Delaware Property & Casualty Insurance License, Practice Exams

How is an arbitration under 21 Del. C. s 2118(j) started, who hears it, and what does an arbitrator cost?

1. By a written request filed with the Superior Court of the county in which the accident occurred; that Court appoints three arbitrators from a panel maintained by the Insurance Commissioner, at least one of whom must be a licensed insurance adjuster; the arbitrator's fee may not exceed $250 per arbitrator for any one arbitration.
2. By a written request mailed to the Insurance Commissioner; the Commissioner or the Commissioner's nominee selects a single arbitrator from a panel of attorneys authorized to practise law in this State, insurance adjusters being eligible only to sit on a panel hearing a property claim; the fee may not exceed $25 for any one arbitration.
3. By a written request mailed to the insurance commissioner; the Commissioner or a nominee picks three from a panel of Delaware attorneys and licensed insurance adjusters, at least one of them an attorney; the arbitrator's fee may not exceed $25 per arbitrator in any one single arbitration. ✓
4. By an oral or written demand made to the insurer, which must then apply to the Insurance Commissioner to constitute a panel; the Commissioner selects three arbitrators, all of whom must be attorneys authorized to practise law in this State; the schedule of costs is fixed by the panel itself at the conclusion of the arbitration.

Why: 21 Del. C. s 2118(j) requires every policy to submit to arbitration on the request of the party claiming a loss within the paragraph (a)(2) coverages or for damage to a motor vehicle. SUCH REQUEST SHALL BE IN WRITING AND MAILED TO THE INSURANCE COMMISSIONER. Paragraph (j)(2) establishes A PANEL OF ARBITRATORS CONSISTING OF ATTORNEYS AUTHORIZED TO PRACTICE LAW IN THE STATE AND INSURANCE ADJUSTERS LICENSED TO ACT AS SUCH; (j)(3) requires the Commissioner to SELECT 3 INDIVIDUALS FROM THE PANEL ..., AT LEAST 1 OF WHOM SHALL BE AN ATTORNEY; and (j)(6) provides that THE ARBITRATOR'S FEE SHALL NOT EXCEED $25 PER ARBITRATOR FOR ANY 1 ARBITRATION.

How are the Arbitration Panels constituted under Delaware Regulation 901 s 9.0?

1. The Commissioner establishes a single Panel for all claims, drawn from a standing list; each sitting has three members chosen by the parties, who then agree a presiding member; an automobile panel must consist entirely of Delaware attorneys, and a homeowners' panel entirely of licensed property appraisers.
2. The Commissioner establishes two types of Panel; each has five members, of whom three sit on any one matter; an automobile panel must include at least one Delaware attorney and one licensed adjuster, and a member whose employer is a party may sit provided the conflict is disclosed to the parties before the hearing begins.
3. The Superior Court appoints the Panels from lists the Commissioner supplies; each has three members with a presiding member elected by the members themselves; an automobile panel must include at least one Delaware attorney, and a member may not serve where his employer or client is a party to the arbitration.
4. The Commissioner establishes two types of Panel, for automobile and for homeowners' claims; each has three members selected by the Commissioner with a presiding member the Commissioner appoints, and no member may serve where his employer or client is a party. Automobile panels need a Delaware attorney. ✓

Why: Delaware Regulation 901 s 9.1: THE COMMISSIONER SHALL ESTABLISH TWO TYPES OF ARBITRATION PANELS ... FOR AUTOMOBILE INSURANCE CLAIMS AND HOMEOWNERS' INSURANCE CLAIMS. Section 9.2: EACH PANEL SHALL CONSIST OF THREE MEMBERS OF SUITABLE BACKGROUNDS OR EXPERIENCE ..., TO BE SELECTED BY THE COMMISSIONER. NO MEMBER MAY SERVE ON A PANEL IN WHICH HIS EMPLOYER OR CLIENT IS A PARTY. EACH PANEL SHALL HAVE A PRESIDING MEMBER WHO SHALL BE APPOINTED BY THE COMMISSIONER. Section 9.2.1: IN THE CASE OF AUTOMOBILE CLAIMS, EACH PANEL SHALL CONSIST OF AT LEAST ONE DELAWARE ATTORNEY AS A MEMBER AND THE BALANCE ... SHALL BE DELAWARE LICENSED INSURANCE ADJUSTERS AND/OR APPRAISER AS DEFINED IN 18 Del.C. s 1702(c). Section 9.2.4: A DECISION BY THE PANEL REQUIRES CONCURRENCE BY AT LEAST TWO OF THE PANEL MEMBERS.

What does 18 Del. C. s 320(c) require of the person being examined?

1. That the person make freely available the accounts, records and documents relating to the subject of the examination that are in the person's own possession, an officer, attorney or agent holding records on the person's behalf being reachable instead only by a subpoena issued under s 326 of the title.
2. That the person, and the person's officers, attorneys, employees, agents and representatives, make freely available the accounts, records, documents, files, information, assets and matters in their possession or control relating to the subject of the examination, and facilitate the examination. ✓
3. That the person produce the accounts, records and documents specified in the examination warrant within thirty days of service of the warrant, and permit the examiner to take copies of them at the expense of the Department rather than at the expense of the person being examined.
4. That the person make freely available everything relating to the subject of the examination, except records subject to a common law or statutory privilege, which the person may withhold on filing a written claim of privilege with the Commissioner before the examination begins.

Why: 18 Del. C. s 320(c) provides that EVERY PERSON BEING EXAMINED, THE PERSON'S OFFICERS, ATTORNEYS, EMPLOYEES, AGENTS AND REPRESENTATIVES, SHALL MAKE FREELY AVAILABLE TO THE COMMISSIONER, OR THE COMMISSIONER'S EXAMINERS, THE ACCOUNTS, RECORDS, DOCUMENTS, FILES, INFORMATION, ASSETS AND MATTERS OF SUCH PERSON, IN THE PERSON'S POSSESSION OR CONTROL, RELATING TO THE SUBJECT OF THE EXAMINATION AND SHALL FACILITATE THE EXAMINATION. The duty reaches the person's professional advisers as well as the person, and it is a duty to FACILITATE, not merely to avoid obstructing.

What rate reduction does 18 Del. C. s 2503(a)(6) require, and for how long?

1. The Commissioner may permit a reduction in rates for a three-year period for a person who completes an approved accident prevention course, but is not obliged to require one; a person who attends the course by order of a court after a conviction is entitled to the same reduction as a person who attends voluntarily.
2. The Commissioner must require a reduction for a five-year period for any person who completes an approved course; instructors certified by the Division of Motor Vehicles are not entitled to it, having taken no course themselves, and the content of the course is a matter for the Division rather than for the statute.
3. The Commissioner must require a reduction in rates for a three-year period for any person who voluntarily attends and completes a motor vehicle accident prevention course approved by the Division of Motor Vehicles; certified instructors get the same reduction, and the course must cover traffic stops. ✓
4. The Commissioner must require a reduction for a three-year period for a person who completes an approved course, provided that person has no moving violation on record; the reduction is ten per cent, rising to fifteen per cent on a refresher course, and those figures are fixed by the section rather than by Regulation 607.

Why: 18 Del. C. s 2503(a)(6): THE COMMISSIONER SHALL REQUIRE A REDUCTION IN RATES FOR A 3-YEAR PERIOD FOR ANY PERSON WHO VOLUNTARILY ATTENDS AND SUCCESSFULLY COMPLETES A MOTOR VEHICLE ACCIDENT PREVENTION COURSE THAT IS APPROVED BY THE DIVISION OF MOTOR VEHICLES. Subparagraph a: the course MUST EDUCATE AN INDIVIDUAL ... ON TRAFFIC STOPS BY A LAW-ENFORCEMENT OFFICER AS REQUIRED UNDER s 2713(e) OF TITLE 21 [and] MUST INCLUDE AT LEAST 2 QUESTIONS ON ANY TEST ... Subparagraph b: INSTRUCTORS THAT HAVE BEEN CERTIFIED BY THE DIVISION ... ARE ENTITLED TO THE SAME REDUCTION. The 10% and 15% figures are Regulation 607's, not the statute's - and VOLUNTARILY is an element.

