Kentucky Insurance Regulations Quiz

What happens if a property & casualty policy is not nonrenewed with 75 days' notice under KRS 304.20-320?

• The policy is voided

• The policy automatically renews

• The policyholder must reapply

• The policy is automatically canceled

Answer explanation

Under KRS 304.20-320, if a property & casualty policy is not nonrenewed with 75 days' notice, it automatically renews. This means the coverage continues without interruption.

Under KRS 304.20-040, what is required for canceling an auto policy for nonpayment?

• 30 days' notice

• Immediate cancellation

• 14 days' notice

• No notice required

Answer explanation

Under KRS 304.20-040, an auto policy can be canceled for nonpayment with 14 days' notice. This means the insurer must inform the policyholder at least 14 days before the cancellation takes effect.

What does KRS 304.14 define?

• Insurance fraud

• Insurance contract terms

• Claims settlement practices

• Lender insurance requirements

Answer explanation

KRS 304.14 specifically defines the terms and conditions of insurance contracts, making 'Insurance contract terms' the correct choice among the options provided.

What is the purpose of the Kentucky Automobile Insurance Plan (KAIP) under KRS 304.13-151?

• To provide insurance for high-risk drivers

• To regulate insurance premiums

• To ensure coverage availability for those unable to obtain voluntary market insurance

• To offer discounts on auto insurance

Answer explanation

The Kentucky Automobile Insurance Plan (KAIP) is designed to ensure coverage availability for individuals who cannot obtain insurance in the voluntary market, thus addressing the needs of high-risk drivers.

Which of the following is a violation of KRS 304.12-230?

• Prompt investigation of claims

• Denying claims without a reasonable basis

• Offering fair settlements

• Explaining claim denials clearly

Answer explanation

Denying claims without a reasonable basis violates KRS 304.12-230, as it indicates unfair practices. In contrast, prompt investigations, fair settlements, and clear explanations are compliant actions.

What is mandatory on all auto policies under KRS 304.39?

• Comprehensive coverage

• Personal Injury Protection (PIP) coverage

• Collision coverage

• Uninsured motorist coverage

Answer explanation

Under KRS 304.39, Personal Injury Protection (PIP) coverage is mandatory on all auto policies. This coverage helps pay for medical expenses and lost wages resulting from an auto accident.

What does KRS 304.39-040 ensure for PIP claims?

• Delayed payment

• Prompt payment

• Reduction of coverage

• Denial of claims

Answer explanation

KRS 304.39-040 ensures prompt payment for PIP claims, requiring insurers to settle claims quickly to support policyholders in their recovery process.

What does the Kentucky Insurance Guaranty Association cover under KRS 304.36-030?

• Life insurance claims

• Political risk insurance

• Health insurance claims

• Insolvencies of most direct insurers

Answer explanation

The Kentucky Insurance Guaranty Association covers insolvencies of most direct insurers, ensuring that policyholders receive benefits when their insurer fails. This does not include life or health insurance claims.

What constitutes insurance fraud under KRS 304.47-020?

• Misuse of premiums

• Timely payment of premiums

• Submitting accurate claims

• Authorized insurance practices

Answer explanation

Under KRS 304.47-020, insurance fraud includes the misuse of premiums, which refers to the improper handling or misappropriation of funds paid for insurance coverage.

What is the penalty for conversion of premium under KRS 304.99-010?

• Suspension of insurance license

• Community service

• A warning letter

• A minimum fine of $100 or twice the amount of the illegal gain

Answer explanation

The penalty for conversion of premium under KRS 304.99-010 is a minimum fine of $100 or twice the amount of the illegal gain, making this the correct choice among the options provided.