Montana Property & Casualty Insurance License, Practice Exams

A boatowners or yacht policy typically combines which two coverage parts?

1. Life insurance on the vessel's owner and health coverage for the crew aboard
2. Crop coverage for waterfront acreage and flood coverage for the dock
3. Workers compensation for the crew and a surety bond guaranteeing the marina's slip fees
4. Hull (physical damage) and protection & indemnity (liability) ✓

Why: Yacht and boatowners policies pair hull coverage for physical damage to the vessel with protection and indemnity (liability) coverage.

What must the Montana commissioner do on finding sufficient evidence that an act of insurance fraud has been committed?

1. Institute an administrative proceeding under 33-1-701 and impose the penalties provided in 33-1-317, the criminal consequences of the conduct being a matter for the county attorney to take up independently if that officer learns of the matter from another source entirely.
2. Refer the matter to the attorney general alone, who decides whether it goes to a prosecuting authority or to a licensing board; the commissioner has no direct dealing with the licensing boards, which are informed by the attorney general where a licence is in question.
3. Inform the appropriate prosecuting authority and professional licensing boards - and, under subsection (2), cooperate to the extent allowed by law with insurance fraud investigators, related organizations of this and other states, and insurance commissioners of other states. ✓
4. Suspend or revoke any licence the person holds under the code and then inform the prosecuting authority, the licensing consequence being immediate and the criminal referral following once the licensing action has been completed and the time for appeal has expired.

Why: MCA 33-1-1204(3): IF THE COMMISSIONER DETERMINES THAT SUFFICIENT EVIDENCE OF THE COMMISSION OF AN ACT OF INSURANCE FRAUD EXISTS, THE COMMISSIONER SHALL INFORM THE APPROPRIATE PROSECUTING AUTHORITY AND PROFESSIONAL LICENSING BOARDS. (2): THE COMMISSIONER SHALL COOPERATE TO THE EXTENT ALLOWED BY LAW WITH INSURANCE FRAUD INVESTIGATORS, RELATED ORGANIZATIONS OF THIS AND OTHER STATES, AND INSURANCE COMMISSIONERS OF OTHER STATES.

In a Homeowners policy, neglect by the insured to use reasonable means to save property at and after a loss is:

1. A duty the insurer must prove it waived before denying any part of the claim
2. A covered cause of loss under the additional coverage for property removed from danger
3. Part of Coverage F, payable up to $1,000
4. An exclusion, meaning resulting additional damage is not covered ✓

Why: Neglect is listed among the exclusions; the insured must take reasonable steps to protect property, and damage from failing to do so is not covered.

The DP-3 (Special Form) insures the dwelling and other structures on what basis?

1. Open perils (all risks except those excluded) ✓
2. Broad form named perils, the DP-2 list
3. Liability and medical payments only
4. Basic form named perils, the DP-1 list

Why: DP-3 provides open-perils (special form) coverage on the dwelling and other structures, covering all causes of loss except those specifically excluded.

Glass breakage to a covered building under broad and special homeowners forms is generally:

1. Covered only under DP-1, which adds breakage of glass as an extended coverage peril on all dwelling forms
2. Part of Section ii liability, since broken glass creates a hazard to visitors on the premises
3. Excluded entirely unless a separate glass floater is purchased for the storm doors and windows
4. Covered, though restricted if the dwelling has been vacant beyond the allowed period ✓

Why: Breakage of glass is a covered additional coverage/peril under broad and special forms, but coverage may be suspended when the dwelling has been vacant beyond the stated period.

Which document in a CPP contains information common to all coverage parts, such as the named insured, policy period, and premium?

1. Interline endorsement
2. Common Policy Declarations ✓
3. Coverage Part Declarations
4. Causes of Loss form

Why: The Common Policy Declarations identify the named insured, mailing address, policy period, business description, and the coverage parts that apply.

What continuing education must an ordinary producer complete under MCA 33-17-1203(1)(a)?

1. During each 12-month period, at least 12 credit hours of approved continuing education, including at least 2 hours of ethics, the requirement running on an annual cycle that corresponds with the calendar year rather than with the biennial renewal of the licence in this State.
2. During each 24-month period, at least 24 credit hours of approved continuing education, including at least 3 hours of ethics credits and at least 1 credit hour on changes in Montana insurance statutes and administrative rules. ✓
3. During each 24-month period, at least 24 credit hours of approved continuing education in any approved subject, the section prescribing the number of hours but leaving their content entirely to the licensee to choose from among the courses the commissioner has approved in this State.
4. During each 24-month period, at least 16 credit hours of approved continuing education including 3 hours of ethics, with a further 8 hours required of a producer holding more than one line of authority under the licence issued to that producer by the commissioner of this State.

Why: MCA 33-17-1203(1)(a): an individual licensed to act as an INSURANCE PRODUCER, ADJUSTER, PUBLIC ADJUSTER, OR CONSULTANT - other than one licensed ONLY for SURETY BAIL BONDS or LIMITED LINES CREDIT INSURANCE - SHALL, DURING EACH 24-MONTH PERIOD, COMPLETE AT LEAST 24 CREDIT HOURS OF APPROVED CONTINUING EDUCATION, INCLUDING AT LEAST 3 HOURS OF ETHICS CREDITS AND AT LEAST 1 CREDIT HOUR ON CHANGES IN MONTANA INSURANCE STATUTES AND ADMINISTRATIVE RULES.

Which actions are NOT adverse underwriting decisions under MCA 33-19-104(1)(b) - yet still require the institution or producer to give reasons?

1. The termination of a policy form on a statewide basis and the rescission of a policy, in neither of which need the institution give any reasons at all, the decision being one about the insurer's book of business rather than about the individual policyholder concerned.
2. A declination of coverage where the coverage is not available on a class basis, and any decision taken on information furnished by the applicant, the chapter being concerned only with decisions taken on information the applicant did not supply and cannot check.
3. The termination of an individual policy form on a class or statewide basis; a declination solely because the coverage is not available on a class or statewide basis; and the rescission of a policy. The specific reasons must nevertheless be given for each of them. ✓
4. The nonrenewal of a policy at the end of its term and the cancellation of a policy for nonpayment of premium, both of which are governed by the cancellation provisions of chapter 15 rather than by the privacy chapter and neither of which requires reasons to be given.

Why: MCA 33-19-104(1)(b): THE FOLLOWING ACTIONS ARE NOT ADVERSE UNDERWRITING DECISIONS, BUT THE INSURANCE INSTITUTION OR INSURANCE PRODUCER RESPONSIBLE FOR THEIR OCCURRENCE SHALL NEVERTHELESS PROVIDE THE APPLICANT OR POLICYHOLDER WITH THE SPECIFIC REASON OR REASONS FOR THEIR OCCURRENCE - (i) THE TERMINATION OF AN INDIVIDUAL POLICY FORM ON A CLASS OR STATEWIDE BASIS; (ii) A DECLINATION OF INSURANCE COVERAGE SOLELY BECAUSE THE COVERAGE IS NOT AVAILABLE ON A CLASS OR STATEWIDE BASIS; or (iii) THE RESCISSION OF A POLICY.

A building valued at $1,000,000 carries an 80% coinsurance clause. The insured carries $600,000 of coverage and suffers a $200,000 loss (before deductible). What does coinsurance pay?

1. $200,000
2. $120,000
3. $160,000
4. $150,000 ✓

Why: Required = 80% of $1,000,000 = $800,000. Penalty factor = $600,000/$800,000 = 0.75. Payment = 0.75 x $200,000 = $150,000.

Which best describes "non-owned autos" in commercial auto?

1. New and used autos held in a dealer's showroom inventory for sale, which Symbol 9 picks up while they sit on the display lot
2. Rental cars the named insured hires under short-term agreements while its own fleet units are in the shop being repaired
3. Autos used in the business but not owned, leased, or borrowed by the named insured — typically employees' own vehicles ✓
4. Autos titled to the named insured but assigned to a single employee for that employee's exclusive use during the workweek

Why: Non-owned autos (Symbol 9) are vehicles not owned/hired by the insured but used in its business, most often employees' personal autos.

Under the liberalization clause, if the insurer broadens coverage during the policy term without additional premium:

1. The broadened form applies only to policies written on or after its effective date
2. The insured must request an endorsement and pay additional premium to obtain it
3. The broadened coverage automatically applies to the existing policy ✓
4. The policy is rewritten at the next renewal

Why: The liberalization clause automatically extends any coverage-broadening change to existing policies at no extra cost.

What sort of body is the Montana insurance guaranty association, and who belongs to it?

1. A state agency within the office of the commissioner, funded by appropriation and staffed by the commissioner's employees; membership is voluntary, and an insurer which chooses not to join is not assessed but its policyholders receive no protection from the association.
2. A nonprofit corporation organized under the laws of this State, in which membership is open to any insurer writing any line of insurance here on payment of the annual subscription fixed by its board, whether or not the insurer holds a Montana certificate of authority.
3. A nonprofit unincorporated legal entity. All insurers defined as member insurers shall be and remain members as a condition of their authority to transact insurance in this state. It acts under a plan of operation under 33-10-106 and through a board of directors under 33-10-104. ✓
4. An unincorporated association of insurers formed voluntarily by agreement among them, which the commissioner has recognized for the purposes of this part; an insurer may withdraw on giving notice to the board, and its authority to transact insurance is unaffected.