How are member insurers assessed under 18 Del. C. s 4208(a)(4), and what are the caps?

1. There are two classes: A for administration, capped at $150 a year and equal as to each member, and B for insolvencies, assessed in proportion to net direct written premiums and capped at two per cent of premiums; assessments are due immediately on written notice, and the Association has no power to defer one for a member in financial difficulty.
2. Three classes: A for administration, B annually to subsidise the Commissioner's oversight, C for an insolvent member. Class A is equal as to each member, once a year at most, not exceeding $150; Class B is capped at one tenth of one per cent; Class C is proportional to net direct written premiums; B and C combined may not exceed two per cent. ✓
3. There are three classes, A, B and C, all assessed in the proportion that a member's net direct written premiums bear to the total; class A is capped at $150 per member per year, class B at two per cent and class C at ten per cent of premiums; assessments are due not less than thirty days after written notice to the member insurers.
4. There are three classes: A for administration, B to subsidise the Commissioner's oversight and C for insolvencies; class A is capped at $1,500 annually and class B at one per cent of premiums, with B and C combined capped at five per cent; the Association may not exempt or defer an assessment in any circumstances.

Why: 18 Del. C. s 4208(a)(4) provides that ASSESSMENTS SHALL BE DUE NOT LESS THAN 30 DAYS AFTER WRITTEN NOTICE TO THE MEMBER INSURERS, and establishes 3 CLASSES: CLASS A ... FOR THE PURPOSE OF MEETING ADMINISTRATIVE COSTS AND OTHER EXPENSES AND EXAMINATIONS ...; CLASS B ... ANNUALLY TO PARTIALLY SUBSIDIZE THE OVERSIGHT ACTIVITIES OF THE COMMISSIONER ...; CLASS C ... TO THE EXTENT NECESSARY TO CARRY OUT THE POWERS AND DUTIES OF THE ASSOCIATION ... WITH REGARD TO AN INSOLVENT MEMBER INSURER. Subparagraph b.1: CLASS A ASSESSMENTS WILL BE EQUAL IN AMOUNT AS TO EACH MEMBER AND MAY BE ASSESSED NOT MORE OFTEN THAN ONCE EACH YEAR. SUCH ASSESSMENT SHALL NOT EXCEED $150 ANNUALLY. Subparagraph b.3: CLASS C ... IN THE PROPORTION THAT THE NET DIRECT WRITTEN PREMIUMS OF THE MEMBER INSURER ... BEARS TO [those] OF ALL MEMBER INSURERS. Subparagraph c: CLASS B SHALL IN NO EVENT EXCEED 1/10 OF 1 PERCENT ...; B AND C COMBINED SHALL NOT ... EXCEED 2 PERCENT. The Association MAY exempt or defer an assessment that would breach a member's minimum capital or surplus.

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.

What immunity and what tax treatment does 18 Del. C. ch. 42 give the Association?

1. No liability and no cause of action arises against any member insurer, the Association or its agents, the Board or the Commissioner for any act or failure to act under the chapter; nor is the Association subject to a claim for bad faith. It is exempt from all fees and taxes except on property. ✓
2. No liability arises against the Commissioner or the Board, but the Association itself may be sued in the ordinary way, including for bad faith in the handling of a covered claim, since s 4208 deems it the insurer to the extent of its obligation and it must take the burdens of that position with its benefits.
3. No liability arises against any of the persons named, and the Association is not subject to a claim for damages for bad faith; the Association is exempt from all taxes of every kind including taxes on the real and personal property it owns, and from all fees levied by the State or any of its subdivisions.
4. No liability arises against the Association or the Commissioner for an act done in good faith, the immunity being lost where bad faith is shown; the Association is exempt from state taxes except premium tax, which it pays on the assessments it collects in the same way as a member insurer pays on premiums.

Why: 18 Del. C. s 4217: THERE SHALL BE NO LIABILITY ON THE PART OF AND NO CAUSE OF ACTION OF ANY NATURE SHALL ARISE AGAINST ANY MEMBER INSURER, THE ASSOCIATION OR ITS AGENTS OR EMPLOYEES, THE BOARD OF DIRECTORS OR THE COMMISSIONER OR THE COMMISSIONER'S REPRESENTATIVES FOR ANY ACTION OR ANY FAILURE TO ACT TAKEN BY THEM IN THE PERFORMANCE OF THEIR POWERS AND DUTIES UNDER THIS CHAPTER. NEITHER SHALL THE ASSOCIATION, ITS OFFICERS, AGENTS AND EMPLOYEES BE SUBJECT TO ANY CLAIM FOR DAMAGES FOR BAD FAITH. Section 4215: THE ASSOCIATION SHALL BE EXEMPT FROM PAYMENT OF ALL FEES AND ALL TAXES LEVIED BY THIS STATE OR ANY OF ITS SUBDIVISIONS, EXCEPT TAXES LEVIED ON REAL OR PERSONAL PROPERTY. The immunity is not qualified by good faith; it is flat.

The PAP towing and labor costs coverage pays for labor:

1. For accident-related medical transport
2. Only when performed at the place of disablement ✓
3. Anywhere repairs are needed regardless of location
4. For routine maintenance at the shop

Why: Towing and labor costs coverage pays towing plus labor, but only labor performed at the place where the vehicle was disabled.

A fidelity bond protects an employer against:

1. Loss caused by the dishonest or fraudulent acts of its employees (e.g., embezzlement) ✓
2. Government-ordered cleanup of pollutants that escape from the employer's premises during operations
3. A contractor's failure to finish a job on schedule, which a performance bond guarantees
4. Bodily injury to customers who slip and fall on the premises

Why: Fidelity bonds (employee dishonesty coverage) protect an employer from loss due to employee theft or fraud.

If an insured carries 100/300 UM limits and is hit by a driver with 25/50 liability limits, underinsured motorists coverage may provide additional recovery of up to:

1. Nothing at all, because the at-fault driver carried liability limits that met the state minimum
2. The difference between the UM/UIM limit and the at-fault driver's coverage, per policy terms ✓
3. The full $300,000 per accident, paid on top of whatever the at-fault driver's insurer already paid
4. Only $25,000, because UIM recovery is capped at the at-fault driver's per-person liability limit

Why: UIM allows the insured to recover the gap between their UIM limit and the underinsured driver's limits, subject to how the state/policy coordinates the limits.

In a CPP, which provision governs cancellation, transfer of rights, and examination of books for ALL coverage parts?

1. The Causes of Loss form
2. The Declarations only
3. The Common Policy Conditions ✓
4. The BPP

Why: The Common Policy Conditions apply to every coverage part in the package and address cancellation, changes, inspections, premiums, and transfer of rights.

Why does Part One (Workers Compensation) of the standard policy contain no dollar limit of liability?

1. Because benefits are capped by the policy's aggregate limit
2. Because the benefit amounts are set by the state's WC statute ✓
3. Because the insurer can choose how much to pay
4. Because Part One only covers medical bills

Why: Part One has no policy limit because the insurer agrees to pay whatever benefits the state statute requires; the statute, not the policy, controls the amount.

Garage coverage (now largely the Auto Dealers Coverage Form) is designed for:

1. Homeowners who keep a detached garage or workshop, insuring the structure and the tools stored inside it
2. Long-haul trucking fleets, replacing the Motor Carrier Coverage Form for carriers hauling freight for hire
3. Businesses in the auto sales/service trade, covering their operations and inventory exposures ✓
4. Individual motorcycle owners insuring a bike for pleasure use

Why: Garage/Auto Dealers coverage addresses the unique liability and physical damage exposures of dealers, repair shops, and service stations, including dealers' inventory.

Under 18 Del. C. s 2407(a)(1), what conduct at the APPLICATION stage is a fraudulent insurance act?

