Iowa Property & Casualty Insurance License, Practice Exams

An Iowa vehicle was impounded after the driver could not show coverage. The owner now produces proof of coverage to the clerk of court before the court date. Under Iowa Code 321.20B, what must be done before the vehicle and its plates come back?

1. After the owner provides proof of financial liability coverage to the clerk of court, the owner or driver may claim the motor vehicle after paying any applicable fine and the costs of towing and storage; and the owner or driver provides a copy of the receipt and the owner pays the county treasurer of the county in which the vehicle is registered a fifteen dollar administrative fee, whereupon the county treasurer shall issue new licence plates and registration to the person. ✓
2. The vehicle and the plates are released at once on production of the proof to the clerk of court, no fine, towing or storage costs or administrative fee being payable, since the impoundment turns out to have been made against a vehicle that was insured at the time it was stopped and the owner should not be made to pay for the officer's mistake in the matter.
3. After the owner provides proof of coverage to the court the owner or driver may claim the vehicle on paying the costs of towing and storage; the fifteen dollar administrative fee is not payable where the vehicle was impounded, that fee applying only where the plates were removed without impoundment, and the county treasurer issues new plates on production of the clerk's receipt alone.
4. The owner must first appear before the court and obtain an order dismissing the citation; only then may the vehicle be claimed, and only on payment of any applicable fine, of the towing and storage costs for the motor vehicle, and of a fifteen dollar administrative fee to the clerk of court, who forwards the fee to the county treasurer of the county in which the motor vehicle is registered, and the county treasurer shall then reissue the original licence plates and registration receipt that the peace officer removed at the roadside rather than issuing new ones.

Why: Iowa Code 321.20B(4)(b)(1)(b) is the impoundment counterpart of (1)(a): IF THE PERSON WAS CITED PURSUANT TO PARAGRAPH 'A', SUBPARAGRAPH (4), THE OWNER OR DRIVER, AFTER THE OWNER PROVIDES PROOF OF FINANCIAL LIABILITY COVERAGE TO THE CLERK OF COURT, MAY CLAIM THE MOTOR VEHICLE AFTER SUCH PERSON PAYS ANY APPLICABLE FINE AND THE COSTS OF TOWING AND STORAGE FOR THE MOTOR VEHICLE, AND THE OWNER OR DRIVER PROVIDES A COPY OF THE RECEIPT AND THE OWNER PAYS TO THE COUNTY TREASURER OF THE COUNTY IN WHICH THE MOTOR VEHICLE IS REGISTERED A FIFTEEN DOLLAR ADMINISTRATIVE FEE, AND THE COUNTY TREASURER SHALL ISSUE NEW LICENSE PLATES AND REGISTRATION TO THE PERSON. So the impounded vehicle carries the towing and storage costs on top of everything the (1)(a) route requires, and the same fifteen dollar fee is payable - the fee does not vary with the route. That is the same requirement 321.20B(4)(a)(4)(b) makes of any person claiming an impounded vehicle. No court order is needed at this stage; the proof goes to the clerk of court and the fee to the county treasurer.

The requirement that contracting parties be of legal age, sane, and not under the influence refers to which contract element?

1. Offer and acceptance
2. Competent parties ✓
3. Legal purpose
4. Consideration

Why: Competent parties means each party must have the legal capacity to contract, being of legal age, mentally competent, and sober.

An Iowa company with a surplus to policyholders of twenty million dollars is offered a single risk on which its exposure would be four million dollars. Under Iowa Code 515.49, may it write the risk?

1. Yes without qualification. The limit in the section is a guideline for the commissioner in examining the company's solvency and does not restrict the risks a company may agree to write.
2. No in any circumstances. A company must not expose itself to loss on any one risk or hazard to an amount exceeding ten per cent of its surplus to policyholders, and reinsurance of the excess, however it may be arranged and with whatever company it is placed, does not affect the calculation of the ceding company's own exposure on the risk for the purposes of that statutory limit.
3. Yes, provided the company's exposure on the risk does not exceed twenty-five per cent of its surplus to policyholders, that being the limit the section sets for a single risk or hazard.
4. No, unless the excess above ten per cent of surplus to policyholders is reinsured in another good and reliable company licensed to sell insurance in this state, or reinsured by a qualifying group of individual unincorporated insurers, or reinsured with a company that has created a trust fund, made a deposit or obtained letters of credit on terms satisfactory to the commissioner. ✓

Why: Iowa Code 515.49 provides that A COMPANY SHALL NOT EXPOSE ITSELF TO LOSS ON ANY ONE RISK OR HAZARD TO AN AMOUNT EXCEEDING TEN PERCENT OF ITS SURPLUS TO POLICYHOLDERS UNLESS one of three things applies. (1) THE EXCESS IS REINSURED IN SOME OTHER GOOD AND RELIABLE COMPANY LICENSED TO SELL INSURANCE IN THIS STATE. (2) THE EXCESS IS REINSURED BY A GROUP OF INDIVIDUAL UNINCORPORATED INSURERS WHO ARE AUTHORIZED TO SELL INSURANCE IN AT LEAST ONE STATE OF THE UNITED STATES AND WHO POSSESS ASSETS WHICH ARE HELD IN TRUST FOR THE BENEFIT OF THE AMERICAN POLICYHOLDERS IN THE SUM OF NOT LESS THAN FIFTY MILLION DOLLARS, AND A CERTIFICATE OF SUCH REINSURANCE SHALL BE FURNISHED TO THE INSURED. (3) THE EXCESS IS REINSURED WITH A COMPANY WHICH HAS, WITH RESPECT TO THE CEDING INSURER, CREATED A TRUST FUND, MADE A DEPOSIT, OR OBTAINED LETTERS OF CREDIT, ON TERMS SATISFACTORY TO THE COMMISSIONER. Ten per cent of twenty million dollars is two million, so the four million dollar exposure is over the line and one of the three routes must be used for the excess. The measure is SURPLUS TO POLICYHOLDERS, not capital and not admitted assets, and the section is a real restriction rather than an examination benchmark. This is the same classification of risks that 515.48(10) refers to when it makes the commissioner designate where a newly approved kind of insurance falls.

A Jewelers Block policy is designed primarily for:

1. Insurance brokers seeking errors and omissions protection for misplaced coverage
2. Automobile dealers insuring vehicles held for sale
3. Manufacturers of jewelry display cases insuring finished cases awaiting shipment
4. Retail and wholesale jewelers covering their stock and customers' property ✓

Why: The Jewelers Block policy is an inland marine form covering a jeweler's stock and customers' jewelry in the jeweler's care against a broad range of perils.

Mobile agricultural machinery and equipment under a farm policy refers to:

1. Livestock such as dairy cattle, hogs, and horses kept for breeding or sale
2. Harvested grain and seed held in silos and storage bins on the premises
3. The farm dwelling and its attached structures
4. Tractors, combines, and similar equipment used in farming operations ✓

Why: Mobile agricultural machinery (tractors, combines, harvesters) is a category of covered farm personal property, often insured for direct physical loss.

An SR-22 is best described as:

1. A title document the state issues when a vehicle changes owners
2. A certificate filed with the state by the insurer verifying that an at-risk driver carries required liability coverage ✓
3. A no-fault accident report the driver must file with the motor vehicle department within 10 days of any crash causing injury
4. A high-risk auto liability policy sold through the state's assigned risk plan

Why: An SR-22 is a financial responsibility certificate the insurer files to confirm a high-risk driver maintains the state's required liability insurance.

A bookkeeper embezzles $50,000 from her employer over two years. Which form responds?

1. Liquor liability, since the thefts occurred during business hours
2. A fidelity bond / employee dishonesty coverage ✓
3. A performance bond guaranteeing the bookkeeper's work
4. CGL Coverage A, treating the missing funds as property damage

Why: Employee theft of employer funds is covered by a fidelity bond/employee dishonesty coverage, not the CGL.

Which loss would be covered under HO-3 on the dwelling but NOT on personal property, due to the difference in covered perils?

1. A fire loss originating in the home's attached garage
2. An accidental, non-named-peril physical loss to the structure ✓
3. A lightning strike that damages the roof
4. A windstorm loss to the siding and shingles

Why: HO-3 covers the dwelling open-peril, so an accidental loss not on the named-perils list is covered for the structure but not for Coverage C personal property, which is named-peril only.

Which of the following best describes fraud in an insurance context?

1. A clerical error by the insurer in preparing the declarations page
2. An ambiguous policy provision that is capable of two readings
3. An honest mistake on the application that the applicant did not know was wrong, and would not have made had the true position been explained
4. An intentional act of deception to induce the other party to part with something of value ✓

Why: Fraud is an intentional deception or misrepresentation made to gain an unfair or unlawful advantage.

An employer is also the manufacturer of the product that injured its own employee, and the employee sues the employer in its role as product maker rather than as employer. What doctrine does this illustrate, potentially triggering Part Two?

1. Dual-capacity doctrine ✓
2. Exclusive remedy doctrine
3. Fellow-servant doctrine
4. Going-and-coming doctrine

Why: The dual-capacity doctrine allows an employee to sue the employer in a second, distinct capacity (e.g., as product manufacturer); such suits can fall under Part Two Employers Liability.

Violations of 18 U.S.C. § 1033 can result in:

1. A written warning letter from the state insurance department and nothing further
2. Loss of eligibility to write NFIP flood policies, with no other consequence
3. A surcharge added to the producer's errors and omissions premium at renewal
4. Federal criminal penalties including fines and imprisonment ✓

Why: Section 1033 carries federal criminal penalties, including fines and imprisonment, depending on the offense and resulting harm.

Under Iowa Code 507.4, whom may the Iowa commissioner appoint to conduct examinations, what powers do those people have, and how is their pay fixed?

1. Insurance examiners, at least one of whom shall be an experienced actuary and at least one an experienced and competent fire insurance accountant, who while conducting examinations possess such of the commissioner's powers as the commissioner delegates to them in writing for the particular examination, and whose time is divided between the division and any other employment they may hold; and assistants when advisable. The commissioner shall employ the rates of compensation fixed by the state merit system for comparable positions and may not depart from them.
2. Insurance examiners, whose qualifications the section leaves entirely to the commissioner's judgment, who while conducting examinations possess all the powers conferred upon the commissioner for such purposes; and assistants when advisable. The commissioner shall employ rates of compensation consistent with current standards in the industry for certified public accountants, attorneys and skilled insurance examiners, and may use rates suggested by the national association of insurance commissioners. Compensation is paid from appropriations for the purpose and is not reimbursed by the companies examined.
3. Insurance examiners, at least one of whom shall be an experienced actuary and at least one an experienced and competent fire insurance accountant, who while conducting examinations possess all the powers conferred upon the commissioner for such purposes and whose entire time is under the commissioner's control; and assistants when in the commissioner's judgment it is advisable. The commissioner shall employ rates of compensation consistent with current standards in the industry for certified public accountants, attorneys and skilled insurance examiners, and may use rates suggested by the national association of insurance commissioners. ✓
4. Insurance examiners, at least one of whom shall be an experienced actuary and at least one an experienced and competent fire insurance accountant, who while conducting examinations possess all the powers conferred upon the commissioner for such purposes and whose entire time is the commissioner's; and assistants when advisable. The commissioner shall employ rates of compensation consistent with current standards in the industry, and may use rates suggested by the national association of insurance commissioners. Examiners appointed under the section are subject to the merit system provisions of chapter 8A like other state employees.

