North Dakota Property & Casualty Insurance License, Practice Exams

A worker can return to light-duty work at reduced hours and lower pay while still recovering. The wage-loss benefit during this period is classified as:

1. Temporary partial disability ✓
2. Temporary total disability
3. Permanent total disability
4. Permanent partial disability

Why: Temporary partial disability (TPD) compensates for the wage loss when a recovering worker can perform some work but earns less than before the injury.

How must a North Dakota producer report a change of address?

1. By noting the new address on the next application or appointment form filed with the department, which is the ordinary way in which the department's records are kept current without imposing a separate filing obligation upon the licensee.
2. The change required by NDCC 26.1-26-33 must be provided to the department electronically or on a letter or form separate from the application or appointment forms and submitted solely for that purpose. ✓
3. By written notice to each appointing insurer, which passes the change to the department in its next filing, the insurer being responsible for the accuracy of the addresses of the producers it has appointed in this state.
4. By any means which brings the change to the department's attention within thirty days, including a telephone call noted on the licensee's file, the rule being concerned with the currency of the record rather than with the form of the notice.

Why: NDAC 45-02-02-13. SEPARATE from the application or appointment forms and SOLELY for that purpose.

Under the PAP, if the named insured dies, coverage is typically extended to:

1. No one, because the policy terminates immediately on the date of the named insured's death
2. The surviving spouse if a resident and the legal representative while acting as such, for a limited period ✓
3. Any heir named in the will, for an unlimited period, because ownership of the covered auto passes through the estate
4. Only the funeral director or other party holding custody of the vehicle until the estate is settled in probate

Why: Part F's death provision continues coverage for the surviving resident spouse and the deceased's legal representative (and certain custodians) for a limited time.

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.

What is a CREDIT HOUR for North Dakota insurance continuing education?

1. Sixty minutes of time, of which at least fifty minutes must be instruction, with a maximum of ten minutes break. Credit will not be approved in increments of less than one-half hour, and neither students nor instructors may earn credit more than once during a reporting period for the same course. ✓
2. Fifty minutes of instruction, the ten-minute break being additional to the hour rather than part of it, and credit being approved in increments of as little as a quarter of an hour for short courses offered at conventions and seminars in this state.
3. Sixty minutes of instruction with no break, and credit is granted in whole hours only, a course of less than a full hour earning nothing however useful its content may be to the licensees who attend it.
4. Sixty minutes of time of which at least forty-five must be instruction, and an instructor earns credit each time the course is presented, the rule rewarding those who teach as well as those who attend.

Why: NDAC 45-02-04-03(6), (6)(a) and (6)(b). 60 / at least 50 / at most 10; half-hour increments; and no repeat credit in a reporting period for student OR instructor.

A large corporation sets aside its own funds in a formal program to pay for its own anticipated losses rather than buying insurance. This is:

1. Coinsurance
2. Reinsurance
3. Reciprocal insurance
4. Self-insurance ✓

Why: Self-insurance is a formal retention program in which an entity sets aside funds to pay its own losses instead of transferring the risk.

Replacement cost coverage pays to repair or replace damaged property:

1. With a deduction for depreciation based on the age of the property
2. Only at the original purchase price shown on the insured's receipt
3. With no deduction for depreciation (subject to policy limits) ✓
4. Only at the item's current market value in a sale between willing parties

Why: Replacement cost coverage pays the full cost to replace property with new property of like kind and quality without deducting depreciation, subject to limits.

On which grounds is the declination or termination of a North Dakota automobile policy prohibited under NDCC 26.1-40-11?

1. Race, religion, nationality and ethnic group alone. Age, sex, marital status and occupation are ordinary underwriting factors which an automobile insurer may use in deciding whether to insure as freely as it uses them in setting the rate to be charged for the risk.
2. Any ground which is not one of the exclusive cancellation reasons in section 26.1-40-02, that section governing declinations as well as terminations so that an insurer may refuse an application only for a reason on which it could have cancelled a policy already issued.
3. The applicant's driving record, claims history and credit information, those being the three matters which the chapter removes from an automobile insurer's consideration in this state unless the insurer can show that each of them is actuarially related to the risk.
4. Race, religion, nationality or ethnic group; solely the lawful occupation; the vehicle's principal location unless for a genuine business purpose; solely age, sex or marital status; prior substandard cover; and a prior declination by another insurer. ✓

Why: NDCC 26.1-40-11(1) to (6). Note which grounds carry SOLELY and which do not: race, religion, nationality and ethnic group are barred outright.

A North Dakota provider bills the no-fault insurer two hundred days after treatment. Must it be paid?

1. No. NDCC 26.1-41-09(3) provides that neither the injured person nor a basic no-fault insurer is required to pay for services billed more than one hundred eighty days after the date of treatment. ✓
2. Yes, the no-fault insurer must pay even two hundred days after treatment, provided the treatment itself was reasonable and necessary and the claim is made within the limitation period for an action for benefits, the chapter placing no time limit upon the rendering of a bill by a provider of services to an injured person in this state.
3. Yes, but the insurer may reduce the bill by the interest it would have earned on the money had the bill been rendered promptly, the delay costing the provider the time value of the payment rather than the payment itself.
4. No, unless the injured person has already paid the bill personally, in which case the insurer must reimburse the injured person because the statutory time limit protects the insurer against the provider alone.

Why: NDCC 26.1-41-09(3). 180 days from the DATE OF TREATMENT, and the bar runs against the injured person as well as the insurer.

When is no North Dakota notice of nonrenewal required, and what follows if the insurer gives neither notice?

1. No notice is required where the policy is being nonrenewed for nonpayment of premium, and if the insurer gives no notice at all the policy simply expires at the end of its term, the insured being taken to know the date on which the cover was written to end.
2. None is required if the insured is sent a renewal notice, bill, certificate or policy showing the insurer's willingness to renew; if neither notice is given, coverage is deemed renewed on payment of the appropriate premium on the same terms. ✓
3. No notice is required where the insured has insured elsewhere or has agreed to the nonrenewal, and where no notice is given the insurer must pay any loss occurring in the thirty days after expiration as though the policy had been renewed for a further term on the same conditions.
4. No notice is required of a policy written for a term of less than one year, and an insurer which gives no notice where one is due commits an unfair trade practice for which the commissioner may suspend its certificate of authority.

Why: NDCC 26.1-39-16(3). The deemed renewal is SUBJECT TO SUBSECTION 1 OF SECTION 26.1-39-13 - the seven cancellation grounds - and lasts until replacement coverage is accepted or the insured agrees to the nonrenewal.

At what hour does a North Dakota insurance policy attach and expire under NDCC 26.1-30-18?

1. At 12:01 in the morning on the day coverage begins and at 11:59 at night on the day of expiration, so that the policy runs for the whole of both days and there is no gap between it and a policy written to take effect on the following day by the same or another insurer in this state.
2. At noon standard time on each day, which is the hour the section fixes for the attachment and the expiration of a policy unless the policy itself states another hour, the parties being free to contract out of the statutory hour by an express provision.
3. It covers the insured at 12:01 A.M. On the day on which coverage begins and expires at 12:01 A.M. On the day of expiration of the policy, so a policy which expires on the first of the month does not cover the whole of that day and a policy which begins then covers all of it. ✓
4. At the hour stated in the policy. The section leaves the hour to the contract and fixes a time only for a policy of insurance on growing crops against loss by hail, which takes effect at the time stated on the application.

Why: NDCC 26.1-30-18. 12:01 a.m. at both ends - so a policy expiring on the 1st does NOT cover the whole of the 1st.

What higher uninsured motorist limits must a North Dakota insurer make available?

1. Whatever limits the insured asks for, up to the limits the insurer is prepared to write for bodily injury liability on the same policy, the chapter placing no ceiling of its own upon uninsured motorist coverage in this state.
2. Limits of at least one hundred thousand dollars per person and three hundred thousand dollars per accident, which the chapter makes the minimum an insurer must offer whatever the liability limits carried on the policy may be.
3. Higher limits under its rating plan and rules on request; but it need not exceed the insured's bodily injury limits, $100,000 per person and $300,000 per accident, or a $300,000 single limit, whichever is less. ✓
4. Higher limits only where the insured also raises the bodily injury liability limits of the policy to the same figures, the two coverages being required to match under this chapter at every level of cover.

Why: NDCC 26.1-40-15.2(2). Three ceilings and the insurer may stop at WHICHEVER IS LESS.

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.

An applicant for an initial North Dakota license is refused and does not request a hearing within thirty days. What is the position?

1. The commissioner must hold a hearing in any event within thirty days of the issuance of the notice, the refusal of an initial licence being a matter which this chapter requires to be determined after a hearing whether or not the applicant asks for one, and the fees accompanying the application are refunded.
2. The refusal stands, but the applicant may request a hearing at any later time while the ground of refusal continues to exist, the thirty days being directory rather than mandatory, and the fees accompanying the application are held to the applicant's credit against a fresh application made afterwards.
3. The refusal stands. The right given by NDCC 26.1-26-40 is a right to request a hearing within thirty days from the date of issuance of the notice, and the commissioner's duty to hold one arises only if requested by the applicant. All fees accompanying the application remain not refundable under 26.1-26-39. ✓
4. The refusal is void for want of a hearing. A licence may be refused only after notice to the applicant and a hearing under section 26.1-26-42, and an applicant who does not request a hearing is treated as having had the matter determined in the applicant's favour by the commissioner of this state.