1. Presenting to an insurer a written statement in support of an application for a policy that contains information which is false in a material particular, an incomplete or merely misleading statement being outside the paragraph because the chapter deals with it as a misrepresentation under 18 Del. C. s 2304(1) instead.
2. Presenting to an insurer any oral or written statement in support of an application that contains false, incomplete or misleading information, whether or not the information concerns a fact material to the application, materiality going only to the amount of the administrative penalty the Commissioner may assess for the act.
3. Preparing or making a statement which the maker knows will be presented to an insurer in support of an application for a policy, an assisting, abetting, soliciting or conspiring person being reached instead by the separate provision which the chapter makes for the claim stage in paragraph (a)(3) of the same subsection.
4. Presenting, causing to be presented, preparing, assisting, abetting, soliciting or conspiring with another to prepare or make any oral or written statement, knowing or believing it will be presented to an insurer in support of an application, containing false, incomplete or misleading information about a fact material to the application. ✓

Why: 18 Del. C. s 2407(a)(1) reaches a person who will PRESENT, CAUSE TO BE PRESENTED, PREPARE, ASSIST, ABET, SOLICIT OR CONSPIRE WITH ANOTHER TO PREPARE OR MAKE ANY ORAL OR WRITTEN STATEMENT WITH KNOWLEDGE OR BELIEF THAT IT WILL BE PRESENTED TO AN INSURER IN CONNECTION WITH, OR IN SUPPORT OF, ANY APPLICATION FOR THE ISSUANCE OF AN INSURANCE POLICY, CONTAINING FALSE, INCOMPLETE OR MISLEADING INFORMATION CONCERNING ANY FACT MATERIAL TO THE APPLICATION. All three of false, INCOMPLETE and misleading; and materiality is an element.

An alien insurer is examined under 18 Del. C. s 318. How far does that examination reach?

1. It is limited to the insurer's insurance transactions, assets, trust deposits and affairs in this State, the Commissioner having no authority to reach business the insurer writes in any other state of the United States.
2. It is limited to the insurer's insurance transactions, assets, trust deposits and affairs in the United States, except as otherwise required by the Commissioner. ✓
3. It reaches the insurer's worldwide transactions, assets and affairs, an alien insurer being subject to the same scope of examination as a domestic insurer once it holds a certificate of authority in this State.
4. It is limited to the insurer's United States trust deposits alone, its transactions and affairs being examined instead by the insurance supervisory official of the jurisdiction under whose laws the insurer was organised.

Why: 18 Del. C. s 318(a) provides that EXAMINATION OF AN ALIEN INSURER SHALL BE LIMITED TO ITS INSURANCE TRANSACTIONS, ASSETS, TRUST DEPOSITS AND AFFAIRS IN THE UNITED STATES EXCEPT AS OTHERWISE REQUIRED BY THE COMMISSIONER. The boundary is the United States, not this State, and the Commissioner may require more.

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

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

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

How often may the Board review an agreement or award under 19 Del. C. s 2347, and on what grounds?

1. On the application of any party on the ground that the employee's incapacity has terminated, increased, diminished or recurred, or that the status of a dependent has changed; the Board may review at any time but not oftener than once in 26 weeks - a restriction on when the Board may convene, not on filing. ✓
2. On the application of any party on the ground that the incapacity has changed; the Board may review not oftener than once in 26 weeks, and the restriction is on when a party may file a petition to review, so that a petition filed inside the period is rejected by the Department without being placed on the Board's docket at all.
3. On the application of the employer alone, the employee's remedy for an increase in incapacity being a fresh claim rather than a review; the Board may review at any time and as often as the employer applies, and a change in the status of a dependent is a ground only where death compensation under s 2330 is in payment.
4. On the application of any party in interest on any ground, including a commutation of payments under s 2358; the Board may review not oftener than once in 52 weeks, and compensation continues until the Board enters an award ending it, the parties having no power to terminate it by consent.

Why: 19 Del. C. s 2347(a) provides that ON THE APPLICATION OF ANY PARTY IN INTEREST ON THE GROUND THAT THE INCAPACITY OF THE INJURED EMPLOYEE HAS SUBSEQUENTLY TERMINATED, INCREASED, DIMINISHED, OR RECURRED, OR THAT THE STATUS OF THE DEPENDENT HAS CHANGED, THE BOARD MAY AT ANY TIME, BUT NOT OFTENER THAN ONCE IN 26 WEEKS, REVIEW ANY AGREEMENT OR AWARD ... THIS SUBSECTION DOES NOT RESTRICT WHEN A PARTY IN INTEREST CAN FILE A PETITION TO REVIEW BUT RATHER WHEN THE BOARD CAN CONVENE TO HEAR THE PETITION. Subsection (c): the section DOES NOT APPLY TO A COMMUTATION OF PAYMENTS UNDER s 2358.

What fine may be imposed under 18 Del. C. s 1712(d), and when does it fall due?

1. Not less than two hundred dollars and not more than twenty thousand dollars for each violation, in addition to or in lieu of a denial, suspension or revocation and after hearing; the order specifies the date for payment, which may not be less than thirty days after the order unless the order says otherwise. ✓
2. Not more than twenty thousand dollars for each violation, the section prescribing no minimum, in addition to or in lieu of a denial, suspension or revocation and after hearing; the order specifies the date for payment, which may not be less than thirty days after the date of the order in any circumstances.
3. Not less than two hundred dollars and not more than twenty thousand dollars in the aggregate however many violations are established, in addition to or in lieu of a denial, suspension or revocation; payment falls due immediately upon the Commissioner's order being served on the licensee.
4. Not less than five hundred dollars and not more than fifty thousand dollars for each violation, after hearing; the order specifies the date for payment, which may not be less than thirty days following the date of the Commissioner's order unless the order otherwise specifies a date for it.

Why: 18 Del. C. s 1712(d) provides that IN ADDITION TO OR IN LIEU OF ANY APPLICABLE DENIAL, SUSPENSION OR REVOCATION OF A LICENSE, A PERSON MAY, AFTER HEARING, BE SUBJECT TO A FINE OF NOT LESS THAN $200 AND NOT MORE THAN $20,000 FOR EACH SUCH VIOLATION. THE COMMISSIONER'S ORDER SHALL SPECIFY THE DATE UPON WHICH SUCH FINE SHALL BE PAID AND SHALL REVOKE THE LICENSE OF ANY LICENSEE FAILING TO COMPLY WITH SUCH ORDER. THE DATE ON WHICH PAYMENT SHALL BE DUE SHALL BE NOT LESS THAN 30 DAYS FOLLOWING THE DATE OF THE COMMISSIONER'S ORDER UNLESS OTHERWISE SPECIFIED IN THE ORDER. Note the FLOOR of $200 - Connecticut's producer fine in 38a-774 has a ceiling only - and that the Commissioner MAY INSTITUTE A CIVIL ACTION TO RECOVER FINES SO LEVIED AND SHALL PAY OVER ALL FINES PAID AND RECOVERED TO THE STATE TREASURER.

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.

A person is dissatisfied with a decision of the inspection bureau. What do 18 Del. C. ss 4112 and 4113 provide?

1. An appeal lies to the Superior Court within thirty days of the action or decision, the Commissioner having no appellate jurisdiction over the inspection bureau; and the bureau and its employees are liable in the ordinary way for a negligently prepared inspection report, the subchapter conferring immunity only on the Commissioner.
2. An appeal lies to the Commissioner within thirty days; after a hearing on not less than ten days' written notice the Commissioner may approve, disapprove or direct reassignment under the plan. No liability arises against insurers, the bureau, the facility, the association or the Commissioner for inspections or reports. ✓
3. An appeal lies to the Commissioner within ten days of the action or decision, and is heard on not less than thirty days' written notice; the Commissioner may approve or disapprove the decision but may not direct that an application be reassigned, that being a matter for the industry placement facility under its own plan of operation.
4. An appeal lies to the Commissioner within thirty days, and is decided on the papers without a hearing; no liability arises against the bureau or the facility for statements in their reports, but the immunity does not extend to the Commissioner or to insurers, who remain answerable for what they say about an applicant's property.

