16 Florida State Law (DFS) Practice Questions & Answers

Every Florida State Law (DFS) practice question from the Insurance License Practice Test, with the correct answer and a short explanation.

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1. In Florida, which state agency is responsible for licensing insurance agents and investigating consumer complaints against them?
- A.The Department of Revenue
- B.The Financial Services Commission
- C.The Department of Financial Services (DFS)✓ Answer
- D.The Office of Insurance Regulation (OIR)
The Department of Financial Services, headed by the Chief Financial Officer, licenses and regulates insurance agents and handles consumer complaints, while the OIR focuses on regulating insurers themselves (rates, forms, and solvency).
Source: Fla. Stat. Ch. 626 (DFS licensing authority); Ch. 20 (OIR)Report a problem with this question
2. Which Florida regulatory body is primarily responsible for approving insurance rates and policy forms and monitoring insurer solvency?
- A.The Department of Financial Services (DFS)
- B.The Florida Bar
- C.The Division of Consumer Services
- D.The Office of Insurance Regulation (OIR)✓ Answer
The Office of Insurance Regulation regulates the insurance companies themselves — reviewing and approving rates and policy forms and monitoring financial condition and solvency — which is a distinct function from the DFS's regulation of agents.
Source: Fla. Stat. § 20.121(3); Ch. 627 (rates/forms)Report a problem with this question
3. Under Florida law, what is an 'appointment' of an insurance agent?
- A.A written contract between an agent and a client
- B.The authorization of a licensee to represent a specific insurer✓ Answer
- C.The passing score on the state licensing exam
- D.The renewal of an agent's license every two years
A license grants the general authority to transact insurance, but an appointment is the separate authorization by which a licensee is empowered to represent a specific insurer; an agent must hold both a license and an appointment to write business for that insurer.
Source: Fla. Stat. § 626.015 (definition of appointment); § 626.112Report a problem with this question
4. In Florida, who is legally responsible for filing an agent's appointment with the Department of Financial Services?
- A.The appointing insurer or general agent✓ Answer
- B.The individual agent applicant
- C.The Office of Insurance Regulation
- D.The client purchasing the policy
Florida uses an insurer-appointment system: the appointing entity (the insurer or general agent), not the agent, files and is responsible for the appointment, because the appointment reflects the insurer's decision to authorize that agent to represent it.
Source: Fla. Stat. § 626.112; § 626.451 (appointment procedure)Report a problem with this question
5. Under Florida's replacement rules, what must a life insurance agent do when a new policy will replace an existing one?
- A.Provide the applicant with a required Notice Regarding Replacement✓ Answer
- B.Obtain written approval from the OIR before proceeding
- C.Cancel the existing policy before the new one is issued
- D.Pay the first premium on the new policy for the client
Florida's replacement regulation requires the agent to give the applicant a Notice Regarding Replacement so the consumer understands the potential disadvantages (new contestability and suicide periods, surrender charges) of dropping existing coverage for a new policy.
Source: Fla. Admin. Code 69O-151 (replacement of life insurance)Report a problem with this question
6. Which of the following is an unfair trade practice known as 'twisting' under Florida insurance law?
- A.Charging a lower premium to a preferred-risk applicant
- B.Sharing commissions with another licensed agent
- C.Using misrepresentation to induce a policyholder to replace an existing policy✓ Answer
- D.Refusing to write a policy for an unqualified applicant
Twisting is the use of misrepresentation or incomplete comparisons to persuade a policyholder to lapse or replace an existing policy; it is prohibited because it induces the consumer to act against their interest based on false information.
Source: Fla. Stat. § 626.9541(1)(l) (twisting)Report a problem with this question
7. Under Florida law, offering a customer a rebate of premium or anything of value not stated in the policy as an inducement to buy insurance is called what?
- A.Rebating✓ Answer
- B.Defamation
- C.Coercion
- D.Boycott
Rebating is offering an inducement — a premium rebate or other valuable consideration not specified in the policy — to persuade someone to buy insurance; it is prohibited because it results in unequal treatment of insureds in the same risk class.
Source: Fla. Stat. § 626.9541(1)(h) (rebating)Report a problem with this question
8. What is the purpose of the Florida Life and Health Insurance Guaranty Association?
- A.To set the premium rates all insurers must charge
- B.To license and appoint insurance agents in the state
- C.To protect policyholders when a member insurer becomes insolvent✓ Answer
- D.To invest the surplus funds of solvent insurers
The guaranty association pays covered claims and continues coverage (up to statutory limits) when a member insurer becomes insolvent, providing a safety net so policyholders are not left unprotected by an insurer's financial failure.
Source: Fla. Stat. § 631.711–631.737 (FL Life & Health Insurance Guaranty Association)Report a problem with this question
9. Under Florida law, membership in the Florida Life and Health Insurance Guaranty Association is:
- A.Limited to agents rather than insurers