Why: NDCC 26.1-26-40: THE COMMISSIONER SHALL HOLD A HEARING, IF REQUESTED BY THE APPLICANT, WITHIN THIRTY DAYS OF THE RECEIPT OF THE REQUEST FOR A HEARING AND UPON TEN DAYS' WRITTEN NOTICE TO THE APPLICANT - the duty is conditional on the request. NDCC 26.1-26-39: ALL FEES ACCOMPANYING THE APPLICATION FOR LICENSE ARE NOT REFUNDABLE.

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.

What happens if the North Dakota association fails to submit a suitable PLAN OF OPERATION?

1. The association may not levy assessments or pay claims until a plan has been approved, the plan being the source of its authority to act and the chapter giving the commissioner no power to supply one in its place.
2. The commissioner, after notice and hearing, shall adopt rules to implement the chapter, and those rules stand until modified or superseded by an approved plan; a plan takes effect on written approval. ✓
3. The commissioner may appoint a receiver for the association and administer it through the department until a board willing to submit a plan has been selected by the member insurers of this state.
4. Nothing. The plan of operation is a convenience for the association's internal management, and its powers and duties come from the chapter itself, so that the association may operate without a plan for as long as it chooses to do so.

Why: NDCC 26.1-42.1-06(1). The first plan was due within NINETY DAYS after 1 August 1999; ALL MEMBER INSURERS SHALL COMPLY with the plan - subsection 2.

A coal miner who develops pneumoconiosis (black lung disease) from workplace dust exposure may receive benefits under:

1. The Defense Base Act, which covers respiratory illness in workers at government-contracted sites
2. The Jones Act, for dust below decks
3. The Black Lung Benefits Act (Federal Mine Safety) ✓
4. FELA, on proof of employer negligence

Why: The Black Lung Benefits Act provides compensation to coal miners who are totally disabled by pneumoconiosis (black lung) arising from mine employment.

What limitation periods apply to North Dakota survivors' benefits and to an ASSIGNED claim?

1. The same two and four year periods which govern an action for the injured person's own benefits, the chapter making no separate provision for survivors and treating the death as the loss from which time runs in every case.
2. Two years after the death in every case, and an assigned claim must be brought within two years of the assignment, the plan being subject to the same limitation as the insurer whose place it takes.
3. Six years after the death, and an action on an assigned claim within thirty days of the rejection of the claim by the insurer to which it was assigned, the short period being designed to bring assigned claims to a conclusion quickly.
4. Two years after the death or six years after the accident, whichever is earlier, or six years after the last payment; and sixty days after rejection of an assigned claim. ✓

Why: NDCC 26.1-41-19(2) and (3). And subsection 4: these periods GOVERN ALL ACTIONS for benefits under the chapter NOTWITHSTANDING ANY LIMITATION PRESCRIBED ELSEWHERE in the laws of this state.

Errors and omissions (E&O) insurance protects a producer against:

1. Flood damage to the agency building and to the client files stored in its basement records room
2. Physical damage to the producer's own car while driving between client appointments, including collision and theft losses
3. Health expenses of the producer and the agency staff
4. Liability arising from negligent acts, errors, or omissions in providing professional insurance services ✓

Why: E&O coverage responds to claims that the producer was professionally negligent, such as failing to obtain requested coverage, and is a key protection against the producer's professional liability exposure.

What may the board of the North Dakota association do to help prevent insolvencies?

1. By majority vote, make recommendations to the commissioner on detecting and preventing insolvencies and on regulation for solvency, and report on the history and causes of a domestic insolvency. ✓
2. Examine the financial condition of member insurers and report those it considers to be in difficulty, the association having the same examination powers as the commissioner over the companies whose failures it must pay for out of assessments upon the rest of the market.
3. Require a member insurer to increase its capital or surplus, or to cease writing business in this state, where the board finds on a majority vote that the insurer's condition threatens the solvency of the association itself.
4. Nothing. The association's functions begin when an insurer has failed, and the detection and prevention of insolvencies is the business of the commissioner, with whom the association has no formal relationship until an order of liquidation has been made.

Why: NDCC 26.1-42.1-10(1) to (3). Recommendations and a post-mortem report - all advisory, and all by MAJORITY VOTE of the board.

By when must a claim be filed with the North Dakota association, and what is never a covered claim?

1. Within two years of the order of liquidation, which is the period allowed for filing claims against the estate, and the association will consider a claim for losses incurred but not reported if the insured can show that the loss occurred during the policy period.
2. Within eighteen months of the order of liquidation in every case, the court's own filing deadline being irrelevant to the association, whose obligations are fixed by this chapter rather than by the orders made in the liquidation proceeding.
3. Within thirty days after the order of liquidation, the same period which governs the claims the association must pay, so that the association's exposure is known within a month of the failure of the insurer.
4. By the earlier of eighteen months after the date of the order of liquidation or the final date set by the court for filing claims against the liquidator; and a claim never includes a claim for protection afforded under the insured's policy for incurred but not reported losses. ✓

Why: NDCC 26.1-42.1-05(1)(b). THE EARLIER of the two dates, and IBNR claims are excluded outright.

A manufacturer wants higher liability limits but identical terms to its CGL across all of its primary policies. The most efficient solution is:

1. Dropping the aggregate
2. A fidelity bond
3. A follow-form excess policy ✓
4. A self-insured retention

Why: A follow-form excess policy adds limits while matching the underlying terms, ideal when only more capacity is needed.

A North Dakota COMMERCIAL policyholder is cancelled midterm for a substantial change in the risk. Which chapter fixes the notice, and how long is it?

1. NDCC 26.1-39-13, and the notice is thirty days, chapter 26.1-39 governing every property and casualty policy written in this state including a commercial one, while chapter 26.1-30.1 supplies only the grounds on which a commercial policy may be cancelled during its term.
2. NDCC 26.1-30.1-03, and the cancellation is not effective prior to thirty days after notice to the policyholder, the notice containing a specific reason drawn from section 26.1-30.1-02. ✓
3. NDCC 26.1-30.1-06, and the notice is sixty days, that section governing the withdrawal of commercial cover whether the withdrawal takes effect during the term or at the expiration of the policy.
4. Both chapters, and the longer period governs, so that a commercial policyholder receives forty-five days' notice of a midterm cancellation, being the nonrenewal period in chapter 26.1-39 rather than the thirty days in chapter 26.1-30.1.

Why: 26.1-30.1-03 for a commercial midterm cancellation - 30 days. 26.1-30.1-06 is the COMMERCIAL NONRENEWAL section - 60 days. Chapter 26.1-39's 30/10 and 45/90 periods belong to the general property and casualty regime.

How does restitution ordered by the North Dakota commissioner under NDCC 26.1-02.1-05.1(4) reach the victim?

1. The commissioner certifies the amount to the district court of Burleigh County, which enters judgment for the victim insurer, restitution under this section being enforced as a civil judgment rather than paid through any fund held by the state for the purpose.
2. The owing party pays it directly to the victim insurer, the commissioner's order operating as a civil judgment which the insurer may enforce in the district court of the county in which the person against whom it was made resides or has a place of business in this state.
3. The owing party pays it to the insurance regulatory trust fund under section 26.1-01-07.1, and from that fund it is paid to the victim insurer or self-insured employer, restitution funds being reallocated to the victim. ✓
4. It is paid into the insurance regulatory trust fund and appropriated to the department for fraud education and enforcement. A victim insurer which wishes to be made whole must bring its own civil action, the fund being a public one and its moneys not available to a private claimant.

Why: NDCC 26.1-02.1-05.1(4) and (5). Restitution goes THROUGH the insurance regulatory trust fund to the victim; it is the only money in that fund which is not available for fraud education and enforcement - RESTITUTION FUNDS MUST BE REALLOCATED TO THE VICTIM.

When does a North Dakota policy on growing crops against loss by HAIL take effect?

1. At 12:01 in the morning on the day on which coverage begins, like every other policy. The section makes no exception for hail insurance on growing crops, and an application which states an earlier hour is of no effect against the statutory rule.
2. At the time the insurer accepts the application at its home office, the crop being at risk from the moment the contract is made, and the producer having no authority to bind the insurer on a hail risk in this state.
3. At 12:01 in the morning on the day after the application is taken, the twenty-four hour delay being designed to prevent a farmer from applying for hail insurance with a storm already in sight, and the delay being one which the commissioner may shorten by bulletin in a season of unusual hazard.
4. At the time and on the day stated on the application for the insurance. The hail policy is the exception to the hour which governs every other policy under the section, and the application rather than the policy fixes the moment at which the cover attaches to the crop. ✓

Why: NDCC 26.1-30-18, second sentence. THE APPLICATION fixes the time and the day for hail on growing crops.

Under the NFIP Dwelling Form, building coverage and contents coverage:

1. Are both automatically included at the same limit
2. Share a single combined limit
3. Have separate limits and must be purchased separately ✓
4. Cannot both be purchased on one property

Why: NFIP building and contents coverages carry separate limits, and contents coverage must be purchased separately from building coverage.

What form may the evidence take under NDCC 26.1-26-42.1?