Why: MCA 33-10-103: THERE IS CREATED A NONPROFIT UNINCORPORATED LEGAL ENTITY TO BE KNOWN AS THE MONTANA INSURANCE GUARANTY ASSOCIATION. ALL INSURERS DEFINED AS MEMBER INSURERS SHALL BE AND REMAIN MEMBERS OF THE ASSOCIATION AS A CONDITION OF THEIR AUTHORITY TO TRANSACT INSURANCE IN THIS STATE. THE ASSOCIATION SHALL PERFORM ITS FUNCTIONS UNDER A PLAN OF OPERATION ESTABLISHED AND APPROVED UNDER 33-10-106 AND SHALL EXERCISE ITS POWERS THROUGH A BOARD OF DIRECTORS ESTABLISHED UNDER 33-10-104.

Under the PAP, the maximum the insurer pays for a covered physical damage loss is generally:

1. The original purchase price shown on the bill of sale, with no reduction for depreciation or deductible
2. A flat amount scheduled in the Declarations for each auto, paid in full whatever the vehicle is worth at the time of loss
3. The lesser of the actual cash value or the amount to repair/replace, minus deductible ✓
4. Replacement cost for a new vehicle of like make and model, with no deductible

Why: Part D limits payment to the lesser of the ACV of the stolen/damaged property or the cost to repair or replace it, less the deductible.

What books and records must an administrator maintain under MCA 33-17-611, for how long, and who may see them?

1. Adequate books and records of all transactions with insurers and insured persons, kept at the principal administrative office for the agreement's duration and 5 years after; the commissioner has access for examination, audit or inspection, and so does the insurer. ✓
2. Records of claims paid only, kept wherever the administrator chooses for three years after payment, open to the insurer on reasonable notice but not to the commissioner except on the commissioner's written finding that an examination of the administrator is necessary.
3. Complete books and records of all transactions, kept at the principal administrative office for the duration of the agreement and for ten years thereafter, access being confined to the commissioner alone because the identities of policyholders are trade secrets by statute.
4. Such books and records as the written agreement with the insurer specifies, for such period as that agreement specifies, the statute leaving both questions to the parties and requiring only that the administrator produce whatever it holds when the commissioner demands it.

Why: MCA 33-17-611: FOR THE DURATION OF THE AGREEMENT REQUIRED BY 33-17-602 AND FOR 5 YEARS THEREAFTER, each administrator shall MAINTAIN AT ITS PRINCIPAL ADMINISTRATIVE OFFICE ADEQUATE BOOKS AND RECORDS OF ALL TRANSACTIONS between the administrator, insurers and insured persons, IN ACCORDANCE WITH PRUDENT STANDARDS OF INSURANCE RECORDKEEPING. THE COMMISSIONER SHALL HAVE ACCESS for EXAMINATION, AUDIT, OR INSPECTION. TRADE SECRETS in the records, INCLUDING THE IDENTITY AND ADDRESSES OF POLICYHOLDERS AND CERTIFICATE HOLDERS, ARE CONFIDENTIAL, except that the commissioner may use the information in proceedings against the administrator. THE INSURER RETAINS THE RIGHT TO CONTINUING ACCESS sufficient to fulfil its contractual obligations to insured persons, subject to any restrictions in the written agreement.

What limits do MCA 28-10-213 to 215 place on ratification?

1. An unauthorized act may be made valid retroactively against third persons whether or not they consent, the whole purpose of ratification being to relate the authority back to the time of the act. A ratification is valid whether or not the principal could have conferred authority at the time of ratifying, and a ratification once made may never be rescinded.
2. No unauthorized act can be made valid retroactively to the prejudice of third persons without their consent. A ratification is not valid unless the principal has power to confer the authority at the time of ratifying, and it may be rescinded only when made without consent required in a contract or with imperfect knowledge of the material facts. ✓
3. No unauthorized act can be made valid retroactively to the prejudice of third persons without their consent, and a ratification is not valid unless the principal had power to confer authority for the act at the time the act was done rather than at the time of ratifying it. A ratification may be rescinded at will by the principal at any time.
4. No unauthorized act can be made valid retroactively to the prejudice of third persons. A ratification is not valid unless the principal has power to confer authority at the time of ratifying, and a ratification may be rescinded whenever the principal afterwards discovers any fact about the transaction which was not known at the time of ratifying it.

Why: MCA 28-10-213: no unauthorized act can be made valid retroactively to the prejudice of third persons without their consent. MCA 28-10-214: a ratification is not valid unless, at the time of ratifying the act done, the principal has power to confer authority for such an act. MCA 28-10-215: a ratification may be rescinded when made without such consent as is required in a contract or with an imperfect knowledge of the material facts of the transaction ratified, but not otherwise. The principal's power is tested at the time of ratifying, not at the time of the act.

Which MCA 33-1-206 paragraph covers loss caused by the breakage or leakage of sprinklers and water pipes, and what else does that paragraph insure?

1. Paragraph (1)(g), boiler and machinery, which reaches the breakage or leakage of sprinklers, hoses and pumps as an accident to apparatus, and which extends to water entering through leaks or openings in buildings, damage to the extinguishing equipment itself being excluded because the equipment is the cause and not the subject of the loss.
2. Paragraph (1)(h), leakage and fire extinguishing equipment, which insures loss or damage to property caused by the breakage or leakage of sprinklers, hoses, pumps, water pipes or containers, but not loss caused by water entering through leaks or openings in buildings, which is a flood or surface water peril outside the casualty definitions.
3. Paragraph (1)(h), leakage and fire extinguishing equipment. It insures loss or damage to any property or interest caused by breakage or leakage of sprinklers, hoses, pumps and other extinguishing equipment, water pipes or containers, or by water entering through leaks or openings in buildings, and loss or damage to the equipment itself. ✓
4. Paragraph (1)(f), glass, which the code reads as covering the fittings and fixed apparatus of a building, including sprinklers, hoses and water pipes, together with the lettering and ornamentation on the glass itself and any water damage which follows from the breakage of the insured glass or of the apparatus attached to it.

Why: MCA 33-1-206(1)(h): LEAKAGE AND FIRE EXTINGUISHING EQUIPMENT IS INSURANCE AGAINST LOSS OR DAMAGE TO ANY PROPERTY OR INTEREST CAUSED BY THE BREAKAGE OR LEAKAGE OF SPRINKLERS, HOSES, PUMPS, AND OTHER FIRE EXTINGUISHING EQUIPMENT OR APPARATUS, WATER PIPES, OR CONTAINERS OR BY WATER ENTERING THROUGH LEAKS OR OPENINGS IN BUILDINGS AND INSURANCE AGAINST LOSS OR DAMAGE TO THE SPRINKLERS, HOSES, PUMPS, AND OTHER FIRE EXTINGUISHING EQUIPMENT OR APPARATUS. MCA 33-1-206(1)(f), GLASS, IS INSURANCE AGAINST LOSS OR DAMAGE TO GLASS, INCLUDING ITS LETTERING, ORNAMENTATION, AND FITTINGS.

The policy section that defines the rights and duties of both parties, such as duties after a loss and cancellation, is the:

1. Insuring agreement
2. Declarations
3. Conditions ✓
4. Definitions

Why: The conditions section spells out the rules, rights, and duties governing how the policy operates for both insurer and insured.

An 'impairment rating' in workers' compensation is used primarily to:

1. Decide which state's compensation law governs a multistate claim
2. Measure the degree of permanent loss of function for benefit determination ✓
3. Set the employer's premium classification code from its payroll
4. Calculate the experience modification factor applied to the employer's manual premium

Why: An impairment rating, often expressed as a percentage, measures the extent of permanent physical impairment and is used to determine permanent disability benefits.

What is a LOW-VOLUME INSURER, and what is PROOF OF FINANCIAL RESPONSIBILITY, under MCA 61-6-102?

1. A low-volume insurer is an insurer that provides motor vehicle liability policies for fewer than 100 vehicles in this state. Proof of financial responsibility is proof of the ability to respond in damages for liability on account of accidents occurring at any time, whether before or after the effective date of the proof, arising out of the use of a motor vehicle.
2. A low-volume insurer is an insurer that provides motor vehicle liability policies for fewer than 500 vehicles in this state. Proof of financial responsibility is proof of ability to respond in damages for liability on account of accidents occurring after the effective date of the proof, arising out of the ownership, maintenance, or use of a motor vehicle. ✓
3. A low-volume insurer is an insurer that writes fewer than 500 motor vehicle liability policies in this state in any calendar year, the test being policies rather than vehicles. Proof of financial responsibility means a certificate of insurance filed with the department under 61-6-133, no other method of giving proof being recognized by this part.
4. A low-volume insurer is an insurer whose motor vehicle premium written in this state is less than five hundred thousand dollars a year. Proof of financial responsibility is proof of the ability to respond in damages arising out of the ownership, maintenance or use of a motor vehicle, including accidents occurring before the effective date of the proof.

