Iowa Independent Adjuster Practice Test: Iowa law, Part 2

Correct answer: B. 8:00 p.m. and 9:00 a.m.

Section 522C.11(3) prohibits a public adjuster from soliciting between 8:00 p.m. and 9:00 a.m., and solicitation includes a door-to-door sale as defined in Iowa Code 555A.1. This is separate from the 72-hour rule after a catastrophic disaster in 522C.11(2). Because a public adjuster contract can be a door-to-door sale, the contract must also explain the insured's rescission rights under chapter 555A.

Reference: Iowa Code 522C.11(3); 522C.10(1)(a)(14)

Correct answer: A. $8,000

Section 522C.10(1)(a)(8) caps a public adjuster's fee at 15% of all claim payments approved by the insurer on a noncatastrophic claim and 10% on a catastrophic disaster claim. A presidential major disaster declaration makes this a catastrophic disaster under 522C.2(4), so the cap is 10% x $80,000 = $8,000. The $12,000 answer applies the 15% noncatastrophic cap, which does not fit these facts.

Reference: Iowa Code 522C.2(4); 522C.10(1)(a)(8)

Correct answer: D. Reasonable pay for time and expenses up to the commitment

If the insurer pays or commits in writing to pay the policy limit within five calendar days after the loss is reported, section 522C.10(2) requires the public adjuster to tell the insured the full claimed amount may not be agreed to, and limits the adjuster to reasonable compensation based on time spent and expenses incurred until the insurer paid or committed. The percentage fee does not apply, but the contract is not void.

Reference: Iowa Code 522C.10(2)

Correct answer: B. It is immediately inactive; he must alert Iowa within 7 calendar days

Section 522C.13(4) makes a nonresident adjuster's Iowa license immediately inactive if the adjuster is placed on probation, suspended, revoked, refused or denied licensure in any other state, and gives the adjuster seven calendar days to alert the commissioner. Missing that deadline is itself a violation. The one-year waiting period in 522C.15 applies to reinstatement after Iowa discipline when the order sets no terms.

Reference: Iowa Code 522C.13(4); 522C.15(1)(g)

Correct answer: C. $50,000

Section 522C.14(1)(b) allows up to $1,000 per violation with a $10,000 aggregate, but if the adjuster knew or reasonably should have known of the violation, up to $5,000 per violation with an aggregate of $50,000 in any one six-month period. Twelve knowing violations would be 12 x $5,000 = $60,000, so the $50,000 cap controls. A cease and desist order is also available, and a condoning employer can be penalized.

Reference: Iowa Code 522C.14(1)(b) and (c)

Correct answer: A. A class C felony

Section 522C.14(2)(a) makes acting as an adjuster without proper licensure, or willfully violating the chapter, a class D felony, raised to a class C felony when the violation results in a loss of more than $10,000. Jason's $14,000 loss crosses that line. The same two tiers apply under 522C.14(2)(b) to an adjuster who steals or misappropriates funds that must be held in trust.

Reference: Iowa Code 522C.14(2)(a) and (b)

Correct answer: D. When committed often enough to indicate a general business practice

Iowa Code 507B.4(3)(j) defines unfair claim settlement practices as committing or performing the listed acts with such frequency as to indicate a general business practice. A single mishandled claim may still break other rules, such as the deadlines in 191 IAC 15.41 and 15.42. After a hearing, 507B.7 allows a cease and desist order and civil penalties of up to $1,000 per violation, or $5,000 if the person knew or should have known.

Reference: Iowa Code 507B.4(3)(j); 507B.7(1)

Correct answer: A. Delaying one part of a policy's coverage to influence another part

Section 507B.4(3)(j)(13) lists failing to promptly settle claims where liability is reasonably clear under one portion of the policy coverage in order to influence settlements under other portions. The other options are also listed practices, items (10), (9) and (12), but they describe different conduct. Rule 191-15.41(6) adds that an undisputed payment under one coverage should be tendered within 30 days if it would end the insurer's known liability under that coverage.

Reference: Iowa Code 507B.4(3)(j)(9), (10), (12) and (13); 191 IAC 15.41(6)

Correct answer: B. 15 days

Rule 191-15.42(1) requires acknowledgment within 15 days of receiving notice of a claim unless payment is made in that time, with a dated file note if the acknowledgment is not in writing. The insurer must also reply within 15 days to pertinent claimant communications. Twenty-one days is the deadline in 15.42(2) for answering a claim inquiry from the Iowa Insurance Division, and 30 days is the decision deadline after proof of loss.

Reference: 191 IAC 15.42(1) to (3)

Correct answer: C. May 4

Rule 191-15.41(2) requires a decision within 30 days after receipt of a properly executed proof of loss, and 15.41(3) lets the insurer take more time by notifying the claimant within those 30 days with its reasons. If the investigation remains incomplete, a letter giving the reasons is due 45 days from that initial notification and every 45 days after. March 20 plus 45 days is May 4.

Reference: 191 IAC 15.41(2) and (3)

Correct answer: A. $20,000 per person, $40,000 per accident, $15,000 property damage

Section 321A.1(11) defines proof of financial responsibility as the ability to respond in damages of $20,000 for bodily injury to or death of one person, $40,000 for two or more people in one accident (subject to the per-person limit) and $15,000 for property damage in one accident. Iowa Code 321.20B requires this coverage to be in effect for a vehicle driven on Iowa highways, and UM and UIM bodily injury limits must be at least as high.

Reference: Iowa Code 321A.1(11); 321.20B(1); 516A.1(1)

Correct answer: D. $55,000

Each injured person is under the $20,000 per-person limit, but the three claims total $45,000, so the $40,000 per-accident bodily injury limit caps that coverage. Property damage is capped at $15,000, leaving $2,000 of the car damage unpaid. Total: $40,000 + $15,000 = $55,000. The $57,000 answer wrongly pays the full car damage, and $60,000 ignores the per-accident cap.

Reference: Iowa Code 321A.1(11)

Correct answer: C. A written rejection signed by Kayla as the named insured

Section 516A.1 requires every Iowa auto liability policy to include uninsured, hit-and-run and underinsured motorist coverage with bodily injury limits at least equal to the 321A.1(11) minimums. The named insured may reject UM, UIM or both, but only by a signed written rejection; on an insurer or producer form, it must be on a separate sheet containing only the rejection. A rejection carries over to renewals with the same insurer.

Reference: Iowa Code 516A.1

Correct answer: B. $500,000

Section 515B.5(1)(a)(3) caps the association's payment at the lesser of the policy limits or $500,000 per claim, so the association pays Elena $500,000 and the remaining $120,000 is not paid by it. Workers' compensation claims are paid in full, unearned premium refunds are paid above $100 up to $10,000 per policy, and the part of a claim within the deductible is never a covered claim.

Reference: Iowa Code 515B.2(4); 515B.5(1)(a)

Correct answer: C. Within 20 days, choosing from the Division's licensed appraiser list

Under section 522F.14(2), within 20 calendar days after receiving the other party's written demand, the claimant and the insurer each select an appraiser from the appraiser list kept by the Insurance Division, and each appraiser attests to being competent and disinterested. The appraisers then have 15 calendar days to agree on an umpire from the umpire list. An adjuster may not act as the appraiser on a claim the adjuster is adjusting.

Reference: Iowa Code 522F.14(2) and (3); 522C.11(13)