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ME state law · part 2 of 2
Maine Property and Casualty Adjuster Practice Test: Maine law, Part 2
15 more Maine law questions for the Maine Property and Casualty Adjuster exam. Every explanation cites the statute or rule it is based on, so you can read the source when a rule surprises you. Start with part 1 on the main Maine adjuster page if you have not done it yet.
Subtopics in this part: Maine Insurance Guaranty Association, Insurable interest, Standard fire policy: suit limitation, Standard fire policy: vacancy, Standard fire policy: proof of loss, Standard fire policy: appraisal, Standard fire policy: company's options, Standard fire policy: mortgagee, Financial responsibility minimums, Medical payments requirement, Uninsured vehicle coverage limits, Underinsured vehicles, Rental vehicle coverage, Maine Automobile Insurance Plan, Dealer and loaner vehicles.
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Maine Insurance Guaranty Association · Application
A property insurer authorized in Maine is placed in liquidation with a finding of insolvency. Kwame, a Maine resident, has an unpaid covered homeowners claim of $360,000 under a policy with a $400,000 dwelling limit. Under 24-A M.R.S. 4438, what is the most the Maine Insurance Guaranty Association will pay on this claim?
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Correct answer: B. $300,000
Section 4438(1)(A) obligates the association to pay covered claims up to $300,000 per claim for most property and casualty claims, and never more than the insolvent insurer owed under the policy. Unearned premium refunds are capped at $25,000 per policy (only the amount over $50 is paid), and cybersecurity claims have a separate $500,000 cap. A claim filed after the earlier of 24 months from the liquidation order or the court's bar date is generally not covered.
Felix sold his insured rental house outright in April, but he never canceled his property policy. The house burned in June. Under 24-A M.R.S. 2406, can Felix collect on the policy for the building loss?
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Correct answer: C. No, because he had no insurable interest at the time of the loss
Section 2406(1) makes property insurance enforceable only for the benefit of persons with an insurable interest in the insured property at the time of the loss. Section 2406(2) defines insurable interest as any actual, lawful and substantial economic interest in the safety or preservation of the property. Having had an interest when the policy was issued, or a policy still being in force, is not enough once Felix has sold the house.
Under the Maine standard fire policy in 24-A M.R.S. 3002, an insured who has complied with all policy requirements must start a lawsuit on the policy within what period?
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Correct answer: B. 2 years after inception of the loss
The suit condition of the Maine standard fire policy bars any action unless all policy requirements have been met and the suit is commenced within two years next after inception of the loss. This is a Maine-specific change: the 1943 New York standard fire policy, the model used in many states, allows only 12 months. Expect questions that test this difference.
Ruth's insured dwelling has been vacant for 75 consecutive days since she moved to a nursing home. A fire then damages the house. Under the Maine standard fire policy, with no written endorsement on the subject, how is the loss treated?
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Correct answer: A. Not covered, since vacancy beyond 60 days suspends coverage
Under the conditions suspending or restricting insurance in 24-A M.R.S. 3002, unless otherwise provided in writing, the insurer is not liable for loss occurring while a described building is vacant or unoccupied beyond a period of sixty consecutive days. At 75 days the suspension applies. The 15% reduction comes from the vacancy condition in ISO commercial property forms, not from the standard fire policy.
Under the Maine standard fire policy, unless the insurer extends the time in writing, within how many days after a loss must the insured render a signed and sworn proof of loss?
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Correct answer: C. 60 days
The requirements in case loss occurs condition in 24-A M.R.S. 3002 calls for immediate written notice, protection of the property, an inventory and, within sixty days after the loss unless extended in writing, a proof of loss signed and sworn to by the insured. Twenty days is the time to name an appraiser after a written appraisal demand, and 30 days is the insurer's window to elect to repair or replace.
Amir and his insurer disagree on the amount of a fire loss, and Amir makes a written demand for appraisal. Under the Maine standard fire policy, which statement about the appraisal process is correct?
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Correct answer: D. Each side names an appraiser within 20 days and pays its own appraiser
Under the appraisal condition in 24-A M.R.S. 3002, on written demand each party selects a competent and disinterested appraiser and notifies the other within twenty days. The appraisers choose an umpire, and if they fail to agree for fifteen days a judge of a court of record selects one. Each party pays its own appraiser and the parties share the umpire and other appraisal expenses equally; a written award by any two sets the loss.
Standard fire policy: company's options · Application
After a fire, the insurer receives Lucia's proof of loss on March 10 and would rather rebuild her garage than pay cash. Under the Maine standard fire policy, by what date must it give notice of its intention to repair or replace?
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Correct answer: C. April 9
The company's options condition in 24-A M.R.S. 3002 lets the insurer take all or part of the property at the agreed or appraised value, or repair, rebuild or replace it with like kind and quality within a reasonable time, if it gives notice of that intention within thirty days after receiving the proof of loss. Thirty days after March 10 is April 9. The policy also states there can be no abandonment of property to the insurer.
Fire destroys a home, and the owner never files a proof of loss. The insurer notifies the named mortgagee, First Coastal Bank, of the owner's failure. Under the Maine standard fire policy, what must the bank do to protect its interest?