Why: MCA 61-6-102(5): LOW-VOLUME INSURER MEANS AN INSURER THAT PROVIDES MOTOR VEHICLE LIABILITY POLICIES FOR FEWER THAN 500 VEHICLES IN THIS STATE. (9): PROOF OF FINANCIAL RESPONSIBILITY MEANS PROOF OF ABILITY TO RESPOND IN DAMAGES FOR LIABILITY ON ACCOUNT OF ACCIDENTS OCCURRING SUBSEQUENT TO THE EFFECTIVE DATE OF THE PROOF OF FINANCIAL RESPONSIBILITY, ARISING OUT OF THE OWNERSHIP, MAINTENANCE, OR USE OF A MOTOR VEHICLE. (10): STATE MEANS ANY STATE, TERRITORY, OR POSSESSION OF THE UNITED STATES, THE DISTRICT OF COLUMBIA, OR ANY PROVINCE OF THE DOMINION OF CANADA. (11): SUSPENSION MEANS THE WITHDRAWAL, BY ACTION OF THE DEPARTMENT, OF A MOTOR VEHICLE'S REGISTRATION FOR A PERIOD OF TIME PRESCRIBED BY DEPARTMENT RULE.

When may the Montana commissioner waive the requirement that a form also be approved by the insurer's state of domicile, and what follows?

1. The commissioner may waive the requirement only where the state of domicile does not review forms of that kind at all, and the insurer must then file with the commissioner a certificate from the domiciliary official to that effect before the Montana filing will be accepted for review.
2. The commissioner may not waive it; approval by the state of domicile is a statutory condition of delivery in Montana for every form to which the section applies, and the only relief is the general exemption power over documents to which the section cannot practicably apply.
3. The commissioner may waive it if the requirement is considered unnecessary to protect Montana insurance consumers; the insurer must then notify the commissioner in writing within 10 days of any disapproval, denial or withdrawal of approval by its domicile state. ✓
4. The commissioner may waive it at the insurer's written request on a showing of hardship, and the insurer must then file the domiciliary approval within 60 days of obtaining it, failing which the Montana approval lapses and the form may no longer be used in this State.

Why: MCA 33-1-501(1)(c): THE APPROVAL OF an insurance policy or annuity contract form, certificate, enrollment form, application form, or other related insurance form BY THE STATE OF DOMICILE MAY BE WAIVED BY THE COMMISSIONER IF THE COMMISSIONER CONSIDERS THE REQUIREMENTS OF SUBSECTION (1)(a) UNNECESSARY FOR THE PROTECTION OF MONTANA INSURANCE CONSUMERS. IF THE REQUIREMENT IS WAIVED, AN INSURER SHALL NOTIFY THE COMMISSIONER IN WRITING WITHIN 10 DAYS OF DISAPPROVAL, DENIAL, OR WITHDRAWAL OF APPROVAL OF A FORM BY THE STATE OF DOMICILE.

A pet dog owned by the insured causes damage. Animals are addressed in a Homeowners policy how?

1. Animals are excluded as covered property but liability for injury they cause may fall under Coverage E ✓
2. Animals are scheduled under Coverage D, and the policy pays their appraised value when a covered peril strikes the home
3. Animals are covered under Coverage A whenever they are kept inside the dwelling structure at the time of the loss
4. Animals are covered as personal property under Coverage C, up to a $500 special limit

Why: Animals, birds, and fish are excluded as Coverage C property, but bodily injury or property damage caused by a pet may be covered under Section II liability.

Most Professional Liability/E&O and D&O policies are written on what kind of trigger?

1. Claims-made ✓
2. Named perils
3. Open peril
4. Occurrence

Why: Professional and management liability lines are typically claims-made, with a retroactive date and ERP options.

Compared with the standard CGL, professional liability and D&O policies most often pay defense costs:

1. Within the limit of insurance, eroding the available limit ✓
2. Only after the self-insured retention has been paid twice
3. In addition to the limit, as under the CGL
4. Never, leaving defense entirely to the insured

Why: Many specialty/management liability policies use defense-within-limits, so defense costs reduce the amount available for settlements.

A statement that is guaranteed to be true and becomes part of the contract is a:

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

Why: A warranty is a statement that is guaranteed true and becomes part of the policy; its breach can void coverage.

How does the BOP commonly differ from a Commercial Package Policy for property valuation?

1. The BOP excludes business income entirely unless it is added by a separate endorsement carrying a scheduled limit
2. The BOP contains no liability coverage, only property
3. The BOP typically provides replacement cost and includes business income automatically ✓
4. The BOP values both building and contents at actual cash value

Why: A BOP typically provides replacement cost valuation and includes business income/extra expense automatically (often without a separate dollar limit), unlike a CPP which adds these separately.

An applicant is charged a higher auto premium because of information in a consumer report. The producer fails to send any adverse action notice. This most likely violates:

1. The NFIP waiting-period rule
2. The crop insurance rules
3. The Terrorism Risk Insurance Act
4. The Fair Credit Reporting Act ✓

Why: Failing to provide the required adverse action notice after taking action based on a consumer report violates the FCRA.

Dividends paid to the policyholders of a mutual insurer are:

1. Not guaranteed and are a return of surplus ✓
2. Guaranteed each year by contract
3. Taxable as ordinary income to the insured
4. Paid only to the stockholders

Why: Mutual policy dividends are not guaranteed; they represent a return of unused premium and are generally not taxable.

A false statement of a material fact on an application that, if known, would have changed the insurer's underwriting decision is a:

1. Warranty
2. Representation
3. Misrepresentation ✓
4. Estoppel

Why: A misrepresentation is a false statement; if it is material it can void the contract.

The maximum NFIP contents coverage available to a residential policyholder is:

1. $250,000
2. $50,000
3. $500,000
4. $100,000 ✓

Why: Residential contents coverage under the NFIP is capped at $100,000, separate from the building limit.

A FAIR Plan is designed primarily to:

1. Offer discounted automobile insurance to drivers who have gone five years without a claim
2. Make property insurance available to applicants who cannot obtain it in the voluntary market ✓
3. Insure state and municipal buildings that private carriers will not write
4. Provide subsidized flood insurance to homeowners in coastal counties

Why: FAIR (Fair Access to Insurance Requirements) Plans are state residual market mechanisms that provide property insurance to risks unable to buy it in the standard voluntary market.

What do MCA 33-17-612 and 33-17-616 require of an administrator with respect to advertising and to documents the insurer sends it?

1. Advertising must be filed with the commissioner 30 days before use and may be used unless disapproved within that period, and documents received from the insurer must be delivered to policyholders within ten working days of receipt whether or not instructions accompany them.
2. An administrator may use only such advertising pertaining to the business underwritten by an insurer as is approved by the insurer in advance of its use; and written communications given to it for its policyholders shall be delivered promptly after the insurer instructs it. ✓
3. Advertising may be used without the insurer's approval provided it does not name the insurer, and documents received from the insurer must be delivered within the time the written agreement specifies, the statute leaving the period to the parties to fix between them.
4. Advertising must be approved by the insurer and by the commissioner before use, and termination notices must be sent by the insurer directly to policyholders rather than through the administrator, other written communications passing through the administrator as usual.

Why: MCA 33-17-612: AN ADMINISTRATOR MAY USE ONLY SUCH ADVERTISING PERTAINING TO THE BUSINESS UNDERWRITTEN BY AN INSURER AS IS APPROVED BY THE INSURER IN ADVANCE OF ITS USE - the insurer's approval, not the commissioner's, and in advance. MCA 33-17-616: ANY POLICIES, CERTIFICATES, BOOKLETS, TERMINATION NOTICES, OR OTHER WRITTEN COMMUNICATIONS DELIVERED BY THE INSURER TO THE ADMINISTRATOR FOR DELIVERY TO ITS POLICYHOLDERS SHALL BE DELIVERED BY THE ADMINISTRATOR PROMPTLY AFTER RECEIPT OF INSTRUCTIONS FROM THE INSURER TO DO SO.

The intentional withholding of a known material fact that the applicant has a duty to disclose is called:

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

Why: Concealment is the failure to disclose a known material fact; if intentional, it can void the contract.

A Montana producer follows the insurer's instructions in obtaining an insurance score and is sued over it. What does MCA 33-18-610 provide?

