South Carolina Property & Casualty Insurance License, Practice Exams

Section 38-43-240 makes three things unlawful for a producer, collector or other person. Which of the following is NOT one of them?

1. Pretending to represent a licensed insurer without its authority
2. Securing cash advances by false statements
3. Failing to account satisfactorily for collections when required
4. Placing a risk with an insurer that has no South Carolina licence ✓

Why: S.C. Code § 38-43-240(A) is a bare three-item list about honesty towards the insurer the producer already represents: pretending to represent or to collect for a licensed insurer without its authority, securing cash advances by false statements, and failing to turn over or satisfactorily account for collections. Placing business with an unlicensed insurer is unlawful too, but under a different section with a different rationale - § 38-43-160, which protects the policyholder rather than the carrier.

An individual insured buys surplus lines cover, and one hundred percent of the insured risk is located outside the state of his principal residence. Under section 38-45-10 his 'home state' for that contract is:

1. The state to which the greatest percentage of his taxable premium for that contract is allocated ✓
2. The state in which the largest single insured risk under the contract is located, whatever the premium allocation
3. The state in which the surplus lines broker is licensed
4. The state in which the surplus lines insurer is domiciled

Why: S.C. Code § 38-45-10(6)(a) works in two steps: the home state is normally where the insured maintains its principal place of business, or for an individual his principal residence, and the premium-allocation test applies only where ONE HUNDRED PERCENT of the risk sits outside it. Subitem (b) adds the affiliated-group rule - where more than one member of an affiliated group is a named insured on a single surplus lines contract, the home state is that of the member carrying the largest percentage of premium. Item (15) confirms that 'state' includes the District of Columbia, Puerto Rico, Guam, the Northern Mariana Islands, the Virgin Islands and American Samoa.

A general contractor requires its subcontractor to name it as an additional insured. The PRIMARY benefit to the general contractor is:

1. The sub's product warranty
2. Reduced workers compensation cost unless an exception clearly applies for the coverage that is in force
3. Coverage under the sub's policy for the GC's vicarious liability arising from the sub's work ✓
4. Lower premium for the sub

Why: As an additional insured on the sub's policy, the GC obtains coverage for liability arising out of the subcontractor's operations.

An insurer rates a South Carolina applicant in a tier above its lowest. Under section 38-77-126 the insurer must disclose that fact to the insured and must also:

1. Offer to move the insured to the lowest tier on request
2. File the tier assignment with the director for approval
3. Refund the difference if the tier is later found unjustified
4. Provide the reason for the higher tier in writing ✓

Why: S.C. Code § 38-77-126 is two sentences and imposes two duties - disclose that the rate level is above the lowest tier for that insurer OR FOR THE GROUP TO WHICH IT BELONGS, and give the reason in writing. The group reference is what gives the section teeth: an insurer cannot place an applicant in a high-rating affiliate and call it that company's lowest tier.

A new NFIP flood policy generally does not take effect until how many days after the application and premium are submitted?

1. 10 days
2. 60 days
3. 30 days ✓
4. 15 days

Why: The NFIP imposes a standard 30-day waiting period before a new flood policy becomes effective, to discourage buying coverage only when a flood is imminent.

A commercial umbrella policy provides which three basic functions?

1. Excess limits over underlying coverage, broader 'drop-down' coverage for some gaps, and additional protection where no underlying exists (subject to an SIR) ✓
2. Replacement cost, ACV, and agreed value
3. Property, auto, and crime coverage combined unless an exception clearly applies for the coverage that is in force according to the insurer's rules in that particular circumstance
4. Surety, fidelity, and bond coverage

Why: Umbrellas provide excess limits over underlying policies, broader coverage that drops down for certain gaps, and coverage for losses not covered by underlying subject to a self-insured retention.

A South Carolina insurer wants to post a standard property and casualty policy on its website instead of mailing or delivering it to the insured. Under section 38-55-730 it may do so only if the policy or endorsement:

1. Has been approved by the Director for electronic delivery
2. Is also held in paper form at the insured's local agency
3. Does not contain personally identifiable information ✓
4. Carries an endorsement recording the insured's consent

Why: S.C. Code § 38-55-730 opens with that precondition, and it is what makes the section work without the consent machinery the rest of the article requires: a standard form containing nothing personal can be published to the world, so no consent is needed to publish it to the insured. Five conditions follow. The document must stay accessible while the policy is in force; it must be archived for five years after expiry and produced on request; it must be posted so the insured can print and save it using software that is widely available and free; each declarations page, at issue and at every renewal, must describe the exact form purchased, give a method of obtaining a free paper copy and state the internet address; and the insurer must give notice of any change to the form, in the format the insured prefers.

An employer operates in a monopolistic state fund jurisdiction and also wants protection against employee lawsuits not covered by the fund. The appropriate solution is:

1. An assigned-risk placement
2. A stop gap employers liability endorsement ✓
3. A Defense Base Act policy
4. A standard Part One policy from a private insurer

Why: Because monopolistic funds provide statutory benefits but not employers liability, a stop gap endorsement (employers liability) on the employer's general liability or WC policy fills that exposure.

