20 Florida State Law (DFS) Practice Questions & Answers

1. 1. An applicant is preparing to become a licensed general lines agent in Florida. Which state entity will issue her license and later investigate consumer complaints about her conduct as an agent?

   • A.The Office of Insurance Regulation (OIR)
   • B.The Department of Financial Services (DFS)✓ Answer
   • C.The Office of Financial Regulation (OFR)
   • D.The Financial Services Commission

   Florida splits regulation by WHO is being regulated: the DFS, headed by the elected Chief Financial Officer, licenses and appoints agents, adjusters and agencies and handles consumer services and investigations, while the OIR regulates INSURERS (certificates of authority, rates, forms, solvency). Because an agent's license and an agent's conduct are people-side matters, they belong to DFS, not OIR; the OFR regulates banks, finance companies and securities, and is not involved in insurance licensing at all.

   Source: Fla. Stat. ss. 20.121(2), 626.112Report a problem with this question

2. 2. Which statement correctly describes the Financial Services Commission in Florida?

   • A.It is a division within the Department of Financial Services headed solely by the Chief Financial Officer
   • B.It is composed of the Governor and Cabinet and serves as agency head for the Office of Insurance Regulation and the Office of Financial Regulation✓ Answer
   • C.It is appointed by the Insurance Commissioner to hear appeals of agent licensing decisions
   • D.It regulates only banks and the securities industry and has no insurance responsibilities

   The Financial Services Commission is not a subordinate unit of DFS; it is the Governor and Cabinet (the Attorney General, the Chief Financial Officer and the Commissioner of Agriculture) acting collectively as a single agency head. Two separate offices sit under it — the OIR for insurers and the OFR for banks, finance companies and securities — which is why insurer solvency and rate decisions trace up to the Commission rather than to the CFO alone.

   Source: Fla. Stat. s. 20.121(3)Report a problem with this question

3. 3. An insurer decides not to renew a personal lines residential (homeowners) property policy for underwriting reasons. How much advance written notice of nonrenewal must the insurer give the first-named insured?

   • A.120 days✓ Answer
   • B.45 days
   • C.60 days
   • D.10 days

   Residential property is given heightened protection in Florida because replacement coverage can be hard to find, so the notice period for nonrenewal, cancellation or termination of personal lines residential and commercial residential policies is 120 days. The commonly confused 45-day figure applies to OTHER property and casualty policies, and the 10-day figure applies only when the reason is nonpayment of premium — candidates lose points by applying the shorter periods to a homeowners nonrenewal.

   Source: Fla. Stat. s. 627.4133(2)(b)Report a problem with this question

4. 4. A candidate has passed the state examination and has received her agent license from the Department, but no insurer has yet appointed her. May she begin soliciting applications for insurance?

   • A.No, a person must be both licensed by the Department and appointed by an appropriate appointing entity before transacting insurance✓ Answer
   • B.Yes, the license by itself grants full authority to transact insurance
   • C.Yes, provided she works under the supervision of the agency's agent in charge
   • D.Yes, for up to 90 days while an appointment is pending

   Florida uses a two-key system: the LICENSE is issued by the Department and proves the individual is qualified, while the APPOINTMENT is the authority granted by an insurer (or by an agency for an unaffiliated agent) to represent it. Section 626.112 requires both simultaneously, so holding a license with no appointment leaves the person legally unable to transact — and transacting anyway constitutes unlicensed activity, which is a felony offense.

   Source: Fla. Stat. s. 626.112(1)(a)Report a problem with this question

5. 5. Which statement correctly describes the renewal of an individual insurance agent's appointment in Florida?

   • A.The appointing entity must file the renewal and pay the fee every 24 months, based on the appointee's birth month✓ Answer
   • B.The Department renews all appointments automatically every 48 months at no cost
   • C.The agent must file the renewal every 24 months based on the calendar year in which the appointment was first issued
   • D.The agent must file the renewal and pay the fee every 12 months on the anniversary of the license

   Because the appointment belongs to the insurer's relationship with the agent, the burden of renewing it falls on the appointing entity rather than the agent: the entity files the required lists and statements and pays the renewal fees and taxes on a 24-month cycle keyed to the individual appointee's birth month (entities instead use the month the original appointment was issued). Reinforcing that allocation, any late filing fee must be paid by the appointing entity and may not be charged back to the appointee.

   Source: Fla. Stat. s. 626.381Report a problem with this question

6. 6. A licensed Florida general lines insurance agency opens a second branch location. What does Florida law require with respect to that branch location?

