CPCU 410 Module 6 Test Bank

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1. Which one of the following statements is correct regarding insurance producer classifications?

A. Soliciting agents have the broadest powers of all insurance producers.

B. Special agents are agents that transact all of a principal’s business in a particular place or of a particular kind.

C. Brokers are independent producers that act as agents for insurance customers.

D. Of all the insurance producers, general agents have the least amount of authority to act on behalf of the insurer.

2. An insurance producer that is employed by the insurer to act for a particular purpose or class of work is a:

A. Soliciting agent.

B. Special agent.

C. General agent.

D. Broker.

3. Which one of the following represents a responsibility of a soliciting agent?

A. Forwarding insurance applications to the insurer.

B. Delivering policies to the insureds upon receipt of premiums.

C. Appointing subagents.

D. Issuing and renewing policies.

4. Which one of the following represents a responsibility of a soliciting agent?

A. Issuing and renewing policies.

B. Inspecting of property to be insured.

C. Adjusting of losses.

D. Seeking applications for insurance.

5. Tara was hired by ABC Insurance Company and given authority to act based on her employment contract. The contract gave Tara the authority to induce individuals to apply for insurance, forward policies to ABC Insurance Company, and deliver policies to the insureds upon receipt of premiums. In addition, Tara occasionally assisted with changes in coverage. Tara is a:

A. Soliciting agent.

B. Special agent.

C. General agent.

D. Broker.

6. If a principal, through his or her actions or by a failure to act, gives an impression to a third party that an agent acts for the principal, the agent possesses:

A. Special authority.

B. Actual authority.

C. Apparent authority.

D. Limited authority.

7. Which one of the following statements is correct regarding producers’ authority?

A. If an insurer consistently ratifies an unauthorized agent’s actions, an agency relationship can arise by procurement.

B. A purported agent’s statements or actions are enough to create an agency by estoppel.

C. Apparent authority is authority that an insurer intentionally allows an agent to believe he or she possesses.

D. A producer has no express or implied authority to act contrary to limitations stated in the insurance application.

8. The implied contract exception to the employment-at-will doctrine would most likely be used by an employee who was terminated:

A. For filing a workers compensation claim after being injured on the job.

B. After refusing to violate another employee’s privacy without seeking their permission.

C. Just before becoming eligible for retirement benefits from the employer.

D. Contrary to statements written in an employee handbook relating to termination only for “just cause.”

9. Which one of the following statements is correct regarding the employment-at-will concept?

A. Employee claims of wrongful termination can take the form of either a breach of contract suit or a wrongful discharge cause of action.

B. Under the employment-at-will doctrine, an employer may only fire an employee if the employee has breached an express contract with the employer.

C. Employees’ lawsuits against employers for illegal termination are referred to as unfair employment practices lawsuits.

D. The covenant-of-good-faith exception to the employment-at-will doctrine is the most commonly accepted exception and is recognized by almost all states.

10. Under the implied-contract exception to the employment at will doctrine, an employee who believes they were terminated improperly can file suit for:

A. Wrongful termination.

B. Termination without cause.

C. Breach of contract.

D. Violation of their civil rights.

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11. Adam, a long-term employee of ABC Company, was fired without just cause exactly one month before becoming eligible for retirement benefits. Adam did not have an employment contract with ABC Company. Assuming all of the following exceptions to the employment at will doctrine are accepted in Adam’s state of employment, and state law does not address termination prior to retirement, which one of the following exceptions would most likely allow Adam to be successful in a lawsuit against ABC Company?

A. Implied-contract exception.

B. Statutory exception.

C. Covenant-of-good-faith exception.

D. Public policy exception.

12. Adam is injured at work and files a workers compensation claim to cover his medical bills and lost wages. One month later, he is terminated without cause. Which exception would he be able to file suit under?

