Washington Property & Casualty Insurance License, Practice Exams

The 'nationwide marine definition' establishes:

1. Which private passenger auto policies each state must honor when a covered auto is driven interstate
2. The types of risks that may properly be written as inland and ocean marine insurance ✓
3. The boundaries of the federal flood hazard zones that FEMA maps along coastal waterways
4. The minimum premium an insurer may charge before writing an ocean marine policy in a state

Why: The Nationwide Marine Definition outlines classes of risks that may properly be insured under marine (inland and ocean) policies, including imports, exports, domestic shipments, instrumentalities of transportation, and certain floaters.

For homeowners', dwelling fire, and private passenger auto policies, RCW 48.18.290 requires the unearned pro rata premium to be paid to the insured no later than:

1. 30 days after the date of notice of cancellation
2. 15 days after the date of notice of cancellation
3. 45 days after the date of notice of cancellation ✓
4. 60 days after the date of notice of cancellation

Why: RCW 48.18.290(4) requires the unearned portion of premium, computed pro rata, to be paid or mailed to the insured as soon as possible and no later than 45 days after the date of notice of cancellation for homeowners', dwelling fire, and private passenger auto policies.

Under RCW 48.53.030, an insurer may cancel a fire insurance policy under the arson-fraud provisions only where:

1. a single suspicious condition is present
2. the insured has filed any prior fire claim
3. two or more of the enumerated conditions exist ✓
4. the property is located in an incorporated city

Why: RCW 48.53.030 provides that, notwithstanding RCW 48.18.290, an insurer may cancel a fire policy for a structure where two or more of the enumerated conditions (such as prolonged vacancy or danger of collapse) exist.

Because WC premium depends on actual payroll, which the insurer estimates at the start of the term, what process is performed after the policy period to determine final premium?

1. An experience modification
2. A residual market assignment
3. A premium audit ✓
4. A loss reserve study

Why: A premium audit reviews the insured's actual payroll records after the policy period so the final premium can be adjusted up or down from the estimate.

Under RCW 48.02.080, if the commissioner has cause to believe a person has violated a penal provision of the code, the commissioner must:

1. conduct a criminal trial within the office of the commissioner whenever the circumstances reasonably require it
2. certify the facts of the violation to the public prosecutor of the jurisdiction where the offense occurred ✓
3. impose the maximum criminal fine authorized by statute as part of the applicable filing then in effect
4. revoke every insurance license the person holds nationwide in the ordinary course of business

Why: RCW 48.02.080(2) provides that if the commissioner has cause to believe any person has violated a penal provision of the code, the commissioner must certify the facts of the violation to the public prosecutor of the jurisdiction in which the offense was committed.

A medical professional wants protection against patient claims of negligent treatment. The correct policy is:

1. Medical Professional Liability (malpractice) / E&O ✓
2. Employee Benefits Liability, which covers errors in administering benefit plans
3. Commercial General Liability, since the patient suffered bodily injury
4. A performance bond for medical work

Why: Patient injury from professional treatment is excluded by the CGL and covered by medical professional liability (malpractice) insurance.

An alien insurer authorized in Washington is being examined. Under RCW 48.03.010, the commissioner's examination of it may be limited to:

1. Its insurance transactions within the United States ✓
2. Only the policies it has issued to Washington residents
3. The three most recent years of its worldwide operations
4. Whatever its domiciliary nation's regulator has reviewed

Why: RCW 48.03.010 provides that examination of an alien insurer may be limited to its insurance transactions in the United States.

A lender requires flood insurance as a condition of a mortgage because the property is in a Special Flood Hazard Area. This requirement comes from:

1. The federal Do-Not-Call rules
2. State law, which conditions the recording of every mortgage on proof of flood insurance before the closing may occur
3. TRIA's make-available requirement
4. Federal flood law requiring federally regulated lenders to mandate flood coverage in high-risk zones ✓

Why: Federal law requires lenders regulated or insured by the federal government to require flood insurance on properties located in Special Flood Hazard Areas.

In the Dwelling Policy, which coverage applies to a detached garage or storage shed?

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

Why: Coverage B — Other Structures covers structures separated from the dwelling, such as detached garages, sheds, and fences.