Why: Iowa Code 507.4(1) provides that THE COMMISSIONER OF INSURANCE MAY APPOINT INSURANCE EXAMINERS, AT LEAST ONE OF WHOM SHALL BE AN EXPERIENCED ACTUARY, AND AT LEAST ONE OF WHOM SHALL BE AN EXPERIENCED AND COMPETENT FIRE INSURANCE ACCOUNTANT, AND WHO, WHILE CONDUCTING EXAMINATIONS, SHALL POSSESS ALL THE POWERS CONFERRED UPON THE COMMISSIONER OF INSURANCE FOR SUCH PURPOSES. THE ENTIRE TIME OF THE EXAMINERS SHALL BE UNDER THE CONTROL OF THE COMMISSIONER, AND SHALL BE EMPLOYED AS THE COMMISSIONER MAY DIRECT. Three things are in the text: the two named specialisms are minimum requirements, the examiner's powers are ALL the commissioner's powers for the purpose and arrive by operation of the statute rather than by delegation, and the examiner's ENTIRE TIME belongs to the commissioner. Iowa Code 507.4(2) provides that the commissioner MAY, WHEN IN THE COMMISSIONER'S JUDGMENT IT IS ADVISABLE, APPOINT ASSISTANTS TO AID IN CONDUCTING EXAMINATIONS, and that THE COMMISSIONER SHALL EMPLOY RATES OF COMPENSATION CONSISTENT WITH CURRENT STANDARDS IN THE INDUSTRY FOR CERTIFIED PUBLIC ACCOUNTANTS, ATTORNEYS, AND SKILLED INSURANCE EXAMINERS. THE COMMISSIONER MAY USE COMPENSATION RATES SUGGESTED BY THE NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS. The benchmark is the market, not the state pay scale, and the subsection makes the point explicit: INSURANCE EXAMINERS EMPLOYED UNDER THIS SECTION SHALL BE EXEMPT FROM THE MERIT SYSTEM PROVISIONS OF CHAPTER 8A, SUBCHAPTER IV, UNDER SECTION 8A.412, SUBSECTION 16 - so examiners are not subject to the merit system. Finally, COMPENSATION SHALL BE PAID FROM APPROPRIATIONS FOR SUCH PURPOSES UPON CERTIFICATION OF THE COMMISSIONER, WHICH SHALL BE REIMBURSED AS PROVIDED IN SECTIONS 507.8 AND 507.9. So the appropriation is a float that is reimbursed by the companies examined.

What minimum limits must an owner's policy of liability insurance carry under Iowa Code 321A.21, exclusive of interest and costs, with respect to each motor vehicle?

1. Twenty-five thousand dollars because of bodily injury to or death of one person in any one accident and, subject to that limit for one person, fifty thousand dollars because of bodily injury to or death of two or more persons in any one accident, and twenty-five thousand dollars because of injury to or destruction of property of others in any one accident, those being the limits generally required across the United States.
2. Twenty thousand dollars because of bodily injury to or death of one person and forty thousand dollars because of bodily injury to or death of two or more persons in any one accident; the section prescribes no minimum for injury to or destruction of the property of others, property damage cover being a matter for the contract between the insurer and the owner of the vehicle insured under the policy.
3. Twenty thousand dollars because of bodily injury to or death of one person in any one accident and, subject to that limit for one person, forty thousand dollars because of bodily injury to or death of two or more persons in any one accident, and fifteen thousand dollars because of injury to or destruction of property of others in any one accident. ✓
4. Fifteen thousand dollars because of bodily injury to or death of one person in any one accident and, subject to that limit for one person, thirty thousand dollars because of bodily injury to or death of two or more persons in any one accident, and twenty thousand dollars because of injury to or destruction of property of others in any one accident.

Why: Iowa Code 321A.21(2)(b) requires an owner's policy of liability insurance to INSURE THE PERSON NAMED IN THE POLICY AND ANY OTHER PERSON, AS INSURED, USING THE MOTOR VEHICLES WITH THE EXPRESS OR IMPLIED PERMISSION OF THE NAMED INSURED, AGAINST LOSS FROM THE LIABILITY IMPOSED BY LAW FOR DAMAGES ARISING OUT OF THE OWNERSHIP, MAINTENANCE, OR USE OF THE MOTOR VEHICLES WITHIN THE UNITED STATES OF AMERICA OR THE DOMINION OF CANADA, SUBJECT TO LIMITS EXCLUSIVE OF INTEREST AND COSTS, WITH RESPECT TO EACH SUCH MOTOR VEHICLE, TWENTY THOUSAND DOLLARS BECAUSE OF BODILY INJURY TO OR DEATH OF ONE PERSON IN ANY ONE ACCIDENT AND, SUBJECT TO SAID LIMIT FOR ONE PERSON, FORTY THOUSAND DOLLARS BECAUSE OF BODILY INJURY TO OR DEATH OF TWO OR MORE PERSONS IN ANY ONE ACCIDENT, AND FIFTEEN THOUSAND DOLLARS BECAUSE OF INJURY TO OR DESTRUCTION OF PROPERTY OF OTHERS IN ANY ONE ACCIDENT. Twenty, forty and fifteen thousand dollars: the twenty-five, fifty and twenty-five thousand dollar figures are not Iowa's limits. Three features of the wording are worth holding onto. The limits are EXCLUSIVE OF INTEREST AND COSTS. They apply WITH RESPECT TO EACH SUCH MOTOR VEHICLE. And the two-person figure is SUBJECT TO SAID LIMIT FOR ONE PERSON, so no single claimant recovers more than twenty thousand dollars out of the forty. By 321A.21(2)(a) the policy must also DESIGNATE BY EXPLICIT DESCRIPTION OR BY APPROPRIATE REFERENCE ALL MOTOR VEHICLES with respect to which coverage is granted.

PAP Part A supplementary payments include all of the following EXCEPT:

1. Interest that accrues on a judgment after it is entered, until the insurer pays its limit
2. Bail bonds up to $250 after an accident
3. The full bodily injury damages owed to the claimant ✓
4. Attorney fees and the cost of defending a suit

Why: Supplementary payments include defense, bail bonds, post-judgment interest, and certain expenses, but NOT the damages themselves, which are paid within the liability limit.

Private crop-hail insurance is distinguished from federal MPCI in that crop-hail:

1. Covers every natural peril capable of reducing a crop yield, including drought and excess moisture
2. Covers only the farm dwelling and its contents
3. Is administered by FEMA alongside the National Flood Insurance Program for agricultural producers
4. Is a private, narrowly focused policy covering primarily hail (and often fire) damage to crops ✓

Why: Crop-hail is sold by private insurers and typically covers hail (often with fire) on a per-acre basis, separate from the broad federal MPCI program.

'Premises and operations' exposure under the CGL refers to:

1. Liability arising out of the insured's premises and ongoing business operations ✓
2. Liability for defective work discovered after the job is finished and accepted
3. Liability the insured takes on by signing a hold-harmless agreement
4. Liability for goods the insured manufactures and sells to the public

Why: Premises and operations covers liability from the insured's location and its ongoing (in-progress) operations.

How does Iowa Code 515I.2 define control for the purposes of the surplus lines chapter, and what does the chapter's definition of a nonadmitted insurer leave out?

1. Control means that an entity directly or indirectly owns, controls or has the power to vote ten percent or more of any class of voting securities of another entity; the ability to control the election of a majority of directors or trustees is evidence of control but is not itself control within the definition. Nonadmitted insurer means an insurer not licensed to do insurance business in this state, and the definition includes a risk retention group as defined in chapter 515E, because such a group is not licensed here.
2. Control means either that an entity directly or indirectly, or acting through one or more other persons, owns, controls or has the power to vote twenty-five percent or more of any class of voting securities of another entity, or that an entity controls in any manner the election of a majority of the directors or trustees of another entity. Nonadmitted insurer means an insurer not licensed to do insurance business in this state, and does not include a risk retention group as defined in chapter 515E. ✓
3. Control means either that an entity directly or indirectly, or acting through one or more other persons, owns, controls or has the power to vote twenty-five percent or more of any class of voting securities of another entity, or that an entity controls in any manner the election of a majority of the directors or trustees of another entity. Nonadmitted insurer means an insurer not licensed to do insurance business in this state, and the definition expressly includes a domestic surplus lines insurer authorized by the commissioner under this chapter.
4. Control means that an entity owns, controls or has the power to vote a majority of any class of voting securities of another entity, indirect ownership and ownership through other persons being disregarded. Nonadmitted insurer means an insurer not licensed to do insurance business in this state, and does not include a risk retention group as defined in chapter 515E.

Why: Iowa Code 515I.2(6) defines CONTROL as EITHER OF THE FOLLOWING: (a) THAT AN ENTITY DIRECTLY OR INDIRECTLY, OR ACTING THROUGH ONE OR MORE OTHER PERSONS, OWNS, CONTROLS, OR HAS THE POWER TO VOTE TWENTY-FIVE PERCENT OR MORE OF ANY CLASS OF VOTING SECURITIES OF ANOTHER ENTITY. (b) THAT AN ENTITY CONTROLS IN ANY MANNER THE ELECTION OF A MAJORITY OF THE DIRECTORS OR TRUSTEES OF ANOTHER ENTITY. EITHER makes the two limbs alternatives, and DIRECTLY OR INDIRECTLY, OR ACTING THROUGH ONE OR MORE OTHER PERSONS defeats the option that disregards indirect ownership. The definition matters because 515I.2(2) defines AFFILIATE as ANY ENTITY THAT CONTROLS, IS CONTROLLED BY, OR IS UNDER COMMON CONTROL WITH THE INSURER and 515I.2(3) defines AFFILIATED GROUP as ANY GROUP OF ENTITIES THAT ARE AFFILIATES - and affiliated groups then reappear in the home state rule in 515I.2(10)(b) and the exempt commercial purchaser test in 515I.2(9)(c)(3). Iowa Code 515I.2(13) defines NONADMITTED INSURER as AN INSURER NOT LICENSED TO DO INSURANCE BUSINESS IN THIS STATE and adds that NONADMITTED INSURER DOES NOT INCLUDE A RISK RETENTION GROUP AS DEFINED IN CHAPTER 515E. That carve-out is what the option bringing a risk retention group inside the definition gets wrong. Contrast 515I.2(1), ADMITTED INSURER, which is AN INSURER LICENSED TO DO INSURANCE BUSINESS IN THIS STATE.

The Homeowners loss settlement (coinsurance) provision generally requires the dwelling to be insured to at least what percentage of replacement cost to receive full replacement-cost settlement on a partial loss?

1. 100%
2. 70%
3. 50%
4. 80% ✓

Why: The replacement-cost loss settlement condition requires the dwelling to be insured to at least 80% of full replacement cost at the time of loss.

Coverage C under the Dwelling Policy insures:

1. The dwelling structure
2. Personal property of the insured ✓
3. Personal liability
4. Detached other structures

Why: Coverage C — Personal Property covers the household contents and personal belongings of the insured. The Dwelling Policy contains no liability coverage by default.

A warehouse roof collapses under the weight of accumulated snow. The insured has only the Basic Causes of Loss form. Is the collapse from snow weight covered?

1. No, weight of snow/ice is added by the Broad and Special forms, not Basic ✓
2. Only if theft accompanied the collapse
3. Yes, weight of snow is listed among the Basic form's named perils
4. Yes, collapse from any cause is a Basic peril

Why: Weight of snow, ice, or sleet is added in the Broad and Special forms; the Basic form does not include it, so the loss would not be covered.

Iowa Code 507B.4 makes one particular basis for a refusal to sell insurance an unfair trade practice in its own right. What is it?

1. Any discrimination in the sale of insurance on the basis of the applicant's occupation, unless the insurer can produce actuarial data supporting the distinction it has drawn between occupations.
2. Any discrimination in the sale of insurance on the basis of the applicant's previous claims history, which the chapter permits an insurer to consider only after the policy has been issued.
3. Any discrimination in the sale of insurance solely on the basis of domestic abuse as defined in section 236.2 or sexual abuse as defined in section 236A.2. ✓
4. Any discrimination in the sale of insurance solely on the basis of the applicant's credit history, unless the insurer has first given the applicant written notice that credit history will be considered.