Why: 18 Del. C. s 4112 provides that ANY PERSON AGGRIEVED BY ANY ACTION OR DECISION OF THE INSPECTION BUREAU OR INDUSTRY PLACEMENT FACILITY MAY APPEAL TO THE COMMISSIONER WITHIN 30 DAYS FROM THE ACTION OR THE DECISION. THE COMMISSIONER SHALL AFTER HEARING HELD UPON NOT LESS THAN 10 DAYS WRITTEN NOTICE ... ISSUE AN ORDER APPROVING THE ACTION OR DECISION, DISAPPROVING [IT] OR DIRECTING THE INSPECTION BUREAU OR THE INDUSTRY PLACEMENT FACILITY TO REASSIGN AND PLACE THE APPLICATION PURSUANT TO SAID PLAN. Section 4113: THERE SHALL BE NO LIABILITY ON THE PART OF, AND NO CAUSE OF ACTION OF ANY NATURE SHALL ARISE AGAINST, INSURERS, THE INSPECTION BUREAU, THE INDUSTRY PLACEMENT FACILITY, THE JOINT UNDERWRITING ASSOCIATION OR THEIR AGENTS OR EMPLOYEES, OR THE COMMISSIONER ..., FOR ANY INSPECTIONS UNDERTAKEN OR STATEMENTS MADE BY THEM IN ANY REPORTS AND COMMUNICATIONS CONCERNING THE PROPERTY TO BE INSURED.

Under TRIA, the federal government's share of insured terrorism losses applies only after the insurer pays:

1. The full amount of every certified loss, with federal reimbursement available only to reinsurers
2. Nothing, since federal sharing begins at the first dollar
3. A flat $1,000 retention for each certified event
4. An insurer deductible based on a percentage of its prior-year premiums ✓

Why: Under TRIA, each insurer retains a deductible (a percentage of its prior-year direct earned premium) before the federal government shares in the remaining certified losses.

Functional replacement cost valuation pays to replace damaged property with:

1. Less costly but functionally equivalent materials ✓
2. Identical materials only, matched to the original in every respect
3. The market value of the property immediately before the loss occurred
4. Property of greater value than that which was damaged or destroyed

Why: Functional replacement cost permits using modern, less expensive materials that serve the same function as obsolete originals.

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

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

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

Equipment Breakdown (Boiler and Machinery) coverage primarily insures loss caused by:

1. Sudden mechanical or electrical breakdown of covered equipment such as boilers and pressure vessels ✓
2. Flood and surface water reaching equipment in a basement, which requires a separate NFIP flood policy
3. Fire spreading from an adjoining building, which is already a named peril on every causes of loss form
4. Theft of portable equipment from a jobsite by employees, which a crime or fidelity bond would address

Why: Equipment Breakdown coverage responds to sudden and accidental breakdown of pressure, mechanical, and electrical equipment, including resulting damage—exposures excluded by standard property forms.

May an injured employee choose their own doctor, and what notice does 19 Del. C. s 2323 require?

1. No - the employee must be treated by a provider certified under 19 Del. C. s 2322D, or by the physician selected and paid by the employer under s 2343; an employee who goes elsewhere bears the cost personally even if the injury is afterwards held to have been compensable under the chapter.
2. Yes, but only after the employer has refused on application to furnish the services under s 2322(b); notice of the intention must be given to the Board, and the employer is liable for the reasonable cost only where the Board has first approved the choice of provider in advance of the treatment being given.
3. Yes - the employee may employ a provider of the employee's own choosing, and no notice is required; the thirty days which the section mentions is the period within which the employer must pay the provider's bill once the alleged injury has been held to be compensable by the Board or by agreement.
4. Yes - any employee who alleges an industrial injury may employ a physician, surgeon, dentist, optometrist or chiropractor of the employee's own choosing; notice that medical aid was employed must be given in writing within thirty days to the employer or its carrier. ✓

Why: 19 Del. C. s 2323 provides that ANY EMPLOYEE WHO ALLEGES AN INDUSTRIAL INJURY SHALL HAVE THE RIGHT TO EMPLOY A PHYSICIAN, SURGEON, DENTIST, OPTOMETRIST OR CHIROPRACTOR OF THE EMPLOYEE'S OWN CHOOSING. NOTICE OF THE EMPLOYEE'S INTENTION TO EMPLOY MEDICAL AID ... SHALL BE GIVEN TO THE EMPLOYEE'S EMPLOYER OR ITS INSURANCE CARRIER OR TO THE BOARD. NOTICE THAT MEDICAL AID WAS EMPLOYED ... SHALL BE GIVEN WITHIN 30 DAYS THEREAFTER TO THE EMPLOYER OR ITS INSURANCE CARRIER IN WRITING. IF THE ALLEGED INJURY IS SUBSEQUENTLY HELD TO BE COMPENSABLE, THE EMPLOYER SHALL BE LIABLE FOR THE REASONABLE COST ... PROVIDED NOTICE OF SAID EMPLOYMENT WAS GIVEN.

A bar overserves a patron who then injures a third party in a fight. Which coverage is designed to respond to the bar's liability?

1. Workers compensation, because the bartender was on duty when the fight started
2. Liquor Liability / Dram Shop coverage ✓
3. A surety bond posted with the state liquor control board
4. CGL Coverage A, because the patron's injury is bodily injury on the premises

Why: Because the CGL excludes the liquor business's liability, the bar needs liquor liability/dram shop coverage for injuries connected to serving alcohol.

A producer is acting as a consultant for a client. What does 18 Del. C. s 1714(e) forbid?

1. Accepting any fee, commission or other consideration from an insurer for any activity for which the producer acting as a consultant has received or will receive a fee from the producer's client. ✓
2. Accepting any fee, commission or other consideration from an insurer for any activity whatever while the producer is acting as a consultant for any client, whether or not the producer has received or will receive a fee from that client for the same activity.
3. Charging the client a fee for any activity for which the producer has received or will receive a commission from an insurer, the subsection giving the insurer's commission priority and requiring the producer to forgo the client's fee in that event.
4. Acting as a consultant for a client and as an appointed agent of an insurer in the same transaction, the two capacities being treated by the subsection as inherently incompatible whatever the arrangements for remuneration may be.

Why: 18 Del. C. s 1714(e) provides that NO PRODUCER ACTING AS A CONSULTANT MAY ACCEPT ANY FEE, COMMISSION OR OTHER CONSIDERATION FROM AN INSURER FOR ANY ACTIVITY FOR WHICH THE PRODUCER ACTING AS A CONSULTANT HAS RECEIVED OR WILL RECEIVE A FEE FROM THE PRODUCER'S CLIENT. It is double payment for THE SAME ACTIVITY that is forbidden, not consulting as such.

An injured employee has already been awarded benefits in Maryland. What does 19 Del. C. s 2303(b) provide?

1. The payment or award under another jurisdiction's law is not a bar to a claim here, provided the Delaware claim is filed within two years after the injury or death; if compensation is paid here, the medical, income and death benefits paid under the other law are credited against what would have been due here. ✓
2. The payment or award under another jurisdiction's law is an election of remedies and bars a claim here, the chapter being framed to prevent double recovery; the two years which the subsection mentions is the period within which an employee who has not claimed elsewhere must bring a claim under this chapter.
3. The payment or award under another jurisdiction's law is not a bar, and the Delaware claim may be filed at any time; the employee keeps the whole of both awards, since the other state's benefits are compensation for a different statutory right and the chapter contains no provision for crediting one against the other.
4. The payment or award under another jurisdiction's law is not a bar provided the claim here is filed within two years; the employee must however elect between the two schemes before any award is made under this chapter, and the election once made is irrevocable and binds the employee's dependents as well.