Under RCW 48.30A.020, all of the following are recognized defenses to a charge under the insurance fraud chapter EXCEPT:

1. the payment was an incidental, purely social gratuity
2. the conduct was a lawful group-buying arrangement
3. a legal provider paid an expert witness for a report
4. the provider was unaware the referral was unlawful ✓

Why: RCW 48.30A.020 lists defenses such as incidental social gifts, group-buying arrangements, and paying an expert witness; mere lack of awareness that a referral was unlawful is not among the enumerated defenses.

Under 18 U.S.C. § 1033, a person who has been convicted of a felony involving dishonesty or breach of trust is prohibited from engaging in the business of insurance unless:

1. They pay a civil fine to the state insurance department and complete an ethics course
2. They obtain written consent from the appropriate insurance regulatory official ✓
3. Ten years have passed since the sentence and any supervised release were completed
4. They retake the state producer licensing examination and pass it before reapplying

Why: Section 1033 bars such felons from the business of insurance affecting interstate commerce unless they obtain written consent from the appropriate state insurance regulator (under 1033(e)).

Under the CGL Supplementary Payments, the insurer will pay up to how much per day for the insured's loss of earnings while attending a trial at the insurer's request?

1. $1,000
2. $100
3. $250 ✓
4. $500

Why: Supplementary Payments include up to $250 per day for the insured's actual loss of earnings due to attendance at hearings or trials at the insurer's request.

Under RCW 48.19.060, the commissioner may extend the thirty-day rate-filing waiting period by an additional period not to exceed:

1. thirty days
2. five days
3. forty-five days
4. fifteen days ✓

Why: RCW 48.19.060(2)(a) allows the commissioner to extend the waiting period by an additional period not to exceed fifteen days by giving notice within the waiting period that additional time is needed to consider the filing.

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

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

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

Under RCW 46.30.030, an insurance identification card issued with a Washington motor vehicle liability policy:

1. Must be printed on tamper-resistant paper stock in a form prescribed by the insurance commissioner before delivery
2. Is mailed to the insured by the department of licensing after the insurer reports the policy
3. Must be issued only in electronic format for policies written on or after January 1, 2013
4. May be provided in either paper or electronic format, including an image displayed on a cellular phone ✓

Why: RCW 46.30.030(1) requires the insurer to provide an identification card as specified by the department of licensing, and states the card may be provided in either paper or electronic format, with acceptable electronic formats including electronic images displayed on a cellular phone or other portable electronic device.

Under RCW 48.53.040, for an arson-fraud cancellation the insurer must provide not less than twenty days' notice of cancellation to each:

1. producer who sold the policy for each policy period the coverage remains in force
2. mortgagee, pledgee, or other person shown by the policy to have an interest in a loss ✓
3. adjacent property owner before the transaction may lawfully proceed
4. local fire department after notice and an opportunity for a hearing

Why: RCW 48.53.040(3) requires the insurer to comply with RCW 48.18.290(1)(b), (2), and (3) and to provide not less than twenty days' notice of cancellation to each mortgagee, pledgee, or other person shown by the policy to have an interest in any loss.

The Accounts Receivable floater covers loss resulting from:

1. Customers who simply refuse to pay invoices the insured has correctly billed them for
2. Poor credit decisions that leave the insured extending terms to unreliable buyers
3. A market downturn that reduces the amount customers are able to pay the insured
4. Inability to collect because records were destroyed by a covered peril ✓

Why: Accounts Receivable coverage pays for sums the insured cannot collect because receivable records were lost or destroyed by a covered cause of loss, plus extra collection and reconstruction costs.

A Washington-domiciled insurer is examined at its home office within the state. Under RCW 48.03.060, the cost of that examination is generally borne by:

1. The insurer being examined in every single instance
2. The National Association of Insurance Commissioners
3. The state, except for certain witness-related fees ✓
4. The policyholders through a surcharge added to premiums

Why: RCW 48.03.060 provides that in-state examinations of a domestic insurer (other than title insurers) are, except as to witness fees, mileage, and expense, at the expense of the state.

Under RCW 46.30.040, a person who knowingly gives a law enforcement officer an expired or canceled insurance policy as evidence of financial responsibility is guilty of:

1. A misdemeanor ✓
2. A traffic infraction only
3. No offense, absent proof of an accident
4. A class B felony

Why: RCW 46.30.040 makes it a misdemeanor to knowingly provide false evidence of financial responsibility to a law enforcement officer or a court, including an expired or canceled policy, bond, or certificate of deposit.