   • A.A service representative employed by the insurer must be designated for the location
   • B.A licensed customer representative may be designated as the person in charge of the location
   • C.No separate designation is required as long as the agency's home office has a licensed agent
   • D.A licensed and appointed agent must be designated as the agent in charge of that location✓ Answer

   Every insurance agency location, including each branch, must have a licensed and appointed AGENT designated as the agent in charge, because the statute makes that agent responsible for supervising the location and ensuring unlicensed staff do not engage in activities requiring licensure. A customer representative cannot fill the role since that license only permits assisting an agent from the agent's office, and the older 'primary agent' designation candidates often recall was repealed and replaced by the agent-in-charge requirement.

   Source: Fla. Stat. s. 626.0428(4)Report a problem with this question

7. 7. An individual is employed by an insurer to assist general lines agents in negotiating and effecting insurance contracts, and may do so only when accompanied by a licensed general lines agent. This individual is best described as a:

   • A.All-lines adjuster
   • B.Managing general agent
   • C.Customer representative
   • D.Service representative✓ Answer

   The distinguishing fact is WHO employs the person and the accompaniment requirement: a service representative is employed by an insurer or managing general agent to help general lines agents negotiate and effect contracts, and must be accompanied by a licensed general lines agent. A customer representative is different — that person is appointed by a general lines agent or agency and assists it in transacting business from the agent's or agency's own office.

   Source: Fla. Stat. s. 626.015Report a problem with this question

8. 8. A Florida-licensed agent has a final order entered against him by the insurance regulator of another state. What is his obligation to the Florida Department of Financial Services?

   • A.He must report the action within 60 days after the final disposition
   • B.He need only disclose the action on his next continuing education compliance filing
   • C.He has no duty to report because the action was taken by another state's regulator
   • D.He must report the action to the Department within 30 days after the final disposition and submit a copy of the order✓ Answer

   The reporting duty exists so the Department can evaluate a licensee's continuing fitness and trustworthiness, so it deliberately reaches administrative actions taken by governmental or regulatory agencies in Florida OR any other state. The licensee must self-report within 30 days after final disposition and furnish the order or consent order; failing to report is itself a separate ground for disciplinary action.

   Source: Fla. Stat. s. 626.536Report a problem with this question

9. 9. Which statement correctly describes Florida's continuing education update course requirement for insurance licensees?

   • A.Continuing education hours earned in excess of the requirement are forfeited and may never be carried forward
   • B.The update course may be skipped in any cycle in which the licensee completes all of the required elective hours
   • C.Only life and health agents are required to take a law and ethics update course
   • D.Each licensee, except a title insurance agent, must complete an update course covering insurance law and ethics that is specific to a license he or she holds✓ Answer

   The update course is the non-waivable core of Florida's CE scheme: the statute requires nearly every licensee (title insurance agents being the carve-out) to take a law-and-ethics update course in each two-year compliance period, and it must correspond to a license actually held so the content is relevant to what the licensee sells. Elective hours cannot substitute for it, and the statute expressly allows excess hours to be carried forward to the next compliance period.

   Source: Fla. Stat. s. 626.2815(3)Report a problem with this question

10. 10. An agent persuades a client to use the accumulated cash value of an existing life insurance policy to purchase an additional policy from the SAME insurer, generating a new commission, without any objectively reasonable basis for believing the client will actually benefit. This practice is known as:

    • A.Sliding
    • B.Rebating
    • C.Churning✓ Answer
    • D.Twisting

    The decisive fact is that the replacement occurs with the SAME insurer using the existing policy's own values — that is the statutory definition of churning. Twisting is the parallel offense involving misleading representations or fraudulent comparisons that induce a client to lapse or surrender a policy and move to a DIFFERENT insurer, which is why these two are so frequently swapped on the exam; the same-insurer versus different-insurer distinction is the only reliable way to tell them apart.

    Source: Fla. Stat. s. 626.9541(1)(aa) (churning); s. 626.9541(1)(l) (twisting)Report a problem with this question

11. 11. An agent tells an applicant for a personal auto policy that towing and rental reimbursement coverage is required by Florida law, and adds it to the policy along with the additional premium. This conduct is an example of:

    • A.Sliding✓ Answer
    • B.Coercion
    • C.Defamation
    • D.Twisting

    Sliding is defined to include representing that a specific ancillary coverage is required by law when it is not, charging for coverage the applicant did not request, or adding coverage without the owner's informed consent — all three describe what happened here. It is distinct from coercion, which involves using force, threats or economic pressure (such as conditioning a loan on buying insurance from a particular source) rather than a false statement about legal requirements.