Why: 19 Del. C. s 2303(b) provides that THE PAYMENT OR AWARD OF BENEFITS UNDER THE WORKERS' COMPENSATION LAW OF ANOTHER STATE, TERRITORY, PROVINCE OR FOREIGN NATION ... SHALL NOT BE A BAR TO A CLAIM FOR BENEFITS UNDER THIS CHAPTER, PROVIDED THAT CLAIM UNDER THIS CHAPTER IS FILED WITHIN 2 YEARS AFTER SUCH INJURY OR DEATH. It then credits, one against the other, (1) THE MEDICAL AND RELATED BENEFITS FURNISHED OR PAID FOR ... UNDER SUCH OTHER ... LAW; (2) THE TOTAL AMOUNT OF ALL INCOME BENEFITS PAID OR AWARDED; and (3) THE TOTAL AMOUNT OF DEATH BENEFITS PAID OR AWARDED. No election is required: the crediting is what prevents a double recovery.

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

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

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

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

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

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

The Homeowners additional coverage for trees, shrubs, and plants typically limits aggregate coverage to what percentage of Coverage A?

1. 20%
2. Unlimited
3. 50%
4. 5% ✓

Why: Trees, shrubs, plants, and lawns are covered up to 5% of Coverage A for named perils (not wind), with a per-item dollar cap.

The examined company requests a hearing on the examination report within the period allowed. What does 18 Del. C. s 321(c) require of the Commissioner?

1. The Commissioner shall grant a hearing as to the report and shall not file the report until after the hearing and after such modifications have been made in it as the Commissioner deems proper. ✓
2. The Commissioner shall grant a hearing as to the report, but may file the report before the hearing is held, any modifications the Commissioner afterwards deems proper being made by way of an amended report filed with the Department in the same manner.
3. The Commissioner may grant a hearing if satisfied that the request is made in good faith and that the grounds stated would, if established, justify modifying the report, and shall in that event withhold the report from filing until the hearing has been held.
4. The Commissioner shall refer the request to a hearing officer, who submits a memorandum of findings and recommendations on which the Commissioner may base a decision whether to file the report as made or with such modifications as appear proper.

Why: 18 Del. C. s 321(c) provides that IF THE COMPANY SO REQUESTS IN WRITING WITHIN SUCH 30-DAY PERIOD, THE COMMISSIONER SHALL GRANT A HEARING AS TO THE REPORT AND SHALL NOT FILE THE REPORT UNTIL AFTER THE HEARING AND AFTER SUCH MODIFICATIONS HAVE BEEN MADE THEREIN AS THE COMMISSIONER DEEMS PROPER. Two obligations, both mandatory: grant the hearing, and hold the report back until it and any modifications are done. A good-faith filter on hearing requests belongs to s 323(d), which governs an application for a hearing generally.

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

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

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

What is the purpose of Delaware Regulation 902, and under what authority is it made?

1. To set forth unfair claim settlement practices which are prohibited whenever they occur, the regulation dispensing with the frequency requirement that 18 Del. C. s 2304(16) imposes so that a single instance of any listed practice is a violation; adopted under 18 Del. C. ss 311 and 2312.
2. To set forth the standards by which the Commissioner will determine whether a claim has been settled fairly, and the remedies available to an insured who is dissatisfied with a settlement offered; adopted under 18 Del. C. ss 311 and 2312 and the Administrative Procedures Act.
3. To set forth unfair claim settlement practices which, when committed or performed with such frequency as to indicate a general business practice, are prohibited; adopted under 18 Del. C. ss 311 and 2312 and promulgated in accordance with the Administrative Procedures Act, 29 Del. C. ch. 101. ✓
4. To set forth unfair claim settlement practices which, when committed with such frequency as to indicate a general business practice, are prohibited; adopted under 18 Del. C. s 1718 and the Administrative Procedures Act, and applicable only to licensees of the Department rather than to insurers.

Why: Delaware Regulation 902 s 1.0 states that THE PURPOSE OF THIS REGULATION IS TO SET FORTH UNFAIR CLAIM SETTLEMENT PRACTICES WHICH, WHEN COMMITTED OR PERFORMED WITH SUCH FREQUENCY AS TO INDICATE A GENERAL BUSINESS PRACTICE, ARE PROHIBITED. s 2.0 records that it IS ADOPTED BY THE COMMISSIONER PURSUANT TO THE AUTHORITY GRANTED BY 18 Del.C. ss 311 AND 2312, AND PROMULGATED IN ACCORDANCE WITH THE DELAWARE ADMINISTRATIVE PROCEDURES ACT, 29 Del.C. Ch. 101. The regulation carries the same frequency requirement as the statute, so a single instance is no more a violation of the regulation than it is of s 2304(16).

When two policies cover the same loss and an 'other insurance' clause requires each to pay a share proportional to its limit, this is:

1. Nonconcurrency
2. Primary and excess
3. Pro rata (proportional) sharing ✓
4. Contribution by equal shares

Why: Pro rata sharing divides the loss among insurers in proportion to each policy's limit relative to total coverage.

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.

The principle that allows insurers to predict losses more accurately as the number of similar exposure units increases is the:

1. Principle of indemnity
2. Law of agency
3. Law of large numbers ✓
4. Doctrine of reasonable expectations

Why: The law of large numbers states that the larger the number of similar exposures, the more predictable actual loss experience becomes.

Salvage refers to:

1. The insurer's right to recover and sell damaged property after paying a total loss ✓
2. The unearned portion of the premium returned to the insured when a policy is canceled early
3. The portion of a loss the insured must bear when the coinsurance requirement is not met
4. The dollar amount subtracted from every covered loss before the insurer issues payment

Why: After paying for a loss (often a total loss), the insurer may take title to and sell the damaged property to recoup some payment—this is salvage.

An 'aggregate' limit represents:

1. The maximum the insurer will pay for all covered losses during the policy period ✓
2. The sublimit that caps payment for any one injured person
3. The most the insurer will pay for any one claim, however many claims are made in the year
4. The retained amount subtracted from each loss payment

Why: An aggregate limit is the total maximum the insurer will pay for all losses during the entire policy period.

What does 18 Del. C. s 2407(b), the practitioner limb, make a fraudulent insurance act?

1. For a practitioner knowingly and wilfully to assist, conspire with or urge any person to violate the chapter, the person urged being reached instead under subsection (a) and no separate provision being made for a person who benefits from the proceeds of the fraud without having presented anything.
2. For a practitioner to present a bill for services, a diagnosis or a prescription that contains false, incomplete or misleading information, the subsection being the one that applies where the maker of the statement is a licensed provider rather than the insured or claimant personally.
3. For a practitioner knowingly and wilfully to assist, conspire with or urge any person to violate the chapter, and for any person who, because of that assistance, conspiracy or urging, knowingly and wilfully benefits from the proceeds derived from the use of the fraud. ✓
4. For any person to pay or receive a fee, commission or other consideration for referring a claimant to a practitioner, whether or not any statement presented to the insurer in consequence of the referral turns out to contain false or misleading information.

Why: 18 Del. C. s 2407(b) provides that IT SHALL BE A FRAUDULENT INSURANCE ACT FOR A PRACTITIONER TO KNOWINGLY AND WILFULLY ASSIST, CONSPIRE WITH, OR URGE ANY PERSON TO VIOLATE ANY OF THE PROVISIONS OF THIS CHAPTER, OR FOR ANY PERSON WHO DUE TO SUCH ASSISTANCE, CONSPIRACY OR URGING BY SAID PRACTITIONER, KNOWINGLY AND WILFULLY BENEFITS FROM THE PROCEEDS DERIVED FROM THE USE OF THE FRAUD. Two limbs in one subsection: the practitioner, and the person who knowingly takes the benefit.

What must a private passenger automobile policy and its accompanying form show under Delaware Regulation 1902?