The Guaranty Association pays a covered claim that satisfies, in whole or in part, the liability obligations of a large insured to another person. Under section 38-31-90 the association may recover what it paid from that insured if his net worth, on 31 December of the year immediately preceding the insolvency, exceeded:

1. $10 million
2. $25 million ✓
3. $50 million
4. $100 million

Why: S.C. Code § 38-31-90(2)(a) is a right of RECOVERY after payment, and its twenty-five million threshold is a different figure doing a different job from § 38-31-20(8)(d)'s ten million, which keeps a large insured's FIRST-PARTY claim outside the definition altogether. Subitem (b) gives the same right of recovery against a person who is an affiliate of the insolvent insurer. Subsection (1) supplies the general rule: a person recovering under the chapter is considered to have assigned his rights under the policy to the association to the extent of his recovery, and must cooperate with the association as he would have had to cooperate with the insolvent insurer.

Section 38-59-20 defines improper claim practices. A liability insurer argues that the section protects only its own policyholders. Under the section the improper claim practices:

1. Reach third-party claimants only where the insured assigns his rights
2. Expressly extend to third-party claimants under liability policies ✓
3. Reach third-party claimants only in property damage claims
4. Are confined to the insurer's own insureds

Why: S.C. Code § 38-59-20 says 'including third-party claims arising under liability insurance policies' at paragraph (2), and repeats the extension at (3), (4), (5), (6), (7) and (8) - seven of its eight paragraphs. That is what makes the section a P&C provision as much as a first-party one: the stranger claimant an adjuster deals with across a liability claim has the protection of it, without any assignment and whatever the class of loss. Paragraph (1), on misrepresenting facts or policy provisions, reaches third-party claimants by its own separate wording.

Under section 38-77-140 the minimum South Carolina automobile liability limit for bodily injury to TWO OR MORE persons in any one accident is:

1. $25,000
2. $50,000 ✓
3. $60,000
4. $100,000

Why: S.C. Code § 38-77-140(A)(2) sets fifty thousand dollars for two or more persons, and it applies 'subject to the limit for one person' - so of that fifty thousand no single claimant may take more than the twenty-five thousand per-person limit. That interaction is what the per-accident figure actually means, and it is the part candidates most often state loosely.

A competitor sues the insured alleging the insured's advertisement infringed its slogan. This falls under:

1. Coverage B — Personal and Advertising Injury ✓
2. Coverage A
3. A fidelity bond in that particular circumstance
4. Coverage C

Why: Advertising injury offenses such as use of another's advertising idea or slogan are covered under Coverage B.

An applicant was previously refused automobile insurance by another insurer. Under section 38-77-122 a South Carolina insurer may not refuse to issue a policy SOLELY because of that fact, and the section treats which of the following the same way?

1. A conviction for driving under the influence within the preceding thirty-six months
2. Prior purchase of insurance through the Associated Auto Insurers Plan ✓
3. The applicant's failure to pay a prior premium
4. The applicant's residence outside this State

Why: S.C. Code § 38-77-122(A) has two lists doing different work. The first is absolute - those factors may not be a reason at all. The second is a SOLELY list: a previous refusal by another insurer, prior purchase through the Associated Auto Insurers Plan, and lawful occupation including military service may each be considered alongside other things but may not stand alone. The subsection then preserves two practices expressly: an insurer may confine its writings to a particular profession or occupation, or to members of a particular religious sect.

How does a standard commercial property deductible typically apply?

1. It does not apply to building losses unless an exception clearly applies
2. Per item with no aggregate
3. Per occurrence, subtracted from the loss after coinsurance is applied ✓
4. Per peril, doubling for theft

Why: The deductible applies per occurrence and is subtracted from the loss amount after any coinsurance adjustment is made.

In deciding whether an insurer's continued operation is hazardous, section 38-5-120 lets the Director consider whether the insurer's operating loss over the immediately preceding twelve months or less, INCLUDING net capital gain or loss, exceeds what share of its surplus in excess of the minimum required?

1. 10%
2. 20%
3. 50% ✓
4. 75%

Why: S.C. Code § 38-5-120(A)(5)(e) sets fifty percent and includes net capital gain or loss, change in nonadmitted assets and cash dividends paid to shareholders in the operating loss. The very next subitem, (f), sets TWENTY percent for the same period and the same surplus measure but EXCLUDES net capital gains - a tighter trigger applied to a narrower loss figure, so an insurer can fail one test and pass the other. Both sit inside a list the section opens with 'may consider one or more of the following', so neither is a threshold the Director must apply.

A person signs an open policy furnished by an unlicensed company, the effect of which is to bind insurance on property in South Carolina. Under section 38-43-170 that person is treated as the producer of the insurer and is personally liable for:

1. The premium the insured paid, with interest
2. A civil penalty set by the Director
3. The insurer's unearned premium reserve on the risk
4. All licences and taxes due on account of the transaction ✓

Why: S.C. Code § 38-43-170 does two things in one section. Its first sentence makes an insurance producer personally liable on all contracts of insurance unlawfully made by or through him, directly or indirectly, for an unauthorized insurer. Its second reaches anyone - not only a licensed producer - who writes or signs an open policy, certificate, blank or coupon of an unlicensed company that binds insurance on South Carolina property, deems that person the insurer's producer, and fixes him with the licences and taxes the transaction should have borne.

An insurer executes an agency contract with a South Carolina producer. Under section 38-43-50 it must file a notice of appointment within how long from the date the contract is executed or the first application is submitted?