1. An insurer shall indemnify, defend, and hold insurance producers harmless from all liability, fees and costs arising out of the producer's use of credit information for an insurer, if the producer follows the insurer's instructions or procedures and with applicable law. ✓
2. The producer is immune from suit altogether, the section conferring on a producer who uses credit information the same immunity that the privacy chapter confers on a person who discloses personal information in accordance with that chapter's requirements.
3. The insurer must indemnify the producer only where the producer follows the insurer's written instructions and the insurer has been found liable in the same proceeding, the producer otherwise bearing its own costs of defending the claim brought against it.
4. The producer is entitled to be reimbursed its legal costs but not any judgment against it, and only where the consumer's claim is dismissed; the section also gives the consumer a new statutory cause of action against the insurer in place of the claim against the producer.

Why: MCA 33-18-610: AN INSURER SHALL INDEMNIFY, DEFEND, AND HOLD INSURANCE PRODUCERS HARMLESS FROM AND AGAINST ALL LIABILITY, FEES, AND COSTS ARISING OUT OF OR RELATING TO THE ACTIONS, ERRORS, OR OMISSIONS OF AN INSURANCE PRODUCER THAT OBTAINS OR USES CREDIT INFORMATION OR INSURANCE SCORES FOR AN INSURER, IF THE INSURANCE PRODUCER FOLLOWS THE INSTRUCTIONS OF OR PROCEDURES ESTABLISHED BY THE INSURER AND COMPLIES WITH ANY APPLICABLE LAW OR REGULATION. THIS SECTION MAY NOT BE CONSTRUED TO PROVIDE A CONSUMER OR OTHER INSURED WITH A CAUSE OF ACTION THAT DOES NOT EXIST IN THE ABSENCE OF THIS SECTION.

A key function of the MCS-90 endorsement is that the insurer:

1. Automatically extends the policy to freight the carrier is hauling, up to the value shown on the bill of lading, with no cargo form
2. Is released from any further obligation once the declared policy limits are paid, even where the federal minimum for that cargo class is higher
3. Lets the carrier drop liability limits from the policy and rely on the endorsement alone
4. Must pay judgments for public liability even if the loss would otherwise be excluded, then may seek reimbursement from the insured ✓

Why: The MCS-90 obligates the insurer to pay covered public liability judgments even if the policy would not otherwise respond, with a right to recover those payments from the insured.

When a business hires independent contractors, the business's own CGL primarily protects it against:

1. Injuries to the contractor's own employees, which the hiring firm's CGL settles as medical payments
2. The contractor's sole negligence in performing the work, even where the hiring firm did nothing wrong
3. Vicarious liability and its own negligence in hiring or supervising the contractors ✓
4. Damage to and liability from the contractor's trucks while they are driven to and from the job

Why: The hiring firm's CGL responds to its vicarious liability and its own negligence; the contractor should carry separate coverage for its operations.

How does MCA 33-23-201(1) define an uninsured motor vehicle?

1. A land motor vehicle the owner or operator of which cannot be identified, or which is insured for bodily injury liability in an amount less than the limits carried by the injured person under the policy under which the uninsured motorist claim is made, the test being one of comparative limits rather than of the presence of any insurance at all.
2. A land motor vehicle which is not registered in this state and which is not insured or bonded for bodily injury liability at the time of the accident, a vehicle registered here being presumed insured for the purposes of this part because registration cannot lawfully be issued without proof of compliance with Title 61, chapter 6, part 1.
3. A land motor vehicle, or any other self propelled vehicle, the ownership, maintenance or use of which is not insured or bonded for bodily injury liability at the time the uninsured motorist claim is presented to the insurer, so that a later lapse or rescission of the other driver's liability policy brings the vehicle within the term.
4. A land motor vehicle, the ownership, maintenance or use of which is not insured or bonded for bodily injury liability at the time of the accident. ✓

Why: MCA 33-23-201(1), closing sentence: AN UNINSURED MOTOR VEHICLE IS A LAND MOTOR VEHICLE, THE OWNERSHIP, THE MAINTENANCE, OR THE USE OF WHICH IS NOT INSURED OR BONDED FOR BODILY INJURY LIABILITY AT THE TIME OF THE ACCIDENT. AT THE TIME OF THE ACCIDENT, not at the time of the claim, and the test is the presence of insurance or a bond, not the size of the limits.

On what may risk classifications be based under MCA 33-16-201(4)(a), and to whom do classifications apply?

1. Classifications may be based only on factors which the commissioner has approved by rule, and apply to the risks the insurer chooses to place in each class, an insurer being free to decline to apply a classification to a particular risk where its judgment is against it.
2. Classifications may be based on the insured's loss experience alone, every other consideration being treated by the chapter as unfairly discriminatory, and they apply uniformly to all risks written by all insurers using the same rating organization's rates.
3. Classifications may be based on size, expense, management and individual experience, but not on location, geographic rating having been abolished for property and casualty risks; they apply to all risks under the same circumstances written by the insurer that made them.
4. Risks may be grouped and rated by classification, modified by rating plans, based on size, expense, management, individual experience, location or any other reasonable consideration; they apply to all risks in substantially the same circumstances. ✓

Why: MCA 33-16-201(4)(a): RISKS MAY BE GROUPED BY CLASSIFICATIONS FOR THE ESTABLISHMENT OF RATES AND MINIMUM PREMIUMS. CLASSIFICATION RATES MAY BE MODIFIED TO PRODUCE RATES FOR SEPARATE RISKS IN ACCORDANCE WITH RATING PLANS THAT ESTABLISH STANDARDS FOR MEASURING VARIATIONS IN HAZARDS OR EXPENSE PROVISIONS, OR BOTH. THE STANDARDS MAY MEASURE ANY DIFFERENCE AMONG RISKS THAT HAVE A PROBABLE EFFECT UPON LOSSES OR EXPENSES. CLASSIFICATIONS OR MODIFICATIONS OF CLASSIFICATIONS OF RISKS MAY BE ESTABLISHED, BASED ON SIZE, EXPENSE, MANAGEMENT, INDIVIDUAL EXPERIENCE, LOCATION OR DISPERSION OF HAZARD, OR ANY OTHER REASONABLE CONSIDERATIONS. (4)(e): CLASSIFICATIONS AND MODIFICATIONS APPLY TO ALL RISKS UNDER THE SAME OR SUBSTANTIALLY THE SAME CIRCUMSTANCES OR CONDITIONS.

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.

The process of grouping policyholders by similar characteristics for rating is called:

1. Reinsurance
2. Subrogation
3. Adjusting
4. Classification ✓

Why: Classification places risks with similar loss-producing characteristics into the same rating group so equitable rates can be applied.

Which of the following best describes how the Broad form's limited collapse provision works relative to the Basic form?

1. Neither form addresses collapse, which is available only by separate endorsement
2. The Basic form already covers collapse from any cause, so the Broad form adds nothing on that point
3. Collapse provisions appear only in inland and ocean marine forms
4. Broad adds coverage for collapse from specified causes that Basic does not provide ✓

Why: The Broad (and Special) forms add a specified-cause collapse provision; the Basic form does not include collapse coverage.

Who is protected by the immunity in MCA 33-19-408, and what is the penalty under 33-19-409 for obtaining information by deception?

1. No action in defamation, invasion of privacy or negligence arises against a person for disclosing information under the chapter or for furnishing it - but not for false information given with malice. False pretenses: a fine of not more than $10,000 or 1 year. ✓
2. The immunity protects insurance institutions and producers but not insurance-support organizations, and it is absolute; obtaining information under false pretenses is punishable by the civil penalty in 33-1-317 rather than by any criminal sanction under the chapter.
3. The immunity protects any person who discloses information in accordance with the chapter, including one who discloses false information believing it to be true or otherwise, and obtaining information under false pretenses carries a fine of not more than $1,000.
4. The immunity protects only a person who furnishes information in response to a subpoena or other legal process; obtaining information under false pretenses is a felony punishable by imprisonment in the state prison for not more than five years and a fine of $10,000.

Why: MCA 33-19-408: A CAUSE OF ACTION OR CLAIM FOR RELIEF IN THE NATURE OF DEFAMATION, INVASION OF PRIVACY, OR NEGLIGENCE DOES NOT ARISE AGAINST ANY PERSON FOR DISCLOSING PERSONAL OR PRIVILEGED INFORMATION IN ACCORDANCE WITH THIS CHAPTER, NOR AGAINST ANY PERSON FOR FURNISHING PERSONAL OR PRIVILEGED INFORMATION TO AN INSURANCE INSTITUTION, INSURANCE PRODUCER, OR INSURANCE-SUPPORT ORGANIZATION. HOWEVER, THIS SECTION DOES NOT PROVIDE IMMUNITY FOR DISCLOSING OR FURNISHING FALSE INFORMATION WITH MALICE OR WILLFUL INTENT TO INJURE ANY PERSON. MCA 33-19-409: ANY PERSON WHO KNOWINGLY AND WILLFULLY OBTAINS INFORMATION ABOUT AN INDIVIDUAL FROM AN INSURANCE INSTITUTION, INSURANCE PRODUCER, OR INSURANCE-SUPPORT ORGANIZATION UNDER FALSE PRETENSES SHALL BE FINED NOT MORE THAN $10,000 OR IMPRISONED FOR NOT MORE THAN 1 YEAR, OR BOTH. MCA 33-19-405 adds that a person who violates the chapter IS SUBJECT TO THE CIVIL PENALTY PROVIDED IN 33-1-317.