Why: Iowa Code 507B.4(3)(g)(3) makes it an unfair trade practice to make or permit ANY DISCRIMINATION IN THE SALE OF INSURANCE SOLELY ON THE BASIS OF DOMESTIC ABUSE AS DEFINED IN SECTION 236.2 OR SEXUAL ABUSE AS DEFINED IN SECTION 236A.2. Two things distinguish it from the two subparagraphs above it. It is not confined to UNFAIR discrimination - ANY discrimination on that basis is caught - and it is about the SALE of insurance rather than about the rates, benefits or terms of a contract already made. The word SOLELY is the limit. The definitions come from sections 236.2 and 236A.2, which sit outside this chapter. The paragraph immediately following works the same way: 507B.4(3)(h), RELEASE OR USE OF GENETIC INFORMATION, makes an unfair trade practice of the FAILURE OF A PERSON TO COMPLY WITH SECTION 729.6, SUBSECTION 4, and says nothing else - the substance of the duty is in that section, not in this one. Claims history is dealt with quite separately, at 507B.4(3)(m).

An Iowa producer holds a licence for property and casualty. A customer argues that the licence itself shows the producer could bind a particular insurer. Under Iowa Code 522B.1, is that right?

1. Yes. A licence is the state's certification that the holder represents every insurer admitted to transact those lines of insurance in Iowa.
2. No, unless the producer also holds an appointment from that insurer under Iowa Code 522B.13, in which case the licence creates apparent authority.
3. No. A licence by itself does not create any authority, actual, apparent or inherent, in the holder to represent or commit an insurer. ✓
4. Yes, for personal lines of authority, but not for commercial lines, where authority to bind must come from a separate written contract with the insurer.

Why: Iowa Code 522B.1(8) defines LICENSE as A DOCUMENT ISSUED PURSUANT TO THIS CHAPTER BY THE COMMISSIONER AUTHORIZING A PERSON TO ACT AS AN INSURANCE PRODUCER FOR THE LINES OF AUTHORITY SPECIFIED IN THE DOCUMENT, and then adds the sentence this item turns on: A LICENSE BY ITSELF DOES NOT CREATE ANY AUTHORITY, ACTUAL, APPARENT, OR INHERENT, IN THE HOLDER TO REPRESENT OR COMMIT AN INSURER. All three kinds of authority are named, so the option treating a licence plus an appointment as creating apparent authority fails. What the licence does is PERMIT the holder to act; what creates the relationship with a particular insurer is the appointment under 522B.13, which requires an individual producer acting as an insurer's agent to be appointed by that insurer.

An Iowa insurer writes a homeowners policy, a private passenger nonfleet automobile policy and a policy on a restaurant's premises. Under Iowa Code 515F.2, which are personal risks and which is a commercial risk?

1. All three are personal risks, since each of them is written for a named individual rather than for a business entity; commercial risk in this chapter means a risk written for a corporation, a partnership or another business entity, so that the character of the insured and not the need which the insurance serves decides which of the two definitions in the section a given policy falls under.
2. The homeowners policy is a personal risk; the automobile and restaurant policies are commercial risks, because the definition of personal risk in this chapter is limited to insurance covering homeowners and tenants and to insurance on mobile homes, a private passenger nonfleet automobile and a restaurant both being risks which the chapter treats as having been written for a commercial purpose.
3. The homeowners and automobile policies are personal risks; the restaurant policy is a commercial risk, because personal risk means insurance covering homeowners, tenants, private passenger nonfleet automobiles, and mobile homes, and other property and casualty insurance for personal, family or household needs, and commercial risk means any kind of risk which is not a personal risk. ✓
4. The homeowners and automobile policies are personal risks; the restaurant policy is neither a personal risk nor a commercial risk, because the chapter defines personal risk alone and leaves every other kind of risk outside its definitions altogether, which is why joint underwriting is available for a restaurant risk while the rate standards of the chapter do not reach the rate charged for it.

Why: Iowa Code 515F.2(8) defines PERSONAL RISK as INSURANCE COVERING HOMEOWNERS, TENANTS, PRIVATE PASSENGER NONFLEET AUTOMOBILES, AND MOBILE HOMES, AND OTHER PROPERTY AND CASUALTY INSURANCE FOR PERSONAL, FAMILY, OR HOUSEHOLD NEEDS. Four named categories and then a residual class defined by the NEED the insurance serves, not by whether the insured is a natural person. Iowa Code 515F.2(2) then defines COMMERCIAL RISK as ANY KIND OF RISK WHICH IS NOT A PERSONAL RISK - a pure residual, so between them the two definitions exhaust the field and nothing falls outside both, which is what the option calling the restaurant policy neither personal nor commercial supposes. The distinction does real work in the chapter: JOINT UNDERWRITING at 515F.2(6) is available only for a COMMERCIAL RISK. Note the qualifiers in the personal risk definition - PRIVATE PASSENGER and NONFLEET - so a fleet of cars owned by a business is not a personal risk even though private passenger vehicles are on the list.

The characteristic that requires certain acts, such as paying premium and providing proof of loss, before the insurer must pay a claim is that insurance is a contract of:

1. Aleatory nature
2. Conditional nature ✓
3. Indemnity
4. Adhesion

Why: Insurance is a conditional contract because both parties must meet certain conditions before the contract can be enforced.

Under Iowa Code 515.51, how must an Iowa company's policies be executed, and what does the section say about group policies?

1. All policies except surety bonds may be made with or without the company's seal but must be subscribed by the president or another officer the directors designate and attested by the secretary or the secretary's designee; and a group motor vehicle or group homeowners policy must not be written or delivered in this state unless the policy is an individual policy or contract form. ✓
2. All policies including surety bonds must bear the company's seal and be subscribed by the president and attested by the secretary in person; and a group motor vehicle or group homeowners policy may be written or delivered in this state only with the prior written approval of the commissioner of insurance, given in advance for the particular group of persons to which the policy is to be issued.
3. All policies except surety bonds may be made with or without the company's seal and need not be subscribed by any officer where the form has been approved by the commissioner; and a group motor vehicle or group homeowners policy may be written and delivered freely in this state.
4. All policies may be made with or without the company's seal but must be subscribed by the president and attested by the secretary; and a group motor vehicle or group homeowners policy must not be written or delivered in this state at all, whatever form it takes.

Why: Iowa Code 515.51 provides that ALL POLICIES OR CONTRACTS OF INSURANCE EXCEPT SURETY BONDS MADE OR ENTERED INTO BY THE COMPANY MAY BE MADE EITHER WITH OR WITHOUT THE SEAL OF THE COMPANY, BUT SHALL BE SUBSCRIBED BY THE PRESIDENT, OR SUCH OTHER OFFICER AS MAY BE DESIGNATED BY THE DIRECTORS FOR THAT PURPOSE, AND BE ATTESTED TO BY THE SECRETARY OR THE SECRETARY'S DESIGNEE OF THE COMPANY. Three things are permissive - the seal, the substitute officer, the secretary's designee - and the signature and attestation themselves are not. Surety bonds are carved out of the whole sentence. The last sentence is a separate rule altogether: A GROUP MOTOR VEHICLE OR GROUP HOMEOWNERS POLICY SHALL NOT BE WRITTEN OR DELIVERED WITHIN THIS STATE UNLESS SUCH POLICY IS AN INDIVIDUAL POLICY OR CONTRACT FORM. So the business may be produced on a group basis but the contract each person receives must be an individual one - which is not a prohibition on group marketing, as the option forbidding any such group policy would have it, and not a matter of the commissioner approving the group, as the option requiring prior written approval would.

Storing oily rags near a furnace is an example of which type of hazard?

1. Speculative hazard
2. Moral hazard
3. Physical hazard ✓
4. Morale hazard

Why: A physical hazard is a tangible condition of property or environment that increases the chance of loss, such as flammable materials near a heat source.

An Extended Reporting Period (tail coverage) on a claims-made policy:

1. Removes the retroactive date from the policy so that injuries from any earlier year become covered claims
2. Extends the time within which claims may be reported for injuries that occurred during the policy period ✓
3. Increases the each-occurrence limit throughout the reporting window without any additional premium charge
4. Extends the period during which the injury itself must occur, adding a further year of covered exposure time

Why: A tail/ERP extends only the reporting window for claims arising from covered occurrences; it does not extend the period during which injury must take place.

An injured Iowan gets judgment against a motorist, and an execution on that judgment is returned unsatisfied because the motorist has nothing. The motorist was insured. Under Iowa Code 516.1, what may the judgment creditor do?

1. Nothing directly against the insurer. The judgment creditor is a stranger to the policy and must pursue the insured, whose own claim against the insurer is personal and not assignable, and cannot be reached by a creditor who was never a party to the contract of insurance.
2. Sue the insurer. Every policy insuring the legal liability of the insured, issued in this state by any company, association or reciprocal exchange, must, notwithstanding any other provision of the statutes, contain a provision that where an execution on a judgment against the insured is returned unsatisfied in an action by a person injured or whose property is damaged, the judgment creditor shall have a right of action against the insurer to the same extent that the insured could have enforced the insured's claim had the insured paid the judgment. ✓
3. Apply to the court that gave judgment for an order joining the insurer as a party to the original action; the insurer may then be made liable for so much of the judgment as the policy limits allow, but only where the court is satisfied that the insured deliberately made himself execution-proof in order to defeat the claim, mere inability to pay not being enough to reach the insurer.
4. The injured person may sue the insurer, but only if the policy itself contains a provision giving a judgment creditor that right; section 516.1 requires insurers to offer such a provision and to explain its effect to the applicant, but the applicant may decline it by a written rejection signed on a separate sheet containing only the rejection and information directly related to it, and a policy issued after such a rejection confers no right of action at all on a judgment creditor whose execution against an insured without assets has been returned unsatisfied.

Why: Iowa Code 516.1 requires that ALL POLICIES INSURING THE LEGAL LIABILITY OF THE INSURED, ISSUED IN THIS STATE BY ANY COMPANY, ASSOCIATION OR RECIPROCAL EXCHANGE SHALL, NOTWITHSTANDING ANY OTHER PROVISION OF THE STATUTES, CONTAIN A PROVISION PROVIDING THAT, IN EVENT AN EXECUTION ON A JUDGMENT AGAINST THE INSURED BE RETURNED UNSATISFIED IN AN ACTION BY A PERSON WHO IS INJURED OR WHOSE PROPERTY IS DAMAGED, THE JUDGMENT CREDITOR SHALL HAVE A RIGHT OF ACTION AGAINST THE INSURER TO THE SAME EXTENT THAT SUCH INSURED COULD HAVE ENFORCED THE INSURED'S CLAIM AGAINST SUCH INSURER HAD SUCH INSURED PAID SUCH JUDGMENT. Four points decide the item. The provision is COMPULSORY - SHALL CONTAIN - and NOTWITHSTANDING ANY OTHER PROVISION OF THE STATUTES, so it cannot be declined by the applicant. It is triggered by an execution RETURNED UNSATISFIED, not by the insured's motive. It reaches a person injured OR WHOSE PROPERTY IS DAMAGED. And the measure of the right is exactly the insured's own: TO THE SAME EXTENT THAT SUCH INSURED COULD HAVE ENFORCED THE INSURED'S CLAIM HAD SUCH INSURED PAID SUCH JUDGMENT - so every defence the insurer had against its own insured is available against the judgment creditor too.

An approved Iowa continuing education provider runs a classroom course and also sells a self-study course with an examination at the end. One classroom attendee arrives an hour late; one self-study candidate returns an examination with no affidavit attached. What do the provider's responsibilities under IAC 191 chapter 11 require in relation to instructors, records, absent students and self-study examinations?