1. A certified copy of the other state's order alone. An electronic communication is not evidence for the purposes of this section, and the insurance producer database is a convenience for the department rather than a source on which an order suspending or revoking a licence may be founded in this state.
2. Any evidence which would be admissible in a hearing conducted in conformity with chapter 28-32, the administrative agencies practice act, since a licence may not be suspended or revoked on material which could not lawfully be received in the formal proceeding for which that chapter provides in this state.
3. A certified copy, electronic mail, or the insurance producer database maintained by the national association named in the section, its affiliates, or subsidiaries. All three of those forms are expressly allowed by the closing sentence of the section, and none of them requires any hearing at all. ✓
4. A certified copy or electronic mail, but not an entry in the insurance producer database, which records the current status of a licence rather than the fact of an order made against it, and which is maintained by a private association rather than by any regulator of this or of any other state.

Why: NDCC 26.1-26-42.1, closing sentence: THIS EVIDENCE MAY BE IN THE FORM OF A CERTIFIED COPY OR BY ELECTRONIC MAIL, OR THROUGH THE INSURANCE PRODUCER DATABASE MAINTAINED BY THE NATIONAL ASSOCIATION OF INSURANCE PRODUCERS, ITS AFFILIATES, OR SUBSIDIARIES. All three forms are expressly allowed. (The cached text names the association of insurance PRODUCERS; 26.1-26-20(2) names the association of insurance COMMISSIONERS. Nothing here turns on which.)

What is the status of documents furnished to the North Dakota insurance department under NDCC 26.1-26-34(6)(a) and (b)?

1. They are public records of the insurance department and are open to inspection, subpoena and discovery in the same way as any other record held by an agency of this state, the commissioner being required to release them upon a request made under the open records law of North Dakota.
2. They are confidential and privileged and may not be used by anyone for any purpose, including by the commissioner, who may found a regulatory or legal action only upon evidence obtained independently of the material furnished under this section by the insurer or the producer or an agent of either of them.
3. They are confidential and privileged and are not subject to subpoena, but they are admissible in evidence in a private civil action where the court is satisfied that they are material to an issue in the action, and the commissioner may be required to testify about them in such an action on the order of the court.
4. They are confidential and privileged, are not subject to subpoena, and are not subject to discovery or admissible in any private civil action, although the commissioner may use them in any regulatory or legal action. And nobody acting under the commissioner's authority may testify about them. ✓

Why: NDCC 26.1-26-34(6)(a): ANY DOCUMENTS, MATERIALS, OR OTHER INFORMATION IN THE CONTROL OR POSSESSION OF THE INSURANCE DEPARTMENT THAT IS FURNISHED BY AN INSURER, INSURANCE PRODUCER, OR AN EMPLOYEE OR AGENT THEREOF, OR OBTAINED BY THE COMMISSIONER IN AN INVESTIGATION PURSUANT TO THIS SECTION, IS CONFIDENTIAL AND PRIVILEGED, IS NOT SUBJECT TO SUBPOENA, AND IS NOT SUBJECT TO DISCOVERY OR ADMISSIBLE IN EVIDENCE IN ANY PRIVATE CIVIL ACTION. HOWEVER, THE COMMISSIONER MAY USE THE DOCUMENTS, MATERIALS, OR OTHER INFORMATION IN THE FURTHERANCE OF ANY REGULATORY OR LEGAL ACTION BROUGHT AS A PART OF THE COMMISSIONER'S DUTIES. (6)(b): NEITHER THE COMMISSIONER NOR ANY PERSON WHO RECEIVES DOCUMENTS, MATERIALS, OR OTHER INFORMATION WHILE ACTING UNDER THE AUTHORITY OF THE COMMISSIONER MAY BE PERMITTED OR REQUIRED TO TESTIFY IN ANY PRIVATE CIVIL ACTION CONCERNING ANY CONFIDENTIAL DOCUMENTS, MATERIALS, OR INFORMATION SUBJECT TO SUBDIVISION a.

A North Dakota consultant is paid a fee by the client and also receives a share of the commission from the insurer on the policy the client bought. Is that permitted?

1. Yes, provided the consultant discloses the commission to the client in the written agreement prepared before the services were rendered and the client signs the agreement knowing of it, the consultant's duty being one of disclosure rather than one of abstaining from every payment by an insurer.
2. Yes. The prohibition in section 26.1-26-41 is directed at employment by and partnership with an insurer or producer, and a share of commission on a single policy is neither of those things, the consultant remaining an independent contractor who happens to be paid from two sources on the same transaction.
3. No, but only where the consultant's fee and the share of commission together exceed a reasonable charge for the work described in the written agreement, the section forbidding double recovery rather than the receipt of remuneration from an insurer as such by a licensed consultant in this state.
4. No. No licensed consultant may receive any remuneration whatsoever from any licensed insurance producer, surplus lines insurance producer, or insurer arising out of activities as a consultant, and the consultant owes complete loyalty to the client alone, whatever the client may have been told of it. ✓

Why: NDCC 26.1-26-41: NO LICENSED CONSULTANT MAY EMPLOY, BE EMPLOYED BY, OR BE IN PARTNERSHIP, LIMITED LIABILITY PARTNERSHIP, OR LIMITED LIABILITY COMPANY WITH NOR RECEIVE ANY REMUNERATION WHATSOEVER FROM ANY LICENSED INSURANCE PRODUCER, SURPLUS LINES INSURANCE PRODUCER, OR INSURER ARISING OUT OF ACTIVITIES AS A CONSULTANT. NDCC 26.1-26-35 supplies the reason: the consultant SHALL SERVE WITH OBJECTIVITY AND COMPLETE LOYALTY THE INTERESTS OF THE CONSULTANT'S CLIENT ALONE.

In a monopolistic state fund jurisdiction, employers must generally obtain workers' compensation coverage from:

1. A federal program
2. Any private insurer licensed in the state
3. An out-of-state surplus lines insurer
4. The state-operated fund only ✓

Why: In monopolistic fund states, the state fund is the sole source of WC coverage and private insurers may not write it; employers must buy from the state fund.

Which rungs of the NDCC 26.1-02.1-05(1)(a) grid are CLASS C felonies?

1. Where the value of any property or services retained exceeds one thousand dollars but does not exceed ten thousand dollars only. The value of the act associated with the fraud governs the two felony rungs above this one and has no part to play at the bottom of the grid, which is concerned with what the offender actually took away.
2. Where the value of any property or services retained exceeds ten thousand dollars but does not exceed fifty thousand dollars; and where the value of the act exceeds fifty thousand dollars. Those are the two rungs immediately below the class A felony, and the grid works downwards from the largest figure to the smallest by steps of that kind.
3. Where the value of any property or services retained does not exceed one thousand dollars. Everything above that figure is a class B felony or a class A felony, and there is no class C rung in the grid at all, the legislature having used only two felony classes and one misdemeanor class in drawing it up.
4. Where the value of the act associated with or directly related to the fraud exceeds ten thousand dollars but does not exceed fifty thousand; and where the value of any property or services retained exceeds one thousand dollars but does not exceed ten thousand. ✓

Why: NDCC 26.1-02.1-05(1)(a)(4) and (5). The grid alternates between THE VALUE OF THE ACT and THE VALUE OF PROPERTY OR SERVICES RETAINED, and the class C rungs are the $10,000-$50,000 band of the first and the $1,000-$10,000 band of the second.

A vessel departs from its customary route for no necessity, and a loss occurs. The insurer may deny coverage based on:

1. The absence of any deductible in the marine declarations
2. Failure to satisfy the cargo policy's coinsurance requirement
3. Breach of the implied warranty of no deviation ✓
4. The Special Causes of Loss form's exclusion for water damage

Why: Unjustified deviation from the agreed or customary route breaches the implied warranty against deviation, allowing the insurer to deny coverage.

Which describes the typical underwriting attitude of a surety toward the principal?

1. The surety expects a predictable frequency of losses and prices the bond to fund them
2. The surety disregards the principal's financial statements and looks instead to the obligee's credit rating, the size of the contract, and the premium it collects for the bond
3. The surety insures the obligee's solvency for the term of the contract
4. The surety underwrites the principal's character, capacity, and capital expecting no loss, similar to a credit decision ✓

Why: Surety underwriting evaluates the principal's character, capacity, and capital like a credit risk, anticipating no loss because the principal must indemnify the surety.

Does NDCC 26.1-39-05 apply to a detached garage and to personal property?

1. Yes to both. The valued policy rule applies to everything insured under a policy on real property in this state, including the contents of the building and any structure appurtenant to it, so that the face of the policy measures the loss whatever was destroyed by the covered peril.
2. No as to personal property, but yes as to a detached garage. An appurtenant structure is real property and is within the section, which draws its line between realty and personalty and nowhere else.
3. Yes as to personal property scheduled in the policy, and no as to an appurtenant structure, the section protecting property to which a specific value has been given in the contract and leaving unscheduled property to be settled on an actual cash value basis.
4. No to both. The section does not apply as to personal property, and a claim for an appurtenant or separate structure is settled at actual replacement cost or actual cash value as the policy provides, unless that structure is individually described and valued before the loss. ✓

Why: NDCC 26.1-39-05(2) and (3). Personal property is out. An appurtenant or separate structure is out UNLESS individually described AND valued BEFORE THE LOSS.

