Montana Multi-Line Adjuster Practice Test: Montana law, Part 2

Correct answer: A. It is prohibited; Grace may choose any body shop she wants

Section 33-18-224 bars an insurer, including its producers and adjusters, from requiring a claimant to use a particular body repair business and from intimidating, coercing or threatening a claimant to use one. The claimant may choose any shop, and the insurer pays the reasonable and necessary cost of covered repairs, up to the market price, less any deductible. The rule protects insureds and third-party claimants alike.

Reference: MCA 33-18-224(1), (4) and (8)(b)

Correct answer: B. Within 10 days of the request

Section 33-15-1126 requires an insurer, on request of a policyholder or a producer the policyholder designates, to provide within 10 days a list of claims charged against the policy, with dates, descriptions, cause, disposition and payments. Failing to provide this list on request is also an unfair claim settlement practice under 33-18-201(15). The disclosure section does not apply to workers' compensation insurance.

Reference: MCA 33-15-1126; MCA 33-18-201(15)

Correct answer: C. Give notice of the suspected fraud to the commissioner within 60 days

Section 33-1-1205(2) requires an insurer, its officers and employees, and an independent adjuster, administrator, consultant or producer who has reason to believe insurance fraud has been or is being committed to notify the commissioner within 60 days. Reporting to the insurer instead is the route for a producer of an insurer. Under 33-1-1210, a person who reports or cooperates is immune from civil liability in the absence of malice.

Reference: MCA 33-1-1205(2); MCA 33-1-1210

Correct answer: A. Only with people who have no privileged relationship with the claimant

Section 33-19-201 generally bars pretext interviews in insurance transactions. The exception allows one when investigating a claim if specific information available for the commissioner's review gives a reasonable basis to suspect criminal activity, fraud, material misrepresentation or material nondisclosure, and only with a person or institution that has no generally or statutorily recognized privileged relationship with the claimant, such as a physician.

Reference: MCA 33-19-201(1) and (2)

Correct answer: D. $300,000

Section 33-10-105(1)(a)(ii) limits the association's obligation to $300,000 for each covered claim, except that unearned premium claims are capped at $10,000 per policy and workers' compensation claims are paid in full. The association also never pays more than the insolvent insurer owed under the policy. Because the $450,000 judgment exceeds the cap, the association pays $300,000.

Reference: MCA 33-10-105(1)(a)

Correct answer: C. An ocean marine cargo policy

Section 33-10-101(3) applies the act to all kinds of direct insurance except life, title, surety, disability, credit, mortgage guaranty and ocean marine insurance. Homeowners and commercial auto claims are covered up to the $300,000 per-claim limit, and 33-10-105 requires the association to pay workers' compensation claims in full. Life and disability claims fall under Montana's separate life and health insurance guaranty association.

Reference: MCA 33-10-101(3); MCA 33-10-105(1)(a)(ii)

Correct answer: B. $260,000

Montana's valued policy law, 33-24-102, provides that when insured improvements to real property are a total loss without criminal fault by the insured, the amount of insurance written in the policy is conclusively the true value of the property and the measure of the loss. The insurer pays the $260,000 limit, not the lower actual cash value or the higher replacement cost. The insurer may still assert fraud in obtaining the policy as a defense.

Reference: MCA 33-24-102

Correct answer: A. 45 days with specific reasons, or at least 20 days for nonpayment

Section 33-23-401 bars an insurer from canceling or refusing to renew a policy insuring a private residence the insured occupies as a home, such as fire, homeowners, theft or liability coverage, without 45 days' written notice stating the specific reasons. When the cancellation is for nonpayment of premium, the notice may not be less than 20 days. The general 10-day midterm cancellation notice in 33-15-1103 yields to this rule.

Reference: MCA 33-23-401; MCA 33-15-1103(2)

Correct answer: D. Keep the policy but exclude or limit day-care business pursuits

Section 33-15-1111 bars an insurer writing homeowners insurance in Montana from denying, canceling or refusing to renew a policy principally because an insured operates a qualifying day-care facility at the insured location. Subsection (2) still lets the insurer exclude or limit coverage for liability or property losses arising from business pursuits, including the day care. Giving notice does not make a prohibited reason acceptable.

Reference: MCA 33-15-1111(1) and (2)

Correct answer: C. The insurer may not nonrenew on the basis of that single loss

Section 33-15-1105(4) bars an insurer from refusing to renew a property and casualty policy because of a single loss during the policy period unless it previously disclosed in writing, at application or before renewal, that a single loss is among its nonrenewal criteria. Corey received no such disclosure, so the 45-day nonrenewal notice that normally applies does not cure the problem. The statute has no dollar threshold.

Reference: MCA 33-15-1105(1) and (4)

Correct answer: B. $68,000

Montana's minimums are $25,000 per person and $50,000 per accident for bodily injury and $20,000 for property damage. The first person is capped at $25,000, so bodily injury payments are $25,000 + $14,000 + $9,000 = $48,000, within the $50,000 per-accident limit. Property damage is capped at $20,000, for a total of $68,000. Paying the full $23,000 of property damage, as 25/50/25 limits would, gives $71,000.

Reference: MCA 61-6-103(1)(b); MCA 61-6-301

Correct answer: A. The insurer need not add uninsured motorist coverage to the renewal

Section 33-23-201(1) requires auto liability policies on vehicles registered and principally garaged in Montana to include uninsured motorist bodily injury coverage at the 61-6-103 limits, but subsection (2) lets the named insured reject it. Once rejected, the coverage need not be included in a renewal policy from the same insurer unless the named insured requests it in writing. An uninsured vehicle is one not insured or bonded for bodily injury liability.

Reference: MCA 33-23-201(1) and (2)

Correct answer: D. It is void, and the insurer must pay the actual replacement value

Section 33-23-202 makes void any policy provision basing total loss reimbursement on book value rather than actual replacement value, except as provided in 27-1-306. Under 27-1-306, actual replacement value is the vehicle's actual cash value immediately before the damage; book value can help determine it, and the parties may agree to use book value only after the damage occurs. Original purchase price is not the measure.

Reference: MCA 33-23-202; MCA 27-1-306

Correct answer: C. $44,000; at 55% fault she would recover nothing

Section 27-1-702 lets a plaintiff recover if her negligence was not greater than that of the defendant (or all defendants combined), with damages reduced by her own percentage. At 45% fault, Jada recovers $80,000 x 55% = $44,000. At 55% fault her negligence is greater than the defendant's 45%, so recovery is barred. Under this rule, a plaintiff found exactly 50% at fault still recovers half.

Reference: MCA 27-1-702

Correct answer: B. No; after 60 days, only nonpayment or license or registration suspension

Once a new policy has been in effect 60 days, 33-23-211 makes cancellation of a motor vehicle liability policy effective only for nonpayment of premium or suspension or revocation of the driver's license or registration of the named insured or a household member or customary operator. Two claims are not a permitted reason, so notice periods do not matter. When a permitted reason exists, 33-23-212 requires 45 days' notice, or 10 days for nonpayment.

Reference: MCA 33-23-211(1) and (2); MCA 33-23-212