The section of a policy that contains the named insured, address, policy period, limits, and premium is the:

1. Declarations ✓
2. Exclusions
3. Conditions
4. Insuring agreement

Why: The declarations page personalizes the policy with the insured's identifying information, coverage limits, and premium.

Self-insurance is best defined as:

1. Buying a policy from an offshore carrier that is not licensed in the insured's home state, so no premium tax applies
2. Purchasing an umbrella policy to sit above the primary limits
3. An entity setting aside its own funds to pay for its own anticipated losses rather than transferring the risk ✓
4. Joining a state FAIR Plan so that the residual market, rather than the entity itself, absorbs the cost of each loss

Why: Self-insurance is a risk-retention technique in which an organization budgets and funds its own losses internally instead of transferring the risk to an insurer.

A driver employed by the owner of a passenger-carrying vehicle injures a pedestrian. What does MCA 61-6-201 provide?

1. The owner is liable for damage done negligently by a driver in the owner's employment, but not for damage done willfully, a willful act taking the driver outside the scope of the employment so that the injured person must look to the driver personally for damages caused by a deliberate act of that driver while driving the owner's vehicle.
2. The owner of a vehicle running or traveling upon any highway or road for the conveyance of passengers is liable for all damage to person or property done by any person in the owner's employment as a driver while driving the vehicle, whether done willfully or negligently or otherwise, in the same manner that driver would be liable. ✓
3. The owner is liable only where the owner was personally negligent in the selection, training or supervision of the driver, the section codifying the ordinary rule of negligent entrustment rather than imposing any liability upon the owner of a vehicle for the acts of a person employed to drive it upon the highways or roads of this state.
4. The driver alone is liable for damage done while driving, and the owner is liable only to the extent of the limits of the motor vehicle liability policy required by 61-6-103, the section being a limitation upon the common law liability of the owner of a vehicle used for the conveyance of passengers rather than an extension of it.

Why: MCA 61-6-201: THE OWNER OF A VEHICLE RUNNING OR TRAVELING UPON ANY HIGHWAY OR ROAD FOR THE CONVEYANCE OF PASSENGERS IS LIABLE FOR ALL DAMAGE TO PERSON OR PROPERTY DONE BY ANY PERSON IN THE OWNER'S EMPLOYMENT AS A DRIVER WHILE DRIVING THE VEHICLE, WHETHER DONE WILLFULLY OR NEGLIGENTLY OR OTHERWISE, IN THE SAME MANNER THAT DRIVER WOULD BE LIABLE. WILLFULLY OR NEGLIGENTLY OR OTHERWISE - the willful act is inside the section, not outside it.

What is the purpose of MCA 33-15 part 11, and to what does it apply?

1. To protect the public in cancellation, renewal, nonrenewal and premium increases on property and casualty contracts, chiefly by regulating midterm cancellation and barring midterm increases; it covers 33-1-206 and 33-1-210 lines except where they conflict with chapter 23. ✓
2. To codify the whole law of cancellation for every class of insurance written in this State, including life and disability, so that one set of periods and grounds governs the termination of any Montana policy whatever the risk it covers and whoever the insurer may be.
3. To give the commissioner power to approve or disapprove each cancellation before it takes effect, and to require an insurer proposing to cancel or decline to renew to satisfy the commissioner that the ground relied upon is a proper one in the circumstances of the case.
4. To protect the public in cancellation and nonrenewal transactions on property and casualty contracts, the part applying to every such contract without exception and overriding the motor vehicle provisions of chapter 23 wherever the two are inconsistent with one another.

Why: MCA 33-15-1101(1): the purpose is TO PROTECT THE PUBLIC WITH REGARD TO INSURANCE TRANSACTIONS THAT INVOLVE CANCELLATION, RENEWAL, NONRENEWAL, OR PREMIUM INCREASES ON CONTRACTS OF PROPERTY OR CASUALTY INSURANCE BY (a) REGULATING THE GROUNDS FOR MIDTERM CANCELLATION; (b) EXCEPT AS PROVIDED IN 33-15-1108, PROHIBITING MIDTERM INCREASES IN PREMIUMS; (c) INCREASING THE OPPORTUNITY FOR INSUREDS TO SHOP FOR REPLACEMENT OR SUBSTITUTE INSURANCE; (d) REDUCING THE OPPORTUNITY FOR BREACH OF CONTRACT, MISREPRESENTATION BY OMISSION OR UNTIMELY DISCLOSURE, AND UNFAIR DISCRIMINATION AMONG INSUREDS; and (e) INCREASING THE OPPORTUNITY FOR INSURANCE PRODUCERS TO COMPETE FREELY. (2): THIS PART APPLIES TO THOSE FORMS OF INSURANCE DEFINED IN 33-1-206 AND 33-1-210, EXCEPT TO THE EXTENT THEY CONFLICT WITH CHAPTER 23 OF THIS TITLE. (3): it DOES NOT LIMIT undefined unfair trade practices under 33-18-1003; POLICIES MAY PROVIDE TERMS MORE FAVORABLE TO INSUREDS; and the rights given ARE IN ADDITION TO other rights.

A farmowners-ranchowners policy is best described as a package that combines:

1. Multiple peril crop insurance on the farmer's planted acreage, bought separately from any dwelling coverage
2. Property and liability coverage for the farm dwelling, farm structures, and farming operations ✓
3. Automobile coverage on farm trucks and tractors only
4. Farm liability alone, leaving the dwelling and outbuildings to be insured under a separate property form

Why: The farmowners-ranchowners policy is a package combining homeowners-type property and liability coverage with coverage for farm structures, equipment, and operations.

To whom does the Workers' Compensation Act apply under MCA 39-71-401(1), and what must an employer do?

1. It applies to all employers who have three or more employees in service at any one time under an appointment or contract of hire, an employer below that threshold being free to elect coverage under compensation plan No. 1, 2 or 3 but not being required to do so, and each employee of an electing employer is bound by the plan which the employer has elected.
2. It applies to all employers and to all employees without exception, an employer being required to elect to be bound by compensation plan No. 1, 2 or 3, and an employee having a corresponding right to elect which of the three plans will govern that employee's own claim, the election to be made in writing and served upon the employer's insurer.
3. It applies to all employers and to all employees except those listed in subsection (2). An employer who has any employee in service under any appointment or contract of hire, expressed or implied, oral or written, shall elect to be bound by compensation plan no. 1, 2, or 3, and each employee is subject to and bound by the plan the employer has elected. ✓
4. It applies to all employers and to all employees, but an employer must elect to be bound by a compensation plan only where the employer carries on a trade or business for profit within this state, a public corporation, a school district and an irrigation district being covered instead by the uninsured employers' fund created by 39-71-503.

Why: MCA 39-71-401(1): EXCEPT AS PROVIDED IN SUBSECTION (2), THE WORKERS' COMPENSATION ACT APPLIES TO ALL EMPLOYERS AND TO ALL EMPLOYEES. AN EMPLOYER WHO HAS ANY EMPLOYEE IN SERVICE UNDER ANY APPOINTMENT OR CONTRACT OF HIRE, EXPRESSED OR IMPLIED, ORAL OR WRITTEN, SHALL ELECT TO BE BOUND BY THE PROVISIONS OF COMPENSATION PLAN NO. 1, 2, OR 3 UNLESS THE PROVISIONS OF 39-71-442 APPLY. EACH EMPLOYEE WHOSE EMPLOYER IS BOUND BY THE WORKERS' COMPENSATION ACT IS SUBJECT TO AND BOUND BY THE COMPENSATION PLAN THAT HAS BEEN ELECTED BY THE EMPLOYER. There is NO MINIMUM NUMBER OF EMPLOYEES in the section.

A Montana employer deducts part of the workers' compensation premium from its workers' wages. What does MCA 39-71-406 provide?

1. It is unlawful for the employer to deduct or obtain any part of any premium required by this chapter from the wages or earnings of its workers, and making or attempting to make any premium deduction is a misdemeanor. ✓
2. The employer may deduct up to one half of the premium from the wages or earnings of its workers where each worker has agreed to the deduction in writing before it is made, and a deduction made without that written agreement is unlawful and is a misdemeanor punishable by a fine of fifty dollars for each citation issued by the department.
3. It is unlawful for the employer to deduct any part of the premium from the wages of its workers, and a deduction made in breach of this section is recoverable by the worker from the employer in a civil action together with a penalty of twice the amount deducted, no criminal liability being imposed on an employer by this section of the chapter.
4. The deduction is unlawful only where the employer is bound by compensation plan No. 2 or No. 3, an employer enrolled under plan No. 1 being self-insured and paying no premium as such, and the making of an unlawful deduction is a ground on which the department may revoke the employer's authority to self-insure under this chapter.