An insured wants to cover a $40,000 diamond ring with no deductible and broad worldwide protection. The best approach is:

1. Add a scheduled personal property floater (endorsement) listing the ring ✓
2. Apply to the state FAIR Plan, which writes basic property coverage on risks the voluntary market has declined
3. Buy an NFIP dwelling policy, since federal flood coverage follows scheduled jewelry anywhere in the world
4. Rely on the homeowners Coverage C limit, which pays the full $40,000 once the policy deductible is satisfied

Why: High-value items exceeding homeowners sublimits are best covered by scheduling them on a personal property floater, which offers broad, often worldwide, coverage with no deductible.

What written agreement must a North Dakota consultant make, and when, under NDCC 26.1-26-35?

1. Before rendering services as an insurance consultant, the consultant shall prepare a written agreement on a form approved by the commissioner. It must outline the nature of the work to be performed and must state the fee for the work, and the consultant and the client shall sign it. ✓
2. Within thirty days after beginning to render services, the consultant shall prepare a written agreement on a form of the consultant's own devising which outlines the nature of the work, the fee being a matter for later agreement between the consultant and the client once the extent of the work is known to both of them.
3. Before rendering services, the consultant shall prepare a written agreement on a form approved by the commissioner outlining the nature of the work. The fee need not be stated in the agreement, and the client's signature is not required, the agreement being the consultant's own record of the retainer rather than a contract between them.
4. Before rendering services, the consultant shall file with the commissioner a written agreement on a form approved by the commissioner which outlines the nature of the work and states the fee, and shall not begin the work until the commissioner has approved the particular agreement as reasonable in its terms and in its fee.

Why: NDCC 26.1-26-35: BEFORE RENDERING SERVICES AS AN INSURANCE CONSULTANT, AN INSURANCE CONSULTANT SHALL PREPARE A WRITTEN AGREEMENT ON A FORM APPROVED BY THE COMMISSIONER. THE AGREEMENT MUST OUTLINE THE NATURE OF THE WORK TO BE PERFORMED BY THE CONSULTANT AND MUST STATE THE FEE FOR THE WORK. THE CONSULTANT AND THE CLIENT SHALL SIGN THE AGREEMENT. A form APPROVED by the commissioner, but the agreement itself is not filed for approval case by case.

When must a North Dakota producer become an appointed agent of an insurer under NDCC 26.1-26-13.1(1)?

1. An insurance producer may not act as an agent of an insurer unless the producer becomes an appointed agent of that insurer. An insurance producer who is not acting as an agent of an insurer is not required to become appointed. The second sentence is the one usually forgotten. ✓
2. Every licensed insurance producer must hold at least one appointment at all times, a licence without an appointment being of no effect in this state, and a producer whose last appointment is terminated must obtain another within thirty days or the licence ceases to continue in force under section 26.1-26-31.
3. An insurance producer may not act as an agent of an insurer unless appointed by that insurer, and a producer who is not acting as an agent of an insurer must still become appointed by at least one insurer in order to sell, solicit or negotiate insurance for any person in this state under this chapter of the Century Code.
4. An insurance producer must become appointed before submitting the first insurance application to an insurer, and a producer who has executed an agency contract with an insurer is appointed by that contract, the filing of the notice of appointment being a matter of record only and not a condition of the producer's authority to act.

Why: NDCC 26.1-26-13.1(1): AN INSURANCE PRODUCER MAY NOT ACT AS AN AGENT OF AN INSURER UNLESS THE INSURANCE PRODUCER BECOMES AN APPOINTED AGENT OF THAT INSURER. AN INSURANCE PRODUCER WHO IS NOT ACTING AS AN AGENT OF AN INSURER IS NOT REQUIRED TO BECOME APPOINTED. The second sentence is the one that is usually forgotten: a producer acting for the INSURED under 26.1-26-07 needs no appointment.

Does a civil fine under NDCC 26.1-26-50 replace a licence sanction?

1. Yes. The civil fine is an alternative to a licence sanction and the two may not be imposed together, the legislative assembly having intended that a person who pays the fine should keep the licence and that a person who loses the licence should not also be fined for the same violation.
2. No, but the commissioner may impose a fine only where a licence sanction has first been imposed for the same violation, the fine being an addition to the sanction rather than a freestanding penalty, and a person who holds no licence at all may not be fined under this section of the chapter.
3. No. The fine and the licence sanction may be imposed together or separately, and neither requires a hearing where the person admits the violation in writing, the hearing being a protection which the person may waive by an admission made to the commissioner before the order is entered.
4. No. It is in addition to or in lieu of any applicable denial, suspension, or revocation of a license, so the commissioner may impose both of them together, or either one of them alone. A hearing is required in either case, and the section reaches any person at all who violates the chapter. ✓

Why: NDCC 26.1-26-50: IN ADDITION TO OR IN LIEU OF ANY APPLICABLE DENIAL, SUSPENSION, OR REVOCATION OF A LICENSE, ANY PERSON VIOLATING THIS CHAPTER MAY, AFTER HEARING, BE SUBJECT TO A CIVIL FINE NOT TO EXCEED TEN THOUSAND DOLLARS FOR EACH VIOLATION. AFTER HEARING, and the section reaches ANY PERSON VIOLATING THIS CHAPTER, not only a licensee.

Where must an action against the North Dakota guaranty association be brought?

1. In the courts of this state, which have exclusive jurisdiction, with exclusive venue in the district courts, though the association may waive that venue in specific actions; a member insurer aggrieved by a final action appeals to the commissioner. ✓
2. In any court of competent jurisdiction, in this state or elsewhere, the association being deemed the insolvent insurer for all purposes and being amenable to suit wherever that insurer could have been sued upon the policy which gave rise to the claim.
3. Before the commissioner in the first instance, whose decision is final as to any question arising under the chapter, the district courts having no jurisdiction until the administrative remedy has been exhausted by the claimant.
4. In the district court of Burleigh County alone, that being the venue the Century Code fixes for proceedings against bodies created by statute and regulated by the insurance department of this state.

Why: NDCC 26.1-42.1-05(3), read with 26.1-42.1-06(3)(h): a member insurer aggrieved by a final action of the association APPEALS TO THE COMMISSIONER WITHIN THIRTY DAYS.

Hired auto physical damage coverage under the BACF can be provided by:

1. Symbol 7 alone, since it reaches every auto the insured operates, rented units included
2. An endorsement to the workers compensation policy covering autos employees rent on trips
3. Symbol 1, which covers any auto and so picks up hired units for physical damage
4. Endorsement or designation that extends physical damage to autos the insured hires or rents ✓

Why: Physical damage on hired autos is added via the appropriate symbol (e.g., 8) or hired auto physical damage endorsement, often with a stated limit.

When is a North Dakota producer regarded as representing the INSURED under NDCC 26.1-26-07?

1. Whenever the producer was first approached by the insured rather than by the insurer, the question turning on who initiated the transaction, so that a producer appointed by the insurer nevertheless represents the insured where the insured sought the producer out and asked for the coverage to be placed.
2. Where the producer is not an appointed insurance producer of the insurer with which an insurance policy is placed and acts or AIDS in any manner in negotiating insurance contracts or placing risks of effecting insurance for a party other than oneself or itself. That producer is regarded as representing the insured or the insured's beneficiary and not the insurer. ✓
3. Where the producer holds an appointment from the insurer with which the policy is placed but charges the insured a separate fee for the service, the fee making the producer the insured's agent for that transaction whatever the appointment may say about the producer's relation to the insurer in the placing of the risk.
4. Where the producer is a surplus lines insurance producer, a surplus lines producer always being regarded as representing the insured because the insurer is not licensed in this state, and where the producer is an insurance consultant who receives a fee from the insured for advice about the policy which is afterwards placed for that insured.

Why: NDCC 26.1-26-07: AN INSURANCE PRODUCER OR SURPLUS LINES INSURANCE PRODUCER, WHO IS NOT AN APPOINTED INSURANCE PRODUCER OF THE INSURER WITH WHICH AN INSURANCE POLICY IS PLACED AND WHO ACTS OR AIDS IN ANY MANNER IN NEGOTIATING INSURANCE CONTRACTS OR PLACING RISKS OF EFFECTING INSURANCE FOR A PARTY OTHER THAN ONESELF OR ITSELF, IS REGARDED AS REPRESENTING THE INSURED OR THE INSURED'S BENEFICIARY AND NOT THE INSURER. The hinge between 26.1-26-06 and 26.1-26-07 is APPOINTMENT: appointed, the producer represents the insurer; not appointed, the insured.

What counts as an insurance continuing education course under NDAC 45-02-04-03(1)?

1. An educational presentation involving insurance fundamentals, policies, laws, risk management or other courses offered in a process of instruction approved by the commissioner as expanding skills and developing knowledge to better serve the insurance buying public. ✓
2. Any course of instruction offered by an approved provider, whatever its subject, the rule regulating who may offer courses rather than what they may contain, and leaving the choice of subject to the provider and to the market of licensees who must take the hours each reporting period.
3. Any course approved by the national association of insurance commissioners for continuing education credit in any member state, North Dakota accepting the approval of that body in place of its own review of the course content.
4. A course in insurance law and ethics only. The commissioner approves no other subject for credit, the purpose of the requirement being to keep licensees current with the statutes and rules which govern their conduct rather than to teach the business of insurance itself.