1. 5 days
2. 15 days ✓
3. 30 days
4. 60 days

Why: S.C. Code § 38-43-50(C) sets fifteen days from whichever comes first, the executed contract or the first insurance application, and each appointment carries the fee § 38-43-80 prescribes, payable by the insurer. An insurer may cover a group with one filing: it may elect to appoint a producer to all or some insurers within its holding company system by a single appointment request.

The Business Auto physical damage coverage offers which coverage categories?

1. Workers compensation
2. Comprehensive, specified causes of loss, and collision ✓
3. Uninsured motorists only
4. Liability and medical payments in that particular circumstance

Why: BACF physical damage can be written as Comprehensive, Specified Causes of Loss (a narrower named-peril option), and Collision.

A South Carolina vehicle glass repair business pays a tow-truck operator a fee for each insurance claimant the operator sends it for windscreen replacement. Under section 38-55-173 the glass business is:

1. In breach of an unfair trade practice, but not criminally liable
2. Liable only if the claimant was unaware of the payment
3. Permitted, the payment being an ordinary referral fee
4. Guilty of a misdemeanor ✓

Why: S.C. Code § 38-55-173(A)(1) makes the referral payment itself the offence, so the claimant's knowledge is irrelevant and no insurer need have suffered a loss. The subsection covers three targets: a third person who refers a claimant, the insurance claimant himself, and the waiver or payment of the claimant's deductible. This is the criminal counterpart to the regulatory controls in § 38-57-75, which govern how insurers and administrators handle the same claims.

The CGL 'Other Insurance' condition typically makes the CGL coverage:

1. Primary, but excess over certain other coverages in specified situations ✓
2. Always pro rata regardless
3. Void if other insurance exists unless an exception clearly applies for the coverage that is in force
4. Always excess

Why: The CGL is generally primary but becomes excess in specified situations (e.g., certain additional-insured or fire scenarios) per the Other Insurance condition.

A South Carolina homeowner files a claim for hail damage to his roof, and the insurer decides not to renew the policy for that reason. Under section 38-75-790 that nonrenewal is:

1. Permitted on sixty days' written notice of nonrenewal
2. Permitted where the claim exceeded the policy deductible
3. Permitted only after two such claims have been made within a period of three years
4. Prohibited, the claim being for damages resulting from an act of God ✓

Why: S.C. Code § 38-75-790 is one sentence protecting a homeowner who did nothing but suffer weather, and it bars the nonrenewal outright rather than regulating the notice for it. It must be read with § 38-75-1210(A)(5), which preserves an insurer's freedom to refuse to issue policies because of the CATASTROPHE EXPOSURE OF WIND: the exposure of the property may be judged, but the insured's act-of-God claim may not be held against him.

The Permitted Incidental Occupancies endorsement allows the insured to:

1. Rent the home to multiple families unless an exception clearly applies for the coverage that is in force
2. Add an automobile to the policy
3. Operate a large factory at home
4. Conduct a limited business or professional office within the residence ✓

Why: This endorsement modifies the policy to permit a small, incidental business or office (such as a professional studio) on the residence premises.

Under the PAP, a non-owned auto driven by the insured (e.g., a borrowed car) is covered for physical damage:

1. At the broadest level of coverage applying to any covered auto on the policy ✓
2. Only under liability
3. Only if listed in the Declarations unless an exception clearly applies for the coverage that is in force
4. Never, because it is not owned

Why: Part D extends to a non-owned auto in the insured's custody, providing the broadest physical damage coverage that applies to any one auto shown on the policy.

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

1. Increase the deductible
2. Lower the premium for everyone unless an exception clearly applies for the coverage that is in force
3. Provide liability protection
4. Encourage insureds to carry coverage close to the full value of the property ✓

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

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

1. An insured only if a manager
2. Covered only for physical damage under the policy's terms
3. Never an insured
4. An insured while using a covered auto with permission ✓

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

Under section 38-57-320, in all cases where it is necessary to file an order with a clerk of court to effect collection of a fine, the licence or certificate of authority of the person fined may be:

1. Summarily revoked or suspended ✓
2. Revoked only after a further hearing
3. Suspended for a maximum of 90 days
4. Revoked only if the fine exceeds $10,000

Why: S.C. Code § 38-57-320 is the sanction that gives the collection machinery its force: once matters have reached the point where an order must be filed with a clerk of court, the licence may go SUMMARILY - without the further hearing the word would otherwise imply. It is the consequence § 38-57-240 requires the Director to warn about in the certified-mail notice, so a licensee has been told in terms before it can happen.

Which of the following is generally TRUE about the relationship between the surety and the principal after the surety pays a loss to the obligee?

1. The obligee repays the surety
2. The surety has the right to seek reimbursement (subrogation/indemnity) from the principal ✓
3. The surety absorbs the loss with no recourse
4. The bond is automatically cancelled with a refund unless an exception clearly applies for the coverage that is in force

Why: After paying the obligee, the surety has a right of indemnity/subrogation against the principal, reflecting surety's guarantee nature.

The voluntary and intentional giving up of a known right is called:

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

Why: A waiver is the intentional and voluntary relinquishment of a known legal right.