1. The provider must ensure each classroom course is conducted by a qualified and competent instructor, and must obtain and maintain an attendance record for each course for at least four years from the end of the year in which the course is offered. It is responsible for both the attendance of the students and their attention, and must refuse to award credit for time periods when the student was absent. It must verify that each self-study examination contains an affidavit from the producer that the examination was independently proctored and completed without outside assistance, and must refuse credit to a producer who fails to submit a properly completed examination or who fails to answer at least 70 percent of the questions correctly. ✓
2. The provider must ensure each classroom course is conducted by a qualified and competent instructor, and must obtain and maintain an attendance record for each course for at least four years from the end of the year in which the course is offered. It is responsible for the attendance of the students, attention being a matter for the student, and may award full credit to a student who was present for part of a course provided the student signed the attendance record on entry, since the attendance record is a record of entrance rather than a minute-by-minute account of presence and the rules leave the provider a discretion to disregard a short absence. It must verify that each self-study examination contains an affidavit from the producer and must refuse credit to a producer who fails to answer at least 70 percent of the questions correctly.
3. The provider must ensure each classroom course is conducted by a qualified and competent instructor, and must obtain and maintain an attendance record for each course for at least two years from the end of the year in which the course is offered, the four-year period in the chapter belonging to the producer's own certificates of completion rather than to the provider's records. It is responsible for both the attendance of the students and their attention, and must refuse to award credit for time periods when the student was absent. It must verify that each self-study examination contains an affidavit from the producer that the examination was independently proctored and completed without outside assistance, and must refuse credit to a producer who fails to answer at least 70 percent of the questions correctly.
4. The provider must ensure each classroom course is conducted by a qualified and competent instructor, and must obtain and maintain an attendance record for each course for at least four years from the end of the year in which the course is offered. It is responsible for both the attendance of the students and their attention, and must refuse to award credit for time periods when the student was absent. The affidavit that the examination was independently proctored and completed without outside assistance is a document the producer files with the division rather than with the provider, so the provider's only duty on a self-study examination is to mark it and to refuse credit to a producer who fails to answer at least 70 percent of the questions correctly.

Why: The first four subrules of IAC 191-11.10 put four duties on a provider. 11.10(1): A CE PROVIDER MUST ENSURE THAT EACH CLASSROOM COURSE IS CONDUCTED BY A QUALIFIED AND COMPETENT INSTRUCTOR. 11.10(2): A CE PROVIDER MUST OBTAIN AND MAINTAIN AN ATTENDANCE RECORD FOR EACH COURSE FOR AT LEAST FOUR YEARS FROM THE END OF THE YEAR IN WHICH THE COURSE IS OFFERED. UPON REQUEST BY THE DIVISION, A CE PROVIDER MUST SUBMIT COPIES OF ATTENDANCE RECORDS. Four years, not two - and this is a different four years from the producer's under 11.4(1)'b', which runs FOR FOUR YEARS AFTER THE END OF THE YEAR OF ATTENDANCE and applies to THE ORIGINAL CERTIFICATES OF COMPLETION. Two people, two documents, two identical periods measured from two different events. 11.10(3): A CE PROVIDER OF AN APPROVED COURSE IS RESPONSIBLE FOR BOTH THE ATTENDANCE OF THE STUDENTS AND THEIR ATTENTION. A CE PROVIDER MUST REFUSE TO AWARD CE CREDIT FOR TIME PERIODS WHEN THE STUDENT WAS ABSENT. BOTH attendance AND attention, and MUST REFUSE rather than may - so a discretion to overlook a late arrival is the opposite of the rule, and the attendance record defined in 11.2 as a sign-in at THE TIME OF ENTRANCE TO THE COURSE does not answer for the hour missed. 11.10(4): A CE PROVIDER MUST VERIFY THAT EACH EXAMINATION SUBMITTED FOR A SELF-STUDY COURSE CONTAINS AN AFFIDAVIT FOLLOWING THE NAIC CE GUIDELINES FROM THE PRODUCER THAT THE EXAMINATION WAS INDEPENDENTLY PROCTORED AND THAT THE EXAMINATION WAS COMPLETED WITHOUT ANY OUTSIDE ASSISTANCE. A CE PROVIDER MUST REFUSE TO AWARD CE CREDIT TO PRODUCERS WHO FAIL TO SUBMIT A PROPERLY COMPLETED EXAMINATION OR WHO FAIL TO CORRECTLY ANSWER AT LEAST 70 PERCENT OF THE QUESTIONS ON THE EXAMINATION. The affidavit goes to the PROVIDER, not to the division, which matches 11.3(4)'b'(1), where the producer SUBMITS AN AFFIDAVIT TO THE CE PROVIDER. There are two independent grounds for refusal here and the candidate in the stem has fallen at the first: a missing affidavit means the examination is not properly completed, whatever the score. The 70 percent is the same single threshold the producer's rule sets in 11.3(4)'b'(2), stated once from each side; it is the score required on a self-study continuing education examination and nothing else in these rules turns on it. The affidavit must follow THE NAIC CE GUIDELINES.

Which exclusion applies under PAP Part A — Liability?

1. Damage to property owned by or being transported by the insured ✓
2. Bodily injury caused by a resident family member driving the covered auto
3. Bodily injury to a pedestrian struck by the insured
4. Liability arising from driving a friend's borrowed car

Why: Part A excludes property owned by, rented to, used by, or in the care of the insured, which is why the insured's own/handled property is not covered.

A statement made by an applicant on an insurance application that is believed to be true to the best of the applicant's knowledge is a:

1. Waiver
2. Representation ✓
3. Concealment
4. Warranty

Why: A representation is a statement believed to be true to the best of one's knowledge; it need not be absolutely true, only true in material respects.

A key distinction between the Jones Act and the LHWCA is that:

1. Both require the injured worker to prove employer negligence before any benefit is payable, so neither one operates as a no-fault system
2. The Jones Act covers seamen on a fault (negligence) basis, while LHWCA covers maritime/dock workers on a no-fault basis ✓
3. Both operate as pure no-fault compensation programs, paying scheduled benefits without any regard to who actually caused the injury
4. The Jones Act pays seamen no-fault scheduled benefits, while the LHWCA requires dock workers to prove that their employer was negligent

Why: The Jones Act lets seamen sue for negligence (fault-based), whereas the LHWCA is a no-fault compensation system for longshore and harbor workers who are not seamen.

An Iowa insurer transacts insurance in this state, and one of its employees asks whether the company's own licence covers her. Under Iowa Code 522B.3, what is the position?

1. The insurer must hold a producer licence for each line of insurance it transacts, and that licence covers its officers and employees so long as they are not paid a commission.
2. The chapter does not require the insurer to be licensed, and for that purpose its officers, directors, employees, subsidiaries and affiliates are all covered by the same exemption.
3. The chapter does not require the insurer itself to obtain a producer licence; and for that purpose 'insurer' does not mean an officer, director, employee, subsidiary or affiliate of the insurer. ✓
4. The chapter does not require the insurer itself to be licensed, but every one of its officers, directors and employees must hold a producer licence whatever their role and however they are paid.

Why: Iowa Code 522B.3(1) provides that NOTHING IN THIS CHAPTER SHALL BE CONSTRUED TO REQUIRE AN INSURER TO OBTAIN AN INSURANCE PRODUCER LICENSE. FOR THE PURPOSES OF THIS SECTION, 'INSURER' DOES NOT MEAN AN OFFICER, DIRECTOR, EMPLOYEE, SUBSIDIARY, OR AFFILIATE OF THE INSURER. The second sentence is the whole point: the corporate exemption is for the corporation, and it does not travel down to the people who work there. Whether a particular officer or employee needs a licence is answered separately, by 522B.3(2)(a), which exempts them only if they receive NO COMMISSION on policies written or sold to insure Iowa risks and their work falls within one of three described categories. So the option requiring every officer, director and employee to hold a licence overstates it too - some employees are exempt, on conditions.

A homeowner's water heater bursts and water damages flooring. Under HO-3, this sudden and accidental discharge of water is:

1. Generally a covered named peril (accidental discharge or overflow of water) ✓
2. Covered only under Section ii liability if a guest is injured by the accidental discharge of water
3. Subject to a $500 sublimit that applies to all plumbing-related losses
4. Excluded as flood damage, since the exclusion applies to any water that escapes onto floors

Why: Sudden and accidental discharge or overflow of water from a plumbing system is a covered broad-form peril; gradual seepage and flood are excluded.

In most liability policies, defense costs are:

1. Paid in addition to the limit of liability ✓
2. Deducted from the limit of liability
3. Paid by the insured
4. Never covered

Why: Defense costs are typically paid in addition to (outside) the policy limits in standard liability forms, though some forms erode limits.

The Peak Season endorsement is most useful for an insured whose:

1. Personal property (inventory) increases significantly during certain periods ✓
2. Automobile fleet expands each summer to handle additional delivery routes and drivers
3. Liability exposure drops in the winter months when the seasonal operation is closed
4. Building value stays constant year after year and needs no adjustment at renewal

Why: Peak Season provides additional limits on business personal property during seasonal periods of higher inventory, such as a retailer before the holidays.

Which of the following is typically a FIRST-PARTY coverage under a cyber policy?

1. Bodily injury liability arising from a hacked industrial control system
2. Advertising injury liability for content posted on the insured's website
3. Breach notification, credit monitoring, and data restoration costs for the insured ✓
4. Defense of a third-party suit alleging the insured leaked customer data

Why: First-party cyber coverages reimburse the insured's own costs, such as breach notification, forensics, and data restoration.

The CGL excludes bodily injury 'expected or intended from the standpoint of the insured.' This is the:

1. Expected or intended injury exclusion ✓
2. Pollution exclusion, which also removes expected or intended injury
3. Contractual liability exclusion
4. Employer's liability exclusion

Why: The expected or intended injury exclusion removes coverage for intentional harm, preserving the fortuity principle.

An insured's son is away at college and keeps belongings in a dorm. Under the Homeowners policy, that property is:

1. Never covered once the student has been away from the residence premises for more than 45 consecutive days
2. Often covered as an insured's property at another residence, subject to the off-premises limit ✓
3. Covered only under Section ii liability for damage the son causes
4. Subject to no limits, since dormitory property is scheduled automatically

Why: A student who is an insured may have personal property at another residence covered subject to the off-premises 10%/$1,000 limitation, depending on form conditions.

In a liability policy, the insurer's 'duty to defend' generally means it must:

1. Provide and pay for the insured's legal defense for covered claims, even groundless ones ✓
2. Defend criminal charges brought against the insured
3. Pay any judgment entered but not the cost of the defense
4. Defend only after the insured has hired counsel and submitted the attorney's bills for reimbursement

Why: The duty to defend obligates the insurer to provide a legal defense against covered claims, including those that are groundless, false, or fraudulent.

A Difference in Conditions (DIC) policy is generally purchased to:

1. Covers only automobile liability arising from vehicles the insured owns, hires, or borrows anywhere in the United States and Canada
2. Replaces the underlying property policy entirely, so the insured may cancel the primary form once the difference in conditions coverage is bound
3. Provides statutory workers compensation benefits in any state the insured has not listed on the information page of its own policy
4. Provide broad, all-risk coverage that fills gaps and covers perils excluded by underlying policies, such as flood and earthquake ✓

Why: DIC coverage supplements an insured's underlying property program by broadening perils and filling coverage gaps, frequently adding flood and earthquake.

Under the Business Auto Coverage Form, an employee operating a covered owned auto on company business is:

1. An insured only if a manager or officer named in the declarations
2. Covered only for physical damage losses
3. Never an insured; only the named insured entity is
4. An insured while using a covered auto with permission ✓

Why: Employees and other permissive users are insureds while operating a covered (owned/hired) auto within the scope of permission.

An Iowa insurer writes credit insurance for a wholesaler that extends trade credit. Under Iowa Code 515.48, what deductions may the cover carry and in what order are they taken?