- B.Determined annually by policyholder vote
- C.Voluntary and available only to large insurers
- D.A mandatory condition of holding authority to transact covered insurance in Florida✓ Answer
Membership is a mandatory condition of an insurer's authority to transact covered lines of insurance in Florida, which ensures the association is broadly funded through assessments and can honor claims of any insolvent member.
Source: Fla. Stat. § 631.715 (membership required as condition of authority)Report a problem with this question
10. In Florida, what is the fiduciary duty of an agent regarding premiums collected from clients on behalf of an insurer?
- A.The funds may be freely invested in the agent's own business
- B.The funds become the agent's personal income once collected
- C.The funds are held in trust and must be accounted for and remitted, not commingled for personal use✓ Answer
- D.The funds must be deposited with the OIR
Premiums an agent receives are trust funds belonging to the insurer or insured; the agent must account for and remit them and may not commingle or convert them, because misuse of these fiduciary funds is a serious violation of the insurance code.
Source: Fla. Stat. § 626.561 (reporting and accounting for funds)Report a problem with this question
11. Under Florida's Unfair Insurance Trade Practices Act, making false or maliciously critical statements about the financial condition of another insurer is prohibited as:
- A.Twisting
- B.Defamation✓ Answer
- C.Sliding
- D.Rebating
Defamation is making, publishing, or circulating a false or maliciously critical statement about an insurer's financial condition; it is prohibited because such statements can unfairly harm a competitor and mislead the public about an insurer's stability.
Source: Fla. Stat. § 626.9541(1)(c) (defamation)Report a problem with this question
12. In Florida, 'sliding' — an unfair practice under Chapter 626 — refers to which of the following?
- A.Splitting a large risk among several insurers
- B.Delaying a legitimate claim payment
- C.Reducing an agent's commission after a sale
- D.Charging for coverage the insured did not request or misrepresenting that it is required✓ Answer
Sliding is adding coverage or charges the applicant did not request — or falsely stating a coverage is required by law or included at no charge — because it deceives the consumer into paying for something they did not knowingly agree to.
Source: Fla. Stat. § 626.9541(1)(z) (sliding)Report a problem with this question
13. Under Florida law, when an insurer cancels certain personal lines policies mid-term for reasons other than nonpayment, it must generally provide the insured with what?
- A.Advance written notice of cancellation and the reason for it✓ Answer
- B.A new policy from a different insurer
- C.An immediate full refund of all commissions paid
- D.The agent's home address and phone number
Florida requires insurers to give advance written notice stating the reason for a mid-term cancellation of covered personal lines policies, so the insured has time to obtain replacement coverage and understand why the policy is ending.
Source: Fla. Stat. § 627.4133 (notice of cancellation/nonrenewal)Report a problem with this question
14. In Florida, an agent knowingly makes misleading comparisons to persuade a client to surrender an existing life policy and buy a new one from a DIFFERENT insurer. Under the Florida Insurance Code, this unfair trade practice is called:
- A.Commingling
- B.Rebating
- C.Twisting✓ Answer
- D.Churning
Twisting is defined in Fla. Stat. 626.9541 as knowingly using misleading representations or incomplete/fraudulent comparisons to induce a person to lapse, surrender, or convert a policy in order to take out a policy with ANOTHER insurer. The key distinguishing feature is the switch to a different insurer; when policy values are misused to replace a policy with the SAME insurer, the practice is instead called churning.
Source: Fla. Stat. 626.9541(1) (Unfair methods of competition — definition of twisting)Report a problem with this question
15. Under Florida law, what is the maximum duration of a temporary insurance agent license issued to allow continuation of an agency's business (for example, when the agent has died or become disabled)?
- A.1 year
- B.30 days
- C.2 years
- D.6 months✓ Answer
Fla. Stat. 626.175 authorizes a temporary license and appointment for a period of 6 months. It is intended to bridge situations such as the death, disability, or absence of the licensed agent, and it terminates earlier if the temporary licensee passes the licensing examination or the underlying circumstance is resolved.
Source: Fla. Stat. 626.175 (Temporary licensing)Report a problem with this question
16. A Florida agent tells an auto insurance applicant that Florida law requires them to also purchase a separate motor club membership, when in fact no such requirement exists, and adds the charge to the policy. This prohibited practice is specifically known in Florida as:
- A.Defamation
- B.Twisting
- C.Boycott
- D.Sliding✓ Answer
Sliding is defined in Fla. Stat. 626.9541 as, among other things, representing that a specific ancillary coverage or product is required by law when it is not, or charging a customer for coverage without the customer's informed consent. Because the agent falsely claimed the motor club membership was legally mandated and added the charge, the conduct fits sliding rather than twisting, which concerns inducing policy replacement.
Source: Fla. Stat. 626.9541(1)(z) (Sliding)Report a problem with this question

