Texas Department of Insurancewww.tdi.state.tx.us - Consumer Helpline 1-800-252-3439
APPLICATION and KNOWLEDGE LEVEL QUESTIONSSince January 7, 2003, all new self study and classroom equivalent courses must use final exams and interactive inquiries that contain 70% application (as opposed to knowledge level) questions. All CE courses must be compliant by by the later of January 7, 2004 or the expiration of a current certification period that began before January 7, 2003 Knowledge level questions involve the recall of specific facts, rules, dates, laws, and the like. These are items that can be memorized. An example of a knowledge level question is: What part of the PAP will cover damage caused by running into an animal? a. Collision The student remembers that “contact with a bird or animal” is listed under other than collision. Application level questions call for the application of learned material in a new situation and usually deal with the application of rules, policies, methods, computations, laws, and so forth. Here are some examples that are based on actual test questions: Jon and his passenger, Jim, are injured when Jon hits some ice on the road and skids into a tree. Jon has a PAP with basic Texas limits, PIP, and a $500 deductible for damage to his automobile. Jon's injuries cost $2500 to repair. Jim's injuries cost $12,000. The car repairs cost $10,500. The arborist who trims and dresses the damage to the tree charges $3000. How much is the insurance company going to pay? a. $27,000 The student remembers what coverages apply and calculates the amount. Rhonda, a life insurance agent, re-reads her contract with the insurer. She realizes that it does not mention several of the activities, including meeting with prospects at their home, that she and her fellow agents perform. What type of authority do they actually have for these practices? a. Judicial The student takes the facts about authority and applies them to a situation Rhonda's agency manager “looks the other way” when some of her fellow agents use an unethical and possibly illegal practice to increase their sales during a sales contest. By ignoring what he knows is happening, he has granted the agents ___________ authority to continue. a. Judicial The student again takes the facts about authority and applies them to a situation. An agent's authority to sell life insurance for a particular insurer is an example of ___________authority a. Judicial authority And again, the student takes the facts about authority and applies them to a situation. An alternate way of presenting these questions would be to combine the facts of the authority examples into one paragraph and then ask the questions. A casualty insurer makes an offer to settle a law suit against their insured for $420,000. The offer is rejected and the jury determined that their insured's liability was $600,000. The policy limits are $500,000. How much must the insurer pay to the plaintiff on behalf of the insured? a. $420,000
Juan is a third party claimant. His car was ruled a total loss in an accident caused by the first party's negligence. Juan dearly loves his car, and wants the insurer to pay $12,000. He thinks $11,000 would repair it, and he wants the extra $1000 for his time and trouble in getting it repaired. The insurer declares it a total loss at $8,000, based on what similar cars are selling for. What fundamental principle of insurance is involved? a. Fairness Doctrine The student takes knowledge of the policy to understand what happened, and applies knowledge of insurance principles to the situation. Some providers have found it may be easier to write a series of questions including some application level, by developing a short case study and asking the student to apply learned facts. A scenario or situation question is often application level, but just inserting a couple of names in a knowledge level question does not automatically make it application level. If the student has to recall facts about a policy, for instance, and apply those facts to a situation in order to answer the question, it probably is. For more information contact: License@tdi.state.tx.us Last updated: 09/21/2006 |