1. The policy or renewal certificate must show the coverages provided, the applicable limits and deductibles, the classification of the automobiles and the rating territory; and it must be accompanied by a rating information form giving a detailed explanation of the classification determination and, where a safe driver or other driver plan is used, a succinct but complete description of that plan and when points will not be assigned. ✓
2. The policy or renewal certificate must show the coverages provided and the applicable limits and deductibles; the classification and rating territory appear on the rating information form instead, which need be sent only on the insured's written request and which need not describe any safe driver plan used in determining the premium.
3. The policy or renewal certificate must show the coverages, limits, deductibles, classification and rating territory, and must be accompanied by a rating information form; failure to comply is deemed a violation of the regulation only, and is not a violation of a Commissioner's order or subject to the penalties in 18 Del. C. ss 2307 and 2308.
4. The policy or renewal certificate must show the coverages, the limits and the premium charged for each; the rating information form is filed with the Department by the insurer or rating organisation and is not given to the insured, its purpose being to let the Department review the classification plan and the individual driver record plan.

Why: Delaware Regulation 1902 s 3.1 requires every private passenger policy or renewal certificate to contain at least 3.1.1 COVERAGES PROVIDED; 3.1.2 THE APPLICABLE LIMITS OF LIABILITY AND DEDUCTIBLES THERETO; 3.1.3 THE CLASSIFICATION OF THE AUTOMOBILE(S); AND 3.1.4 THE RATING TERRITORY. Section 3.2 requires it to BE ACCOMPANIED BY A 'RATING INFORMATION FORM' WHICH SHALL PROVIDE A DETAILED EXPLANATION OF THE CLASSIFICATION DETERMINATION ... IN ADDITION, IF A 'SAFE DRIVER' PLAN, OR ANY OTHER DRIVER PLAN IS USED IN PREMIUM DETERMINATION, THE RATING INFORMATION FORM SHALL PROVIDE SUCCINCT, BUT COMPLETE, DESCRIPTION OF SUCH PLAN, STATING UNDER WHAT CIRCUMSTANCES POINTS WILL NOT BE ASSIGNED. Section 5.1: FAILURE TO COMPLY ... SHALL BE DEEMED TO BE A VIOLATION OF A COMMISSIONER'S ORDER, AND SHALL SUBJECT THE PERSONS IN VIOLATION TO THE PENALTIES PRESCRIBED IN 18 Del.C. ss 2307, 2308, AND/OR ss 520, 106.

Under the PAP, an insured loses control on ice and slides into a tree. This loss is covered under:

1. Liability
2. Other Than Collision
3. Medical Payments
4. Collision ✓

Why: Striking a tree as the result of losing control is a collision loss, since collision includes upset or impact with an object.

What does 18 Del. C. s 2411(d) add to a penalty assessed against a person found to have committed insurance fraud?

1. Liability for the costs actually incurred by the Bureau in investigating the matter, proved by an itemised statement which the Bureau files with the Commissioner and which the person assessed may contest at the hearing in the same way as the underlying charge.
2. Liability for the costs incurred by the Bureau, the assessment for costs being fifteen per cent of each penalty assessed under the section rather than the costs actually run up in the particular investigation. ✓
3. Liability for the costs incurred by the Bureau, assessed at fifteen per cent of the financial loss caused by the act of insurance fraud as that loss is defined by s 2403(f), and payable in addition to any restitution the Commissioner may order.
4. Liability for the Department's attorneys' fees and costs, but only where a civil action has had to be brought under subsection (c) to collect the penalty; a person who pays the penalty when it falls due bears no part of the Bureau's costs at all.

Why: 18 Del. C. s 2411(d) provides that ANY PERSON WHO IS FOUND TO HAVE COMMITTED AN ACT OF INSURANCE FRAUD, OR VIOLATED AN ORDER OF THE COMMISSIONER PURSUANT TO A HEARING, SHALL BE LIABLE FOR COSTS INCURRED BY THE BUREAU. THE ASSESSMENT FOR COSTS SHALL BE 15% OF EACH PENALTY ASSESSED PURSUANT TO THIS SECTION. A flat percentage of the penalty, not the actual cost, and violating an ORDER attracts it as surely as the fraud itself.

A policyholder telephones the insurer to ask whether a cracked window would be covered, and does not claim. May the insurer count that when it decides whether to renew?

1. No. 18 Del. C. s 4131 provides that an insurer shall not consider an inquiry regarding a homeowners policy or a loss under it to be a claim for the purposes of making underwriting decisions, including decisions to nonrenew; an inquiry is any contact initiated by an insured that is not the filing of a claim. ✓
2. Yes. Section 4131 provides only that an inquiry is not itself a claim for the purposes of the claim counts in s 4130; the insurer remains free to take the inquiry into account as part of the general picture of the risk in deciding whether to renew, to re-rate or to impose a higher deductible on the renewal.
3. No, unless the inquiry concerned a loss which the insurer afterwards inspected, in which case the inspection report may be taken into account; an inquiry which leads to no inspection is disregarded, since the insurer has no independent knowledge of the condition of the property from which to judge the risk.
4. Yes, provided the insurer has disclosed in the form required by Regulation 702 that inquiries are among the occurrences likely to cause a nonrenewal; the disclosure requirement exists precisely so that a policyholder knows before making contact what the consequences of doing so may turn out to be.

Why: 18 Del. C. s 4131 provides that AN INSURER SHALL NOT CONSIDER AN INQUIRY REGARDING A HOMEOWNERS POLICY OR A LOSS UNDER THAT POLICY TO BE A CLAIM FOR PURPOSES OF MAKING UNDERWRITING DECISIONS, INCLUDING BUT NOT LIMITED TO DECISIONS TO NONRENEW A POLICY. AN INQUIRY IS ANY CONTACT INITIATED BY AN INSURED THAT IS NOT THE FILING OF A CLAIM. The bar is on all underwriting decisions, not only on the nonrenewal counts in s 4130.

Which perils does the Broad Causes of Loss form ADD beyond the Basic form?

1. Earthquake and flood, which the Basic form omits from its list of covered causes
2. War and nuclear hazard, added back once the Broad form endorsement is attached
3. Wear and tear from ordinary use
4. Falling objects; weight of snow, ice, or sleet; and water damage ✓

Why: The Broad form adds falling objects; weight of snow, ice, or sleet; water damage; and includes a limited collapse provision.

Actual cash value is generally calculated as:

1. The face amount of the policy
2. Market value plus profit
3. Replacement cost minus depreciation ✓
4. Replacement cost plus appreciation

Why: ACV is typically replacement cost less depreciation, reflecting the property's depreciated value at the time of loss.

What must the notice show where the wind or hurricane deductible is a PERCENTAGE, under 18 Del. C. s 4140(a)(4) and (5)?

1. The insurer must provide an example tailored to the insured value of the specific property, a generic illustration being insufficient because the point of the notice is to tell this policyholder what this deductible will cost; and a notice is required whether or not there is a separate deductible for wind, hail or hurricane losses.
2. The insurer must state the deductible as a dollar amount as well as a percentage, calculated on the insured value shown in the declarations, and must repeat that calculation at each renewal; where there is no separate deductible for those perils the insurer must say so expressly in the notice rather than omitting the notice altogether.
3. The insurer must provide an example of how the deductible applies, which need not be tailored to the specific property; where there is no separate deductible for wind, hail or hurricane losses the insurer must still send the notice, stating that the policy's general deductible applies to those perils in the same way as to any other.
4. The insurer must give an example of how the deductible applies to the loss; it need not be tailored to the insured value of the specific property but must show clearly how the deductible works (2% on a house insured for $300,000 means $6,000). Where there is no separate deductible for those perils, no notice is required. ✓

Why: 18 Del. C. s 4140(a)(4) provides that IF THERE IS A PERCENTAGE DEDUCTIBLE, THE INSURER MUST PROVIDE AN EXAMPLE OF HOW IT APPLIES TO THE LOSS. THE EXAMPLE DOES NOT HAVE TO BE TAILORED TO THE INSURED VALUE OF THE SPECIFIC PROPERTY, BUT MUST SHOW CLEARLY HOW THE DEDUCTIBLE WORKS (E.G., A 2% DEDUCTIBLE ON A HOUSE INSURED FOR $300,000 MEANS THE POLICY HOLDER IS RESPONSIBLE FOR $6,000 OF THE WIND, HAIL OR HURRICANE LOSS). Paragraph (a)(5): IF THERE IS NOT A SEPARATE DEDUCTIBLE FOR WIND/HAIL OR HURRICANE LOSSES, THE INSURER IS NOT REQUIRED TO PROVIDE A NOTICE. Subsection (b) makes the section a MINIMUM, so an insurer may say more.