An insurer settling a first-party automobile benefit asks the claimant to sign a general release that would also give up his claim against the other driver. Under section 38-77-260 that release is null and void unless a proper disclosure statement was delivered and an interval has elapsed of not less than:

1. 3 days ✓
2. 10 days
3. 15 days
4. 30 days

Why: S.C. Code § 38-77-260(a) requires the three days to run from the LATER of the delivery of the disclosure statement and the payment or settlement of the first-party benefits, so an insurer cannot start the clock with a document handed over at the moment of signature. The disclosure statement, on a form the director approves, must say plainly that first-party benefits are contractual obligations entirely separate from anyone's legal liability, and that the claimant is not required to release any rights arising from that liability in order to be paid.

Which best describes the DP-2 vs DP-3 distinction?

1. DP-2 is broad named peril; DP-3 is special (open) peril on the dwelling ✓
2. Both are basic peril only
3. Both are open peril
4. DP-2 is open peril; DP-3 is named peril for the coverage that is in force

Why: DP-2 provides broad-form named perils, while DP-3 upgrades the dwelling and other structures to open-peril (special form) coverage.

An insured carrying underinsured motorist coverage on three vehicles is injured in an accident in which none of those vehicles is involved. Under section 38-77-160 coverage is available:

1. Only if the vehicle he occupied was itself an insured vehicle
2. To the combined limits of all three vehicles
3. To the extent of the coverage on any one of the vehicles carrying the underinsured coverage ✓
4. Only to the mandatory uninsured motorist limits prescribed by section 38-77-150 for the vehicle he occupied

Why: S.C. Code § 38-77-160 answers the pedestrian and passenger case with the same anti-stacking logic it applies when one of the insured's own vehicles is involved: one vehicle's coverage, not the sum of them. The section does not say which vehicle, only that it is any one of those carrying the excess or underinsured coverage.

Section 38-75-400 governs the rates applicable to insurance written by the South Carolina Wind and Hail Underwriting Association. The section states that as a residual market mechanism the association:

1. Must offer rates no higher than the average admitted market rate for the risk
2. Must offer the lowest rate available for the risk in the coastal area
3. Is not intended to offer rates competitive with the admitted market ✓
4. May not apply surcharges of any kind to its rates

Why: S.C. Code § 38-75-400(B) says so expressly and states the object instead: rates must be adequate and established at a level that permits the association to operate as a self-sustaining mechanism. The association must maintain rate-making data, monitor rate adequacy and notify the director semi-annually so that he may take corrective action by order. Rates adjusted by such an order are exempt from the twelve-month limitation in § 38-73-920, and the order is subject to judicial review by the Administrative Law Court.

Section 38-75-50 addresses a clause purporting to limit or invalidate the force of a policy where the insured property is encumbered by a real estate mortgage. Such a clause is:

1. Enforceable only against a commercial insured
2. Enforceable where the mortgagee is named in the policy
3. Enforceable if it was disclosed at the time of application
4. Void ✓

Why: S.C. Code § 38-75-50 is one sentence and admits no exception. It is worth reading beside § 38-75-40, because the contrast is the lesson: the coinsurance clause is void only until it is properly labelled, while the encumbrance clause cannot be rescued by any form of disclosure or approval at all.

Civil Authority coverage under a Business Income form provides for loss when:

1. The insured voluntarily closes for renovation unless an exception clearly applies for the coverage that is in force
2. A government order prohibits access to the premises due to a covered cause of loss to nearby property ✓
3. Employees go on strike
4. A competitor opens nearby

Why: Civil Authority extends Business Income/Extra Expense when access to the insured premises is prohibited by a civil authority because of a covered cause of loss to property in the vicinity.

Because the standard policy's Part One does not apply in monopolistic fund states (where coverage comes from the state fund), what does the policy still commonly provide for those states via endorsement?

1. Part One statutory benefits
2. Vocational rehabilitation
3. Stop Gap / Employers Liability coverage ✓
4. Other States Insurance

Why: In monopolistic states, the state fund provides statutory benefits but not employers liability; a stop gap (Employers Liability) endorsement fills that gap.

A homeowner applies for NFIP flood coverage on June 1 because heavy rains are forecast. A flood damages the home on June 10. The claim will most likely be:

1. Paid in full
2. Denied because the 30-day waiting period had not elapsed ✓
3. Paid only for contents
4. Paid at 50% because of the waiting period

Why: Because the standard 30-day NFIP waiting period had not yet passed, the policy was not in effect at the time of loss and the claim would be denied.

A homeowner stores a guest's furniture temporarily. Property of others while on the residence premises is:

1. Covered only under liability under the policy's terms
2. Subject to a $200 limit
3. Never covered
4. Coverable at the insured's option under Coverage C ✓

Why: Coverage C may, at the insured's option, apply to property of others while on the part of the residence premises occupied by an insured.

Section 38-1-20 defines property insurance as covering listed perils and any other perils to property the director considers proper subjects of property insurance. The definition then adds a qualifier, which is that the peril must not already be:

1. Excluded by the policy form the insurer has filed
2. Specified in one of the other line definitions in the section ✓
3. Covered by a policy the insured holds with another insurer
4. Reinsured under a treaty approved by the director

Why: S.C. Code § 38-1-20(50) is a residual definition: it lists perils from fire and weather through earthquake, rising waters, riot, vandalism and glass breakage, then closes by excepting anything already specified in items (1), (7), (11), (35), (40), (54) or (59) - accident and health, annuity, casualty, life, marine, surety and title. So the way to classify a risk in South Carolina is to check the other definitions FIRST and let property catch what is left. Note one express carve-out inside it: theft of automobiles and personal effects in them is property insurance, but no other form of theft insurance is.