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Correct answer: A. Render a proof of loss within 60 days after the notice
The mortgagee interests and obligations clause in 24-A M.R.S. 3002 says that if the insured fails to render proof of loss, the mortgagee, upon notice, must render proof of loss in the policy's form within sixty days after the notice, and it is then subject to the appraisal, payment and suit provisions. The insurer may cancel the mortgagee's interest only with ten days' written notice. The policy forbids abandonment of property to the insurer.
Under 29-A M.R.S. 1605, which minimum limits must a Maine motor vehicle liability policy carry to serve as proof of financial responsibility?
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Correct answer: B. $50,000/$100,000 bodily injury, $25,000 property damage, $2,000 medical payments
Section 1605(1)(C) requires at least $50,000 for injury to or death of one person, $100,000 for one accident, $25,000 for property damage, $2,000 of medical payments under section 1605-A and $500 of towing and storage coverage under section 1605-B. Maine's bodily injury minimums are double the 25/50 found in many states. Uninsured vehicle coverage under 24-A M.R.S. 2902 must be at least the bodily injury minimums.
Sofia's private passenger auto policy carries only the Maine minimum medical payments coverage. In an accident, Sofia and two passengers in her car each incur $3,500 of medical costs within six months. Under 29-A M.R.S. 1605-A, what is the most the required coverage pays in total?
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Correct answer: A. $6,000 ($2,000 for each injured occupant)
Section 1605-A requires at least $2,000 per person for medical costs incurred by the driver and passengers of the insured vehicle, limited to costs incurred within one year after the injury. With three injured occupants, the minimum pays up to $2,000 each, or $6,000. Paying $2,000 once treats the limit as per accident, and $10,500 ignores the limit. The requirement does not apply to policies insuring more than 4 vehicles.
Jamal buys a Maine private passenger auto policy with bodily injury limits of $250,000/$500,000 and signs no rejection form. Under 24-A M.R.S. 2902, what uninsured vehicle coverage limits must the policy include?
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Correct answer: D. $250,000/$500,000, equal to his liability limits
For private passenger policies subject to the Maine Automobile Insurance Cancellation Control Act, section 2902(2) requires uninsured vehicle coverage equal to the bodily injury liability limits unless the purchaser expressly rejects that amount on a signed and dated insurer form. Even with a rejection, limits may not fall below the 50/100 minimums. If an insured keeps the same limits for 2 consecutive years with the same insurer, acceptance is presumed for future policies.
Claire carries uninsured vehicle coverage of $300,000/$500,000. She is injured by a driver whose liability policy has limits of $100,000/$300,000. Under 24-A M.R.S. 2902, how is the at-fault vehicle classified for Claire's claim?
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Correct answer: D. Underinsured, as its limits are below Claire's coverage
Section 2902(1) defines an underinsured motor vehicle as one with coverage in amounts less than the minimum bodily injury limits of the financial responsibility law or less than the limits of the injured party's uninsured vehicle coverage. The driver's $100,000 per person exceeds the 50/100 minimums but is below Claire's $300,000, so the vehicle is underinsured. Maine's required uninsured vehicle coverage includes uninsured, underinsured and hit-and-run vehicles.
Eli's Maine personal auto policy has liability and collision coverage with a $500 collision deductible. He rents a car for a 10-day trip and damages it in a collision. Under 24-A M.R.S. 2927, which statement is correct?
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Correct answer: A. His policy covers the damage, plus loss of use for up to 30 days
Section 2927(2) requires a personal auto policy with liability plus collision or comprehensive coverage to cover the insured's obligation for actual damage to a covered rental vehicle rented under an agreement of 45 days or fewer in the United States, its territories or Canada, including verifiable loss of use charges for up to 30 days. The rental deductible may not exceed the highest applicable collision or comprehensive deductible, here $500, and registration location does not matter.
Under 24-A M.R.S. 2325, the Maine Automobile Insurance Plan apportions applicants who cannot get auto coverage through ordinary methods. What maximum liability limits must the plan be able to offer on a personal auto policy?
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Correct answer: D. At least 250/500/100, or a $500,000 combined single limit
Section 2325(6) says the maximum liability limits the plan offers on a personal auto policy may not be less than $250,000 per person and $500,000 per occurrence for bodily injury and $100,000 for property damage, with a $500,000 combined single limit as an alternative. Every insurer writing Maine auto liability, physical damage or medical payments coverage must participate. After a nonpayment cancellation, unearned premium must be returned within 10 working days.
While his car is being repaired, Owen drives a loaner car bearing a Maine dealer's plates and causes an accident. Owen has his own personal auto policy. Under 24-A M.R.S. 2909, which policy pays first?
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Correct answer: D. The dealer's policy, as primary up to its required limits
Section 2909 requires the dealer policy filed under 29-A M.R.S. 1612 to cover both the owner and the operator, and the owner's policy must be primary up to the section 1612 limits of $100,000/$300,000 bodily injury and $100,000 property damage. Other valid insurance available to an operator who is not the owner, such as Owen's own policy, is excess. The loaner may be a temporary substitute auto under Owen's policy, but that coverage is still excess here.