'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.

What does 18 Del. C. s 4213 provide about detecting and preventing insolvencies, and what does s 4214 require of the Board?

1. The Board must recommend to the Commissioner on detection and prevention at least annually, and its reports are public documents open to inspection by any member insurer; a report on the history and causes of an insolvency is optional, and the Association files a financial report not later than December 31 of each year.
2. The Board may recommend to the Commissioner on detection and prevention and on any matter germane to a member's solvency - such reports not being public documents; it shall report on the history and causes of any insolvency in which the Association paid. The Association files a financial report by June 30. ✓
3. The Commissioner alone is charged with detecting and preventing insolvencies, the Board's role being to pay claims once insolvency has occurred; the Board files a financial report not later than June 30 each year, and the Association is exempt from examination, being a creature of statute rather than an insurer.
4. The Board may recommend to the Commissioner on detection and prevention, and its reports are not public documents; the Commissioner has no reciprocal duty to report to the Board, the flow of information under the chapter running only one way, and the Association's financial report is due not later than June 30 each year.

Why: 18 Del. C. s 4213: (1) THE BOARD OF DIRECTORS MAY, UPON MAJORITY VOTE, MAKE RECOMMENDATIONS TO THE COMMISSIONER FOR THE DETECTION AND PREVENTION OF INSURER INSOLVENCIES ...; (3) IT SHALL BE THE DUTY OF THE COMMISSIONER TO REPORT TO THE BOARD OF DIRECTORS WHEN THE COMMISSIONER HAS REASONABLE CAUSE TO BELIEVE THAT ANY MEMBER INSURER ... MAY BE INSOLVENT OR IN A FINANCIAL CONDITION HAZARDOUS TO THE POLICYHOLDERS OR THE PUBLIC; (4) THE BOARD ... MAY ... MAKE REPORTS AND RECOMMENDATIONS TO THE COMMISSIONER UPON ANY MATTER GERMANE TO THE SOLVENCY, LIQUIDATION, REHABILITATION OR CONSERVATION OF ANY MEMBER INSURER. SUCH REPORTS AND RECOMMENDATIONS SHALL NOT BE CONSIDERED PUBLIC DOCUMENTS; (6) THE BOARD ... SHALL, AT THE CONCLUSION OF ANY INSURER INSOLVENCY IN WHICH THE ASSOCIATION WAS OBLIGATED TO PAY COVERED CLAIMS, PREPARE A REPORT ON THE HISTORY AND CAUSES ... Section 4214: THE ASSOCIATION SHALL BE SUBJECT TO EXAMINATION AND REGULATION BY THE COMMISSIONER. THE BOARD ... SHALL SUBMIT, NOT LATER THAN JUNE 30 OF EACH YEAR, A FINANCIAL REPORT FOR THE PRECEDING CALENDAR YEAR.

For how long may a temporary licence run under 18 Del. C. s 1711(a), and what must the Commissioner deem?

1. Not more than 180 days, and the Commissioner must deem the temporary licence necessary for the servicing of an insurance business; the temporary licensee must pass the written examination within that period or the temporary licence lapses at the end of it without possibility of renewal.
2. Not more than 180 days, and the Commissioner must deem the temporary licence necessary for the servicing of an insurance business; no examination is required. ✓
3. Not more than 90 days, renewable once for a further 90 days on cause shown, and the Commissioner must deem the temporary licence necessary for the servicing of an insurance business in one of the cases the subsection lists.
4. Not more than one year, and the Commissioner must deem the temporary licence to be in the public interest; an examination is required unless the applicant would be exempt from it under s 1709 of the title had a full licence been applied for.

Why: 18 Del. C. s 1711(a) lets the Commissioner ISSUE A TEMPORARY LICENSE FOR A PERIOD NOT TO EXCEED 180 DAYS WITHOUT REQUIRING AN EXAMINATION IF THE INSURANCE COMMISSIONER DEEMS THAT THE TEMPORARY LICENSE IS NECESSARY FOR THE SERVICING OF AN INSURANCE BUSINESS in the listed cases. No examination, and 180 days is the ceiling.

What does 18 Del. C. s 2313 provide about the Commissioner's powers under chapter 23?

1. They are exclusive of any other powers to enforce penalties, fines or forfeitures with respect to the methods, acts and practices the chapter declares to be unfair or deceptive, so that proceedings under this chapter bar any other proceeding arising out of the same conduct.
2. They are additional to any other powers to enforce penalties, fines or forfeitures authorised by law with respect to the methods, acts and practices the chapter declares to be unfair or deceptive. ✓
3. They are additional to any other powers, except that a person penalised under s 2308 of this title may not afterwards be proceeded against under any other provision of the title in respect of the same act or practice, the penalty under this chapter being taken to exhaust the matter.
4. They are additional to the powers of the Attorney General under the Consumer Fraud Act, but are exclusive as against any other provision of this title, the chapter being a self-contained code for the regulation of trade practices in the business of insurance in this State.

Why: 18 Del. C. s 2313 provides that THE POWERS VESTED IN THE COMMISSIONER BY THIS CHAPTER SHALL BE ADDITIONAL TO ANY OTHER POWERS TO ENFORCE ANY PENALTIES, FINES OR FORFEITURES AUTHORIZED BY LAW WITH RESPECT TO THE METHOD, ACTS AND PRACTICES HEREBY DECLARED TO BE UNFAIR OR DECEPTIVE. Nothing in the chapter is exclusive of anything.

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.

The 'Damage to Premises Rented to You' coverage in the CGL applies to:

1. Loss of business income the tenant suffers while the damage to rented premises is repaired
2. Property damage to premises rented to the named insured, including fire and certain other perils for short-term rentals ✓
3. Bodily injury to tenants and their guests occurring in the common areas of the rented building, paid without regard to fault
4. Damage to any property the named insured owns, occupies, or holds on loan, wherever that property sits at the time of loss

Why: This coverage (formerly fire legal liability) pays for damage to premises rented to the insured, with fire and other listed perils for premises rented for 7 or fewer consecutive days.

A 'stated amount' is most commonly used to value:

1. Specialized or unusual vehicles/equipment where ACV is hard to determine ✓
2. Owner-occupied dwellings written on a homeowners form, where the limit is set by a replacement cost estimator
3. General damages for pain and suffering in a bodily injury claim
4. Liability limits for bodily injury and property damage

Why: Stated amount coverage is used for specialty vehicles or equipment, with the insurer paying the lesser of the stated amount or ACV at loss.

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

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

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

What is an interline endorsement in a CPP?

1. A separate stand-alone policy
2. An endorsement that applies to a single coverage part only
3. A type of declarations page
4. An endorsement affecting more than one coverage part ✓

Why: Interline endorsements modify provisions that apply to more than one coverage part, such as common policy changes affecting both property and liability.

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

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

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

The 'other insurance' condition in a property policy generally provides that the policy will pay:

1. The full loss regardless of other coverage, leaving the insured to collect again from each insurer
2. Its pro-rata share when other valid insurance exists on the same property ✓
3. Nothing at all if any other valid policy is in force
4. Double the loss amount, splitting the payment between the two insurers

Why: When more than one policy covers the same loss, the other insurance condition typically calls for pro-rata sharing based on each policy's limits.

Smoke damage under a Homeowners policy is typically:

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

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

Coverage C under the Dwelling Policy insures:

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

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

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

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

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

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.