Sections 38-73-736 and 38-73-737 give driver training credits against private passenger automobile premium rates, and distinguish a 'youthful operator' from every other driver. A youthful operator is a person under the age of:

1. 18
2. 21
3. 25 ✓
4. 30

Why: S.C. Code § 38-73-736(A)(3) adds a second element to the definition: the person must be under twenty-five AND have his liability and collision rates determined by a youthful driver classification. Age alone does not make a youthful operator of a driver the insurer does not so classify. The distinction decides which section applies - § 38-73-736 gives the credit to a driver who is NOT a youthful operator, § 38-73-737 to one who is.

Beyond reporting the accident and satisfying one of the three alternative conditions, section 38-77-170 imposes a third requirement before an insured may recover against an unknown owner or operator. That requirement is that the insured:

1. Has exhausted the limits of every other applicable coverage
2. Was not negligent in failing to determine the identity of the other vehicle and its driver at the time of the accident ✓
3. Has first obtained a judgment against the unknown motorist as John Doe
4. Has given his insurer written notice of the claim within thirty days of the accident and cooperated in its investigation

Why: S.C. Code § 38-77-170(A)(3) puts the burden on what the insured did at the scene rather than on anything he did afterwards. The three requirements are cumulative - the police report under item (1), one of the three conditions in item (2), and this - and failing any one of them leaves no right of action or recovery under the uninsured motorist provision at all.

Section 38-31-30 applies the Guaranty Association Act to all kinds of direct insurance except those it lists. Which of the following is on that list of exclusions?

1. Homeowners multiple peril insurance
2. Title insurance ✓
3. Workers' compensation insurance
4. Private passenger automobile insurance

Why: S.C. Code § 38-31-30 excludes ten things, and the three offered against title insurance here are not merely covered - they have accounts of their own under § 38-31-40. The exclusions run to life, annuity, health or accident insurance; mortgage guaranty, financial guaranty and other protection against investment risks; fidelity and surety bonds; credit, vendors' single interest and collateral protection insurance; warranties and service contracts; retroactive insurance of known losses; title insurance; ocean marine; transactions that do not transfer risk; and self-insured losses predating a block transfer.

Experience rating in workers' compensation works by comparing an individual employer's actual losses to:

1. The employer's payroll growth
2. The federal benefit schedule
3. The expected (average) losses for employers in the same classifications ✓
4. The losses of unrelated industries unless an exception clearly applies for the coverage that is in force

Why: Experience rating compares an employer's actual loss experience to the average expected losses for similar employers, producing a credit or debit modification.

A technology consultant gives faulty advice causing a client a large financial loss (no bodily injury or property damage). The proper coverage is:

1. Liquor liability
2. Technology/Professional E&O ✓
3. CGL Coverage A
4. A bid bond

Why: Pure financial loss from negligent professional advice is covered by professional E&O, not the CGL which requires BI/PD (or a covered offense).

Under section 38-5-110 the Secretary of State may not issue a charter to an insurer, grant an amendment of charter, or permit a foreign or alien insurer to do business in this State without:

1. A certificate of solvency from the insurer's domiciliary regulator
2. The written approval of the Director ✓
3. Proof that the insurer has appointed a resident agent
4. The approval of the Insurance Commission at a public meeting

Why: S.C. Code § 38-5-110 makes it UNLAWFUL for the Secretary of State to act without the Director's written approval, which puts insurance company formation behind a regulatory gate rather than a purely corporate one. It is a short section with long consequences: it is why a South Carolina insurer cannot be created, or its charter amended, through the ordinary corporate route, and it is the mechanism that gives the Director control over a domestic insurer's name where § 38-5-100 controls a foreign one's.

A commercial property insurer offers its insureds free thermal-imaging surveys of their electrical switchgear to help them prevent fires. Under section 38-57-150 this is:

1. A prohibited inducement not specified in the policy
2. Permitted only if the survey is charged at cost
3. Permitted, as a service relating to loss control of the covered risks ✓
4. Permitted only if offered to every insured of that class

Why: S.C. Code § 38-57-150(3)(b) expressly preserves an insurer's freedom, by or through employees, affiliates or third-party representatives, to offer or give an insured services or other offerings free or at a discount where they DIRECTLY AND REASONABLY RELATE to loss control of the risks the policy covers. That relationship is the whole test - it is what separates a loss-control service from an inducement. Subsection (3)(a) keeps the outer boundary in place: nothing in the section permits an unfair method of competition or an unfair or deceptive act.

Section 38-73-325 addresses the absence of credit information about an applicant. An insurer may use that absence for underwriting purposes only if:

1. The applicant has been given written notice and an opportunity to supply the information
2. It presents information satisfactory to the director that the absence is related to the risk ✓
3. The absence has been confirmed by two consumer reporting agencies
4. The insurer treats every applicant without credit information in the same way

Why: S.C. Code § 38-73-325 is one sentence and it reverses the usual burden: the absence of credit information is presumptively irrelevant, and the insurer must satisfy the director that it bears on the risk before using it at all. Section 38-73-425 states the identical rule for the casualty and automobile article, so the same test applies whichever article governs the line.