Under RCW 48.53.040, the unearned pro rata premium after an arson-fraud cancellation must be paid or mailed to the insured no later than:

1. thirty days after the notice of cancellation was issued ✓
2. forty-five days after the notice of cancellation was issued
3. sixty days after the notice of cancellation was issued
4. ten days after the notice of cancellation was issued

Why: RCW 48.53.040(4) requires the unearned portion of premium, computed pro rata, to be paid or mailed to the insured as soon as possible and no later than thirty days after the date the notice of cancellation was issued.

Under RCW 48.27.010, no person may compel an insured or applicant to procure property insurance in an amount:

1. in excess of the amount that could reasonably be expected to be paid under the policy in the event of a loss ✓
2. less than the outstanding loan balance, after notice to the borrower and an opportunity for a hearing before the lender
3. that includes a coinsurance clause for each policy period during which the coverage remains in force at the lender's request
4. greater than the state's minimum coverage requirement

Why: RCW 48.27.010(4) prohibits compelling an insured or applicant to procure property insurance in an amount in excess of the amount that could reasonably be expected to be paid under the policy (or combination of policies) in the event of a loss, whether required in connection with a loan or otherwise.

Under RCW 48.30.300, an insurer may NOT refuse to issue, cancel, or decline to renew a contract because of the insured's:

1. prior claims history within the past three years
2. residence in a designated high-arson area whenever the circumstances reasonably require it
3. sex, marital status, sexual orientation, or the presence of any disability ✓
4. failure to complete a defensive driving course

Why: RCW 48.30.300(1) prohibits refusing to issue, canceling, or declining to renew a contract because of the sex, marital status, or sexual orientation, or the presence of any disability, of the insured or prospective insured.

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

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

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

Which of the following is NOT one of the four elements required to prove a negligent act?

1. Intent to cause harm ✓
2. A breach of that duty
3. Proximate cause
4. A legal duty owed

Why: Negligence requires duty, breach, proximate cause, and damages. Intent is not required—an intentional act is a different category (an intentional tort).

The policy period condition specifies:

1. The deductible that applies to each covered loss during the term
2. The territory within which a covered loss must occur for coverage to apply
3. The number of persons who may qualify as insureds under the contract
4. The dates and times during which coverage is effective ✓

Why: The policy period sets the effective and expiration dates/times defining when coverage applies.

A policy that contains only one coverage part is best described as:

1. A package policy
2. A reporting form
3. A monoline policy ✓
4. An umbrella policy

Why: A monoline policy provides only one type of coverage; combining two or more coverage parts creates a package policy.

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 named-peril forms limited to fire, lightning, and internal explosion
3. Both are open-peril forms, differing only in the amount of loss of use provided
4. DP-2 is open peril on the dwelling; DP-3 is named peril only

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

An 'additional insured' endorsement on a CGL is most commonly used to:

1. Move the retroactive date back several years, so that occurrences from earlier policy years become reportable under the current claims-made policy without buying a tail
2. Raise the each occurrence and the general aggregate limits carried by the named insured for one job, without having to rewrite the declarations page at each renewal
3. Extend the named insured's policy to cover another party (such as a landlord or project owner) for liability arising from the named insured's work ✓
4. Convert the policy from an occurrence trigger to a claims-made trigger midterm

Why: Additional insured endorsements extend coverage to specified third parties (landlords, GCs, owners) for liability connected to the named insured's operations.

Under RCW 48.30.310, when an individual applies for personal automobile coverage on an individually owned passenger vehicle, an insurer must NOT consider the applicant's:

1. credit-based insurance score
2. commercial motor vehicle employment driving record ✓
3. years of licensed driving experience
4. record of at-fault accidents in the applicant's own vehicle

Why: RCW 48.30.310 prohibits an insurer, in issuing or renewing or rating an individually owned passenger vehicle policy, from considering the applicant's commercial motor vehicle employment driving record maintained while driving a commercial vehicle as an employee of another.

"Home state," as defined in RCW 48.17.010, is the jurisdiction where a producer:

1. first passed a producer licensing examination as a resident
2. maintains a principal residence or business and is licensed ✓
3. has appointed the commissioner to receive service of process
4. files the greatest number of applications in a calendar year

Why: RCW 48.17.010 defines "home state" as the state, territory, or Canadian province where the producer maintains a principal place of residence or business and is licensed to act as a producer.

A reciprocal insurer is best described as:

1. An insurer owned and operated by the federal government to write perils private carriers avoid
2. A corporation owned by its stockholders, who elect the board of directors and receive dividends
3. An unincorporated group of subscribers who insure one another, managed by an attorney-in-fact ✓
4. A foreign insurer that writes only surplus lines business through resident surplus lines brokers

Why: A reciprocal or interinsurance exchange is an unincorporated association of subscribers who exchange insurance among themselves, administered by an attorney-in-fact.

An Installation floater covers:

1. Dishonest acts committed by the contractor's own employees, including theft of materials from the job site
2. Property/materials being installed by a contractor until installation is complete and accepted ✓
3. The contractor's office building and the permanent fixtures inside it
4. Equipment after it has been sold and delivered to the public, while it sits in the buyer's possession

Why: An Installation floater covers materials and equipment during transit, storage, and installation until the work is accepted, common for HVAC or fixture installers.

Under RCW 48.15.060, insurance contracts properly procured as surplus line coverage from unauthorized insurers in accordance with the chapter are:

1. enforceable only by the surplus line broker for each policy period the coverage remains in force
2. subject to cancellation at any time by the commissioner
3. valid only until an authorized insurer offers replacement coverage
4. fully valid and enforceable as to all parties, like contracts of authorized insurers ✓

Why: RCW 48.15.060 provides that insurance contracts procured as surplus line coverage in accordance with the chapter are fully valid and enforceable as to all parties and are given recognition to the same effect as like contracts issued by authorized insurers.

Medical Payments to Others (Coverage F) typically does NOT pay for injuries to:

1. The named insured or a resident relative ✓
2. A delivery person hurt on the walkway
3. A guest tripping on the stairs
4. A child injured at a party

Why: Coverage F excludes the named insured and regular residents of the household; it is intended for injuries to third parties, not the insureds themselves.

The Permitted Incidental Occupancies endorsement allows the insured to:

1. Rent the dwelling to as many as four separate families while keeping owner-occupant eligibility
2. Add an automobile used in the business to the policy
3. Operate a manufacturing shop on the premises
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 GLBA privacy rule, an insurer that intends to share a customer's nonpublic personal financial information with a nonaffiliated third party generally must first:

1. Obtain a court order approving transfer of the customer's file to the recipient
2. File a notice with FEMA
3. Cancel the policy before any data changes hands
4. Provide a privacy notice and the opportunity to opt out ✓

Why: GLBA requires insurers to deliver a privacy notice and, before sharing nonpublic personal information with nonaffiliated third parties, give the consumer a chance to opt out.

Each of the following is a ground for the commissioner's discretionary action against a certificate of authority under RCW 48.05.140 EXCEPT that the insurer:

1. Refuses to submit its records for examination
2. Is formed under the laws of a foreign nation ✓
3. Is in a condition hazardous to its policyholders
4. Fails to pay a final Washington judgment in 30 days

Why: RCW 48.05.140 lists discretionary grounds such as a hazardous condition, refusing examination, and failing to pay a final judgment within thirty days; merely being an alien or foreign insurer is not a ground.

All of the following are prohibited rebates or inducements under RCW 48.30.140 EXCEPT:

1. commissions paid to a producer for risks the producer personally owns ✓
2. an abatement of premium offered to an insured not named in the policy
3. a cash payment set off against the insured's first premium installment
4. earnings or dividends promised as an inducement outside the policy terms

Why: RCW 48.30.140(2) expressly excepts commissions paid to a licensed producer for insurance placed on that person's own property or risks; the other items are inducements not provided for in the policy.

Which statement about Homeowners Section II Coverage E limits is correct?

1. It is unlimited for any suit brought by a guest injured on the residence premises
2. It is a per-occurrence limit, commonly starting at $100,000 and increasable ✓
3. It is always written equal to the Coverage A dwelling limit shown on the declarations
4. It applies to property damage only, not bodily injury

Why: Personal Liability (Coverage E) is written with a per-occurrence limit, commonly starting at $100,000 and increasable for higher protection.