    Source: Fla. Stat. s. 626.9541(1)(z)Report a problem with this question

12. 12. Which statement is true about a Florida agent rebating a portion of her commission to an insured?

    • A.Rebating is permitted only on commercial lines risks and never on personal lines
    • B.Rebating is permitted whenever the insured requests it in writing before the policy is issued
    • C.Rebating is permitted only if it is made under a rebate schedule filed with the insurer and is available to all insureds in the same actuarial class on a uniform basis✓ Answer
    • D.Rebating is prohibited in all circumstances in Florida

    Florida is one of the few states that permits rebating, which is why candidates trained on national material wrongly answer 'always prohibited.' The rationale for the conditions is anti-discrimination: the rebate must follow a schedule filed with the insurer and be applied uniformly so that every insured in the same actuarial class buying the same policy receives the same percentage, and it may never be varied on the basis of age, sex, race, place of residence, nationality, ethnic origin, marital status or occupation.

    Source: Fla. Stat. s. 626.572Report a problem with this question

13. 13. An agent collects premium payments from clients and deposits them into her personal business operating account, using the money to pay office expenses before remitting the premiums to the insurer. Under Florida law, this is:

    • A.Improper, because premiums received by a licensee are trust funds held in a fiduciary capacity that must be accounted for and paid over to the person entitled to them✓ Answer
    • B.Acceptable, provided the agent operates through a licensed insurance agency
    • C.Acceptable, because the agent has already earned her commission on those policies
    • D.Acceptable, provided the premiums are remitted to the insurer within 90 days

    All premiums and return premiums received under the license belong to the insurer, the insured or another party — never to the agent — and the statute expressly classifies them as trust funds received in a fiduciary capacity that must be accounted for and paid over in the regular course of business. Commingling them with operating funds and spending them breaches that fiduciary duty regardless of whether the agent later remits, and misappropriation of fiduciary funds carries criminal penalties graded by amount.

    Source: Fla. Stat. s. 626.561(1)Report a problem with this question

14. 14. A Florida consumer purchases a fixed annuity contract. What is the minimum unconditional refund ('free look') period the contract must provide?

    • A.10 days
    • B.21 days✓ Answer
    • C.14 days
    • D.30 days

    Florida requires an unconditional refund period of 21 days for fixed annuity contracts and likewise 21 days for variable or market value annuity contracts, and the insurer must attach a cover page disclosing that period along with contact information for the company, the selling agent and the Department's toll-free helpline. Note that the 21 days now applies to every annuity purchaser regardless of age — older study material describing a 14-day annuity free look extended to 21 days only for buyers 65 or older is out of date, and the 14-day figure now relates to life insurance policies and the buyer's guide/policy summary delivery rule.

    Source: Fla. Stat. s. 626.99(4)(b)Report a problem with this question

15. 15. A Florida homeowner's property coverage was placed with an eligible surplus lines (unauthorized) insurer, which later becomes insolvent with an unpaid claim outstanding. What is the role of the Florida Insurance Guaranty Association (FIGA)?

    • A.FIGA will pay the covered claim just as it would for an admitted insurer
    • B.The Florida Life and Health Insurance Guaranty Association will pay the claim instead
    • C.FIGA provides no protection, because surplus lines coverage is expressly excluded from the FIGA account✓ Answer
    • D.FIGA will pay one half of the covered claim and the insured must absorb the remainder

    FIGA is funded by assessments on ADMITTED property and casualty insurers, so its statutory scope is limited to the insurers that pay into it; surplus lines is on the express exclusion list, along with life, annuity, health and disability, title, surety, ocean marine and workers' compensation. This is precisely why the surplus lines disclosure given to the insured must warn that the policy is not protected by the guaranty association, and why an agent may not advertise guaranty association protection as an inducement to purchase.

    Source: Fla. Stat. s. 631.52(2)Report a problem with this question

16. 16. An applicant seeks a new personal residential policy from Citizens Property Insurance Corporation. An authorized (admitted) insurer has offered her comparable coverage at a premium 15 percent higher than the comparable Citizens premium. What is the result?

    • A.She is ineligible for Citizens, because the authorized insurer's offer is not more than 20 percent greater than the comparable Citizens premium✓ Answer
    • B.She is eligible for Citizens as long as the agent documents a diligent effort in the private market
    • C.She is eligible for Citizens, but only through the Coastal Account
    • D.She is eligible for Citizens, because the private offer costs more than the Citizens premium

    Citizens is a residual market of last resort, not a price-competitive option, so the statute makes an applicant or renewal INELIGIBLE whenever an authorized insurer offers comparable coverage at a premium that is not more than 20 percent greater than the comparable Citizens premium. A 15 percent differential falls inside that band, so the private offer disqualifies her; only if the admitted offer exceeded the Citizens premium by more than 20 percent could she remain eligible.