Section 38-73-430 governs the making of casualty and automobile rates. Among the matters to which the section says due consideration must be given, it expressly names:

1. The rates approved for the South Carolina Wind and Hail Underwriting Association
2. The insurer's investment income from realized and unrealized capital gains during the preceding calendar year
3. The number of insurers writing the same class of risk in this State
4. Assessments for purposes such as the guaranty fund and the wind and hail joint underwriting association ✓

Why: S.C. Code § 38-73-430(5) lets an insurer build the cost of residual-market and guaranty-fund assessments into its rates, which is the mechanism by which those bodies are ultimately paid for. Item (2) permits systems of expense provisions to differ between insurers to reflect their operating methods, and item (3) permits risks to be grouped by classification and classification rates to be modified by rating plans that measure variations in hazard or expense demonstrably having a probable effect upon losses or expenses.

In addition to the criminal penalties, section 38-55-540 requires a court sentencing a person convicted under it to order:

1. Surrender of any insurance licence the person holds
2. Payment of the insurer's investigation costs
3. A period of supervised probation after release
4. Full restitution to the victim of the benefit obtained ✓

Why: S.C. Code § 38-55-540(B) makes restitution mandatory - the court MUST order it - and measures it by the economic advantage or benefit the offender obtained as a result of the violation. It adds a second head that is easy to overlook: the difference between any taxes owed and any taxes the person actually paid, where applicable, which catches the offender who declared none of the proceeds.

Injuries to civilian federal government employees (such as a postal or federal agency worker) are covered under:

1. FELA
2. The Defense Base Act in that particular circumstance
3. The Federal Employees' Compensation Act (FECA) ✓
4. The LHWCA

Why: FECA provides workers' compensation benefits to civilian employees of the federal government for job-related injuries and illnesses.

Section 38-31-60 caps the Guaranty Association's total obligation to one insured and its affiliates at ten million dollars in the aggregate, counting payments by similar associations in other states. That cap does not apply to a claim for benefits under:

1. Workers' compensation coverage ✓
2. Homeowners multiple peril coverage
3. Automobile liability coverage
4. Any coverage written in one of the four statutory accounts

Why: S.C. Code § 38-31-60(a)(iv) carves workers' compensation out of the aggregate cap, as the section carves it out of the per-claim floor and ceiling - the statute protects the injured worker ahead of the association's balance sheet at every turn. Note what the cap counts: payments made by this association AND by any one or more similar associations in any other state, to or on behalf of that insured, its affiliates and additional insureds, on the policies of ANY ONE insolvent insurer. Where more than one claimant may have a claim under those policies, the association may adopt a plan to allocate what is payable as it considers equitable.

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

1. Per claim with no per-accident cap unless an exception clearly applies for the coverage that is in force according to the insurer's rules
2. As the most paid regardless of the number of insureds, claims, vehicles, or persons involved (per the limits shown) ✓
3. Per insured separately
4. Doubling for multiple vehicles

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).

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

1. Only a written warning
2. Loss of flood coverage only for the coverage that is in force
3. A premium surcharge
4. Federal criminal penalties including fines and imprisonment ✓

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

Under section 38-77-270, Christian Science care or care and treatment by any licensed healing art:

1. May be excluded by policy endorsement
2. Is payable only under medical payments coverage
3. Constitutes economic loss ✓
4. Is outside the definition of a covered expense

Why: S.C. Code § 38-77-270 does two things in two sentences: it confirms that nothing in title 38 prohibits an insurer from PROVIDING such care and treatment, and it classifies that care as economic loss. The classification is what gives it effect, because economic loss is the currency in which first-party automobile benefits are measured - so a claimant who chooses this route is not put outside the cover for having done so.

Under section 38-77-200, apart from what the section itself provides for or the form prescribed by the director may provide, the only thing that may be required of the insured under the uninsured motorist provision is:

1. Exhaustion of every other coverage applicable to the loss
2. Proof that the uninsured motorist is unable to pay a judgment
3. The establishment of legal liability of the uninsured motorist ✓
4. A sworn proof of loss filed within sixty days

Why: S.C. Code § 38-77-200 leaves the insured with one burden and takes away the rest, and it closes by providing that the insured may not be restricted or prevented in any manner from employing legal counsel or instituting legal proceedings. Read together with the arbitration bar in the same sentence, the section's whole effect is to keep the insured's route to a court open.

An insurer's charter has been revoked. A person acting on its behalf, knowing this, continues to collect renewal premiums from South Carolina policyholders. Under section 38-55-130 this is:

1. Unlawful ✓
2. Lawful, as the premiums fund existing claims
3. Lawful if the policyholders are told of the revocation
4. Lawful until the Director orders collection to stop

Why: S.C. Code § 38-55-130 reaches soliciting, delivering any policy and collecting any premiums, and it binds any person acting for or on the insurer's behalf as well as the insurer itself - so the agent is exposed on his own account. It applies where the charter has been surrendered as well as where it has been revoked or cancelled 'for any reason'. Knowledge is an element: the section says KNOWINGLY.