Why: NDAC 45-02-04-03(1). The touchstone is BETTER SERVICE TO THE INSURANCE BUYING PUBLIC.

A crew member (seaman) injured aboard a vessel in navigation would most likely pursue a claim under which law?

1. The Defense Base Act
2. The Jones Act ✓
3. FECA
4. FELA

Why: The Jones Act protects seamen (crew members of vessels in navigation), allowing them to sue their employer for injuries caused by negligence, borrowing FELA's fault-based framework.

A North Dakota producer, acting without malice, reports a suspected fraudulent insurance act to the fraud unit and is sued for defamation. What does NDCC 26.1-02.1-04 provide?

1. That in the absence of malice no civil cause of action of any nature exists against the producer for libel, slander or any other relevant tort for filing reports or otherwise cooperating with an investigation. ✓
2. That the producer who reports without malice is immune from a defamation action brought by the person reported but not from one brought by that person's own insurer, the section protecting the reporter against the subject of the report alone and leaving other claimants to the common law.
3. That the producer has a qualified privilege which the plaintiff may overcome by showing that the report was made without reasonable grounds, the chapter protecting a reporter who has acted carefully rather than one who has merely acted in good faith upon information which turned out to be wrong.
4. That the producer is immune only if the report was made to the commissioner. A report made to a not-for-profit anti-fraud organization or to a federal agency is outside the section, which protects the statutory reporting channel alone and leaves other disclosures to the common law.

Why: NDCC 26.1-02.1-04(1) and (3). ABSENCE OF MALICE is the condition throughout. Subsection 2 adds protection from criminal proceedings and civil penalties EXCEPT IN PROSECUTION FOR PERJURY OR INSURANCE FRAUD, and subsection 5 preserves any existing common law or statutory privilege.

Under PAP Part A, which of the following is an "insured" while using a non-owned auto?

1. The named insured and family members for any auto, and others only for the covered auto ✓
2. Any person operating the named insured's vehicle for a fee, such as a valet or mechanic on duty
3. Only the registered owner of the non-owned auto, since that owner's policy is primary
4. Anyone in the world who drives any vehicle with the named insured's verbal or written permission

Why: For Part A, the named insured and family members are insureds for the ownership/use of any auto, while other persons are insureds only for use of the named insured's covered auto.

A North Dakota insurer receives notice of a property loss and furnishes no blank form of proof of loss for thirty days. What follows?

1. The insured's time to make proof of loss begins to run when the form is eventually furnished, the insurer's delay costing it nothing but the delay itself, and the claim being payable in the ordinary course once the proof has been made.
2. What follows is that the insurer must pay the claim without proof of loss and is liable in addition for interest from the date notice was given, the section treating the failure as a denial of the claim and the commissioner being empowered to assess a penalty for it under the unfair claim settlement practices provisions.
3. Nothing, unless the insured can show prejudice from the delay. The requirement to furnish the form within twenty days is directory rather than mandatory, and an insured who was in fact able to prove the loss without the insurer's form has lost nothing by the failure to supply it.
4. The insurer has waived the requirement of proof of loss. The section says so in terms where the insurer fails to furnish a blank form within the required time, and the waiver follows from the failure itself rather than from anything the insured must do about it. ✓

Why: NDCC 26.1-32-08. The waiver is automatic on the failure. Twenty days is the insurer's period; thirty days is too late.

Under the CGL, the duty to defend ends when:

1. The policy is renewed and a fresh set of aggregate limits takes effect for the new term
2. The applicable limit of insurance has been exhausted by payment of judgments or settlements ✓
3. The insured retains its own attorney and the insurer reimburses those fees
4. The first claim of the policy period is filed against the insured

Why: The insurer's duty to defend ceases once the applicable limit is used up by judgments or settlements.

What do NDCC 26.1-04-17 and 26.1-04-09 give the North Dakota commissioner?

1. The power to suspend or revoke a producer's licence for any violation of this chapter whatever, and the power to examine the affairs of any person in this state, whether or not that person is engaged in the business of insurance, in order to determine whether an unfair method of competition has been used by anyone.
2. The power to suspend or revoke a producer's licence for misrepresentation or discrimination after a formal hearing held in conformity with chapter 28-32, and the power to examine the affairs of an insurer but not of a producer, a producer's records being reachable only under the licensing chapter of this title.
3. Upon satisfactory evidence of a violation of this chapter relating to misrepresentation or discrimination by a producer, power to suspend or revoke that producer's license; and power to examine and investigate the affairs of every person in the business of insurance in this state to detect unfair or deceptive practices. ✓
4. The power to revoke, but not to suspend, the licence of a producer who has misrepresented or discriminated; and the power to examine the affairs of every person engaged in the business of insurance, but only upon a written complaint made by a person claiming to have been injured by an unfair or deceptive act or practice.

Why: NDCC 26.1-04-17: UPON SATISFACTORY EVIDENCE OF THE VIOLATION OF ANY PROVISION OF THIS CHAPTER RELATING TO MISREPRESENTATION OR DISCRIMINATION BY ANY INSURANCE PRODUCER OF ANY INSURANCE OR SURETY COMPANY, RECIPROCAL, BENEVOLENT SOCIETY, OR ANY OTHER INSURANCE ORGANIZATION OR ASSOCIATION, THE COMMISSIONER MAY SUSPEND OR REVOKE THE LICENSE OF THE OFFENDING INSURANCE PRODUCER. NDCC 26.1-04-09, AUTHORITY OF COMMISSIONER: THE COMMISSIONER MAY EXAMINE AND INVESTIGATE THE AFFAIRS OF EVERY PERSON ENGAGED IN THE BUSINESS OF INSURANCE IN THIS STATE TO DETERMINE WHETHER THE PERSON HAS BEEN OR IS ENGAGED IN ANY UNFAIR METHOD OF COMPETITION OR IN ANY UNFAIR OR DECEPTIVE ACT OR PRACTICE PROHIBITED BY SECTION 26.1-04-02.

In a liability policy, an 'occurrence' is best described as:

1. Any intentional act by the insured that results in injury or damage
2. An accident, including continuous or repeated exposure to harmful conditions ✓
3. A scheduled loss of a kind specifically listed on the declarations page
4. A single instantaneous event, so that repeated exposure is excluded

Why: An occurrence is defined as an accident, including continuous or repeated exposure to substantially the same general harmful conditions, broadening coverage beyond a single sudden event.

Which figure belongs to which North Dakota penalty provision - one thousand, five thousand and ten thousand dollars?

1. One thousand for each act, ten thousand in the aggregate, is 26.1-04-13(1)(a) for a willful violation of 26.1-04-03; five thousand for each act and fifty thousand in any six months is the same paragraph where the person knew; ten thousand for each act is 26.1-04-14, for violating a final cease and desist order. ✓
2. One thousand dollars is the penalty for a first violation of this chapter, five thousand for a second and ten thousand for a third or subsequent violation, the scale rising with the number of times the person has been found to have engaged in an unfair method of competition in this state.
3. One thousand dollars for each act is the penalty where the person knew or reasonably should have known of the violation; five thousand for each act where the violation was wilful; and ten thousand dollars is the aggregate ceiling on any penalty imposed by the commissioner under this chapter in any six-month period.
4. One thousand dollars for each act, aggregate ten thousand, is the penalty for violating a cease and desist order; five thousand for each act, aggregate fifty thousand, is the penalty for a wilful violation of section 26.1-04-03; and ten thousand dollars is the civil fine for a violation of the producer licensing chapter.

Why: NDCC 26.1-04-13(1)(a): A MONETARY PENALTY OF NOT MORE THAN ONE THOUSAND DOLLARS FOR EACH AND EVERY ACT OR VIOLATION BUT NOT TO EXCEED AN AGGREGATE PENALTY OF TEN THOUSAND DOLLARS UNLESS THE PERSON KNEW OR REASONABLY SHOULD HAVE KNOWN THAT PERSON WAS IN VIOLATION OF SECTION 26.1-04-03, IN WHICH CASE THE PENALTY MUST BE NOT MORE THAN FIVE THOUSAND DOLLARS FOR EACH AND EVERY ACT OR VIOLATION BUT NOT TO EXCEED AN AGGREGATE PENALTY OF FIFTY THOUSAND DOLLARS IN ANY SIX-MONTH PERIOD. NDCC 26.1-04-14: A SUM NOT TO EXCEED A MONETARY PENALTY OF NOT MORE THAN TEN THOUSAND DOLLARS FOR EACH AND EVERY ACT OR VIOLATION of a final cease and desist order.

How long has a claimant to make proof of loss in North Dakota once the blank form is furnished?

1. Sixty days in every case, the section fixing one period for all kinds of insurance so that neither the claimant nor the insurer need ask what kind of policy is in question before working out when the proof of loss is due to be delivered to the insurer which issued it.
2. Ninety days in every case, measured from the date of the loss rather than from the furnishing of the blank form, so that an insurer which is slow to supply the form shortens the time available to the claimant rather than extending it.
3. Sixty days after the blank form is furnished in the case of insurance other than life insurance; and ninety days after receipt of the blank form for the beneficiary of a life insurance policy. ✓
4. Thirty days for insurance other than life and sixty days for life insurance, the shorter period for property claims reflecting the fact that the loss can be inspected at once while a life claim may require documents from outside the state.

