Delaware Property and Casualty Insurance Flashcard

Front

What is a surplus lines broker authorized to do?

Back

Procure coverage from nonadmitted insurers

Answer explanation

A surplus lines broker is authorized to procure coverage from nonadmitted insurers, which are not licensed in the state but can provide coverage for risks that admitted insurers cannot. This makes the correct choice.

Front

Before placing surplus lines business, what must a broker do?

Back

Conduct a diligent search for coverage from admitted insurers

Answer explanation

Before placing surplus lines business, a broker must conduct a diligent search for coverage from admitted insurers to ensure all options are explored before seeking non-admitted options.

Front

What must surplus lines policies include on their declaration page?

Back

A disclaimer about the carrier's licensing status

Answer explanation

Surplus lines policies must include a disclaimer about the carrier's licensing status on their declaration page to inform the insured that the insurer is not licensed in the state, ensuring transparency.

Front

Who is liable for claim payment if a commercial fire loss occurs under a surplus lines policy?

Back

The surplus lines carrier

Answer explanation

In a surplus lines policy, the surplus lines carrier is responsible for claim payments. This is because they are the insurer providing coverage, unlike the broker or other entities listed.

Front

What can happen to a surplus lines broker who fails to meet licensing requirements?

Back

They may face suspension, revocation, or fines

Answer explanation

A surplus lines broker who fails to meet licensing requirements may face serious consequences, including suspension, revocation of their license, or fines, making this the correct answer.

Front

What must surplus lines brokers maintain as part of their records?

Back

Detailed records of all policies placed, including applications and endorsements

Answer explanation

Surplus lines brokers must maintain detailed records of all policies placed, including applications and endorsements, to ensure compliance and proper documentation. This is essential for regulatory purposes.

Front

What is the purpose of a broker's affidavit in surplus lines transactions?

Back

To certify that all regulatory steps were followed

Answer explanation

The broker's affidavit in surplus lines transactions serves to certify that all regulatory steps were followed, ensuring compliance with legal requirements in the insurance process.

Front

What must an insurer obtain if they want to charge a rate that deviates from the filed manual rate?

Back

The applicant's written consent

Answer explanation

An insurer must obtain the applicant's written consent to charge a rate that deviates from the filed manual rate. This ensures that the applicant agrees to the non-standard rate being applied.

Front

Where must producers place premium funds according to Regulation 505?

Back

In a separate fiduciary account

Answer explanation

According to Regulation 505, producers must place premium funds in a separate fiduciary account to ensure proper handling and accountability, protecting the interests of the insured.

Front

What happens if an admitted insurer becomes insolvent?

Back

The Delaware Property and Casualty Insurance Guaranty Association pays covered claims

Answer explanation

If an admitted insurer becomes insolvent, the Delaware Property and Casualty Insurance Guaranty Association steps in to pay covered claims, protecting policyholders from financial loss.