A private insurer authorised to write property insurance in South Carolina on a direct and statewide basis does not wish to belong to the Wind and Hail Underwriting Association. Under section 38-75-330 membership in the association is:

1. Optional, subject to a surcharge on its coastal writings
2. Required only of insurers actually writing property insurance in the coastal area as that area is defined by article 5
3. A condition of its authority to continue to transact the business of insurance in this State ✓
4. Required only of insurers domiciled in this State

Why: S.C. Code § 38-75-330(B) makes membership a licensing condition rather than a commercial choice, and it lasts as long as the association exists. Two narrow exemptions are written into the same subsection - insurers whose writings are limited to property wholly owned by parent, subsidiary or allied organisations, and those limited to property wholly owned by religious organisations - and even they must provide essential property insurance for their coastal risks as a condition of the exemption.

Which of the following best distinguishes FELA from a typical state workers' compensation system?

1. FELA is fault-based requiring proof of negligence, while state WC is no-fault ✓
2. FELA provides automatic no-fault benefits, while state WC is fault-based
3. FELA covers only federal civilian employees
4. FELA caps medical benefits at a fixed amount

Why: Unlike no-fault state WC systems, FELA requires the injured railroad worker to prove the employer's negligence to recover damages.

Section 38-77-151 places funds collected by the Department of Motor Vehicles under chapter 10 of title 56 on deposit with the State Treasurer as the Uninsured Motorists Fund. The share of that fund the Department of Insurance retains, for enforcement and for consumer information, is:

1. 5 percent
2. 10 percent ✓
3. 15 percent
4. 20 percent

Why: S.C. Code § 38-77-151 says what the retained share pays for: enforcing title 38 including §§ 38-77-112, 38-77-122 and 38-77-123, publishing an automobile insurance buyer's guide for consumers and a brochure comparing automobile insurance premiums, and providing a public awareness campaign. Interest earned by the fund is retained by the fund, and the remainder may be expended by the director for the administration of the chapter as §§ 38-77-154 and 38-77-155 provide.

Under the PAP, when an insured has two PAPs from DIFFERENT insurers covering the same liability loss on a non-owned auto, coverage is generally coordinated as:

1. Both primary
2. Each excess, sharing on the basis stated in the other-insurance provision ✓
3. The newer policy is void unless an exception clearly applies for the coverage that is in force
4. Neither pays

Why: When the insured's coverage is excess (as on a non-owned auto) under two policies, they typically share the excess pro rata as provided in the other-insurance clause.

An insurer appoints a South Carolina producer on a general appointment. Under the fee table in section 38-43-80 the initial and biennial general appointment fee is:

1. $25
2. $40
3. $100 ✓
4. $250

Why: S.C. Code § 38-43-80(A)(1)(b) sets one hundred dollars for a general appointment and the same one hundred for a special appointment, against forty for a local one. The fees are the insurer's to pay under § 38-43-50(C), not the producer's. Two hundred and fifty dollars appears in this section too, but it is not a fee at all - it is the penalty that must accompany a late reactivation under subsection (B)(4).

A hurricane strikes the South Carolina coast. Section 38-3-430 lets the department promulgate standardized requirements for insurers by emergency regulation, and requires those regulations to address claims reporting, grace periods for premiums and other duties, and:

1. A moratorium on rate increases for the following year
2. Mandatory arbitration of disputed hurricane claims
3. A minimum payment on every claim within 30 days
4. Temporary postponement of cancellations and nonrenewals ✓

Why: S.C. Code § 38-3-430(A) names three subjects the emergency regulations must address - claims reporting requirements, grace periods for the payment of premiums and the performance of other duties by insureds, and the temporary postponement of cancellations and nonrenewals - and then leaves the Director room for any other rule he considers necessary. The three share one aim: to stop a policyholder losing cover, or losing a claim, because a disaster made it impossible to do something on time.

Under section 38-77-160 an automobile insurance carrier must offer additional uninsured motorist coverage at the option of the insured. The section fixes the ceiling on what must be offered at:

1. The limits the director prescribes by regulation
2. The limits carried by the at-fault motorist
3. Twice the mandatory limits prescribed by section 38-77-150
4. The limits of the insured's own liability coverage ✓

Why: S.C. Code § 38-77-160 ties the ceiling to the insured's OWN liability limits, and the next sentence does the same for underinsured motorist coverage. Both are offers the carrier must make at the insured's option, sitting on top of the mandatory coverage § 38-77-150 prescribes. Section 38-77-350(E) supplies what happens when the offer is ignored: if the executed form is not returned within thirty days the insurer must add uninsured and underinsured motorist coverage at the insured's liability limits.

Federal Multiple Peril Crop Insurance (MPCI) is overseen by which federal entity?

1. The Federal Reserve
2. The Department of Commerce under the policy's terms
3. The Risk Management Agency (RMA) of the USDA ✓
4. FEMA

Why: MPCI is administered through the USDA's Risk Management Agency, which works with the Federal Crop Insurance Corporation and private insurers.

A 'valued policy law' in some states requires that, for a total loss to real property by a covered peril, the insurer pay:

1. The full face amount of the policy ✓
2. Replacement cost minus depreciation
3. The market value of the land
4. Actual cash value only

Why: Where valued policy laws apply, the insurer must pay the full policy face amount on a total loss of real property by a covered peril, regardless of actual value.