Why: NDCC 26.1-32-08. 60 days for NON-LIFE, from the FURNISHING of the blank; 90 days for a LIFE beneficiary, from RECEIPT of it.

Which North Dakota section was repealed by S.L. 2023, ch. 282, section 9?

1. 26.1-26-45, notification of suspension or revocation of a nonresident licence, the duty to notify the commissioner of the licensee's residence having been absorbed into the general notification duty which section 26.1-26-44 lays upon the commissioner in respect of every suspension, revocation or refusal.
2. 26.1-26-42.1, revocation of a nonresident licence without notice and hearing, which was repealed as inconsistent with chapter 28-32, the administrative agencies practice act, so that every licence issued under this chapter now falls to be dealt with after notice to the licensee and a hearing.
3. 26.1-26-51, the statute of limitations for a civil action against a licensee, the ordinary limitation periods of title 28 of the Century Code now governing such an action in place of the special two-year and six-year periods which that section had laid down for a claim against an insurance licensee.
4. 26.1-26-46, license suspension or revocation - duty of licensee. The other three sections around it are all of them still in force: 26.1-26-42.1, the revocation of a nonresident licence; 26.1-26-45, notification to the resident state; and 26.1-26-51, the limitation period for a civil action here. ✓

Why: The cached text of NDCC 26.1-26-46 reads: LICENSE SUSPENSION OR REVOCATION - DUTY OF LICENSEE. REPEALED BY S.L. 2023, CH. 282, SEC. 9. NDCC 26.1-26-42.1, 26.1-26-45 and 26.1-26-51 are all still in force.

What is ACCIDENTAL BODILY INJURY under NDCC 26.1-41-01(1)?

1. Bodily injury, sickness or disease, including death resulting therefrom, arising out of the operation of a motor vehicle, and accidental as to the person claiming benefits; but excluding injury as the result of an individual entering or alighting from a stopped motor vehicle if the injury is not caused by another motor vehicle. ✓
2. Any bodily injury sustained in a motor vehicle accident, whether or not it was accidental as to the person claiming the benefits, the chapter compensating the loss rather than inquiring into the state of mind of the person who suffered it, and leaving intentional conduct to be dealt with by the insurer's right of subrogation.
3. Bodily injury arising out of the operation of a motor vehicle, including injury sustained while entering or alighting from a stopped vehicle, the chapter treating the whole of the journey from the kerb to the seat as part of the use of the vehicle.
4. Bodily injury or death arising out of the ownership, maintenance or use of a motor vehicle, excluding sickness or disease however caused, since a disease is not an injury and the chapter is directed at the traumatic consequences of a collision rather than at illness which may follow one.

Why: NDCC 26.1-41-01(1). Two limits worth holding: ACCIDENTAL AS TO THE CLAIMANT, and the entering-or-alighting exclusion, which yields if another motor vehicle caused the injury.

A North Dakota resident producer moves to another state. What does NDCC 26.1-26-20(3) require?

1. The producer shall file a change of address and provide certification from the new resident state within thirty days of the change of legal residence, and a producer who moves must also send the fee and a fresh application for a nonresident licence in this state, the resident licence having become void upon the change of residence under section 26.1-26-19.
2. The producer shall file a change of address within ten working days of the move, the same period which a business entity has to report a change in the status of its principal insurance producer, and shall pay the fee prescribed by section 26.1-01-07 for the issue of a nonresident licence in place of the resident one.
3. The producer shall file a change of address and provide certification from the new resident state within thirty days of the change of legal residence. A fee or license application is not required. That same rule also governs any nonresident producer who moves from one other state into a different other state. ✓
4. Nothing is required of the producer. The commissioner learns of the change through the insurance producer database maintained by the national association of insurance commissioners and converts the resident licence to a nonresident licence without any filing, fee or application by the producer who has moved.

Why: NDCC 26.1-26-20(3): A NONRESIDENT INSURANCE PRODUCER WHO MOVES FROM ONE STATE TO ANOTHER STATE OR A RESIDENT INSURANCE PRODUCER WHO MOVES FROM THIS STATE TO ANOTHER STATE SHALL FILE A CHANGE OF ADDRESS AND PROVIDE CERTIFICATION FROM THE NEW RESIDENT STATE WITHIN THIRTY DAYS OF THE CHANGE OF LEGAL RESIDENCE. A FEE OR LICENSE APPLICATION IS NOT REQUIRED. Thirty days, and no fee and no application.

May North Dakota basic no-fault benefits be STACKED?

1. Yes, where separate premiums have been paid on separate vehicles, an insured who has paid twice being entitled to the benefit of both limits, and an anti-stacking clause in the policy being void to that extent under the law of this state.
2. No. Cover is limited to the benefits on the secured vehicle involved, plus optional excess benefits bought by the person or a relative; they may not be added to benefits from any other source. ✓
3. Yes, up to the eighty thousand dollar total which the chapter allows when optional excess benefits have been purchased, stacking being the means by which that total is reached where the household owns more than one secured motor vehicle.
4. No, but benefits on other vehicles become available once the benefits on the vehicle involved in the accident have been exhausted, the chapter forbidding simultaneous recovery rather than successive recovery from the policies in the household.

Why: NDCC 26.1-41-14. It follows from the $30,000 cap in 26.1-41-01(2), which applies REGARDLESS OF THE NUMBER OF INSURERS OBLIGATED.

A property worth $500,000 has a 90% coinsurance requirement. The insured carries $360,000 and has a $50,000 loss. Ignoring deductible, the insurer pays:

1. $50,000
2. $40,000 ✓
3. $36,000
4. $45,000

Why: Required = 90% x $500,000 = $450,000. Did/should = $360,000/$450,000 = 0.80. Payment = 0.80 x $50,000 = $40,000.

What does NDAC 45-02-04-03 say about correspondence courses and about courses approved by other North Dakota bodies?

1. Correspondence courses earn credit on enrolment rather than on completion, since attendance cannot be measured, and courses approved by other state bodies earn no credit at all because the commissioner has no power to accept another agency's approval.
2. Correspondence courses are not approved for credit in this state, the rules requiring classroom attendance which can be verified, and reciprocity being confined to insurance courses approved by the insurance regulator of another state.
3. Credit for a correspondence course requires a proctored examination, and the commissioner must approve courses of the real estate commission and the state bar association whenever a licensee asks, the reciprocity provision being mandatory rather than discretionary.
4. Credit for a correspondence course must be based on successful completion as prescribed by the provider and approved by the commissioner; and the commissioner may approve credit for insurance-related courses approved by the North Dakota real estate commission and the North Dakota state bar association. ✓

Why: NDAC 45-02-04-03(4) and (5). The reciprocity is a MAY, and it names two bodies: the real estate commission and the state bar association.

Which CGL limit is the most that will be paid for the sum of all damages because of bodily injury and property damage arising out of any one occurrence?

1. Each Occurrence Limit ✓
2. Products-Completed Operations Aggregate
3. Personal and Advertising Injury Limit
4. General Aggregate Limit

Why: The Each Occurrence Limit caps total BI and PD damages (plus medical payments) for a single occurrence.

On what condition may the North Dakota commissioner share confidential fraud documents under NDCC 26.1-02.1-07(3)?

1. That the sharing is limited to agencies of this state and of the United States. The section does not authorize the commissioner to share confidential material with the regulator of another country or with a private not-for-profit anti-fraud organization.
2. That the district court of Burleigh County approves the disclosure on the commissioner's application, the court being the guardian of the privilege which the section creates and the commissioner having no power to waive it in favour of another agency without a judicial order permitting the disclosure.
3. That the documents have first been redacted to remove nonpublic personal information about a policyholder, the privacy law in section 26.1-02-27 continuing to apply to material in the commissioner's hands and overriding the sharing provisions of the fraud chapter to that extent.
4. That the recipient agrees to maintain their confidentiality and privileged status. On that condition they may be shared with other state, federal and international regulatory agencies, with the national association of insurance commissioners and with law enforcement. ✓

Why: NDCC 26.1-02.1-07(3)(a). The reciprocal power in (3)(b) requires the commissioner to maintain as confidential anything received with notice that it is confidential under the law of the source jurisdiction; and (4) provides that disclosure to the commissioner, or sharing under (3), WAIVES NO PRIVILEGE OR CLAIM OF CONFIDENTIALITY.

A North Dakota producer's license has been suspended in another state. When is that a ground under NDCC 26.1-26-42(13)?

1. Whenever the licensee's license has been suspended or revoked in any other state, province, district, or territory for any reason or purpose other than noncompliance with continuing education programs, or noncompliance with mandatory filing requirements imposed by that jurisdiction provided the filing does not directly affect the public interest, safety, or welfare. ✓
2. Whenever the licensee's licence has been suspended or revoked in any other state, province, district or territory, for any reason whatever, including a suspension for noncompliance with that jurisdiction's continuing education programme or with a purely administrative filing requirement imposed upon licensees there.
3. Only where the other jurisdiction's proceeding was a formal one conducted after notice and hearing and the licensee had a right of appeal from it, a suspension imposed administratively in another state being no evidence of anything against the licensee for the purposes of this section of the chapter.
4. Only where the conduct for which the other jurisdiction suspended or revoked the licence would itself have been a ground under one of the other seventeen paragraphs of this section had it occurred in this state, so that the commissioner must examine the substance of the other state's proceeding.