Why: MCA 39-71-406: IT IS UNLAWFUL FOR THE EMPLOYER TO DEDUCT OR OBTAIN ANY PART OF ANY PREMIUM REQUIRED TO BE PAID BY THIS CHAPTER FROM THE WAGES OR EARNINGS OF THE EMPLOYER'S WORKERS, AND THE MAKING OR ATTEMPT TO MAKE ANY PREMIUM DEDUCTION IS A MISDEMEANOR. The ATTEMPT is an offence as well as the deduction itself.

In a policy with more than one named insured, the 'first named insured' is generally responsible for:

1. Personally defending any lawsuit brought against a co-insured before the insurer's duty to defend attaches
2. Nothing beyond the duties of any other named insured
3. Adjusting and settling every claim, since the other named insureds may not deal directly with the adjuster
4. Paying premiums and receiving cancellation notices, and may act on behalf of others ✓

Why: The first named insured has specific duties and rights, such as paying premiums, receiving notices, and requesting changes on behalf of all insureds.

What must be considered in making Montana rates under MCA 33-16-201(2), and what special period applies to fire insurance?

1. Montana loss experience alone, the chapter requiring that a rate used in this State be supported by experience gathered in this State, with a three-year period for fire insurance because fire losses are volatile and a shorter period would distort the rate.
2. Loss experience and expenses only. Investment income, catastrophe loading and any margin for underwriting profit are excluded from the ratemaking calculation in this State, and fire insurance is rated on the most recent ten-year period for which experience is available.
3. Past and prospective loss experience within and outside this state, revenue and profits from reserves, conflagration and catastrophe hazards, a margin for underwriting profit, expenses, and judgment factors. For fire insurance, the last 5-year period. ✓
4. Past and prospective loss experience and a reasonable margin for profit, together with the dividends the insurer has returned to its policyholders, which must be deducted from the rate so that participating and nonparticipating insurers compete on the same net price.

Why: MCA 33-16-201(2)(a): CONSIDERATION MUST BE GIVEN, WHEN APPLICABLE, TO PAST AND PROSPECTIVE LOSS EXPERIENCE WITHIN AND OUTSIDE THIS STATE, TO REVENUE AND PROFITS FROM RESERVES, TO CONFLAGRATION AND CATASTROPHE HAZARDS, IF ANY, TO A REASONABLE MARGIN FOR UNDERWRITING PROFIT AND CONTINGENCIES, TO PAST AND PROSPECTIVE EXPENSES, BOTH COUNTRYWIDE AND THOSE SPECIALLY APPLICABLE TO THIS STATE, AND TO ALL OTHER FACTORS, INCLUDING JUDGMENT FACTORS, CONSIDERED RELEVANT WITHIN AND OUTSIDE THIS STATE. IN THE CASE OF FIRE INSURANCE RATES, CONSIDERATION MAY BE GIVEN TO THE EXPERIENCE OF THE FIRE INSURANCE BUSINESS DURING THE MOST RECENT 5-YEAR PERIOD FOR WHICH EXPERIENCE IS AVAILABLE. (2)(b): CONSIDERATION MAY ALSO BE GIVEN TO DIVIDENDS, SAVINGS, OR UNABSORBED PREMIUM DEPOSITS allowed or returned to policyholders - MAY, not must.

What penalty does MCA 33-17-411 allow against a nonresident producer?

1. A fine by the commissioner of up to $50,000 for each violation; and, at the commissioner's discretion, revocation or suspension of the Montana nonresident licence for a period of up to 5 years. ✓
2. A fine of up to $5,000 for each violation, which is the ceiling the code applies to insurance producers and adjusters generally, together with revocation or suspension of the nonresident licence for such period as the commissioner considers appropriate in the circumstances of the case.
3. A fine of up to $25,000 for each violation and revocation of the licence, suspension not being available against a nonresident because the commissioner cannot supervise a licensee outside the State during a period of suspension imposed under this part of the chapter as enacted.
4. No fine at all, the commissioner's remedy against a nonresident being confined to reporting the conduct to the producer's home state regulator, which alone may impose a monetary penalty on a person licensed as a resident within its own jurisdiction under its law.

Why: MCA 33-17-411: A NONRESIDENT INSURANCE PRODUCER WHO VIOLATES A CONDITION OF THE PRODUCER'S MONTANA LICENSE OR A PROVISION OF THIS PART IS SUBJECT TO A FINE BY THE COMMISSIONER OF UP TO $50,000 FOR EACH VIOLATION AND MAY, AT THE DISCRETION OF THE COMMISSIONER, HAVE THE MONTANA NONRESIDENT LICENSE REVOKED OR SUSPENDED FOR A PERIOD OF UP TO 5 YEARS. Note how far this exceeds the $5,000 per violation ceiling 33-1-317 sets for producers generally.

A scenario: lightning strikes and starts a fire destroying the kitchen. Which forms would cover this loss to the dwelling?

1. Only DP-3 and HO-3, because open-peril dwelling forms are the only ones that include fire and lightning
2. Only liability forms, since fire damage is settled as a third-party claim
3. Only HO-4, which is the sole form written on the dwelling itself
4. All standard dwelling and homeowners forms, since fire and lightning are basic perils ✓

Why: Fire and lightning are core covered perils in every standard dwelling and homeowners form, so the kitchen fire loss would be covered under all of them.

Under MCA 33-1-1202(1), what is the first way a person commits administrative or civil insurance fraud?

1. By knowingly making a false statement to an insurer with intent to defraud it, the section requiring proof of an intention to deceive as well as of the falsity of the statement and of the materiality of the fact to which the statement relates in the claim concerned.
2. By presenting, or causing to be presented, to any insurer, purported insurer, producer, or administrator any written or oral statement containing false, incomplete, or misleading information material to or in support of a claim, for the purpose of obtaining money. ✓
3. By presenting a claim for a loss that did not occur, the first subsection being directed at wholly fabricated claims and the later subsections at claims which are genuine but inflated or supported by documents which have been altered after they were first issued.
4. By presenting a statement containing false information to an insurer, whether or not the person sought any money or benefit by doing so, the subsection reaching the false statement itself and leaving the person's purpose to go to the penalty rather than to liability.

Why: MCA 33-1-1202(1): a person commits the act of administrative or civil insurance fraud when the person, FOR THE PURPOSE OF OBTAINING ANY MONEY OR BENEFIT, PRESENTS OR CAUSES TO BE PRESENTED TO ANY INSURER, PURPORTED INSURER, PRODUCER, OR ADMINISTRATOR, AS DEFINED IN 33-17-102, ANY WRITTEN OR ORAL STATEMENT, INCLUDING COMPUTER-GENERATED DOCUMENTS, CONTAINING FALSE, INCOMPLETE, OR MISLEADING INFORMATION CONCERNING ANY FACT OR THING MATERIAL TO, AS PART OF, OR IN SUPPORT OF A CLAIM FOR PAYMENT OR OTHER BENEFIT PURSUANT TO AN INSURANCE POLICY. Note INCOMPLETE as well as false, and ORAL as well as written.

What must a licensee file under MCA 33-17-1205(1) and (3), and what happens on failure?

1. Annually, a certification of the hours completed during the preceding calendar year, and on failure the licence is suspended until the certification is filed, the licensee being able to continue transacting business under another licensee's authority during the period of suspension in this State.
2. Biennially, a certification of the hours completed, and on failure the commissioner may impose a fine under 33-1-317 but the licence itself continues in force, the sanction for non-compliance being monetary rather than affecting the licence held by that individual in this State.
3. Biennially, a certification of the approved activities completed in the preceding biennium, the CE affidavit also reporting the final disposition of any administrative or criminal action elsewhere or by another Montana agency; on failure the licence lapses. ✓
4. Biennially, a certification of the hours completed together with the certificates issued by each course provider, and on failure the licence lapses but the individual may continue to conduct insurance business under a business entity licence with which that individual is affiliated.

Why: MCA 33-17-1205(1): each individual subject to 33-17-1203 SHALL FILE BIENNIALLY, in a format the commissioner supplies, CERTIFICATION AS TO THE APPROVED COURSES, LECTURES, SEMINARS, AND INSTRUCTIONAL PROGRAMS SUCCESSFULLY COMPLETED DURING THE PRECEDING BIENNIUM. (2) IF AN INDIVIDUAL FAILS TO COMPLY, THE INDIVIDUAL'S LICENSE LAPSES. AN INDIVIDUAL WITH A LAPSED LICENSE MAY NOT CONDUCT INSURANCE BUSINESS UNDER ANOTHER PERSON'S LICENSE, INCLUDING A BUSINESS ENTITY LICENSE AFFILIATION. (3) IN THE CONTINUING EDUCATION AFFIDAVIT, a producer, adjuster or public adjuster SHALL REPORT THE FINAL DISPOSITION OF ANY ADMINISTRATIVE ACTION OR OF ANY CRIMINAL ACTION taken in another jurisdiction or by another Montana governmental agency - FINAL DISPOSITION OF A CRIMINAL ACTION MEANING A PLEA AGREEMENT OR SENTENCE AND JUDGMENT.