Under RCW 48.17.010, "negotiate" means the act of:

1. conferring directly with or offering advice directly to a purchaser concerning the substantive benefits, terms, or conditions of a contract ✓
2. issuing the policy and delivering it to the insured for each policy period the coverage remains in force unless the commissioner directs otherwise
3. filing rates and forms with the commissioner on an insurer's behalf in the manner prescribed by the commissioner
4. collecting and accounting for premium funds received from an insured according to the schedule adopted by rule

Why: RCW 48.17.010(11) defines negotiate as conferring directly with, or offering advice directly to, a purchaser or prospective purchaser concerning any of the substantive benefits, terms, or conditions of the contract, by a person who sells or obtains insurance for purchasers.

Under RCW 48.53.020, an anti-arson application is NOT required for:

1. fire insurance policies covering one to four-unit owner-occupied residential dwellings ✓
2. a fire policy on a vacant commercial warehouse to the extent permitted under the insurance code
3. a fire policy on a newly constructed apartment building
4. any policy issued after June 10, 1982 in the ordinary course of business

Why: RCW 48.53.020(4) provides that an anti-arson application is not required for fire policies covering one to four-unit owner-occupied residential dwellings, policies existing as of June 10, 1982, or renewals of those policies.

Under RCW 48.05.030, no insurer may transact insurance in Washington unless it:

1. is authorized by a certificate of authority issued by the commissioner then in force ✓
2. has first been approved by the National Association of Insurance Commissioners
3. maintains a paid-in capital surplus of at least twenty million dollars
4. has been operating in its state of domicile for at least ten years

Why: RCW 48.05.030 provides that no person may act as an insurer and no insurer may transact insurance in this state other than as authorized by a certificate of authority issued by the commissioner and then in force, except as otherwise provided in the code.

An insurer incorporated in the state where it is transacting business is classified as:

1. Alien
2. Domestic ✓
3. Foreign
4. Reciprocal

Why: A domestic insurer is one organized under the laws of the state in which it is doing business.

Under RCW 48.19.020, the standard governing premium rates for insurance is that rates shall not be:

1. higher than those charged in any neighboring state
2. changed more than once in any calendar year
3. excessive, inadequate, or unfairly discriminatory ✓
4. set without the approval of a rating organization

Why: RCW 48.19.020 establishes the rate standard: premium rates for insurance shall not be excessive, inadequate, or unfairly discriminatory.

A large, financially strong corporation chooses to retain its own workers' compensation risk and pay benefits directly, with state approval. This arrangement is called:

1. Experience rating
2. Monopolistic funding
3. Assigned risk
4. Self-insurance ✓

Why: Qualified self-insurance allows financially sound employers, with state approval and security/bonding, to pay WC benefits directly rather than buying a policy.

Under RCW 48.22.020, the commissioner must approve a plan for the equitable apportionment among insurers of applicants who are in good faith entitled to but unable to procure automobile insurance through ordinary methods. This plan is commonly known as:

1. an assigned risk plan ✓
2. a residual reinsurance pool
3. a joint underwriting association
4. a market assistance plan

Why: RCW 48.22.020 directs the commissioner to approve a reasonable plan for the equitable apportionment among insurers of applicants unable to procure insurance through ordinary methods, the assigned risk plan; all such insurers must subscribe and participate.

The Automatic Increase in Insurance (inflation guard) endorsement on a dwelling policy does what?

1. Converts an actual cash value dwelling policy to replacement cost settlement at the next renewal
2. Periodically increases the Coverage A limit to keep pace with inflation ✓
3. Automatically adds theft coverage on the dwelling once the limit has risen above its original amount
4. Lowers the premium each year in which no claim is filed

Why: The inflation guard / automatic increase endorsement raises the dwelling limit at set intervals to help the amount of insurance keep up with rising construction costs.

A resident producer who places insurance directly or indirectly with an insurer with which the producer is not appointed must, under RCW 48.17.250, maintain a bond in the amount of:

1. $2,500, or 5 percent of the premiums brokered in the previous calendar year, whichever is greater, up to $100,000 ✓
2. $1,000, or 2 percent of prior-year premiums, whichever is less regardless of where the risk is located
3. $25,000, or 10 percent of prior-year premiums, whichever is greater unless the commissioner directs otherwise
4. $10,000 fixed, regardless of premium volume after notice and an opportunity for a hearing

Why: RCW 48.17.250(1) requires the bond to be $2,500, or 5 percent of the premiums brokered in the previous calendar year, whichever is greater, but not to exceed $100,000 total aggregate liability.