1. A deduction of an agreed percentage not exceeding thirty-three and one-third per cent representing anticipated profits, and a further deduction not exceeding ten per cent on losses on credits extended to risks with inferior ratings; the agreed deduction for normal loss is taken first from the gross covered loss sustained by the insured, and the coinsurance percentages are then deducted afterwards from what remains.
2. A deduction of an agreed percentage not exceeding ten per cent representing anticipated profits, and a further deduction not exceeding thirty-three and one-third per cent on losses on credits extended to risks with inferior ratings, and an agreed deduction for normal loss; the coinsurance percentages are deducted in advance of the agreed normal loss from the gross covered loss sustained. ✓
3. An agreed deduction for normal loss only; the section permits no coinsurance percentage in credit insurance, the whole of the loss above the agreed normal loss being payable to the insured wholesaler in every case.
4. A deduction of an agreed percentage not exceeding ten per cent representing anticipated profits only; the section fixes no separate deduction for credits extended to risks with inferior ratings, which are simply excluded from the cover altogether.

Why: Iowa Code 515.48(8) authorises a company to INSURE OR GUARANTEE AND INDEMNIFY MERCHANTS, TRADERS, AND THOSE ENGAGED IN BUSINESS AND GIVING CREDIT FROM LOSS AND DAMAGE BY REASON OF GIVING AND EXTENDING CREDIT TO THEIR CUSTOMERS AND THOSE DEALING WITH THEM, WHICH BUSINESS SHALL BE KNOWN AS CREDIT INSURANCE. Paragraph (a) then says such insurance MAY COVER LOSSES, LESS A DEDUCTION OF AN AGREED PERCENTAGE, NOT TO EXCEED TEN PERCENT, REPRESENTING ANTICIPATED PROFITS, AND A FURTHER DEDUCTION NOT TO EXCEED THIRTY-THREE AND ONE-THIRD PERCENT, ON LOSSES ON CREDITS EXTENDED TO RISKS WHO HAVE INFERIOR RATINGS, AND LESS AN AGREED DEDUCTION FOR NORMAL LOSS. Paragraph (b) fixes the sequence: SUCH COINSURANCE PERCENTAGES SHALL BE DEDUCTED IN ADVANCE OF THE AGREED NORMAL LOSS FROM THE GROSS COVERED LOSS SUSTAINED BY THE INSURED. The two percentages are therefore attached to different things - ten per cent to anticipated profits, thirty-three and one-third per cent to inferior-rated credits - and the option putting thirty-three and one-third per cent on anticipated profits reverses them. Note that this is the only class in 515.48 that the statute names for the reader: WHICH BUSINESS SHALL BE KNOWN AS CREDIT INSURANCE.

Under the PAP, a "temporary substitute auto" used while the covered auto is being repaired is treated as:

1. A non-owned auto, which the pap leaves entirely uninsured
2. Excluded outright once the covered auto goes into the shop
3. A covered auto, picking up the coverages that applied to the disabled vehicle ✓
4. Covered for Part A liability only, never for damage to the substitute itself

Why: A temporary substitute for a covered auto out of service (for repair, breakdown, etc.) is covered with the same coverages as the vehicle it replaces.

An injured Iowa insured is entitled to the highest single uninsured motorist limit among three policies. Two different insurers wrote them. Under Iowa Code 516A.2, how is that amount found among the insurers?

1. The amount shall be paid by the insurers according to any priority of coverage provisions contained in the policies insuring the injured person. ✓
2. The amount shall be divided equally among the insurers of the policies, any priority of coverage provision in a policy being of no effect against them.
3. The amount shall be paid in full by the insurer of the vehicle the injured insured occupied, which may then seek contribution from the others.
4. The amount shall be paid by the insurers in proportion to the premiums each charged for the coverage in the policy it wrote.

Why: Iowa Code 516A.2(3) ends WHICH AMOUNT SHALL BE PAID BY THE INSURERS ACCORDING TO ANY PRIORITY OF COVERAGE PROVISIONS CONTAINED IN THE POLICIES INSURING THE INJURED PERSON. The statute fixes WHAT the insured gets - the highest single limit - and then leaves HOW the insurers find it to the policies themselves. That is a deliberate division of labour, and it is consistent with 516A.2(1)(a), which allows forms of coverage to include TERMS, EXCLUSIONS, LIMITATIONS, CONDITIONS, AND OFFSETS WHICH ARE DESIGNED TO AVOID DUPLICATION OF INSURANCE OR OTHER BENEFITS, and with 516A.2(1)(b), which declares that antistacking provisions may be enforced. The words ACCORDING TO ANY PRIORITY OF COVERAGE PROVISIONS give the policy wording its effect as between the insurers, which is exactly what the second and fourth options take away. Nothing in the subsection makes the insurer of the occupied vehicle primarily liable as a matter of statute.

Under PAP Part B, a family member struck by a car while walking across the street is:

1. Covered only if the striking vehicle was uninsured, since Part B follows the tortfeasor
2. Not covered, because Part B reaches only persons occupying the covered auto
3. Covered, since family members are insureds for medical payments as pedestrians struck by an auto ✓
4. Covered only under Part A liability, once fault is established against the driver

Why: Part B covers the named insured and family members as pedestrians when struck by a motor vehicle, in addition to occupants of the covered auto.

The primary purpose of a coinsurance clause in property insurance is to:

1. Increase the deductible automatically whenever property values rise during the term
2. Lower every insured's premium by a fixed percentage regardless of the amount carried
3. Extend liability protection to others who share ownership of the insured property
4. Encourage insureds to carry coverage close to the full value of the property ✓

Why: Coinsurance encourages insureds to insure to value (e.g., 80%, 90%, or 100%) by penalizing underinsurance at the time of a loss.

Saying that a property insurance contract is personal means that it:

1. Can only be sold to individuals in their own names, and never to a partnership, corporation or other business entity
2. Covers only personal property such as furniture and clothing, and never the dwelling or other real property
3. Must be signed in person by the named insured before the coverage can attach
4. Insures a person, not the property itself, and generally cannot be transferred without the insurer's consent ✓

Why: A personal contract insures the individual against loss, not the property; it cannot be assigned to another party without the insurer's consent.

Under the Business Auto Coverage Form, the covered "auto" definition generally includes:

1. Mobile equipment such as forklifts kept entirely on the insured's premises
2. Company aircraft and watercraft used to carry employees
3. Railcars operated on a private siding
4. Land motor vehicles, trailers, and semitrailers designed for use on public roads ✓

Why: A covered auto is a land motor vehicle, trailer, or semitrailer designed for travel on public roads, including attached machinery, but not most mobile equipment.

A 'nonscheduled' (unscheduled) permanent partial disability typically involves:

1. An injury to a body part named on the statutory schedule, such as a thumb or a foot, paid at a fixed number of weeks regardless of actual wage loss
2. An injury compensable only under Part Two, Employers Liability, because the statute schedules no benefit for that body part
3. An injury that resolves before maximum medical improvement is reached, so benefits end when the worker is released to full duty
4. An injury to the body as a whole (e.g., back or internal organ) valued by impairment to earning capacity ✓

Why: Nonscheduled injuries affect the body as a whole or parts not on the schedule (such as the back), and benefits are based on the impact on earning capacity or impairment rating.

Smoke damage under a Homeowners policy is typically:

1. Covered only under DP-1 and DP-2, since homeowners forms treat smoke as a pollution loss instead
2. A covered named peril, though smoke from agricultural smudging or industrial operations may be excluded ✓
3. Excluded entirely, because smoke residue is considered gradual damage rather than a sudden loss
4. Covered under Coverage E liability, which reimburses the insured for smoke damage to their contents

Why: Smoke is a covered peril, but smoke arising from agricultural smudging or industrial operations is commonly excluded.

Iowa Code 515F.2 defines both 'rate' and 'prospective loss costs'. How do the two differ?

1. A rate is the premium actually charged to a particular insured after all individual risk variations have been applied; prospective loss costs are the same figure taken before any individual discount or surcharge has been applied to it, and both of them include a provision for the insurer's own expenses and for its profit, together with any minimum premium that the insurer intends to charge for the class of business concerned and any policy fee that it proposes to add to the premium charged to the individual insured.
2. A rate is the cost of insurance per exposure unit, whether expressed as a single number or as a prospective loss cost with an adjustment for expenses, profit and individual insurer variation in loss experience, before any individual risk variation, and does not include minimum premium; prospective loss costs are the portion of a rate that does not include provisions for expenses other than loss adjustment expenses, or profit, based on historical aggregate losses developed and trended to a future point in time. ✓
3. A rate is the cost of insurance per exposure unit including minimum premium; prospective loss costs are the portion of that rate representing the insurer's own expenses and profit, calculated from the insurer's historical operating results.
4. A rate is the figure an advisory organization files on behalf of its members; prospective loss costs are the figure an individual insurer files for its own use, the difference being who makes the filing rather than what the figure contains.

Why: Iowa Code 515F.2(11) defines RATE as THE COST OF INSURANCE PER EXPOSURE UNIT WHETHER EXPRESSED AS A SINGLE NUMBER OR AS A PROSPECTIVE LOSS COST WITH AN ADJUSTMENT TO ACCOUNT FOR THE TREATMENT OF EXPENSES, PROFIT, AND INDIVIDUAL INSURER VARIATION IN LOSS EXPERIENCE, PRIOR TO ANY APPLICATION OF INDIVIDUAL RISK VARIATIONS BASED ON LOSS OR EXPENSE CONSIDERATIONS, AND DOES NOT INCLUDE MINIMUM PREMIUM. Two things follow: a rate is a figure BEFORE individual risk variation, so it is not the premium a particular insured pays; and minimum premium is expressly outside it, which is why 515F.2(13) has to name MINIMUM PREMIUM separately as SUPPLEMENTARY RATING INFORMATION. Iowa Code 515F.2(10) defines PROSPECTIVE LOSS COSTS as THAT PORTION OF A RATE THAT DOES NOT INCLUDE PROVISIONS FOR EXPENSES (OTHER THAN LOSS ADJUSTMENT EXPENSES) OR PROFIT, AND IS BASED ON HISTORICAL AGGREGATE LOSSES AND LOSS ADJUSTMENT EXPENSES ADJUSTED THROUGH DEVELOPMENT TO THEIR ULTIMATE VALUE AND PROJECTED THROUGH TRENDING TO A FUTURE POINT IN TIME. Loss adjustment expenses are in; every other expense and all profit are out. That is exactly why 515F.10 lets an advisory organization distribute prospective loss costs but forbids it to compile or distribute recommendations relating to rates that include profit or expenses other than loss adjustment expenses. Two supporting definitions complete the picture: DEVELOPED LOSSES at (4) are losses adjusted BY STANDARD ACTUARIAL TECHNIQUES to ultimate value, and LOSS TRENDING at (7) is A PROCEDURE FOR PROJECTING DEVELOPED LOSSES TO THE AVERAGE DATE OF LOSS FOR THE PERIOD DURING WHICH THE POLICIES ARE TO BE EFFECTIVE.

Under the unendorsed PAP, towing and labor (Part D) coverage is:

1. An optional coverage that must be added, with a stated per-disablement limit ✓
2. Built into Part A liability, so any tow after an accident is paid within the liability limit
3. Included automatically at full cost whenever the policy carries collision, with no separate premium
4. Available only for rental cars the insured hires while the covered auto is being repaired

Why: Towing and labor costs coverage is an optional add-on with a small per-disablement limit (e.g., $25–$75), not automatically included.

The Business Auto Coverage Form (BACF) is designed primarily for:

1. Motorcycle clubs insuring members' bikes for rallies
2. Individuals who want to insure one family car used for commuting and personal errands
3. Businesses needing liability and physical damage coverage on their autos ✓
4. Personal use of motor homes and travel trailers

Why: The Business Auto Coverage Form provides liability and physical damage coverage for vehicles owned, hired, or used by a business.

A dry cleaner damages a customer's coat. The dry cleaner wants to pay for it regardless of fault to keep goodwill. Best coverage:

1. Bailee's customer floater ✓
2. Installation floater
3. Accounts receivable
4. Contractors equipment floater

Why: A bailee's customer floater covers customers' goods in the bailee's care, often on a direct-damage basis regardless of the bailee's legal liability.