A Montana producer takes premium money knowing the insurer will not put the coverage on risk. Which limb of MCA 33-1-1202 is that, and what else sits beside it?

1. Subsection (4), which also requires that the producer have converted the premium to the producer's own use; merely accepting money for coverage which is not placed is a breach of the fiduciary duty in 33-17-1102 rather than an act of insurance fraud under this part.
2. Subsection (1), because the premium is taken for the purpose of obtaining money; the section contains no separate provision about premiums, the taking of a premium for coverage that will not exist being treated as the presentation of a misleading statement to the insured.
3. Subsection (7), counterfeit insurance documents, on the footing that a producer who takes premium money knowing that coverage will not be provided must necessarily give the insured some document evidencing a policy which the insurer has not in fact issued to that person.
4. Subsection (4): accepting premium money knowing that coverage will not be provided. Beside it sits subsection (3), presenting or causing to be presented to or by an insurer, purported insurer, producer or administrator a materially false or altered application of insurance. ✓

Why: MCA 33-1-1202(4): ACCEPTS PREMIUM MONEY KNOWING THAT COVERAGE WILL NOT BE PROVIDED. (3): PRESENTS OR CAUSES TO BE PRESENTED TO OR BY AN INSURER, PURPORTED INSURER, PRODUCER, OR ADMINISTRATOR, AS DEFINED IN 33-17-102, A MATERIALLY FALSE OR ALTERED APPLICATION OF INSURANCE. Note the words TO OR BY - the section reaches an application put forward BY a producer as well as one presented TO an insurer.

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.

What is 'surplus lines insurance' in Montana, and who is an 'unauthorized insurer'?

1. Surplus lines insurance is any insurance of any class placed with an insurer which does not hold a Montana certificate of authority, including life and disability insurance; and an unauthorized insurer includes a risk retention group, which is unauthorized by definition.
2. Surplus lines insurance is property and casualty insurance placed through a licensed surplus lines producer only; insurance an insured procures directly for itself is independently procured insurance and is a separate category outside the surplus lines law altogether.
3. Surplus lines insurance is any property, casualty, or inland marine insurance placed with an unauthorized insurer eligible to accept it, and includes independently procured insurance. An unauthorized insurer is one not authorized here, and is not a retention group. ✓
4. Surplus lines insurance is insurance which cannot be obtained from an authorized insurer, whatever the class; and an unauthorized insurer is one whose certificate of authority has been suspended or revoked by the commissioner rather than one which never held one.

Why: MCA 33-2-301(3)(u): SURPLUS LINES INSURANCE MEANS ANY PROPERTY, CASUALTY, OR INLAND MARINE INSURANCE PERMITTED IN A STATE TO BE PLACED DIRECTLY OR THROUGH A SURPLUS LINES INSURANCE PRODUCER WITH AN UNAUTHORIZED INSURER ELIGIBLE TO ACCEPT THE INSURANCE. THE TERM INCLUDES INDEPENDENTLY PROCURED INSURANCE. THE TERM DOES NOT INCLUDE THE KINDS OF INSURANCE EXEMPTED UNDER 33-2-317. (w): UNAUTHORIZED INSURER MEANS, WITH RESPECT TO A STATE, AN INSURER NOT AUTHORIZED TO TRANSACT THE BUSINESS OF INSURANCE IN THE STATE. THE TERM INCLUDES AN INSURANCE EXCHANGE AUTHORIZED UNDER THE LAWS OF ANOTHER STATE. THE TERM DOES NOT INCLUDE A RISK RETENTION GROUP, as defined in the LIABILITY RISK RETENTION ACT OF 1986, 15 U.S.C. 3901(a)(4). (j): EXPORT means TO PLACE SURPLUS LINES INSURANCE WITH AN UNAUTHORIZED INSURER. (l): INDEPENDENTLY PROCURED INSURANCE means SURPLUS LINES INSURANCE PROCURED DIRECTLY BY AN INSURED FROM AN ELIGIBLE SURPLUS LINES INSURER.

A primary reason an organization purchases an umbrella in addition to its CGL, auto, and employers liability is to:

1. Obtain a single high layer of catastrophic liability protection above several underlying policies ✓
2. Cover first-party damage to the organization's own buildings and equipment
3. Lower the deductibles that apply under the underlying primary policies
4. Eliminate the need to carry workers compensation insurance in the states where it operates

Why: Umbrellas provide a consolidated high limit of catastrophic excess protection over multiple underlying liability policies.

In auto insurance, "stacking" of uninsured motorists coverage refers to:

1. Combining UM limits across multiple covered vehicles or policies to increase recovery ✓
2. Applying a separate deductible to each vehicle before uninsured motorists benefits are paid
3. Excluding any driver added to the policy after inception from uninsured motorists benefits
4. Reducing the uninsured motorists limit by the amount already paid by the at-fault driver's insurer

Why: Stacking allows an insured to add together the UM limits for each insured vehicle (or policy) to increase the total amount available.

Under the BACF, the limit of insurance for liability is typically written as:

1. Unlimited, with no dollar cap stated anywhere
2. A single limit for the most the insurer will pay for any one accident or loss ✓
3. A per-person limit only, applied separately to each injured claimant
4. Split limits only, never a combined single limit

Why: The Business Auto Coverage Form most commonly uses a combined single limit for liability per accident.

A dockworker loading and unloading ships, injured while working on the pier and over navigable waters, is most likely covered by:

1. The Jones Act, since anyone whose work is performed over navigable water qualifies as a seaman
2. FELA, which Congress extended to cover cargo handling at any interstate terminal
3. The Black Lung Benefits Act, for dust in ship holds
4. The Longshore and Harbor Workers' Compensation Act (LHWCA) ✓

Why: The LHWCA provides no-fault workers' compensation benefits to longshore, harbor, and maritime workers (such as those loading/unloading vessels) who are not seamen.

An insured who, knowing they are fully covered, becomes careless about locking doors exhibits which type of hazard?

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

Why: A morale hazard is carelessness or indifference to loss because the person knows insurance will cover it.

Under the Homeowners definition, an 'insured' typically includes:

1. The named insured, resident relatives, and other persons under 21 in their care ✓
2. The insurer's agent, whose acts in servicing the policy are treated as acts of the named insured
3. Only the person shown on the declarations page, with relatives added by written endorsement
4. Any visitor to the home, for as long as that person remains on the residence premises

Why: Insured generally includes the named insured, resident relatives, and others under 21 in the care of an insured, plus students away under certain conditions.

What is the general rule in MCA 33-19-306(1), and which of the following disclosures does the section permit without the individual's authorization?

1. The rule is that a licensee may disclose freely to any other licensee; the section restricts only disclosures to persons outside the insurance business, and a licensee receiving information under it may use and further disclose that information as it thinks fit.
2. The rule is that no disclosure whatever may be made without the individual's written authorization in the form prescribed by 33-19-206; the exceptions in the section concern the form of the authorization rather than the circumstances in which it can be dispensed with.
3. The rule is that a licensee may not disclose information without authorization; but disclosure to a medical care institution or a medical professional is forbidden outright, medical information being disclosable only to the individual to whom it pertains.
4. A licensee may not disclose personal or privileged information from a transaction, except as the section provides. Disclosure between licensees is permitted where reasonably necessary to detect fraud or for either to perform its insurance function. ✓

Why: MCA 33-19-306(1): EXCEPT AS PROVIDED IN THIS SECTION, A LICENSEE MAY NOT DISCLOSE PERSONAL OR PRIVILEGED INFORMATION ABOUT AN INDIVIDUAL COLLECTED OR RECEIVED IN CONNECTION WITH AN INSURANCE TRANSACTION. (2) Disclosure MAY BE MADE WITH THE WRITTEN AUTHORIZATION of the individual, in the form provided in 33-19-206. (3) Disclosure LIMITED TO WHAT IS REASONABLY NECESSARY may be made to a person to enable that person to provide information back to the licensee FOR DETECTING OR PREVENTING CRIMINAL ACTIVITY, FRAUD, MATERIAL MISREPRESENTATION, OR MATERIAL NONDISCLOSURE, the recipient agreeing IN WRITING not to disclose further. (4)(a) Disclosure MAY BE MADE BETWEEN LICENSEES if limited to what is reasonably necessary (i) TO DETECT OR PREVENT CRIMINAL ACTIVITY, FRAUD, MATERIAL MISREPRESENTATION, OR MATERIAL NONDISCLOSURE; or (ii) FOR EITHER THE DISCLOSING OR RECEIVING LICENSEE TO PERFORM ITS INSURANCE FUNCTION; and (4)(b) the RECEIVING LICENSEE MAY NOT FURTHER DISCLOSE unless the section otherwise permits. (5) Disclosure may be made to A MEDICAL CARE INSTITUTION, A MEDICAL PROFESSIONAL, OR THE INDIVIDUAL where reasonably necessary to VERIFY COVERAGE OR BENEFITS, INFORM AN INDIVIDUAL OF A MEDICAL PROBLEM, CONDUCT AN OPERATIONS OR SERVICES AUDIT, or DETERMINE THE REASONABLENESS OR NECESSITY OF MEDICAL SERVICES. (6) Disclosure MAY be made TO AN INSURANCE REGULATORY AUTHORITY and MUST be made AS REQUIRED BY LAW.