The 'your product' exclusion in the CGL means the policy will not pay for:

1. Bodily injury caused by the product to a third party
2. Property damage to the insured's own product itself ✓
3. Medical payments
4. Defense costs

Why: Damage to the insured's own product is excluded; injury the product causes to others remains covered.

The Valuable Papers and Records floater covers:

1. Cost to research, replace, or restore lost documents and records ✓
2. Money and securities kept in the insured's office safe
3. Computer hardware and the media stored in it
4. The insured's legal liability for losing a client's documents

Why: Valuable Papers and Records coverage pays the cost to research, reconstruct, or replace damaged or destroyed written, printed, or otherwise inscribed documents and records.

Under RCW 48.15.020, each violation of the prohibition against representing an unauthorized insurer is punishable by a fine of not more than:

1. $5,000
2. $10,000
3. $25,000 ✓
4. $50,000

Why: RCW 48.15.020(3) provides that each violation constitutes a separate offense punishable by a fine of not more than $25,000, and may result in suspension or revocation of a license.

Under RCW 48.17.530, when may the license of a business entity be suspended or revoked because of an individual licensee's violation?

1. Only after every partner, officer, and manager of the entity has personally taken part in the individual's violation and been separately disciplined for it
2. Automatically whenever any affiliated individual licensee is disciplined, because the entity's license derives from the appointments its individuals hold
3. When the violation was known or should have been known by a partner, officer, or manager and was neither reported nor corrected ✓
4. Only when the commissioner proves the entity received a financial benefit from the violation, since the entity itself performed no act

Why: RCW 48.17.530(2) allows a business entity's license to be disciplined when an individual's violation was known or should have been known by a partner, officer, or manager and was neither reported to the commissioner nor corrected.

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

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

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

Under RCW 48.30.100, no insurer, producer, or other person may:

1. issue a binder without stating the identity of the insurer unless the commissioner directs otherwise
2. collect premium before delivering the policy as a condition of doing business in this state
3. guarantee or agree to the payment of future dividends or refunds in any specific or approximate amount ✓
4. advertise the existence of the guaranty association whenever the circumstances reasonably require it

Why: RCW 48.30.100 provides that no insurer, producer, title insurance agent, or other person may guarantee or agree to the payment of future dividends or future refunds of unused premiums or savings in any specific or approximate amounts or percentages.

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

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

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

In a competitive state fund jurisdiction, the state fund:

1. Writes only Employers Liability, leaving benefits to carriers
2. Is the only lawful source of workers compensation coverage
3. Competes with private insurers as one option among many ✓
4. Is reserved for federal employees covered by the FECA program

Why: A competitive state fund operates alongside private insurers; employers may buy WC from the state fund or from private carriers.

Under RCW 48.32.060, when the association pays a covered claim, its obligation to a policyholder or claimant may in no event exceed:

1. twice the amount of the unearned premium
2. the face amount of the policy from which the claim arises ✓
3. the guaranty association's total annual assessment cap
4. the insured's net worth

Why: RCW 48.32.060(1)(a)(i) provides that in no event may the association be obligated to a policyholder or claimant in an amount in excess of the face amount of the policy from which the claim arises.

An employee commuting to work in their own car is injured before arriving at the job site. Under the general 'going-and-coming' rule, this injury is usually:

1. Covered by FECA, which reaches any employee injured while traveling to a workplace
2. Compensable, because the drive to the job site is the first act performed for the employer's benefit each day
3. Not compensable, because ordinary commuting is not in the course of employment ✓
4. Compensable only under Part Two of the workers compensation policy

Why: Under the going-and-coming rule, ordinary commuting to and from work generally does not arise in the course of employment and is not compensable, with limited exceptions.

Under RCW 48.18.545, if disputed credit history was used to place a consumer with an affiliate charging higher premiums, and the consumer later resolves the dispute, what must the insurer do?

1. Reissue or rerate the policy retroactive to the effective date of the current policy term using accurate credit history ✓
2. Cancel the affiliate policy and require the consumer to submit an entirely new application before any coverage can resume
3. Refer the consumer to the consumer reporting agency for compensation
4. Refund one hundred percent of all premiums paid during the policy term

Why: RCW 48.18.545(6) requires the insurer, once the consumer resolves the dispute under the fair credit reporting act and notifies the insurer in writing, to reissue or rerate the policy retroactive to the effective date of the current term, providing the premiums and terms accurate credit history would have produced.

