✓
• d.Discard the damaged items to avoid mold

Duties after loss include giving prompt notice, protecting the property from further damage and keeping a record of the reasonable emergency repairs, preparing an inventory of damaged property, cooperating with the investigation and submitting a proof of loss when the insurer asks. Throwing damaged items out destroys the proof the adjuster needs, and permanent repairs are made after the loss has been inspected.

A proof of loss filed with the insurer is best described as:

• a.The adjuster's own estimate of repair costs
• b.A receipt showing that the premium was paid
• c.A sworn statement of the amount claimed✓
• d.The insurer's written offer of settlement

A proof of loss is the insured's signed and sworn statement setting out the time and cause of the loss, the interests of the insured and of others in the property, and the amount being claimed, with supporting records. It comes from the insured, not the insurer, which is why the settlement offer and the adjuster's estimate describe other documents. The time allowed to file one is set by law where the policy is issued.

The insured and the insurer agree the fire loss is covered but cannot agree on its dollar amount. Under the appraisal condition:

• a.A court names one appraiser for both parties
• b.The insurer's adjuster sets the final figure
• c.The insured must accept the estimate or sue at once
• d.Each picks an appraiser and the two pick an umpire✓

Either party may demand appraisal. Each side chooses and pays its own competent appraiser, the two appraisers select an umpire, and an amount agreed to by any two of the three sets the amount of the loss, with the umpire's cost shared. Appraisal settles value only; whether the loss is covered at all stays a coverage question the process cannot decide, so it is not a substitute for a coverage dispute.

The suit against us condition provides that an insured may sue the insurer only after:

• a.Complying fully with the policy terms✓
• b.Filing a written complaint with a regulator
• c.The insurer has denied the claim in writing
• d.Both sides finish an appraisal of the loss

The condition bars an action against the insurer unless the insured has complied with the policy's provisions, and it also requires suit to be brought within the period the policy states, a period fixed by the law where the policy is issued. Complaining to a regulator is a separate consumer remedy that the policy does not make a precondition, and appraisal is demanded only when the dispute is about amount.

After a covered loss, the policy's option to repair or replace allows the insurer to:

• a.Refuse the claim when repairs cost too much
• b.Name the contractor the insured has to hire
• c.Restore the property instead of paying cash✓
• d.Pay the insured the full policy limit at once

The insurer reserves the right to pay the value of the lost property, to pay the cost of repairing it, or to repair or replace it with property of like kind and quality, which caps what an insured can insist on in cash. The option is a settlement choice, not a way out of the claim, so refusing a costly claim is not what it permits, and it does not force the insured to hire anyone.

A dry cleaner ruins a customer's coat. Under the no benefit to bailee condition, the cleaner:

• a.Cannot use the customer's insurance✓
• b.May file the claim as a loss payee
• c.Becomes an insured under that policy
• d.Shares the loss with the insurer evenly

The condition states that the insurance gives no benefit to any person or organization holding, storing or moving the property for a fee. So the insurer may pay its own insured for the coat and then subrogate against the cleaner, whose own liability coverage is meant to answer for the damage. Treating a bailee as an insured or a loss payee would let the responsible party hide behind the customer's policy.

Under the loss payment condition, the insurer adjusts a covered loss with, and pays:

• a.The mortgagee alone on any property loss
• b.The named insured, unless another is named✓
• c.The contractor who repaired the property
• d.Any resident of the household who claims

The insurer adjusts losses with the named insured and pays the named insured unless some other person is named in the policy, such as a mortgagee or loss payee, or is legally entitled to receive payment. A repair contractor has no claim against the policy and must look to the insured, and a household resident is not automatically the payee even where that person is an insured for coverage purposes.

Two policies cover the same $30,000 loss, one with a $200,000 limit and one with a $100,000 limit. Under the other insurance condition, the larger policy pays:

• a.$15,000
• b.$20,000✓
• c.$10,000
• d.$30,000

The other insurance condition makes each policy pay the proportion of the loss that its limit bears to the total of all applicable limits, so the larger policy pays 200,000 divided by 300,000, or two thirds of $30,000, which is $20,000, and the smaller one pays $10,000. The insured collects $30,000 in total and no more, because indemnity does not allow a profit from carrying two policies.