A. Implied-contract exception.

B. Public policy exception.

C. Covenant-of-Good-Faith exception.

D. Statutory exception.

13. Two days short of her six-month anniversary with A1 Mart, Jen is unexpectedly fired. A1 Mart offers medical benefits after 6 months of employment. Why would the covenant-of-good-faith allow Jen to file suit?

A. A1 Mart had an obligation to provide medical benefits and terminated her to avoid it.

B. A1 Mart did not provide the required 90-day notice before terminating Jen without cause.

C. A1 Mart breached the implied contract entered into with Jen.

D. A1 Mart did not provide concrete reasons that Jen was terminated.

14. Which one of the following statements is correct regarding the Age Discrimination in Employment Act?

A. The Act prohibits age discrimination with respect to the hiring and termination process only.

B. The Act permits mandatory retirement for certain executives over age 65 who are entitled to a pension benefit.

C. Individuals alleging age discrimination under the Act must file a formal complaint with the Department of Labor.

D. Employers with less than 50 employees are exempt from the provisions of the Act.

15. The bona fide occupational qualification exception to the Age Discrimination in Employment Act:

A. Permits terminated pilots to file age discrimination suits.

B. Protects employees terminated as a result of a disability.

C. Is needed in order for a union to be organized in a given industry.

D. Allows termination of employment based on factors that would normally be considered discrimination.

16. Which one of the following statements is correct regarding antidiscrimination laws?

A. The Equal Pay Act prohibits an employer from basing wages on a seniority system.

B. The Consumer Credit Protection Act prohibits termination resulting from an employee having wages garnished.

C. The Jury Systems Improvement Act requires an employer to provide full pay to an employee missing work because of jury duty.

D. The Uniformed Services Employment and Reemployment Rights Act requires an employer to rehire any persons serving in the military as soon as a position becomes available.

17. Which one of the following statements is correct regarding the Immigration Reform and Control Act of 1986?

A. Under the Act, immigrants unauthorized to work in the U.S. can face civil fines for seeking employment.

B. It allows employers to take national origin into consideration when hiring employees.

C. It is enforced by the Customs Enforcement Agency (CEA).

D. It prevents employers from discriminating against immigrants who have obtained appropriate authorization to work.

18. Victor, age 53, feels as though he is being discriminated against at work because of his age. He is not sure how the ADEA works. Which of the following is true?

A. He should resign from his job and file a complaint with the ADEA requesting reinstatement.

B. He should file a timely complaint with the EEOC, which may be resolved through an administrative process or the courts.

C. He should file a lawsuit against his employer.

D. He should resign from his job and find work with another employer.

19. A union is trying to form at a company. Which tactic may a company employ to discourage employees from joining?

A. Give extra vacation days right before union vote occurs.

B. Promise to give raises to people not joining.

C. Have a concerted anti-union campaign at the workplace.

D. Threaten to fire any employees who join the union.

20. A1 Company has a history of choosing male candidates over female candidates. Anne and Joe are managers at A1 with the same credentials. Anne’s performance reviews are consistently better than Joe’s, but he is selected for a new senior management position. Anne can file an employment discrimination suit based on:

A. The Civil Rights Act of 1866.

B. Executive Order 11246.

C. The disparate treatment theory.

D. The disparate impact theory.

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21. Micah, a software engineer for BBB Company, is injured in a motor vehicle accident, leaving him in a wheelchair and suffering from extreme anxiety around cars. His request to work from home four days a week to better manage his job and his disability is denied. BBB may be:

A. In violation of the Family Medical Leave Act.

B. In violation of Occupational Safety and Health Act.

C. In violation of the Americans with Disabilities Act.

D. Justified in refusing Micah’s request.

22. Jane runs a beauty salon that employs 4 people and rents booth space to 11 others. While interviewing for a part-time receptionist position, she rejects the application of Mae, a woman in her 60s, even though she is highly qualified. Why can’t Mae file suit for age discrimination under the Age Discrimination in Employment Act (ADEA)?