Under RCW 48.18.220, when a producer receipts premium money at the time of binding coverage, the receipt must state that it is a binder, a brief description of the coverage bound, and:

1. the commissioner's written approval of the binder form and its filing number
2. the effective date of the policy that will replace the binder when it is issued
3. the producer's license number and the address of the office issuing the binder
4. the identity of the insurer in which the coverage is bound ✓

Why: RCW 48.18.220 requires that a receipt for premium received when binding coverage state that it is a binder, give a brief description of the coverage bound, and identify the insurer in which the coverage is bound. This does not apply to life and disability insurances.

Under RCW 48.30A.015, it is unlawful for a service provider to engage in a regular practice of:

1. waiving, rebating, or paying all or part of a claimant's casualty or property insurance deductible ✓
2. processing insurance claims for compensation as part of the applicable filing then in effect
3. referring claimants to licensed legal providers regardless of where the risk is located
4. advertising repair services to the general public unless the commissioner directs otherwise

Why: RCW 48.30A.015(2) makes it unlawful for a service provider to engage in a regular practice of waiving, rebating, giving, paying, or offering to waive all or any part of a claimant's casualty or property insurance deductible.

A legal doctrine that reduces a plaintiff's recovery in proportion to their own degree of fault is:

1. Contributory negligence
2. Res ipsa loquitur
3. Comparative negligence ✓
4. Strict liability

Why: Comparative negligence apportions damages according to each party's percentage of fault rather than barring recovery entirely.

An insurer decides not to renew a commercial general liability policy. All of the following are required by RCW 48.18.2901 or 48.18.289 EXCEPT:

1. written notice of nonrenewal to the named insured at least 60 days before expiration
2. the commissioner's prior written approval of the nonrenewal decision ✓
3. a copy of the nonrenewal notice to the producer on the account within five working days
4. inclusion of the insurer's actual reason for refusing to renew

Why: RCW 48.18.2901 requires 60 days' notice with the actual reason, and RCW 48.18.289 requires a copy to the producer within five working days. Neither statute requires the commissioner's prior approval of an individual nonrenewal decision.

In an insurance contract, the consideration given by the insured is:

1. The promise to pay covered claims that arise during the policy period
2. The certificate of authority that the insurer holds from its state of domicile
3. The policy document itself, once it has been delivered to the applicant
4. The payment of premium and the statements made in the application ✓

Why: The insured's consideration is the premium plus the representations made in the application; the insurer's consideration is its promise to pay covered losses.

'Perils of the sea' in ocean marine refers to:

1. Negligence by the master or crew in navigating the vessel, standing alone
2. Fortuitous accidents or casualties of the sea, such as heavy weather, sinking, and stranding ✓
3. Every cause of loss arising on a voyage, including inherent vice of the cargo and delay in delivery
4. Ordinary wear and tear on hull and rigging from the normal action of wind and waves

Why: Perils of the sea are extraordinary, fortuitous events peculiar to the sea, like storms, stranding, collision, and sinking—not the ordinary action of wind and waves.

Under 'contribution by equal shares,' insurers covering the same loss pay:

1. Only the insurer whose policy was written first, with the others reimbursing it afterward
2. Nothing until the insured has paid a share equal to the deductible
3. Equal amounts until the lowest limit is exhausted, then the rest continue ✓
4. Amounts proportional to each policy's limit of insurance

Why: Each insurer contributes equal amounts until the smallest applicable limit is used up; remaining insurers continue contributing equally.

Under RCW 48.03.020, which persons may the commissioner examine as often as deemed advisable to ascertain compliance with the code?

1. Only those licensees against whom a formal complaint is pending before the commissioner
2. Insurance producers, surplus line brokers, adjusters, and title insurance agents ✓
3. Only insurers domiciled in Washington, since foreign insurers are examined by their home state regulator
4. Policyholders suspected of submitting fraudulent claims, whose records the commissioner may subpoena

Why: RCW 48.03.020 authorizes the commissioner to examine, as often as advisable, the accounts, records, documents, and transactions of any insurance producer, surplus line broker, adjuster, or title insurance agent, among others.