A contractor's negligence floods the insured's kitchen, and the insured signs a paper releasing the contractor. The insurer may then:

• a.Pay in full and then sue the insured
• b.Refuse to pay what it cannot recover✓
• c.Cancel the policy back to its start date
• d.Pay the claim and still sue the contractor

The subrogation condition transfers the insured's rights of recovery to the insurer once it pays, and it forbids the insured from doing anything after a loss that impairs those rights. An insured who releases the negligent party destroys the insurer's recovery and can lose the claim to that extent. A release given before any loss is a different matter and is generally permitted in writing.

A dwelling fire is traced to arson by the owner. Under the mortgage clause, the mortgagee shown on the declarations:

• a.Is paid its interest in the property✓
• b.Collects only the unearned premium
• c.Loses its claim along with the insured
• d.Must sue the owner to collect the debt

The mortgage clause gives the mortgagee rights of its own, so denial of the owner's claim for an act such as arson does not defeat the lender's interest, provided the mortgagee meets its own duties, which include paying the premium on demand and filing a proof of loss if the insured will not. Having paid the mortgagee alone, the insurer takes over that much of the debt and may pursue the owner.

The assignment condition provides that an insured who sells the home may hand the policy to the buyer:

• a.At any time before the policy expires
• b.Once the buyer's premium check clears
• c.By recording the deed at the courthouse
• d.Only with the insurer's written consent✓

Insurance is a personal contract written on a particular insured, so the policy cannot be assigned to someone else without the insurer's written consent; the buyer is a different risk the underwriter has never seen. Recording a deed transfers the property, not the contract of insurance, and paying a premium does not make a stranger the insured. In practice the buyer arranges a policy of their own.

When a named insured dies during the policy period, coverage on the covered property continues for:

• a.The deceased's legal representative✓
• b.The buyer of the property at probate
• c.No one, since the policy ends at death
• d.Any heir who is named in the will

The death of the named insured condition keeps the property covered by naming the legal representative of the deceased as an insured for that property, and by covering any person who has proper temporary custody of the property until a representative is appointed. Coverage does not simply stop at the moment of death, and an heir named in a will is not automatically the person the condition protects.

The conceptual difference between cancellation and non-renewal is that a non-renewal:

• a.Requires the insured's written agreement
• b.Refunds the premium on a short-rate basis
• c.Ends the policy at its expiration date✓
• d.Ends the policy in the middle of a term

Cancellation ends a policy before the end of the term it was written for and produces a return of the unearned premium, while non-renewal simply lets the policy run to its expiration date and does not continue it into a new term. Neither requires the insured to agree, and each carries its own notice requirements set by the law where the policy is issued rather than by the form itself.

Which agency issues resident personal lines insurance producer licenses in Indiana?

• a.Indiana Bureau of Motor Vehicles, Insurance Division
• b.Indiana Department of Insurance✓
• c.The federal Department of Insurance
• d.Indiana Insurance Commission

Insurance in Indiana is regulated at the state level by the Indiana Department of Insurance (IDOI), which licenses producers, reviews rates and forms, and enforces the state insurance code. There is no federal insurance department. Source: Indiana Department of Insurance (https://www.in.gov/idoi/).

How are the minimum auto liability limits that an Indiana personal auto policy must carry established?

• a.By Indiana state law, which sets minimum liability limits every auto policy must meet; verify the current figures with the Indiana Department of Insurance✓
• b.By the county where the vehicle is registered
• c.By each insurer's own underwriting rules, with no state floor
• d.By the federal government under a national auto-insurance mandate

Auto liability minimums are set by state financial-responsibility law, not by insurers or a federal mandate. Because the exact dollar figures can change, quote them only after confirming the current amounts with the Indiana Department of Insurance (https://www.in.gov/idoi/).