A. Hiring isn’t covered under the ADEA.

B. Jane only has four employees, and therefore the ADEA doesn’t apply to her business.

C. Part-time workers aren’t covered by the ADEA.

D. Mae can sue under the ADEA.

23. The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires certain employers to offer employees continuation of group health insurance for a period of time after a qualifying event. A qualifying event eligible for COBRA continuation coverage would include:

A. Termination of employment due to the employee’s gross misconduct.

B. Eligibility for group health coverage.

C. Termination of employment due to the employee’s poor performance.

D. Increase in employee’s hours resulting in overtime worked for four consecutive weeks.

24. Which one of the following statements is correct regarding employee welfare law provisions?

A. Provisions of the Occupational Safety and Health Administration Act mandate how employees must perform their jobs safely.

B. The Family Medical Leave Act requires employers to offer up to 10 weeks of paid leave to eligible employees during a 12-month period.

C. Under the Fair Labor Standards Act, union employees are prohibited from receiving overtime, unless they are paid a salary.

D. The Consolidated Omnibus Budget Reconciliation Act requires employers to offer subsidized health insurance to employees for 24 months after termination of employment.

25. Which one of the following statements is correct regarding continuation coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA)?

A. Premiums charged for the COBRA coverage cannot exceed 50% of the cost to the plan for the period of coverage for an active employee.

B. COBRA applies to employers who had the equivalent of 50 or more full or part-time employees during the preceding year.

C. Federal government plans, as well as church related plans, are subject to COBRA continuation requirements.

D. COBRA coverage will apply if an employee’s hours were reduced, resulting in them no longer being eligible for regular coverage.

26. Which one of the following is a characteristic of the Health Care and Education Reconciliation Act of 2010?

A. It requires employers with more than 100 employees to offer group healthcare plans.

B. It imposes financial penalties on employers with 50 or more employees who do not offer group healthcare plans.

C. It requires employers with more than 25 employees to establish drug-prevention programs and to maintain a drug-free workplace.

D. It provides a marketplace for employers to shop for group healthcare plans.

27. Which one of the following statements is correct regarding federal privacy statutes?

A. The Drug-Free Workplace Act requires all employers with more than 50 employees to maintain a drug-free workplace.

B. The Employee Polygraph Protection Act requires federal contractors to submit to lie detector tests upon request.

C. The Electronics Communications Privacy Act prohibits interception of any wire communication in a place of business engaged in international commerce.

D. The Fair Credit Reporting Act governs permissible disclosure of information collected by consumer reporting agencies used for employment pre-screening.

28. Which one of the following statements is correct regarding the Health Insurance Portability and Accountability Act (HIPAA)?

A. It grants patients the right to view their medical records but not the right to amend them.

B. Employers are considered covered entities under the Act.

C. It was enacted to improve the portability of health insurance coverage for workers in the event of job changes or unemployment.

D. It permits patients to learn the identity of those accessing their medical records, provided the records were accessed within the last six months.

29. Jake, an employee at A1 Company, worked 45 hours one week, 25 hours the next week and 52 hours the following week. As an exempt employee under the Fair Labor Standards Act, how much overtime is he entitled to?

A. He is not entitled to overtime.

B. 2 hours.

C. 12 hours.

D. 17 hours.

30. Tom, an employee who is paid by the hour and receives hourly overtime pay, worked 55 hours one week, and worked 35 hours the next week. How many hours must his employer pay him time-and-a-half overtime under the Fair Labor Standards Act?

A. 0 hours.

B. 5 hours.

C. 10 hours.

D. 15 hours.

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31. Sue’s husband has been diagnosed with cancer and she has asked to switch to a temporary part-time schedule so she can take care of him. Her employer would likely grant her request because:

A. The Fair Labor Standards Act requires her employer to accommodate her because she has a serious illness.

B. The employer could be subject to a breach of contract lawsuit if they don’t grant her the request.

C. Failure to do so would cause Sue to automatically become vested in the employer’s retirement benefits.

D. Sue may have a cause of action under the Family Medical Leave Act.

CPCU 410 Module 6 Test Bank

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