An Iowa claimant with a covered claim against the association also has a policy of her own that responds to the same loss, and a second claimant could recover from the guaranty association of two different states. What does Iowa Code 515B.9 require of each?

1. The first may choose which policy to claim under, the association's obligation being treated as other insurance and contributing rateably with the other policy; the amount payable on the covered claim is reduced only by what she actually recovers under that other policy. The second must seek recovery first from the association of the place of residence of the insured in every case, the chapter drawing no distinction between a first party property claim, a workers' compensation claim and any other kind of claim which two guaranty associations might both be obliged to meet.
2. The first must exhaust all coverage provided by the other policy before the association pays, and any obligation of the association is not to be considered other insurance; the amount payable on the covered claim is reduced by the full applicable limits of that other policy. The second must seek recovery first from the association of the place of residence of the insured, save that a first party claim for damage to property with a permanent location goes first to the association of the location of the property; but sums recovered from another guaranty association or equivalent organization are not subtracted from the maximum liability of the association under the section which fixes what it must pay on a covered claim.
3. The first must exhaust all coverage provided by the other policy, whether primary, excess or pro rata, before the association pays, and any obligation of the association is not to be considered other insurance; the amount payable on the covered claim is reduced by the full applicable limits of that other policy, or by the total recovery where there are no applicable limits. The second must seek recovery first from the association of the place of residence of the insured, save that a first party claim for damage to property with a permanent location goes first to the association of the location of the property, and a workers' compensation claim to the association of the residence of the claimant. ✓
4. The first must exhaust all coverage provided by the other policy before the association pays, but a policy providing liability coverage to a person merely jointly and severally liable with the insured of the insolvent insurer need not be exhausted first; the amount payable is reduced by the full applicable limits of the other policy. The second must seek recovery first from the association of the place of residence of the insured, save that a workers' compensation claim goes first to the association of the residence of the claimant.

Why: Iowa Code 515B.9(1)(a) requires a person having a claim under another insurance policy which ALLEGES THE SAME DAMAGES OR ARISES FROM THE SAME FACTS, INJURY, OR LOSS that gives rise to a covered claim TO FIRST EXHAUST ALL COVERAGE PROVIDED BY THAT POLICY, WHETHER SUCH COVERAGE IS ON A PRIMARY, EXCESS, OR PRO RATA BASIS, and provides that ANY OBLIGATION OF THE ASSOCIATION SHALL NOT BE CONSIDERED OTHER INSURANCE. The association is the last resort, not a co-insurer, which is what the option treating the association as other insurance contributing rateably misses. By (1)(a)(1), ANY AMOUNT PAYABLE ON A COVERED CLAIM SHALL BE REDUCED BY THE FULL APPLICABLE LIMITS OF SUCH OTHER INSURANCE POLICY AND THE ASSOCIATION SHALL RECEIVE FULL CREDIT FOR SUCH LIMITS OR WHERE THERE ARE NO APPLICABLE LIMITS, THE CLAIM SHALL BE REDUCED BY THE TOTAL RECOVERY - the credit is for the LIMITS, not for what was actually paid, so a claimant who settles the other policy cheaply bears the difference. By (1)(a)(2), A POLICY PROVIDING LIABILITY COVERAGE TO A PERSON WHO MAY BE JOINTLY AND SEVERALLY LIABLE WITH, OR A JOINT TORTFEASOR WITH, THE PERSON COVERED UNDER THE POLICY OF THE INSOLVENT INSURER SHALL BE FIRST EXHAUSTED BEFORE ANY CLAIM IS MADE AGAINST THE ASSOCIATION - which is what the option excusing a joint tortfeasor's policy from exhaustion denies. Iowa Code 515B.9(2) then orders the guaranty associations themselves: A PERSON HAVING A CLAIM WHICH MAY BE RECOVERED UNDER MORE THAN ONE INSURANCE GUARANTY ASSOCIATION OR ITS EQUIVALENT SHALL SEEK RECOVERY FIRST FROM THE ASSOCIATION OF THE PLACE OF RESIDENCE OF THE INSURED. HOWEVER, IF THE CLAIM IS A FIRST PARTY CLAIM FOR DAMAGE TO PROPERTY WITH A PERMANENT LOCATION, RECOVERY SHALL BE FIRST SOUGHT FROM THE ASSOCIATION OF THE LOCATION OF THE PROPERTY. IF THE CLAIM IS A WORKERS' COMPENSATION CLAIM, RECOVERY SHALL BE FIRST SOUGHT FROM THE ASSOCIATION OF THE RESIDENCE OF THE CLAIMANT. Three rules, and the claim type chooses between them. The subsection closes: ANY SUMS RECOVERED FROM ANY OTHER GUARANTY ASSOCIATION OR EQUIVALENT ORGANIZATION SHALL BE SUBTRACTED FROM THE MAXIMUM LIABILITY OF THE ASSOCIATION UNDER SECTION 515B.5, SUBSECTION 1, PARAGRAPH A .

A 10-year-old roof has a replacement cost of $12,000 and an estimated life of 20 years with straight-line depreciation. Its ACV is approximately:

1. $1,200
2. $10,800
3. $6,000 ✓
4. $12,000

Why: At 50% depreciation (10 of 20 years), ACV = $12,000 − $6,000 = $6,000.

The 'mysterious disappearance' of property is typically covered under which?

1. DP-1 basic named-peril coverage, once the theft endorsement is attached to the policy
2. HO open-peril personal property scheduling (e.g., personal articles floater) ✓
3. Coverage F medical payments, which reimburses the value of property that cannot be located
4. Coverage D, loss of use, limited to 20% of the Coverage A limit

Why: Open-peril scheduled coverage (personal articles floater) can cover mysterious disappearance, which named-peril forms typically do not.

In a CLAIMS-MADE form, coverage is generally triggered when:

1. The claim is first made against the insured during the policy period (on or after the retroactive date) ✓
2. The general aggregate limit has been exhausted by earlier payments
3. The injury occurs, even if that happens after the policy has expired and no extended reporting period was bought
4. The full annual premium has been paid to the insurer

Why: A claims-made policy responds when the claim is first made during the policy period, provided the injury occurred on or after the retroactive date.

A manufacturer wants to avoid any coinsurance penalty at the time of loss and is willing to agree on the property's value in advance. The best option is:

1. Spoilage endorsement
2. Reporting form
3. Peak Season endorsement
4. Agreed Value option ✓

Why: The Agreed Value option suspends the coinsurance condition based on a value agreed upon by insurer and insured, avoiding any coinsurance penalty.

An applicant for Iowa homeowners insurance is buying a house she has never owned. The insurer declines the risk solely because the previous owner made two fire claims on it. Under Iowa Code 507B.4, is that permitted?

1. Yes. The loss history attaches to the property rather than to its owner, and an insurer may decline a risk on the strength of the property's own record of losses at that address, whoever happened to own the property at the time those particular losses occurred.
2. No, and there is no exception: an insurer declining to insure a property not previously owned by the applicant based solely on a previous owner's loss history is a listed unfair trade practice in every case.
3. No, unless the insurer can provide evidence that the previous owner did not repair damage to the property; declining to insure a property not previously owned by the applicant based solely on a previous owner's loss history is otherwise a listed unfair trade practice. ✓
4. Yes, provided the insurer first gives the applicant written notice of the previous owner's loss history and an opportunity to comment on it before the application is finally declined.

Why: Iowa Code 507B.4(3)(l), HISTORY OF A PROPERTY, makes it an unfair trade practice to DECLINE TO INSURE A PROPERTY NOT PREVIOUSLY OWNED BY AN APPLICANT FOR PERSONAL LINES PROPERTY AND CASUALTY INSURANCE, BASED SOLELY ON THE LOSS HISTORY OF A PREVIOUS OWNER OF THE PROPERTY, UNLESS THE INSURER CAN PROVIDE EVIDENCE THAT THE PREVIOUS OWNER DID NOT REPAIR DAMAGE TO THE PROPERTY. Three conditions have to line up before the paragraph bites: the property must be one the applicant did not previously own, the coverage must be personal lines property and casualty insurance, and the decision must rest SOLELY on the previous owner's loss history - so an insurer relying on the state of the building as it finds it today is elsewhere. The exception is expressly written into the paragraph, which is why the option saying there is no exception overstates it, and its logic is repair: what the insurer must show is not that losses happened but that the damage was left unrepaired. No notice-and-comment procedure appears anywhere in the paragraph.

A retail employee sues the company for sexual harassment and wrongful termination. Which policy is designed to respond?

1. Workers Compensation and Employers Liability
2. CGL Coverage A, Bodily Injury Liability
3. Commercial Property, Special Form
4. Employment Practices Liability (EPLI) ✓

Why: Harassment and wrongful termination are employment practices claims handled by EPLI, not the CGL.

To win a commercial general liability account, an Iowa producer offers the prospect a personal cheque for part of the first premium, an amount not provided for in any filing. Under Iowa Code 507B.4, who is exposed?

1. The producer only. The rebate paragraph binds the person paying, allowing or giving the inducement, and an insured who accepts what is offered commits no unfair trade practice by doing so.
2. Neither, unless the insurer knew of and authorised the payment; a rebate not provided for in any filing but paid out of a producer's own money rather than out of premium is outside the paragraph, the premium the insurer receives being unaffected.
3. The insurer only, since the rebate reduces the premium actually collected for the risk and an insurer is answerable under this chapter for the acts of the producers who write its business, whether or not it knew what was offered and whether the money came from the producer's own funds or from the premium; the producer and the insured are not themselves within the rebate paragraph at all on these facts.
4. Both the producer and the insured. It is an unfair trade practice to pay, allow or give, or offer to, directly or indirectly, any rebate, discount, abatement, credit or reduction of premium or other valuable consideration not specified in the policy except as provided for in an applicable filing; and an insured named in a policy, or an employee of the insured, shall not knowingly receive or accept it. ✓

Why: Iowa Code 507B.4(3)(i)(3)(a) is the rebate limb for insurance OTHER THAN LIFE INSURANCE, LIFE ANNUITY, OR ACCIDENT AND HEALTH INSURANCE, so it is the one a property and casualty producer works under. It reaches PAYING, ALLOWING, OR GIVING, OR OFFERING TO PAY, ALLOW, OR GIVE, DIRECTLY OR INDIRECTLY, AS AN INDUCEMENT TO PURCHASE OR ACQUIRE such insurance, OR AFTER INSURANCE HAS BEEN EFFECTED, ANY REBATE, DISCOUNT, ABATEMENT, CREDIT, OR REDUCTION OF THE PREMIUM NAMED IN A POLICY OF INSURANCE, OR ANY SPECIAL FAVOR OR ADVANTAGE IN THE DIVIDENDS OR OTHER BENEFITS TO ACCRUE ON THE POLICY, OR ANY VALUABLE CONSIDERATION OR INDUCEMENT, NOT SPECIFIED IN THE POLICY, EXCEPT TO THE EXTENT PROVIDED FOR IN AN APPLICABLE FILING. The words OR AFTER INSURANCE HAS BEEN EFFECTED show that the paragraph is not confined to the inducement to buy, and DIRECTLY OR INDIRECTLY defeats the argument that the money came from the producer's own pocket. Then comes the sentence candidates forget: AN INSURED NAMED IN A POLICY, OR AN EMPLOYEE OF THE INSURED, SHALL NOT KNOWINGLY RECEIVE OR ACCEPT, DIRECTLY OR INDIRECTLY, ANY REBATE, DISCOUNT, ABATEMENT, CREDIT, OR REDUCTION OF PREMIUM, OR ANY SUCH SPECIAL FAVOR OR ADVANTAGE OR VALUABLE CONSIDERATION OR INDUCEMENT. Taking a rebate is itself prohibited.