Why: NDCC 26.1-26-42(13): THE LICENSEE'S LICENSE HAS BEEN SUSPENDED OR REVOKED IN ANY OTHER STATE, PROVINCE, DISTRICT, OR TERRITORY FOR ANY REASON OR PURPOSE OTHER THAN NONCOMPLIANCE WITH CONTINUING EDUCATION PROGRAMS, OR NONCOMPLIANCE WITH MANDATORY FILING REQUIREMENTS IMPOSED UPON A LICENSEE BY THE STATE, PROVINCE, DISTRICT, OR TERRITORY PROVIDED THE FILING DOES NOT DIRECTLY AFFECT THE PUBLIC INTEREST, SAFETY, OR WELFARE. Two carve-outs, and the second is itself qualified.

How does the ISO Business Income form generally handle ordinary payroll?

1. It is always excluded from business income unless the insured buys a separate payroll form
2. It is covered only for executives, managers, and other salaried key employees
3. It is never treated as a continuing expense
4. It is included unless specifically limited or excluded by endorsement ✓

Why: Ordinary payroll is included as a continuing expense by default, but the insured may limit it (e.g., 90 days) or exclude it to reduce premium.

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.

Which further persons are exempt from North Dakota producer licensing under NDCC 26.1-26-09(2)(d) and (g)?

1. Any employee of an insurer who inspects, rates or classifies risks, whether or not that employee is also individually engaged in the sale or solicitation of insurance; and any employee who counsels the employer about the employer's insurance interests, whether salaried or paid by commission and whether employed full time or part time.
2. An employee of an insurer who supervises the training of insurance producers, but not one who merely inspects, rates or classifies risks, which is the work of a licensed producer; and a salaried full-time employee who counsels the employer about the employer's own insurance interests but not about those of a subsidiary or a business affiliate.
3. An employee of an insurer who inspects, rates, or classifies risks or supervises the training of producers and who is not individually engaged in selling insurance; and a salaried full-time employee who counsels that person's own employer and neither sells insurance nor receives a commission. ✓
4. An employee of an organization employed by an insurer who inspects or rates risks and who does not sell insurance individually; and any person who counsels or advises another relative to that other's insurance interests without charging a fee, a fee being what turns such advice into the business of an insurance consultant in this state.

Why: NDCC 26.1-26-09(2)(d): AN EMPLOYEE OF AN INSURER OR AN ORGANIZATION EMPLOYED BY AN INSURER OR AN ORGANIZATION WHO INSPECTS, RATES, OR CLASSIFIES RISKS OR SUPERVISES THE TRAINING OF INSURANCE PRODUCERS AND WHO IS NOT INDIVIDUALLY ENGAGED IN THE SALES, SOLICITATION, OR NEGOTIATION OF INSURANCE. (2)(g): A SALARIED FULL-TIME EMPLOYEE WHO COUNSELS OR ADVISES THAT PERSON'S EMPLOYER RELATIVE TO THE INSURANCE INTERESTS OF THE EMPLOYER OR OF THE SUBSIDIARIES OR BUSINESS AFFILIATES OF THE EMPLOYER PROVIDED THAT THE EMPLOYEE DOES NOT SELL OR SOLICIT INSURANCE OR RECEIVE A COMMISSION.

A hearing has been held on a North Dakota cease and desist order. What must the commissioner do next, and by when?

1. Within ten days after the hearing, issue an order vacating the cease and desist order or making it permanent, the ten days being the same period within which the hearing itself had to be held after the application for it was received by the commissioner's office under this section of the Century Code.
2. Within thirty days after the hearing, refer the matter to the attorney general, who then determines whether the cease and desist order should be vacated or made permanent, the commissioner having no power to decide the outcome of a hearing held upon the commissioner's own order under this title.
3. Within thirty days after the hearing, issue an order vacating the cease and desist order or making the cease and desist order permanent, as the facts require. That is the third of the section's three separate periods, coming after the thirty days in which to apply and the ten days in which to be heard. ✓
4. Nothing within any fixed period. The cease and desist order remains in force until the commissioner issues an order vacating it or making it permanent, and the section lays down no time within which that must be done, so that an order may stand indefinitely after the hearing has been concluded by the commissioner.

Why: NDCC 26.1-01-03.1: THE COMMISSIONER, WITHIN THIRTY DAYS AFTER THE HEARING, SHALL ISSUE AN ORDER VACATING THE CEASE AND DESIST ORDER OR MAKING THE CEASE AND DESIST ORDER PERMANENT, AS THE FACTS REQUIRE. Three periods in one section: THIRTY DAYS for the aggrieved party to ask for a hearing, TEN DAYS for the hearing to be held, THIRTY DAYS for the commissioner to decide.

How long must proof of a North Dakota automobile termination notice be kept, and what proves mailing?

1. Three years, matching the shortest period within which an action upon a policy may be brought in this state, and proof of mailing is established by the affidavit of the employee who placed the notice in the mail.
2. One year, and the only sufficient proof is a certified mail receipt signed by the named insured, a certificate of mailing showing merely that something was posted rather than that the insured received it.
3. For as long as the policy remains in force and for three years afterwards, the department being entitled to examine the insurer's termination practices over that period and requiring the records to be available for that purpose.
4. One year, for proof of mailing a cancellation or nonrenewal notice and for records of a willingness to renew; mailing is proved by a postal certificate of mailing or IMb Tracing to the address shown in the insured's policy. ✓

Why: NDCC 26.1-40-07(1) and (2). Compare the property chapter, 26.1-39-13(2) and 26.1-39-16(1), where the same postal machinery establishes CONCLUSIVE proof of receipt ON THE THIRD CALENDAR DAY; here it establishes sufficient proof of MAILING.

The North Dakota commissioner addresses an inquiry to an insurance company. What does NDCC 26.1-02-03 require?

1. The company shall reply in writing within thirty days of receipt of the inquiry, and an extension of time may be granted by the commissioner at any time, whether the company requests it before or after the period has run. The commissioner may address inquiries only to a company which already holds a certificate of authority in this state.
2. The company shall reply in writing within twenty days of receipt, and no extension of time is available in any circumstances. The commissioner may address inquiries to any company doing business here in relation to its financial condition only, a question about any other matter connected with its transactions being outside the section.
3. The company shall reply within twenty days of the date of the inquiry rather than of its receipt, and the commissioner may grant an extension on the company's request made at any time. The commissioner may address inquiries to a company applying for permission to do business here but not to one which is already doing business here.
4. The company shall reply in writing within twenty days of receipt of the inquiry unless within that twenty days the company requests and the commissioner grants an extension of time. The commissioner may address such inquiries to any company doing or applying for permission to do business in this state, in relation to its activities, condition, or any other matter connected with its transactions. ✓

Why: NDCC 26.1-02-03: THE COMMISSIONER MAY ADDRESS TO ANY INSURANCE COMPANY DOING OR APPLYING FOR PERMISSION TO DO BUSINESS IN THIS STATE ANY INQUIRIES IN RELATION TO THE COMPANY'S ACTIVITIES, CONDITION, OR ANY OTHER MATTER CONNECTED WITH THE COMPANY'S TRANSACTIONS. THE COMPANY SHALL REPLY IN WRITING TO SUCH AN INQUIRY WITHIN TWENTY DAYS OF RECEIPT OF THE INQUIRY UNLESS WITHIN THAT TWENTY DAYS THE COMPANY REQUESTS AND THE COMMISSIONER GRANTS AN EXTENSION OF TIME. The request AND the grant must both fall inside the twenty days.

A North Dakota licensee misses twelve percent of the classroom hours of an approved continuing education course. What follows?

1. No certificate of attendance will be issued. The rule withholds it from a participant absent for more than ten percent of the classroom hours, so the licensee earns no credit for the offering however much was attended in the classroom. ✓
2. The licensee receives a certificate for the classroom hours actually attended, rounded down to the nearest half hour, credit being given for instruction received and withheld only for the part of the course which was missed by the participant.
3. The provider may issue the certificate if the licensee completes a make-up assignment approved by the coordinator, the ten percent figure being a guide to the provider rather than a bar upon the issue of the certificate in a proper case.
4. The licensee must sit the course examination and pass it before the certificate issues, the examination standing in the place of attendance where a participant has missed part of the instruction given in the classroom.

Why: NDAC 45-02-04-03(8). More than TEN PER CENT and the certificate does not issue at all.

What is REBATING under NDCC 26.1-04-03(8)(a)?

1. Knowingly permitting or offering to make or making any contract of life insurance, life annuity or accident and health insurance other than as plainly expressed in the contract issued, or paying, allowing or giving, directly or indirectly, as inducement to the insurance, any rebate of premium or any valuable consideration whatever not specified in the contract. ✓
2. Paying or allowing any rebate of premium on any contract of insurance of any kind, including a property or casualty contract, the subsection reaching every line of insurance written in this state and making no distinction between life, annuity, accident and health business and property and casualty business.
3. Paying or allowing a rebate of premium to an insured, but not offering to do so, an offer which is not accepted causing no loss to anyone; and not the giving of any other valuable consideration, which is dealt with as an inducement under the separate section governing the acceptance of rebates by an insured person.
4. Knowingly permitting or making any contract of insurance other than as plainly expressed in the policy issued upon it, whatever the line of business, and paying any rebate of premium, but the subsection is expressly subject to any applicable filing in effect under the laws regulating insurance rates in this state.