    Source: Fla. Stat. s. 627.351(6)(c)5.a.Report a problem with this question

17. 17. Which statement best describes the Florida Hurricane Catastrophe Fund (FHCF)?

    • A.It is the state-run insurer of last resort that issues property policies to homeowners who cannot obtain coverage privately
    • B.It is a tax-exempt state trust fund that reimburses participating insurers for a portion of their catastrophic hurricane losses, and participation is mandatory as a condition of writing covered residential policies✓ Answer
    • C.It is a federal disaster program administered by FEMA that pays hurricane claims directly to Florida homeowners
    • D.It is a guaranty association that pays the outstanding claims of property insurers that have become insolvent

    The FHCF operates one level above the consumer: it is essentially state-provided reinsurance, taking a reimbursement premium from insurers and paying them back for a share of their hurricane losses so that catastrophe capacity stays affordable and the residential market remains viable. It therefore never pays a policyholder directly; the insurer-of-last-resort role belongs to Citizens and the insolvency role belongs to FIGA, which is why those two are the strongest distractors.

    Source: Fla. Stat. s. 215.555(4)Report a problem with this question

18. 18. Which statement correctly describes sinkhole-related coverage in Florida property insurance policies?

    • A.Sinkhole loss coverage is mandatory in every property policy, while catastrophic ground cover collapse coverage is optional
    • B.Catastrophic ground cover collapse coverage is mandatory in every property policy, while sinkhole loss coverage need only be made available for an appropriate additional premium✓ Answer
    • C.Both catastrophic ground cover collapse coverage and sinkhole loss coverage are mandatory in every property policy
    • D.Both coverages are optional and may be purchased only by endorsement

    Florida requires every property insurance policy to include catastrophic ground cover collapse coverage, but that peril is narrowly defined and requires ALL FOUR elements: abrupt collapse of the ground cover, a depression clearly visible to the naked eye, structural damage to the building including the foundation, and the structure being condemned and ordered vacated by the authorized governmental agency. Ordinary settling or cracking therefore is not covered, and broader sinkhole loss coverage is a separate optional coverage the insurer must merely make available for an additional premium.

    Source: Fla. Stat. s. 627.706(1), (2)(a)Report a problem with this question

19. 19. A Florida homeowner insured by the same insurer suffers covered damage from one hurricane in August and from a second hurricane in October of the same year. How does the hurricane deductible apply?

    • A.The hurricane deductible applies once on a calendar-year basis; for the second hurricane the insurer may apply the greater of the remaining hurricane deductible or the all-other-perils deductible✓ Answer
    • B.The deductible is waived entirely for any second and subsequent hurricane loss
    • C.The full hurricane deductible applies separately to each hurricane loss
    • D.The hurricane deductible applies once per hurricane season, which runs from June 1 through November 30

    The hurricane deductible is annual rather than per-event, so it applies on a CALENDAR-YEAR basis to all covered hurricane losses from the same insurer or insurer group during that year — a rule designed to keep a policyholder from absorbing a large percentage deductible repeatedly in a heavy storm year. Once it has been satisfied or partially eroded, the insurer may apply to a subsequent hurricane only the greater of the remaining hurricane deductible or the all-other-perils deductible; note the trap that the period is the calendar year, not the June-through-November hurricane season.

    Source: Fla. Stat. s. 627.701(3)(a)Report a problem with this question

20. 20. A Florida driver is injured in a motor vehicle accident but does not seek any medical treatment until 20 days after the accident. What is the effect on her Personal Injury Protection (PIP) medical benefits?

    • A.PIP medical benefits are not payable, because initial services and care must be lawfully received within 14 days after the motor vehicle accident✓ Answer
    • B.PIP medical benefits are payable in full, because Florida imposes no time limit on when treatment must begin
    • C.PIP medical benefits are payable only if treatment begins within 60 days after the accident, so she still qualifies
    • D.PIP medical benefits are payable only if treatment begins within 30 days after the accident, so she still qualifies

    Florida's no-fault statute conditions PIP medical benefits on the injured person receiving initial services and care within 14 days after the accident, a requirement added to curb staged accidents and delayed, unrelated treatment claims. Missing that window forfeits medical benefits entirely; even when it is met, reimbursement is capped at the lower non-emergency limit unless a physician, osteopathic physician, dentist, physician assistant or advanced practice registered nurse determines the injured person had an emergency medical condition.

    Source: Fla. Stat. s. 627.736(1)(a)Report a problem with this question

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