Under the PAP, the limit of liability for Part A applies:

1. Separately to each claim with no per-accident cap, so every claimant injured in one collision may collect the full stated limit
2. As the most paid regardless of the number of insureds, claims, vehicles, or persons involved (per the limits shown) ✓
3. Per insured separately, so two insureds riding in one auto double the limit available for that accident
4. Doubled when two or more vehicles are listed on the same declarations page

Why: The Part A limit of liability is the most the insurer will pay for one accident regardless of the number of insureds, claims, vehicles, or persons (subject to split/CSL terms).

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.

For a renter (HO-4), which Section I coverage is the primary coverage?

1. Coverage A — Dwelling
2. Coverage C — Personal Property ✓
3. Coverage D only
4. Coverage B — Other Structures

Why: For tenants, Coverage C — Personal Property is the centerpiece of Section I, since the renter does not own the building.

How long before delivery must a Montana form filing be made, and how must it be sent?

1. Not less than 30 days before delivery, by any means giving proof of dispatch, the commissioner's office recording the date of posting rather than the date of receipt because the insurer cannot know when a filing sent to Helena will reach the commissioner's office.
2. Not less than 90 days before delivery, by certified mail only, the period being longer for a property or casualty form than for a life or disability form because a property form is commonly filed by a rating organization on behalf of a number of its members at once.
3. At any time before the form is used, the section fixing no minimum period; the insurer must simply wait for the commissioner's approval, or for the running of the deemer period, before it delivers or issues the form for delivery anywhere in this State.
4. Not less than 60 days before delivery, and it must be delivered by hand or sent by certified mail with a return receipt requested. The commissioner's office shall mark a filing with the date of receipt. ✓

Why: MCA 33-1-501(2)(a): THE FILING MUST BE MADE NOT LESS THAN 60 DAYS BEFORE DELIVERY AND MUST BE DELIVERED BY HAND OR SENT BY CERTIFIED MAIL WITH A RETURN RECEIPT REQUESTED. THE COMMISSIONER'S OFFICE SHALL MARK A FILING WITH THE DATE OF RECEIPT BY THE COMMISSIONER'S OFFICE.

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.

Which claims is the Montana association obligated on, by reference to the determination of insolvency?

1. Covered claims existing before the determination of insolvency only; a loss occurring after the determination is uninsured, the policy having come to an end by operation of law on the date the court entered the order of liquidation against the insurer concerned.
2. Covered claims arising at any time during the policy period, whether before or after the determination of insolvency, the association standing in the insurer's shoes for the whole of the term for which the premium was paid by the insured to that insurer.
3. Covered claims existing before the determination and those arising within 60 days after it, whatever the policy expiration date, so that every insured has a full two months in which to find replacement cover before the protection of the association comes to an end.
4. Covered claims existing prior to the determination of insolvency and those arising within 30 days after it, or before the policy expiration date if that is less than 30 days after it, or before the insured replaces that policy or cancels it in those same 30 days. ✓

Why: MCA 33-10-105(1)(a)(i): the association IS OBLIGATED TO THE EXTENT OF THE COVERED CLAIMS EXISTING PRIOR TO THE DETERMINATION OF INSOLVENCY AND ARISING WITHIN 30 DAYS AFTER THE DETERMINATION OF INSOLVENCY OR BEFORE THE POLICY EXPIRATION DATE IF LESS THAN 30 DAYS AFTER THE DETERMINATION OR BEFORE THE INSURED REPLACES THE POLICY OR CAUSES ITS CANCELLATION IF THE INSURED DOES SO WITHIN 30 DAYS OF THE DETERMINATION.

Which statement about MPCI and the role of private insurers is correct?

1. Private insurers are barred from MPCI, which the Risk Management Agency writes and services itself
2. Private insurers sell and service MPCI policies under federal reinsurance through the RMA/FCIC ✓
3. MPCI is sold only by agricultural lenders as a condition of an operating loan
4. FEMA sells and adjusts all MPCI policies through the same regional offices that administer flood coverage

Why: MPCI is delivered by private insurers who sell and service the policies, with federal reinsurance and oversight provided through the RMA and the Federal Crop Insurance Corporation.

Which of the following is one of the four required elements of a legally enforceable contract?

1. Aleatory exchange
2. Subrogation
3. Indemnification
4. Consideration ✓

Why: The required elements of a contract are offer and acceptance, consideration, competent parties, and legal purpose.

Auto liability limits of 100/300/50 are an example of:

1. Split limits ✓
2. A coinsurance requirement
3. An aggregate limit
4. A combined single limit

Why: Split limits separate coverage into per-person bodily injury, per-accident bodily injury, and property damage amounts.

The Motor Carrier Coverage Form is most appropriate for:

1. An individual insuring the family sedan for commuting
2. A business that transports goods or people for hire (trucking) ✓
3. A homeowner adding coverage for a car kept in the garage
4. A motorcycle dealership that sells and services bikes

Why: The Motor Carrier Coverage Form is tailored for businesses that haul property or passengers for others, addressing trucking-specific exposures.

What may the commissioner do under MCA 33-17-1001(1), and may the actions be combined?

1. Suspend or revoke a licence alone, a civil penalty being available only in a separate proceeding brought under the general penalty provisions of the code, and the two remedies not being capable of being imposed together in respect of the same conduct by the same licensee in this State.
2. Refuse to issue or renew a licence alone, a licence once issued being capable of suspension or revocation only by order of the district court on the commissioner's petition, and a civil penalty being recoverable in the same proceeding as part of the relief sought there.
3. Levy a civil penalty alone, the code having replaced suspension and revocation with monetary penalties for all but the most serious conduct, and a licence being withdrawn only where a penalty has been imposed and left unpaid for more than ninety days in this State under this chapter.
4. Suspend, revoke, refuse to renew or refuse to issue a licence under the chapter, levy a civil penalty in accordance with 33-1-317, or choose any combination of those actions, when a licensee or an applicant for licensure has done any of the fourteen things the subsection lists. ✓

Why: MCA 33-17-1001(1): THE COMMISSIONER MAY SUSPEND, REVOKE, REFUSE TO RENEW, OR REFUSE TO ISSUE A LICENSE UNDER THIS CHAPTER, MAY LEVY A CIVIL PENALTY IN ACCORDANCE WITH 33-1-317, OR MAY CHOOSE ANY COMBINATION OF ACTIONS when a licensee or applicant has done one of the listed things. The remedies are cumulative.

What complaint record must an insurer keep under MCA 33-18-1001, and for how long must the data be held?

1. A complete record of all complaints received during the current calendar year, showing the number and disposition of each, the data being kept for at least 3 years and filed annually with the commissioner on the form the department prescribes.
2. A record of every complaint the commissioner forwards to the insurer, the insurer being under no obligation as to complaints made to it directly, and that record being retained for as long as the policy concerned remains in force in this State.
3. A complete record of all complaints since the last examination, which must be filed with the commissioner within 30 days of the close of each calendar year, the retention period being fixed by rule rather than by the section itself.
4. A complete record of all complaints received since its last examination, showing the total number, classification by line, nature, disposition and time taken; and complaint, claims, rating and marketing data kept for at least 5 years. ✓

Why: MCA 33-18-1001: (1) an insurer SHALL MAINTAIN A COMPLETE RECORD OF ALL COMPLAINTS IT HAS RECEIVED SINCE THE DATE OF ITS LAST EXAMINATION UNDER 33-1-401, indicating THE TOTAL NUMBER, THEIR CLASSIFICATION BY LINE OF INSURANCE, THE NATURE OF EACH, THE DISPOSITION and THE TIME IT TOOK TO PROCESS EACH. (2) an insurer or health insurance lead generator shall keep books and records so that data on COMPLAINTS, CLAIMS, RATING, UNDERWRITING AND MARKETING MATERIALS are ACCESSIBLE AND RETRIEVABLE for examination, MAINTAINED FOR AT LEAST 5 YEARS. (3) COMPLAINT means ANY WRITTEN COMMUNICATION PRIMARILY EXPRESSING A GRIEVANCE.

General average in ocean marine refers to:

1. The average premium charged across all vessels in a single fleet policy
2. A total loss of the vessel and everything aboard, after which the underwriter pays the full insured value
3. A voluntary sacrifice or expense incurred to save the venture, shared proportionally by all parties ✓
4. A partial loss falling entirely on the owner of the damaged property, with no contribution from others

Why: General average is a partial loss intentionally incurred (e.g., jettisoning cargo) to save the entire venture; the loss is shared proportionally among all interests (ship, cargo, freight).