Which body writes and enforces the insurance regulations that govern personal lines policies sold in Indiana?

• a.The county recorder where the policy is delivered
• b.The United States Department of Insurance in Washington, D.C.
• c.The Indiana Department of Insurance, a state agency✓
• d.A private trade association of insurers with no government authority

Insurance is regulated state by state; in Indiana the Indiana Department of Insurance supervises the market, licenses producers, and enforces rating, cancellation, and coverage rules. No federal department of insurance exists. Source: Indiana Department of Insurance (https://www.in.gov/idoi/).

After a producer is licensed in Indiana, what generally must occur before he or she can transact business for a specific insurer?

• a.The producer must complete five supervised sales on a temporary permit
• b.The producer must post a personal surety bond with the state treasurer
• c.The insurer must appoint the producer, and the appointment is filed with the Indiana Department of Insurance✓
• d.Nothing further; the license alone authorizes sales for any insurer

A license lets a person act as a producer, but to represent a particular company that insurer must appoint the producer, with the appointment recorded by the Indiana Department of Insurance. A producer may hold appointments from several insurers at once, following the NAIC producer-licensing model.

Which statement about continuing education (CE) for resident personal lines producers in Indiana is correct?

• a.CE must be completed once, in the first year, and never again
• b.Passing the licensing exam permanently exempts a producer from CE
• c.CE is optional and only suggested for newly licensed producers
• d.Resident producers must complete state-approved CE each renewal cycle to keep the license active; confirm the exact hours and ethics requirement with the Indiana Department of Insurance✓

Like other states, Indiana requires resident producers to complete approved continuing education every renewal cycle, typically including an ethics component. Specific hour totals change, so verify the current CE requirement with the Indiana Department of Insurance (https://www.in.gov/idoi/).

How are cancellation and nonrenewal of a personal auto or homeowners policy regulated in Indiana?

• a.There are no notice rules; cancellation is governed solely by the contract
• b.Only the policyholder may cancel; insurers can never cancel mid-term
• c.State law limits the reasons an insurer may cancel or nonrenew and requires advance written notice to the insured; confirm the exact notice period with the Indiana Department of Insurance✓
• d.An insurer may cancel any personal policy at any time for any reason with no notice

Indiana, like other states, restricts mid-term cancellation of personal auto and homeowners policies to specified reasons (such as nonpayment or material misrepresentation) and requires advance written notice of cancellation or nonrenewal. The exact number of days varies by reason and line, so verify current Indiana notice periods with the Indiana Department of Insurance.

Regarding uninsured/underinsured motorist (UM/UIM) coverage on an Indiana personal auto policy, which is generally true?

• a.State law generally requires insurers to make uninsured/underinsured motorist coverage available; confirm the current UM/UIM rules with the Indiana Department of Insurance✓
• b.UM/UIM automatically replaces the policy's liability coverage
• c.UM/UIM is available only to commercial fleets
• d.UM/UIM is prohibited in Indiana

State auto laws generally require insurers to offer uninsured/underinsured motorist coverage, which protects the insured when the responsible driver has no or insufficient coverage. Because the specifics of required limits and elections vary, confirm the current Indiana UM/UIM rules with the Indiana Department of Insurance (https://www.in.gov/idoi/).

A producer explaining how auto liability claims are resolved to an Indiana client should rely on which principle?

• a.Whether a state uses an at-fault (tort) or no-fault framework is set by that state's law, so the producer should confirm Indiana's current framework and related coverage rules with the Indiana Department of Insurance✓
• b.Fault is decided by the insured's employer, not by state law
• c.Indiana has abolished all liability claims between drivers
• d.Every state uses an identical no-fault system, so the explanation is the same nationwide

How an auto claim is handled depends on whether the state follows a traditional at-fault (tort) framework or a no-fault/PIP framework, and this is fixed by state statute. Rather than assume, a producer should confirm Indiana's current system and related coverages with the Indiana Department of Insurance (https://www.in.gov/idoi/).