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

1. A warranty from the subcontractor that its work and materials will stay free of defects for one year
2. A lower experience modification factor on the general contractor's workers compensation
3. Coverage under the sub's policy for the GC's vicarious liability arising from the sub's work ✓
4. A reduced premium for the subcontractor, which the GC recovers in the bid price

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

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

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

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

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 the PAP, glass breakage is typically covered under:

1. Medical Payments under Part B
2. Liability under Part A of the pap
3. Collision coverage under Part D
4. Other Than Collision (comprehensive) ✓

Why: Glass breakage is normally covered as an Other Than Collision (comprehensive) loss, though it can be claimed as collision when caused by a collision event.

An operator was charged under 21 Del. C. s 2118(p) but the vehicle was in fact insured. What does paragraph (p)(2) provide?

1. The operator shall not be convicted if the vehicle was in fact insured, whether or not any proof is produced to the court, the existence of the insurance being a complete defence which the prosecution must disprove; failure to produce the card at the time of the stop goes only to the costs the court may award against the operator on an acquittal.
2. The operator must still be convicted, since the offence created by the subsection is the failure to carry and produce the card rather than the absence of insurance; the court may however suspend the minimum fine in whole or in part where proof of insurance in force at the time is produced to it before the date of sentencing.
3. The operator shall not be convicted if, before conviction, the operator produces to the court the insurance identification card or other sufficient proof - including an automobile, garage keeper's or other commercial or personal insurance policy - showing insurance in full force and effect at all pertinent times covering that vehicle. ✓
4. The operator shall not be convicted if, before conviction, the operator produces to the court the insurance identification card itself; some other proof of insurance will not do, because subsection (s)(2) makes the failure to produce a card presumptive evidence that the person is operating the vehicle without the insurance this title requires.

Why: 21 Del. C. s 2118(p)(2) provides that AN OPERATOR SHALL NOT BE CONVICTED UNDER THIS SUBSECTION IF, PRIOR TO CONVICTION, THE OPERATOR SHALL PRODUCE TO THE COURT IN WHICH THE OFFENSE IS TO BE TRIED THE INSURANCE IDENTIFICATION CARD OR IN LIEU THEREOF OTHER SUFFICIENT PROOF, INCLUDING BUT NOT LIMITED TO AN AUTOMOBILE, GARAGE KEEPER'S OR OTHER COMMERCIAL OR PERSONAL INSURANCE POLICY, SHOWING THAT THERE WAS INSURANCE IN FULL FORCE AND EFFECT AT ALL PERTINENT TIMES COVERING OR WHICH WOULD COVER THE SAID MOTOR VEHICLE OR THE OPERATION OF THE SAID MOTOR VEHICLE BY THE OPERATOR CHARGED. Paragraph (p)(3) lets the Justice of the Peace Court take that proof by mail, facsimile or other court-approved method instead of an appearance.

Which statement about no-fault auto insurance CONCEPTS is generally correct?

1. No-fault systems let injured parties recover certain economic losses from their own insurer regardless of fault ✓
2. No-fault means no one pays for accident losses until a court or arbitration panel first assigns fault to one of the drivers
3. No-fault eliminates the need for liability coverage entirely, so states adopting it repeal their financial responsibility laws
4. No-fault applies only to property damage claims, with every bodily injury claim still settled through the tort system

Why: Under no-fault concepts, an injured person's own insurer pays specified personal injury/economic losses regardless of who caused the accident, with limits on lawsuits.

Which Homeowners form is intended for condominium unit-owners?

1. HO-6 ✓
2. HO-8
3. HO-4
4. HO-2

Why: HO-6 is the Unit-Owners form for condominium and co-op owners, covering personal property and improvements to the unit with a small base Coverage A limit.

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, such as fire, windstorm, theft or collision
3. The financial harm that results when a loss occurs, measured in dollars
4. The uncertainty about whether a loss will occur at all in a given period

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

18 Del. C. s 2304(7)b forbids collecting a premium in excess of the applicable charge. What may nevertheless be charged in addition?

1. A surplus lines broker licensed under Chapter 19 may charge applicable state and federal taxes and a nominal service charge to cover communication expenses; and a life insurer may charge amounts actually to be expended for a medical examination on application or reinstatement. ✓
2. A surplus lines broker licensed under Chapter 19 may charge applicable state and federal taxes and a service charge in such amount as the broker reasonably determines; and a life insurer may charge amounts actually to be expended for a medical examination on application or on reinstatement of a policy.
3. Any licensed producer may charge a nominal service charge to cover communication expenses in addition to the premium required by the insurer, the exception in the subdivision not being confined to surplus lines business placed under Chapter 19 of the title.
4. Nothing. The prohibition is absolute, and a surplus lines broker who needs to recover state and federal taxes must build them into the premium filed with and approved by the Commissioner rather than charge them to the insured as a separate item.

Why: 18 Del. C. s 2304(7)b forbids wilfully collecting AS PREMIUM OR CHARGE FOR INSURANCE ANY SUM IN EXCESS OF THE PREMIUM OR CHARGE APPLICABLE TO SUCH INSURANCE, AND AS SPECIFIED IN THE POLICY, in accordance with the classifications and rates filed with and approved by the Commissioner. It then provides that this SHALL NOT BE DEEMED TO PROHIBIT THE CHARGING AND COLLECTION BY SURPLUS LINES BROKERS LICENSED UNDER CHAPTER 19 OF THIS TITLE OF THE AMOUNT OF APPLICABLE STATE AND FEDERAL TAXES AND NOMINAL SERVICE CHARGE TO COVER COMMUNICATION EXPENSES, IN ADDITION TO THE PREMIUM REQUIRED BY THE INSURER, NOR ... THE CHARGING AND COLLECTION BY A LIFE INSURER OF AMOUNTS ACTUALLY TO BE EXPENDED FOR MEDICAL EXAMINATION OF AN APPLICANT FOR LIFE INSURANCE OR FOR REINSTATEMENT. The service charge must be NOMINAL and for COMMUNICATION EXPENSES, and the exception is confined to surplus lines brokers.

The Watercraft endorsement on a Homeowners policy is generally used to:

1. Schedule jewelry and other valuables that the insured keeps aboard the boat
2. Extend limited liability for certain larger boats otherwise excluded ✓
3. Insure large yachts for both hull damage and liability without a separate marine policy
4. Cover flood damage to the home when rising water reaches it from the adjoining lake

Why: The watercraft endorsement extends Section II liability for boats that exceed the size/horsepower thresholds otherwise excluded by the base policy.

When an employer is held responsible for the negligent acts of an employee committed within the scope of employment, this is:

1. Contributory negligence
2. Vicarious liability ✓
3. Absolute liability
4. Strict liability

Why: Vicarious liability holds one party (e.g., an employer) responsible for the actions of another (e.g., an employee acting within the scope of employment).

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

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

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

A Value Reporting form differs from a standard policy in that:

1. Premium is based on values the insured reports rather than a fixed limit ✓
2. Coinsurance is never required because reported values are audited each month
3. It covers only the insured's liability exposures, not property
4. It excludes loss caused by fire

Why: Value Reporting forms adjust premium based on reported values; failure to report accurately can trigger a penalty (full reporting clause).

A dwelling with a $400,000 replacement cost is insured for $240,000. The 80% requirement is $320,000. A partial loss of $40,000 (ignoring deductible) would be settled at what amount under the coinsurance formula?

1. $32,000
2. $24,000
3. $40,000
4. $30,000 ✓

Why: Apply (carried $240,000 / required $320,000) x $40,000 = 0.75 x $40,000 = $30,000, the most the policy pays before deductible.

Custom furnishings or equipment installed in a pickup or van (e.g., custom murals, special carpeting) under the unendorsed PAP are:

1. Covered automatically up to the actual cash value of the furnishings, with no endorsement needed
2. Covered in full with no dollar limit, because they are permanently attached to the vehicle
3. Generally excluded from Part D unless coverage is added by endorsement ✓
4. Covered only under Part A liability, and only if the equipment injures a passenger

Why: The PAP excludes custom furnishings or equipment in pickups and vans unless coverage is specifically added, often by endorsement.