A recreational vehicle (motorhome) used for travel is most appropriately insured under:

1. A homeowners policy, which extends its personal property limit to vehicles used for travel
2. A crop-hail policy endorsed for hail damage to the roof
3. A surety bond guaranteeing the loan on the chassis
4. A specialized RV/motorhome policy combining auto and dwelling-type coverages ✓

Why: RVs require specialized policies that blend automobile coverages (liability, physical damage) with personal-property and living-quarters coverages.

The premium basis for workers' compensation insurance is generally expressed as a rate applied to:

1. Square footage of the workplace
2. Gross sales revenue
3. Each employee per year
4. Each $100 of payroll ✓

Why: WC premium is calculated using rates per $100 of payroll for each job classification, then adjusted by other factors.

An applicant asks whether the Iowa FAIR plan can write cover on her car and on goods she ships. Under Iowa Code 515F.32, what is 'basic property insurance' for the plan's purposes?

1. Insurance against direct or consequential loss to property of any kind, including automobile physical damage and inland marine insurance; the plan exists to write what the voluntary market will not, so no class is excluded.
2. Insurance against direct loss to property as defined in the standard fire policy only; homeowners insurance is written in the voluntary market and is outside the plan, as are automobile and inland marine insurance, and the commissioner may add no class to the plan.
3. Insurance against direct loss to property as defined in the standard fire policy and the extended coverage endorsement; homeowners insurance; and automobile physical damage insurance where the vehicle is garaged at the insured dwelling; but not inland marine insurance and no other class, the commissioner having no power to add one.
4. Insurance against direct loss to property as defined in the standard fire policy and extended coverage, vandalism and malicious mischief endorsements; homeowners insurance; and such other coverage or classes of insurance as the commissioner may add to the FAIR plan; but it does not include automobile insurance or inland marine insurance. ✓

Why: Iowa Code 515F.32(1) defines BASIC PROPERTY INSURANCE as INSURANCE AGAINST DIRECT LOSS TO PROPERTY AS DEFINED IN THE STANDARD FIRE POLICY AND EXTENDED COVERAGE, VANDALISM, AND MALICIOUS MISCHIEF ENDORSEMENTS; HOMEOWNERS INSURANCE; AND SUCH OTHER COVERAGE OR CLASSES OF INSURANCE AS MAY BE ADDED TO THE FAIR PLAN BY THE COMMISSIONER. It then excludes two things by name: BASIC PROPERTY INSURANCE DOES NOT INCLUDE ANY OF THE FOLLOWING: (a) AUTOMOBILE INSURANCE. (b) INLAND MARINE INSURANCE. So the answer to the applicant is no on both counts. Three features of the definition repay attention. It is anchored to THE STANDARD FIRE POLICY - Iowa's own, prescribed by section 515.109 - and to the extended coverage, vandalism and malicious mischief endorsements. Homeowners insurance is expressly inside it. And the list is open at the top: the COMMISSIONER may add other coverage or classes, which is what the option saying the commissioner may add no class denies. Note also the width of INSURER in this subchapter. By 515F.32(3) it INCLUDES ALL COMPANIES OR ASSOCIATIONS LICENSED TO TRANSACT INSURANCE BUSINESS IN THIS STATE UNDER CHAPTERS 515, 518, AND 518A, RECIPROCAL INSURERS ISSUED A CERTIFICATE OF AUTHORITY PURSUANT TO CHAPTER 520, AND COMPANIES OR ASSOCIATIONS ADMITTED OR SEEKING TO BE ADMITTED to do business under any of those chapters, NOTWITHSTANDING ANY PROVISION OF THE CODE TO THE CONTRARY - so chapter 518 and 518A associations are inside the FAIR plan even though 515F.3(2)(f) puts their business outside the rest of ch. 515F.

An Iowa policyholder makes a reasonable request to his insurer for information about his own policy to which he is entitled, and the insurer simply does not reply. Under Iowa Code 507B.4, is that a listed unfair trade practice?

1. No. Refusing information to which a policyholder is entitled on reasonable request is a listed unfair trade practice only where the request comes from the commissioner, a policyholder's remedy for silence being a claim on the policy or an application to the commissioner to compel a reply.
2. Yes, but only where the insurer expressly refuses; a failure to reply is not a refusal, and the paragraph reaches the insurer that says no rather than the insurer that says nothing at all.
3. No, unless the request was made in writing and the insurer failed to reply within thirty days of receiving it, that being the period the chapter allows for a response to an inquiry of this kind.
4. Yes. Failing or refusing to furnish any policyholder or applicant, upon reasonable request, information to which that individual is entitled is a listed unfair trade practice. ✓

Why: Iowa Code 507B.4(3)(s), INFORMATION, is one sentence: FAILING OR REFUSING TO FURNISH ANY POLICYHOLDER OR APPLICANT, UPON REASONABLE REQUEST, INFORMATION TO WHICH THAT INDIVIDUAL IS ENTITLED. Three points come out of the wording. FAILING OR REFUSING covers silence as well as a refusal, so the distinction between an express refusal and a failure to reply does not exist. The persons protected are the POLICYHOLDER OR APPLICANT, not the commissioner - a person's duty to respond to the COMMISSIONER is a different provision, 507B.4A(1), which deems a response untimely if it is not made within thirty days of receipt of the inquiry unless good cause exists for delay. And the paragraph carries no period of its own: the request must be REASONABLE and the information must be information TO WHICH THAT INDIVIDUAL IS ENTITLED, but no number of days is fixed.

Employee Benefits Liability (EBL) coverage protects an employer against:

1. Errors or omissions in the administration of the company's employee benefit programs ✓
2. Discrimination and harassment claims brought by job applicants and current employees alike
3. Bodily injury to an employee occurring in the course of employment
4. Liability for injuries caused by products the employer made and sold

Why: EBL covers negligent acts, errors, or omissions in administering employee benefit plans (e.g., failing to enroll an employee).

Iowa Code 515F.4 sets the standards a casualty rate must meet. What are they, and what may be taken into account?

1. Rates shall not be excessive or unfairly discriminatory, an inadequate rate being a matter for the solvency provisions of chapter 515 rather than for this chapter; and due consideration may be given only to the insurer's own past loss experience within this state, to the conflagration and catastrophe hazards within this state, and to a reasonable margin for profit and contingencies, the experience of other insurers and of advisory organizations being irrelevant to what this particular insurer may lawfully charge for an Iowa risk; and in the case of fire insurance rates, consideration shall be given to the experience of the fire insurance business during a period of not more than the most recent five-year period for which experience data is available.
2. Rates shall not be excessive, inadequate or unfairly discriminatory; and due consideration may be given to past and prospective loss experience within and outside this state, to the conflagration and catastrophe hazards, to a reasonable margin for profit and contingencies, to dividends, savings or unabsorbed premium deposits allowed or returned to policyholders, to past and prospective expenses within and outside this state, and to all other relevant factors, with fire insurance rates taking account of experience over not less than the most recent five-year period for which data is available. ✓
3. Rates shall not be excessive, inadequate or unfairly discriminatory; and due consideration may be given to loss experience, catastrophe hazards, profit and expenses, but only so far as those things arise within this state, since a rate charged for an Iowa risk must be supported by Iowa data alone; and in the case of fire insurance rates, consideration shall be given to the experience of the fire insurance business during a period of not less than the most recent three-year period for which experience data happens to be available to the particular insurer that is making the rate filing in question.
4. Rates shall be adequate to the risk and shall not be unfairly discriminatory, an excessive rate being left to the discipline of competition rather than to the commissioner; and due consideration may be given to any factor the insurer considers relevant, the section leaving the choice of ratemaking factors entirely to the insurer's own actuarial judgement and requiring only that the resulting rate be filed before it is used; dividends, savings and unabsorbed premium deposits returned to policyholders, members or subscribers may not be weighed at all, being a distribution of surplus after the event rather than a cost of providing the insurance, and no special rule governs the experience period for fire insurance rates.

Why: Iowa Code 515F.4(1) states the three-part standard in five words: RATES SHALL NOT BE EXCESSIVE, INADEQUATE, OR UNFAIRLY DISCRIMINATORY. Iowa Code 515F.4(2) then lists what may be weighed: PAST AND PROSPECTIVE LOSS EXPERIENCE WITHIN AND OUTSIDE THIS STATE; THE CONFLAGRATION AND CATASTROPHE HAZARDS; A REASONABLE MARGIN FOR PROFIT AND CONTINGENCIES; DIVIDENDS, SAVINGS, OR UNABSORBED PREMIUM DEPOSITS ALLOWED OR RETURNED BY INSURERS TO THEIR POLICYHOLDERS, MEMBERS, OR SUBSCRIBERS; PAST AND PROSPECTIVE EXPENSES BOTH WITHIN AND OUTSIDE THIS STATE; AND ALL OTHER RELEVANT FACTORS WITHIN AND OUTSIDE THIS STATE. WITHIN AND OUTSIDE THIS STATE appears three times, which is what the option confining those considerations to things arising within this state denies. The section closes the subsection with a rule for one line only: IN THE CASE OF FIRE INSURANCE RATES, CONSIDERATION SHALL BE GIVEN TO THE EXPERIENCE OF THE FIRE INSURANCE BUSINESS DURING A PERIOD OF NOT LESS THAN THE MOST RECENT FIVE-YEAR PERIOD FOR WHICH EXPERIENCE DATA IS AVAILABLE - SHALL, not may, and five years is a floor rather than a ceiling.

Iowa Code 516A.2 limits how far the coverages required by the chapter must go. What is the general rule?

1. Nothing in the chapter shall be construed as requiring the forms of coverage provided under it to afford limits in excess of the liability limits of the policy in which they appear, so that an insured who buys liability limits above the statutory minimum automatically obtains uninsured and underinsured protection at the same level as that liability cover.
2. The chapter requires the forms of coverage provided under it to afford limits equal to the total of the limits of every automobile liability or motor vehicle liability policy under which the injured insured is insured, so that the protection rises with the number of policies the insured or the insured's household happens to have bought, and each of those policies responds in full up to its own stated limit whatever any of the others may pay towards the very same loss suffered by the injured insured.
3. Nothing in the chapter shall be construed as limiting the forms of coverage provided under it in any way, the minimum limits prescribed elsewhere in the Code being a floor and not a ceiling; where an insured is covered by several policies each of them responds in full and the insured may recover the aggregate of them all.
4. Nothing in the chapter shall be construed as requiring the forms of coverage provided under it, whether alone or in combination with similar coverage afforded under other automobile liability or motor vehicle liability policies, to afford limits in excess of those that would be afforded had the insured been involved in an accident with a motorist who was insured under a policy of liability insurance with the minimum limits for bodily injury or death prescribed in section 321A.1, subsection 11. ✓

Why: Iowa Code 516A.2(1)(a) states the ceiling: NOTHING CONTAINED IN THIS CHAPTER SHALL BE CONSTRUED AS REQUIRING FORMS OF COVERAGE PROVIDED PURSUANT HERETO, WHETHER ALONE OR IN COMBINATION WITH SIMILAR COVERAGE AFFORDED UNDER OTHER AUTOMOBILE LIABILITY OR MOTOR VEHICLE LIABILITY POLICIES, TO AFFORD LIMITS IN EXCESS OF THOSE THAT WOULD BE AFFORDED HAD THE INSURED THEREUNDER BEEN INVOLVED IN AN ACCIDENT WITH A MOTORIST WHO WAS INSURED UNDER A POLICY OF LIABILITY INSURANCE WITH THE MINIMUM LIMITS FOR BODILY INJURY OR DEATH PRESCRIBED IN SECTION 321A.1, SUBSECTION 11. The benchmark is what the insured would have had if the other motorist had carried the statutory minimum - no more. WHETHER ALONE OR IN COMBINATION WITH SIMILAR COVERAGE AFFORDED UNDER OTHER AUTOMOBILE LIABILITY OR MOTOR VEHICLE LIABILITY POLICIES is the phrase that answers the options adding together the limits of several policies: the chapter does not require the protection to be multiplied by the number of policies the insured happens to hold. Note that this is a rule about what the chapter requires, not a cap on what an insurer may sell; and note that the subsection opens with an exception, for a policy containing both underinsured and uninsured or hit-and-run coverage.

