Rhode Island 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 Rhode Island?

• a.The Rhode Island Division of Motor Vehicles
• b.The Insurance Division of the Department of Business Regulation (DBR)✓
• c.The Rhode Island Bureau of Insurance Agents
• d.The federal Department of Insurance

Insurance in Rhode Island is regulated by the Insurance Division of the Department of Business Regulation (DBR). It licenses producers, reviews rates and forms, and enforces the insurance code. There is no federal insurance department. Source: Rhode Island Department of Business Regulation (https://dbr.ri.gov).

What minimum auto liability limits must a Rhode Island personal auto policy carry?

• a.$15,000 per person / $30,000 per accident bodily injury and $5,000 property damage
• b.$25,000 per person / $50,000 per accident bodily injury and $25,000 property damage✓
• c.$20,000 per person / $40,000 per accident bodily injury and $10,000 property damage
• d.$50,000 per person / $100,000 per accident bodily injury and $50,000 property damage

Rhode Island requires minimum auto liability limits of 25/50/25 — $25,000 bodily injury per person, $50,000 bodily injury per accident, and $25,000 property damage. State law also allows a $75,000 combined single limit as an alternative. Source: Rhode Island General Laws Section 31-47-2.

Instead of split 25/50/25 limits, Rhode Island law permits an auto policy to satisfy the financial-responsibility requirement with what alternative?

• a.No coverage at all if the driver posts a $1,000 bond
• b.Property-damage coverage only
• c.A combined single limit of $75,000 covering all liability in one accident✓
• d.A federal SR-22 filing that replaces liability coverage

Under Rhode Island General Laws Section 31-47-2, a policy may meet the requirement either with split limits of $25,000/$50,000/$25,000 or with a single combined limit of $75,000 that covers bodily injury and property damage together in one accident. Producers should explain both structures. Source: Rhode Island General Laws Section 31-47-2.

How does Rhode Island generally handle liability for auto accidents?

• a.It is a pure no-fault state; each driver's own insurer pays regardless of fault
• b.It bars all lawsuits between drivers and routes claims through a state fund
• c.It is a traditional at-fault (tort) state; the at-fault driver is responsible for the other party's injuries and damage✓
• d.It requires mandatory PIP on every policy in place of liability coverage

Rhode Island is a traditional at-fault (tort) state: the driver who causes a crash is responsible for the other party's injuries and property damage, which is why liability limits matter. Rhode Island does not use a no-fault/PIP system. Confirm current rules with the Rhode Island Department of Business Regulation (https://dbr.ri.gov).

After a producer is licensed in Rhode Island, what generally must occur before transacting business for a specific insurer?

• a.Nothing further — the license alone authorizes sales for any insurer
• b.The insurer must appoint the producer, with the appointment on file with the DBR Insurance Division✓
• c.The producer must post a personal surety bond with the state treasurer
• d.The producer must first sell to at least five clients on a temporary permit

A license lets a person act as a producer, but to represent a particular company that insurer must appoint the producer, with the appointment filed with the Rhode Island DBR Insurance Division. A producer may hold appointments from several insurers at once. This follows the NAIC producer-licensing model Rhode Island uses.

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

• a.Resident producers must complete state-approved CE each renewal cycle to keep the license active; confirm the exact hours and ethics requirement with the DBR Insurance Division✓
• b.CE is optional and only recommended for new producers
• c.CE is required once, in the first year, and never again
• d.Passing the licensing exam permanently exempts a producer from all CE

Like other states, Rhode Island requires resident producers to complete approved continuing education each renewal cycle, typically including an ethics component, before renewing. Because specific hour totals can change, verify the current CE requirement with the Rhode Island Department of Business Regulation (https://dbr.ri.gov).

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

• a.An insurer may cancel any personal policy at any time for any reason with no notice
• b.Only the policyholder may ever cancel; insurers can never cancel mid-term
• c.There are no notice rules; cancellation is governed solely by the contract
• d.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 DBR Insurance Division✓

Rhode Island 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 — verify current Rhode Island notice periods with the Department of Business Regulation.

Which best describes the body that writes and enforces Rhode Island's insurance regulations affecting personal lines policies?

• a.The Insurance Division of the Department of Business Regulation, a state agency✓
• b.A private trade association of insurers with no government authority
• c.The federal Department of Insurance in Washington, D.C.
• d.The city clerk's office where the policy is issued

Insurance in Rhode Island is regulated at the state level by the Insurance Division of the Department of Business Regulation. There is no federal department of insurance; each state supervises its own market, licenses producers, and enforces cancellation, rating, and coverage rules. Source: Rhode Island Department of Business Regulation (https://dbr.ri.gov).