Why: NDCC 26.1-04-03(8)(a), REBATES: EXCEPT AS OTHERWISE EXPRESSLY PROVIDED BY LAW, KNOWINGLY PERMITTING OR OFFERING TO MAKE OR MAKING ANY CONTRACT OF LIFE INSURANCE, LIFE ANNUITY, OR ACCIDENT AND HEALTH INSURANCE, OR AGREEMENT AS TO SUCH CONTRACT OTHER THAN AS PLAINLY EXPRESSED IN THE CONTRACT ISSUED THEREON, OR PAYING OR ALLOWING, OR GIVING OR OFFERING TO PAY, ALLOW, OR GIVE, DIRECTLY OR INDIRECTLY, AS INDUCEMENT TO THE INSURANCE OR ANNUITY ANY REBATE OF PREMIUMS PAYABLE ON THE CONTRACT, OR ANY SPECIAL FAVOR OR ADVANTAGE IN THE DIVIDENDS OR OTHER BENEFITS THEREON, OR ANY VALUABLE CONSIDERATION OR INDUCEMENT WHATSOEVER NOT SPECIFIED IN THE CONTRACT. The lines named in (8)(a) are LIFE, LIFE ANNUITY AND ACCIDENT AND HEALTH; the general prohibition on an INSURED ACCEPTING a rebate, which is not confined to those lines, is NDCC 26.1-04-06(1).

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.

Which CGL condition requires the insured to notify the insurer of an occurrence 'as soon as practicable'?

1. The Separation of Insureds condition, which treats each insured separately
2. The Premium Audit condition, which sets the final premium after the term ends
3. The Other Insurance condition governing pro rata sharing
4. The Duties in the Event of Occurrence, Offense, Claim or Suit condition ✓

Why: The duties condition requires prompt notice of an occurrence or claim and cooperation with the insurer.

May a North Dakota commercial fire policy exclude loss caused by terrorism?

1. Yes. NDCC 26.1-39-06(4) provides that a commercial insurance policy providing fire coverage in accordance with the section may exclude coverage for loss by fire insured against if the fire is caused directly or indirectly by terrorism. ✓
2. No. The standard policy insures against loss by fire whatever its cause, and the section permits no provision inconsistent with the standard form to be made a part of a policy issued on property in this state, so an exclusion of that kind is of no effect however clearly it is expressed.
3. Yes, any fire policy, personal or commercial, may exclude fire caused by terrorism, provided the exclusion is printed apart from the other conditions of the policy under the separate title which the section requires for provisions required by law to be stated in the policy.
4. Yes, but only with the commissioner's approval of the wording in each case, the exclusion being a departure from the standard form which the section allows the commissioner to permit on a showing that the reinsurance market requires it.

Why: NDCC 26.1-39-06(4). COMMERCIAL policies, fire caused DIRECTLY OR INDIRECTLY by terrorism.

To whom may a North Dakota insurer or producer pay or assign commissions under NDCC 26.1-26-04(4)?

1. To an insurance agency alone. A payment or assignment to any other person who does not sell, solicit or negotiate insurance in this state is a payment to an unlicensed person within subsection 1 and is forbidden however the payment may be characterized by the insurer or the producer making it.
2. To an insurance agency or to any person whatever, whether or not that person sells, solicits or negotiates insurance in this state and whether or not that person is licensed, the subsection being a general permission which displaces the prohibitions in subsections 1 and 2 of the section entirely.
3. To an insurance agency or to persons that do not sell, solicit, or negotiate insurance in this state, unless the payment violates section 26.1-04-06. The permission is expressly subject to that cross-reference, so a payment otherwise within it is still bad if it offends that section of this title. ✓
4. To an insurance agency or to persons that do not sell, solicit or negotiate insurance in this state, provided in each case that the person to whom the payment or assignment is made holds a licence of some kind issued under this chapter and has consented in writing to the assignment of the commission.

Why: NDCC 26.1-26-04(4): AN INSURER OR INSURANCE PRODUCER MAY PAY OR ASSIGN COMMISSIONS, SERVICE FEES, BROKERAGES, OR OTHER VALUABLE CONSIDERATION TO AN INSURANCE AGENCY OR TO PERSONS THAT DO NOT SELL, SOLICIT, OR NEGOTIATE INSURANCE IN THIS STATE, UNLESS THE PAYMENT VIOLATES SECTION 26.1-04-06. The permission is expressly subject to that cross-reference.

Theft of property is covered automatically under which Causes of Loss form?

1. None of the forms
2. Broad only
3. Special form ✓
4. Basic only

Why: Theft is not a named peril under Basic or Broad, but the open-perils Special form covers theft (subject to special limits) since it is not excluded.

What is an ADVERSE ACTION under NDCC 26.1-25.1-02(1)?

1. A denial or cancellation of, an increase in any charge for, or a reduction or other adverse or unfavorable change in the terms of coverage or amount of any insurance, existing or applied for, in connection with the underwriting of personal insurance. ✓
2. A denial or cancellation of insurance. An increase in the premium is not an adverse action within the chapter, the consumer's remedy for a rate increase being the rate chapter's prohibition on rates which are excessive or unfairly discriminatory rather than the notice provisions of this one.
3. Any decision by an insurer which leaves the consumer worse off than before, including a decision to nonrenew and a decision to place the consumer in a less favorably priced tier, whether the decision is taken in the underwriting of personal insurance or of commercial insurance written for an individual in this state.
4. A decision to decline an application for personal insurance taken wholly or partly on the basis of credit information, a decision affecting an existing policy being governed by the cancellation and nonrenewal provisions of chapter 26.1-40 instead.

Why: NDCC 26.1-25.1-02(1). Four limbs, EXISTING OR APPLIED FOR, and tied to the underwriting of PERSONAL insurance.

May North Dakota uninsured or underinsured motorist limits be STACKED?

1. Yes, where separate premiums have been paid for separate vehicles. An insured who has paid twice for the coverage is entitled to the benefit of both limits, and an anti-stacking clause in the policy is void to that extent under the law of this state.
2. Yes, but only across policies rather than within one policy, so that an insured covered under two separate policies may add the two limits together while an insured with three vehicles on one policy is confined to a single limit.
3. No. Whatever the number of vehicles, persons covered, claims, or premiums paid, the limit may not be added to or stacked upon limits for other motor vehicles to determine the coverage available in any one accident however many policies apply. ✓
4. No, and for the same reason an insured entitled to coverage under more than one policy may recover under the first policy only, the others being of no effect once a claim has been made under any of them.

Why: NDCC 26.1-40-15.4(2). And where more than one policy applies, 26.1-40-15.4(3) caps the recovery at THE HIGHEST LIMIT PROVIDED FOR ANY ONE VEHICLE UNDER ANY ONE POLICY.

The CGL Aircraft, Auto, or Watercraft exclusion eliminates coverage for:

1. Bodily injury or property damage arising from ownership, operation, or use of autos, aircraft, or most watercraft ✓
2. Every claim for bodily injury the insured causes, whether or not a vehicle, aircraft, or watercraft was involved in the accident
3. Personal and advertising injury offenses such as libel, slander, and wrongful eviction
4. Slip-and-fall claims on premises the insured owns or rents for its business

Why: This exclusion routes auto, aircraft, and watercraft exposures to separate policies (e.g., business auto, aircraft, marine).

What does NDCC 26.1-02-03 say about the quality of the information supplied to the North Dakota commissioner?

1. It is a violation of this title for a person to knowingly supply the commissioner with false, misleading, or incomplete information. All three of those kinds are named there, and the mental element is knowingly. Being a violation of the title, it carries the fine of up to ten thousand dollars for each violation imposed after a hearing. ✓
2. It is a violation of this title for a person to supply the commissioner with false or misleading information, whether knowingly or not, the section imposing strict liability for the accuracy of anything filed with the commissioner; but incomplete information is not a violation where the omission was inadvertent rather than deliberate.
3. It is a violation of this title for a person to knowingly supply the commissioner with false or misleading information. Incomplete information is not within the section, the remedy for a reply which does not answer the inquiry being a further inquiry addressed to the company by the commissioner under the same section of this title.
4. It is a criminal offence, punishable as a class A misdemeanor, for a person to knowingly supply the commissioner with false, misleading, or incomplete information, and the commissioner must report every such instance in detail to the attorney general for prosecution in the courts of this state before any administrative fine may be imposed.

Why: NDCC 26.1-02-03, closing sentence: IT IS A VIOLATION OF THIS TITLE FOR A PERSON TO KNOWINGLY SUPPLY THE COMMISSIONER WITH FALSE, MISLEADING, OR INCOMPLETE INFORMATION. All three - FALSE, MISLEADING, OR INCOMPLETE - and the mental element is KNOWINGLY. Being a violation of the title, it carries the 26.1-01-03.3(1) fine of up to ten thousand dollars for each violation.