A producer who exceeds the actual authority granted by the insurer but acts within the authority the public reasonably believes the producer has may still bind the insurer because of:

1. Express authority
2. Subrogation
3. Apparent authority ✓
4. The law of large numbers

Why: Apparent authority can bind the insurer when a third party reasonably relies on the appearance of authority the insurer permitted to exist.

An Iowa insured tenders the full amount due on a chapter 515 policy, including court costs, after suit has been commenced for the unpaid premium but before the policy has been cancelled. What do Iowa Code 515.130, 515.131 and 515.132 provide?

1. From the date of payment the policy revives and is in full force and effect, provided the payment is made during the term of the policy and before a loss occurs; the commissioner prepares and promulgates tables of short rates which are the rate to be given in any notice the chapter requires, and no company may discriminate unfairly between like assureds in those rates; and no provision or agreement in or independent of the policy may defeat the insured's right to pay short rates and costs and have the policy cancelled. ✓
2. From the date of payment the policy revives and is in full force and effect, whether or not payment is made during the term and whether or not a loss has already occurred, section 515.131 being intended to restore the insured to the position she would have occupied had the premium been paid when due; the commissioner promulgates tables of short rates for the guidance of companies; and the insured's right to pay short rates and have the policy cancelled may be varied by an agreement independent of the policy.
3. From the date of payment the policy revives and is in full force and effect, provided payment is made during the term of the policy and before a loss occurs; the commissioner prepares tables of short rates which are advisory only and from which a company may depart where its own filed rates differ; and no provision in the policy may defeat the insured's right to pay short rates and have the policy cancelled, though an agreement independent of the policy may do so.
4. The policy revives only from the date the insurer notifies the insured in writing that it accepts the payment, and only if no loss has occurred before then; the commissioner prepares tables of short rates which are the rate to be given in any notice the chapter requires; and no provision or agreement in or independent of the policy may defeat the insured's right to pay short rates and costs and have the policy cancelled.

Why: Iowa Code 515.131 provides that AT ANY TIME BEFORE CANCELLATION OF THE POLICY FOR NONPAYMENT OF ANY PREMIUM, ASSESSMENT, OR INSTALLMENT PROVIDED FOR THEREIN, OR IN ANY NOTE OR CONTRACT FOR THE PAYMENT THEREOF, OR AFTER ACTION COMMENCED OR JUDGMENT RENDERED THEREON, THE INSURED MAY PAY TO THE INSURER THE FULL AMOUNT DUE, INCLUDING COURT COSTS IF ANY, AND FROM THE DATE OF SUCH PAYMENT, OR THE COLLECTION OF THE JUDGMENT, THE POLICY SHALL REVIVE AND BE IN FULL FORCE AND EFFECT, PROVIDED SUCH PAYMENT IS MADE DURING THE TERM OF THE POLICY AND BEFORE A LOSS OCCURS. Revival is automatic on payment - no acceptance by the insurer is called for, which is what the option requiring written acceptance adds - but the two provisos are hard limits. Iowa Code 515.130 provides that the commissioner SHALL PREPARE AND PROMULGATE TABLES OF THE SHORT RATES PROVIDED FOR IN SECTION 515.132, FOR THE VARIOUS KINDS AND CLASSES OF INSURANCE GOVERNED BY THE PROVISIONS OF THIS CHAPTER, WHICH, WHEN PROMULGATED, SHALL BE FOR THE GUIDANCE OF ALL COMPANIES COVERED IN THIS CHAPTER AND SHALL BE THE RATE TO BE GIVEN IN ANY NOTICE THEREIN REQUIRED, and that NO COMPANY SHALL DISCRIMINATE UNFAIRLY BETWEEN LIKE ASSUREDS IN THE RATE OR RATES SO PROVIDED. SHALL BE THE RATE is mandatory, not advisory. Iowa Code 515.132 provides that NO PROVISION, STIPULATION, OR AGREEMENT TO THE CONTRARY IN OR INDEPENDENT OF THE POLICY OR CONTRACT OF INSURANCE SHALL AVOID OR DEFEAT THE RIGHT OF ANY INSURED TO PAY SHORT RATES AND COSTS OF ACTION, IF ANY, AND HAVE THE POLICY AND ALL CONTRACTS CONNECTED THEREWITH, INCLUDING JUDGMENTS RENDERED THEREON, CANCELED. IN OR INDEPENDENT OF is the phrase that closes the side-agreement route the options letting an agreement independent of the policy defeat that right leave open.

An Iowa officer issues a citation and removes a car's licence plates and registration receipt at the roadside. The driver asks whether she may drive the car home. Under Iowa Code 321.20B, may she?

1. No. Once the licence plates and the registration receipt have been removed the vehicle may not be driven on the highways of this state at all, and the driver must arrange for it to be towed from the place where it was stopped to wherever she wishes it to be taken.
2. Yes, for up to seventy-two hours after receiving the citation and for any purpose she chooses, the removal of the plates being a step taken against the vehicle's registration rather than against the driver's privilege to use it; and she need not keep the citation in the vehicle while driving it, the officer having already forwarded the registration receipt and the evidence of the violation to the county treasurer of the county in which the vehicle is registered, and the driver's own operating privileges being unaffected by the removal of the plates whether or not they are otherwise suspended.
3. Yes, but only if she first obtains from the county treasurer of the county in which the vehicle is registered a temporary permit authorising its removal, and only for the time the permit specifies; the section gives the driver no period of grace of its own after the citation has been issued to her.
4. Yes. The motor vehicle may be driven for a time period of up to forty-eight hours after receiving the citation solely for the purpose of removing it from the highways of this state, unless the driver's operating privileges are otherwise suspended; and after receiving the citation the driver shall keep the citation in the motor vehicle at all times while driving it as so provided, as proof of the privilege to drive it for that limited time and purpose. ✓

Why: Iowa Code 321.20B(4)(a)(3)(b) provides that THE MOTOR VEHICLE MAY BE DRIVEN FOR A TIME PERIOD OF UP TO FORTY-EIGHT HOURS AFTER RECEIVING THE CITATION SOLELY FOR THE PURPOSE OF REMOVING THE MOTOR VEHICLE FROM THE HIGHWAYS OF THIS STATE, UNLESS THE DRIVER'S OPERATING PRIVILEGES ARE OTHERWISE SUSPENDED. AFTER RECEIVING THE CITATION, THE DRIVER SHALL KEEP THE CITATION IN THE MOTOR VEHICLE AT ALL TIMES WHILE DRIVING THE MOTOR VEHICLE AS PROVIDED IN THIS SUBPARAGRAPH, AS PROOF OF THE DRIVER'S PRIVILEGE TO DRIVE THE MOTOR VEHICLE FOR SUCH LIMITED TIME AND PURPOSE. Four limits are packed into that. The period is forty-eight hours and it runs from RECEIVING THE CITATION. The purpose is SOLELY removal from the highways - not the driver's own errands, which is what the option allowing seventy-two hours for any purpose allows. The permission fails altogether if the driver's operating privileges are otherwise suspended. And the citation itself has to stay in the vehicle, taking the place of the registration receipt the officer has removed. No permit from the county treasurer is required.

An Iowa producer is disciplined by another state's insurance regulator and, in a separate matter, is criminally charged in a third state. Under Iowa Code 522B.16, what must the producer report to the Iowa commissioner, and from what dates?

1. The administrative action, within thirty days of the final disposition of the matter; the criminal prosecution need not be reported unless and until it results in a conviction, from which date thirty days runs.
2. Both, within thirty days of the final disposition of each matter, so that the producer reports the criminal prosecution only when the case has been concluded by acquittal, conviction or dismissal.
3. The administrative action, within thirty days of the final disposition of the matter; and the criminal prosecution, within thirty days of the initial pretrial hearing date. ✓
4. The administrative action, within thirty days of the date it was commenced against the producer; and the criminal prosecution, within thirty days of the date the producer was charged.

Why: Iowa Code 522B.16 creates two reporting duties with two different triggers. By (1), a producer SHALL REPORT TO THE COMMISSIONER ANY ADMINISTRATIVE ACTION TAKEN AGAINST THE INSURANCE PRODUCER IN ANOTHER JURISDICTION OR BY ANOTHER GOVERNMENTAL AGENCY IN THIS STATE WITHIN THIRTY DAYS OF THE FINAL DISPOSITION OF THE MATTER, and the report SHALL INCLUDE A COPY OF THE ORDER, CONSENT TO THE ORDER, AND OTHER RELEVANT LEGAL DOCUMENTS. By (2), WITHIN THIRTY DAYS OF THE INITIAL PRETRIAL HEARING DATE, the producer SHALL REPORT TO THE COMMISSIONER ANY CRIMINAL PROSECUTION OF THE INSURANCE PRODUCER TAKEN IN ANY JURISDICTION, with A COPY OF THE INITIAL COMPLAINT FILED, THE ORDER RESULTING FROM THE HEARING, AND ANY OTHER RELEVANT LEGAL DOCUMENTS. The criminal duty therefore bites long before any verdict - the trigger is a pretrial hearing date, not a conviction and not the disposition - and it reaches a prosecution in ANY JURISDICTION. Note also the breadth of (1): an administrative action by another Iowa governmental agency counts, not only one taken in another state.

Under Iowa Code 505.23, when is an evidentiary hearing before the Iowa commissioner a contested case subject to chapter 17A?

1. In every proceeding the commissioner conducts under chapters 505A through 523G.
2. Only where an insurance producer's licence under chapter 522B is at stake.
3. Only in a proceeding which the commissioner has elected in advance, by order, to treat as a contested case.
4. In a proceeding under section 508B.7, 515G.7, 521A.3 or 521A.14, or on a merger or consolidation under chapter 521. ✓

Why: Iowa Code 505.23 provides that IF AN EVIDENTIARY HEARING IS CONDUCTED IN A PROCEEDING PURSUANT TO SECTION 508B.7, 515G.7, 521A.3, OR 521A.14, OR IN A PROCEEDING WITH RESPECT TO A MERGER OR CONSOLIDATION PURSUANT TO CHAPTER 521, THE PROCEEDING IS A CONTESTED CASE SUBJECT TO CHAPTER 17A. The section is a NAMED LIST, not a general rule, which is what makes the option covering every proceeding under chapters 505A through 523G wrong - it does not say that every hearing is a contested case, and it does not say that a hearing outside the list is not one; it settles the question for these particular proceedings, which are the reorganisation, conversion and holding-company transactions where the point would otherwise be argued. Chapter 17A is Iowa's administrative procedure act. The section does not say what any of the sections it names requires, only that a hearing under one of them is a contested case.

The Special Causes of Loss form is best characterized as:

1. An open-perils (all-risk) form covering risks of direct physical loss unless excluded ✓
2. A form that excludes theft, so a separate crime coverage part must be purchased for stolen stock
3. A named-peril form covering only fire and lightning, with all other causes added by endorsement
4. A liability form protecting the insured against third-party claims arising from the premises

Why: The Special form is open-perils: it covers risk of direct physical loss unless specifically excluded or limited, shifting the burden of proof to the insurer.

A producer wants to cold-call prospects by phone to sell insurance. Before calling, the producer should:

1. Mail each prospect a flood zone notice, which federal telemarketing rules accept in place of checking any list
2. Restrict all calling to the hours between 10 p.m. and 8 a.m., when consumers are most likely to be home
3. Rely on the agency's own internal contact list
4. Scrub the call list against the National Do-Not-Call Registry and honor registered numbers ✓

Why: Telemarketers must check the Do-Not-Call Registry and avoid calling registered numbers absent an applicable exception, to comply with federal telemarketing rules.