Under RCW 48.32.030, "net direct written premiums" means direct gross premiums written in this state on covered policies, less:

1. all commissions paid to producers as a condition of doing business in this state
2. the insurer's investment income for the year
3. premiums ceded to a rating organization
4. return premiums and dividends paid or credited to policyholders ✓

Why: RCW 48.32.030(8) defines net direct written premiums as direct gross premiums written in this state on covered policies, less return premiums and dividends paid or credited to policyholders on such direct business; it excludes premiums on contracts between insurers or reinsurers.

The Ordinance or Law endorsement provides coverage for:

1. The insured's liability to the city for operating in violation of building codes
2. Increased costs from enforcement of building codes after a covered loss ✓
3. Flood damage to the building whenever a local ordinance requires floodproofing
4. Earthquake shake damage only, in designated seismic zones

Why: Ordinance or Law covers loss to the undamaged portion, demolition costs, and increased construction costs required to comply with current building codes after a covered loss.

Under RCW 48.32.060, member insurers must be notified of an assessment not later than:

1. ninety days before it is due
2. ten days before it is due
3. sixty days before it is due
4. thirty days before it is due ✓

Why: RCW 48.32.060(1)(c)(i) requires that each member insurer be notified of the assessment not later than thirty days before it is due.

RCW 48.30.180 prohibits "twisting," which is defined as inducing an insured, by misrepresentation or misleading comparison, to:

1. lapse, terminate, forfeit, surrender, retain, or convert an insurance policy ✓
2. accept a rebate not provided for in the policy in the ordinary course of business
3. purchase insurance as a condition of obtaining a loan
4. file a false or inflated claim under a casualty policy

Why: RCW 48.30.180 provides that no person shall, by misrepresentations or misleading comparisons, induce or tend to induce any insured to lapse, terminate, forfeit, surrender, retain, or convert any insurance policy.

Under the Business Auto Coverage Form, the named insured is an insured for any covered auto. Additionally, who qualifies as an insured?

1. Only the corporation's officers and directors, and only while they are on company business
2. Any member of the public who is injured near a covered auto, whether or not anyone was at fault
3. Anyone using a covered auto with the named insured's permission (with some exceptions) ✓
4. Only employees on the company payroll, and only while driving during scheduled work hours

Why: Permissive users of a covered auto are insureds, subject to exceptions such as employees using their own autos and certain auto-business operations.

A contract to insure stolen merchandise so it can be resold would be unenforceable due to lack of which element?

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

Why: A contract must have a legal purpose; insuring an illegal activity violates that requirement and is void.

Under RCW 48.32.080, if a member insurer fails to pay an assessment when due, the commissioner may, as an alternative to suspension or revocation, levy a fine that shall not exceed:

1. ten percent of the unpaid assessment per month
2. one percent of the unpaid assessment per month
3. five percent of the unpaid assessment per month, but not less than $100 per month ✓
4. a flat $1,000 regardless of the amount unpaid for each policy period the coverage remains in force

Why: RCW 48.32.080(2)(b) authorizes the commissioner, as an alternative to license action, to levy a fine on a member insurer that fails to pay an assessment when due, not exceeding five percent of the unpaid assessment per month, but no less than $100 per month.

Under RCW 48.18.230, if a policy has not been issued, a binder may be extended or renewed beyond ninety days only:

1. at the producer's sole discretion in the ordinary course of business
2. if the insured pays an additional premium deposit
3. upon the commissioner's written approval or in accordance with the commissioner's rules ✓
4. automatically, for a second ninety-day term before the transaction may lawfully proceed

Why: RCW 48.18.230(2) provides that if the policy has not been issued, a binder may be extended or renewed beyond ninety days only upon the commissioner's written approval or in accordance with the commissioner's rules.

Which valuation method pays the cost to repair or replace property with new property of like kind and quality, without deduction for depreciation?

1. Agreed value
2. Functional replacement cost
3. Actual cash value
4. Replacement cost ✓

Why: Replacement cost pays to repair or replace with new property of like kind and quality with no deduction for depreciation.

Damages awarded to punish a wrongdoer for malicious or grossly negligent conduct are called:

1. General damages
2. Compensatory damages
3. Punitive damages ✓
4. Special damages

Why: Punitive (exemplary) damages are intended to punish and deter egregious conduct, not to compensate the victim's actual loss.