Practice questions cover general, uniform insurance concepts. State-specific laws and limits vary — study your state's official exam outline before testing. Insurance info (NAIC) →

1. In Florida, which state agency is responsible for licensing insurance agents and investigating consumer complaints against them?

2. Which Florida regulatory body is primarily responsible for approving insurance rates and policy forms and monitoring insurer solvency?

3. Under Florida law, what is an 'appointment' of an insurance agent?

4. In Florida, who is legally responsible for filing an agent's appointment with the Department of Financial Services?

5. Under Florida's replacement rules, what must a life insurance agent do when a new policy will replace an existing one?

6. Which of the following is an unfair trade practice known as 'twisting' under Florida insurance law?

7. Under Florida law, offering a customer a rebate of premium or anything of value not stated in the policy as an inducement to buy insurance is called what?

8. What is the purpose of the Florida Life and Health Insurance Guaranty Association?

9. Under Florida law, membership in the Florida Life and Health Insurance Guaranty Association is:

10. In Florida, what is the fiduciary duty of an agent regarding premiums collected from clients on behalf of an insurer?

11. Under Florida's Unfair Insurance Trade Practices Act, making false or maliciously critical statements about the financial condition of another insurer is prohibited as:

12. In Florida, 'sliding' — an unfair practice under Chapter 626 — refers to which of the following?

13. Under Florida law, when an insurer cancels certain personal lines policies mid-term for reasons other than nonpayment, it must generally provide the insured with what?

14. In Florida, an agent knowingly makes misleading comparisons to persuade a client to surrender an existing life policy and buy a new one from a DIFFERENT insurer. Under the Florida Insurance Code, this unfair trade practice is called:

15. Under Florida law, what is the maximum duration of a temporary insurance agent license issued to allow continuation of an agency's business (for example, when the agent has died or become disabled)?

16. A Florida agent tells an auto insurance applicant that Florida law requires them to also purchase a separate motor club membership, when in fact no such requirement exists, and adds the charge to the policy. This prohibited practice is specifically known in Florida as: