Florida Statutes and Rules — Common to All Lines — practice questions

13% of the exam ≈20 real questions 26 free questions here

The largest single domain on the exam at about 20 scored questions: the CFO and DFS, licensing and appointments, continuing education, fiduciary duties, the guaranty fund, and the unfair trade practices list. National study guides cover this worst, which is exactly why it decides pass and fail.

Where people lose points

• Twisting induces replacement with a different insurer; churning uses the client’s existing policy values, typically with the same insurer.
• Sliding adds coverage the client did not ask for; rebating gives back part of the commission.
• Fines were raised: up to $12,500 per nonwillful violation and $187,500 per willful violation.
• Section 626.611 grounds are mandatory action; 626.621 grounds are discretionary.
• Appointments renew on a 24-month cycle tied to the licensee’s birth month.

Questions and answers, explained

All 10 questions above, with the correct answer and why it is correct. Everything here is on florida statutes and rules — common to all lines.

1. Which statement correctly describes the scope of the "Florida Insurance Code"?

   • AChapters 624 through 632, plus chapters 634, 635, 636, 641, 642, 648, and 651Correct
   • BChapter 626 only, because it governs agents and insurance operations
   • CChapters 624 and 626 only
   • DAll of Title XXXVII of the Florida Statutes without exception

   Why: Section 624.01, F.S., states that chapters 624-632, 634, 635, 636, 641, 642, 648, and 651 constitute the Florida Insurance Code. Option D is the closest distractor but is too broad: Title XXXVII also contains chapters (such as ch. 633, fire prevention and control) that the statute does not include in the Code. (Outline FL-I.E)

   Reference s. 624.01, F.S. — Outline FL-I.E

2. An unincorporated aggregation of subscribers who exchange insurance contracts among themselves, operating collectively through a common attorney-in-fact, is known as a:

   • Amutual insurer
   • Breciprocal insurerCorrect
   • Cfraternal benefit society
   • Dstock insurer

   Why: Under s. 629.021, F.S., a reciprocal insurer is an unincorporated aggregation of subscribers operating individually and collectively through an attorney-in-fact to provide reciprocal insurance among themselves. A mutual insurer — the closest distractor — is an incorporated company owned by its policyholders and managed by a board of directors, not by an attorney-in-fact. (Outline FL-I.E)

   Reference s. 629.021, F.S. — Outline FL-I.E

3. An agent places a health policy with an entity that holds no Florida certificate of authority, and the agent reasonably should have known this. The entity later refuses to pay a covered $40,000 claim. Under s. 626.901, F.S., the agent is:

   • Apersonally liable to the insured for the full amount of the claim or loss not paidCorrect
   • Bliable only for the return of the premiums collected
   • Cnot liable, because an agent acts for the insurer and not for the insured
   • Dliable only if the entity is later placed in liquidation

   Why: Section 626.901(2), F.S., makes any person who knew or reasonably should have known that a contract was entered into with an unauthorized insurer, and who solicited, negotiated, took application for, or effectuated it, liable to the insured for the full amount of the claim or loss not paid. Option B is the closest distractor: a premium refund is not the measure of liability, because the statute is designed to put the insured in the position the coverage promised. The guaranty association does not respond, because unauthorized insurers are not member insurers. (Outline FL-I.E)

   Reference s. 626.901(2), F.S. — Outline FL-I.E

4. Which applicant may be exempted from the written examination for a Florida life or health agent license?

   • AAn applicant who holds an active Chartered Life Underwriter (CLU) designationCorrect
   • BAn applicant with 5 years of experience as an unlicensed customer service employee
   • CAn applicant who scored 95 percent or higher on the 60-hour prelicensing course final
   • DAn applicant whose Florida license was suspended 10 years ago

   Why: Section 626.221(2)(g), F.S., exempts from the written examination an applicant who holds an active CLU designation from The American College, and the same subsection exempts other categories such as certain limited licenses, qualifying former department employees, and holders of qualifying insurance degrees; the department may still test such applicants on pertinent provisions of the Florida Insurance Code. Option D is the closest distractor: reinstatement without examination is discretionary and limited to licenses suspended within the preceding 4 years, so a 10-year-old suspension does not qualify. (Outline FL-I.F)

   Reference s. 626.221(2)(g), F.S. — Outline FL-I.F

5. Florida requires each insurance agency location to designate an "agent in charge." That designated person must:

   • Ahold the licenses required for at least two of the lines handled there, and supervise all staffCorrect
   • Bbe the majority owner of the agency and be listed as such on its state registration
   • Cbe licensed as a nonresident agent in at least one other state in addition to holding a Florida license
   • Dhold an active CLU or CPCU professional designation in addition to the state license

   Why: Section 626.0428(4)(a), F.S., requires each place of business to be in the active full-time charge of a licensed and appointed agent holding the agent licenses required to transact at least two of the lines of insurance being handled at that location, and paragraphs (4)(d) and (4)(e) make the agent in charge responsible for supervising every individual at the location and accountable for their misconduct or code violations. The designation is filed with the department; if the agent in charge ends his or her affiliation and no replacement is designated, the agency license automatically expires on the 91st day. Ownership and professional designations are irrelevant to the requirement. (Outline FL-I.F)

   Reference s. 626.0428(4), F.S. — Outline FL-I.F

6. A licensed agent begins transacting insurance under a firm name other than her own legal name. She must file that firm, corporate, or business name with the Department of Financial Services within:

   • A10 days after the initial transaction under that name
   • B30 days after the initial transaction under that nameCorrect
   • C60 days after the initial transaction under that name
   • Dthe next license renewal cycle

   Why: Section 626.541, F.S., requires a licensee using a firm, corporate, or business name other than his or her own to file that name with the department within 30 days after the initial transaction of insurance under it, along with the address of each office using the name and the names of officers, directors, and associated individuals. Any later change to the name, personnel, or addresses must likewise be reported in writing within 30 days. Option D is the closest distractor, but the duty is triggered by the transaction, not by the renewal cycle. (Outline FL-I.F)

   Reference s. 626.541, F.S. — Outline FL-I.F

7. A Florida-licensed life and health agent also sells securities. A regulator in another state enters a consent order against him for a sales-practice violation. Under s. 626.536, F.S., he must file copies of the order and related documents with the Department of Financial Services:

   • Awithin 10 days after the order is entered
   • Bwithin 30 days after the final disposition of the administrative actionCorrect
   • Cwithin 60 days after the final disposition of the administrative action
   • Donly if the other state's action also suspends his Florida license

   Why: Section 626.536, F.S., requires a licensee to submit a copy of the order, consent to order, or other relevant legal documents to the DFS within 30 days after the final disposition of any administrative action taken against him by a governmental agency or other regulatory agency in Florida or any other jurisdiction, relating to the business of insurance, the sale of securities, or activities involving fraud, dishonesty, trustworthiness, or breach of a fiduciary duty. Option D is the closest distractor: the reporting duty is triggered by the other jurisdiction's action itself, and failure to report is independently sanctionable. (Outline FL-I.F)

   Reference s. 626.536, F.S. — Outline FL-I.F

8. Which Florida entity is responsible for licensing insurance agents and investigating licensee misconduct?

   • AThe Office of Insurance Regulation (OIR)
   • BThe Office of Financial Regulation (OFR)
   • CThe Department of Financial Services (DFS)Correct
   • DThe Financial Services Commission

   Why: The DFS, headed by the elected Chief Financial Officer, licenses agents, adjusters, and agencies and investigates licensees; it also operates consumer services, insurance fraud investigations, receiverships, and unclaimed property (s. 20.121, F.S.; ch. 626, F.S.). The OIR — the closest distractor — regulates insurance companies (certificates of authority, rates, forms, market conduct), not agents. (Outline FL-I.B)

   Reference s. 20.121, F.S.; ch. 626, F.S. — Outline FL-I.B

9. Which of the following falls under the jurisdiction of the Office of Financial Regulation (OFR)?

   • AApproval of life insurance policy forms
   • BRegulation of state-chartered banks, credit unions, finance companies, and the securities industryCorrect
   • CIssuing insurance agent licenses
   • DPaying covered claims of insolvent insurers

   Why: Under s. 20.121(3)(a), F.S., the OFR is responsible for banks, credit unions, other financial institutions, finance companies, and the securities industry. Policy forms belong to the OIR, agent licensing to the DFS, and covered claims of insolvent insurers to the guaranty associations. (Outline FL-I.D)

   Reference s. 20.121(3)(a), F.S. — Outline FL-I.D

10. What is the key ownership difference between a mutual insurer and a stock insurer?

    • AA mutual insurer may issue only term insurance
    • BA stock insurer is owned by its policyholders, who elect its directors
    • CA mutual insurer is owned by its policyholders, while a stock insurer is owned by its stockholdersCorrect
    • DA stock insurer may not pay any dividends

    Why: A mutual company has no stockholders; it is owned by its policyholders, who may receive non-guaranteed policy dividends from divisible surplus. A stock company is owned by shareholders, who receive corporate dividends — option B simply reverses the two structures. Both types may obtain a certificate of authority and issue any approved product line in Florida. (Outline FL-I.E)

    Reference Standard industry curriculum — Outline FL-I.E

Topics inside this domain

• Twisting vs churning vs sliding vs rebating
• Annuities on the Florida 2-15
• HIV testing and consent in Florida underwriting
• Premium trust funds and fiduciary duty
• Compulsory vs discretionary license discipline
• Florida guaranty association limits

Drill other domains

• Types of Life Policies and Features (10%)
• Life Policy Riders, Provisions, Options, and Exclusions (10%)
• Life Application, Underwriting, and Policy Delivery (8%)
• Retirement and Other Life Insurance Concepts (5%)
• Types of Health Policies (11%)
• Health Policy Provisions, Clauses, and Riders (10%)

← Back to the full practice exam