A hazard is best defined as:

1. Any condition or situation that increases the likelihood or severity of a loss ✓
2. The cause of a loss
3. The financial harm resulting from a loss
4. The uncertainty about whether a loss will occur according to the insurer's rules

Why: A hazard is a condition that increases the chance that a peril will occur or the severity of a resulting loss.

Section 38-77-161 addresses uninsured and underinsured motorist coverage in excess and umbrella policies. It provides that such coverage:

1. Must be provided at the limits of the underlying policy
2. Need not be provided in this State by any excess or umbrella policy ✓
3. Must be offered, but may be rejected by the insured in writing
4. Must be provided where the underlying policy is a South Carolina policy

Why: S.C. Code § 38-77-161 is one sentence and it lifts excess and umbrella writers out of the scheme entirely - neither the mandatory provision in § 38-77-150 nor the offers § 38-77-160 requires reaches them. It sits consistently with the chapter's own definitions, since § 38-77-30(10.5) already puts a policy providing insurance on an excess basis such as an umbrella policy outside 'policy of automobile insurance'.

A PAP insured rents a car on vacation and damages it. Which coverage most directly responds to the damage to the rented car?

1. Part C — Uninsured Motorists in that particular circumstance
2. Part D — Coverage for Damage to Your Auto (non-owned auto) ✓
3. Part A — Liability
4. Part B — Medical Payments

Why: Damage to a non-owned auto in the insured's custody, such as a rental, is covered under Part D at the broadest physical damage coverage on the policy.

The implied warranty of legality in ocean marine requires that:

1. The voyage occur in daylight
2. The vessel be domestically owned
3. All cargo be perishable
4. The venture be a lawful one ✓

Why: The warranty of legality requires that the insured venture be legal; insuring an illegal voyage (e.g., smuggling) is unenforceable.

Many WC laws include a 'retroactive' provision tied to the waiting period. This means that if a disability lasts beyond a specified time, the worker:

1. Receives only medical benefits
2. Loses all benefits for the waiting period for the coverage that is in force
3. Must reapply for benefits
4. Is paid benefits back to the date of injury, including the waiting period ✓

Why: Under a retroactive provision, if the disability continues beyond a set number of days, the worker is paid wage benefits retroactively, including for the initial waiting period.

A hit-and-run accident with an unidentified driver who flees is typically covered under which PAP part?

1. Part A — Liability
2. Part B — Medical Payments only
3. Part C — Uninsured Motorists ✓
4. Part D — Collision only

Why: An unidentified hit-and-run vehicle is treated as an uninsured motor vehicle, so bodily injury is addressed under Part C — Uninsured Motorists.

Under the PAP, "occupying" means:

1. Only sitting in the driver's seat
2. Driving the vehicle on a public road
3. In, upon, getting in, on, out, or off a vehicle ✓
4. Owning or leasing the vehicle

Why: "Occupying" is defined as in, upon, getting in, on, out, or off of a vehicle, which is broader than merely riding inside it.

A person sues the Director to recover a chapter 57 fine he says was illegally collected. Under section 38-57-310 the amount he may recover in that suit may not exceed:

1. The fine paid under protest, plus interest at the legal rate
2. The fine paid under protest, plus his attorney's fees
3. The fine paid under protest, plus service and witness costs ✓
4. Twice the fine paid under protest

Why: S.C. Code § 38-57-310 caps recovery at the fine itself together with costs arising from the service of process and procuring the attendance of witnesses - no interest, no attorney's fees, and no damages for the collection. The limitation matters because it defines what is actually at stake in a protest action, and it works with § 38-57-300, under which the Attorney General defends the Director in such proceedings.

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

1. DP-1 named peril unless an exception clearly applies for the coverage that is in force
2. HO open-peril personal property scheduling (e.g., personal articles floater) ✓
3. Coverage F
4. Coverage D

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

A worker loses the use of both hands and is permanently unable to engage in any gainful employment. This is classified as:

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

Why: Permanent total disability (PTD) applies when the worker is permanently and completely unable to return to any gainful employment.

An employee files a claim, and the only question is whether to pay statutory benefits set by the state law. Which Part of the policy responds?

1. Part One ✓
2. Part Two
3. Part Four
4. Part Three

Why: Payment of the benefits required by the state WC statute is handled by Part One — Workers Compensation.

A person is found by a court to have violated the insurance fraud article for the third time. Under section 38-55-550 the civil penalty for a third or subsequent offence is a fine of:

1. Not less than $5,000 and not more than $10,000
2. Not more than $15,000, with no minimum
3. Not less than $15,000, with no maximum
4. Not less than $10,000 and not more than $15,000 ✓

Why: S.C. Code § 38-55-550(A)(3) brackets the third and subsequent offence between ten and fifteen thousand dollars. Note where the money goes, because it is unusual: the civil penalty is paid to the DIRECTOR OF THE INSURANCE FRAUD DIVISION, not into the general fund, and under subsection (D) all such revenues must be used to fund the costs of enforcing and administering the article. The court may also award court costs and reasonable attorneys' fees to the director.

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

1. Combining UM limits across multiple covered vehicles or policies to increase recovery ✓
2. Layering multiple deductibles
3. Excluding coverage for additional drivers
4. Reducing limits when more than one vehicle is insured for the coverage that is in force

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