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Massachusetts unfair insurance practices practice questions

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The all-lines Massachusetts section on both producer exams includes "unfair or deceptive acts or practices" under chapter 176D, section 3, and rebating under chapter 175, sections 182 to 184. [1] This page explains what those laws define as unfair, then gives 12 practice questions. Each answer names the section it comes from.

What chapter 176D, section 3 lists

Section 3 defines these as unfair methods of competition and unfair or deceptive acts or practices in the business of insurance: [2]

  1. Misrepresentation and false advertising of policies, such as misrepresenting benefits or terms, misrepresenting dividends, misrepresenting to get someone to lapse, exchange or surrender a policy, or calling a policy shares of stock.
  2. False information and advertising generally: untrue, deceptive or misleading statements about the business of insurance.
  3. Defamation: false statements, or ones maliciously critical of or derogatory to someone's financial condition, meant to injure them.
  4. Boycott, coercion and intimidation.
  5. False statements and entries about financial condition or in books and reports.
  6. Stock operations and advisory board contracts promising returns as an inducement to insurance.
  7. Unfair discrimination between people of the same class and equal expectation of life (life) or essentially the same hazard (accident and health).
  8. Rebates.
  9. Unfair claim settlement practices, such as refusing to pay claims without a reasonable investigation.
  10. Failure to keep complaint records.
  11. Misrepresentation in insurance applications to get a fee, commission or other benefit.

Practice questions

1. A producer tells a client their old policy is "worthless" to get them to surrender it and buy a new one. The statement is false. Which practice is this?
A. Defamation
B. Misrepresentation for the purpose of inducing the surrender of a policy
C. Boycott
D. Unfair claim settlement

Answer: B. Misrepresenting to induce the lapse, forfeiture, exchange, conversion or surrender of a policy is listed in 176D:3(1). [2]

2. A producer spreads a false story that a competing insurer is about to go broke, to win its customers. What is this called?
Answer: Defamation. It covers false statements, or statements maliciously critical of or derogatory to a person's financial condition, made to injure that person. (176D:3(3)) [2]

3. A producer describes a life policy as "shares of stock in the company." Is that allowed?
Answer: No. Misrepresenting a policy as shares of stock is an unfair practice. (176D:3(1)) [2]

4. Two applicants are in the same class with equal expectation of life. The insurer charges one a higher life rate for no reason tied to risk. What is this?
Answer: Unfair discrimination. (176D:3(7)) [2]

5. A producer offers to give back part of the commission to a client who buys a policy. Which laws does this run into?
Answer: Rebating rules. Section 182 of chapter 175 bars an agent or broker from paying or allowing any valuable consideration or inducement not specified in the policy, and 176D:3(8) lists rebates as an unfair practice. [3][2]

6. Can the client who takes that rebate also break the law?
Answer: Yes. Section 183 says no person shall receive or accept such a rebate or inducement. [4]

7. An insurer refuses to pay claims without doing a reasonable investigation. What is this?
Answer: An unfair claim settlement practice. (176D:3(9)) [2]

8. How long must agents, brokers and adjusters keep written communications that express a grievance?
Answer: Two years from receipt, with a record of how each was handled. (176D:3(10)) [2]

9. When the commissioner charges someone with an unfair practice, how much notice of the hearing is required?
Answer: At least twenty-one days after the statement of charges and notice are served. (176D:6) [5]

10. After a hearing finds a violation, what fine can be imposed?
Answer: Not more than one thousand dollars for each act or practice. The commissioner can also order the person to cease and desist and can suspend a license, or revoke it for repeated violations. (176D:7) [6]

11. Someone violates a final cease and desist order. What is the penalty?
Answer: Up to ten thousand dollars for each violation, recoverable in a civil action, plus possible license suspension or revocation. (176D:10) [7]

12. A court finds a claimant was harmed by a violation the commissioner has determined. What extra amount can the court award?
Answer: Punitive damages of up to twenty-five percent of the claim. (176D:7) [6]

Two related rules

Study tips

More Massachusetts law questions are in the free Massachusetts insurance law practice test.

Prep Retention is independent and is not affiliated with Pearson VUE or the state.

Sources

Laws and exam documents quoted as of October 2026.

  1. Pearson VUE, Massachusetts content outlines 122301 (effective July 22, 2026): https://www.pearsonvue.com/content/dam/VUE/vue/en/documents/publications/122301.pdf
  2. M.G.L. c. 176D, s. 3: https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXXII/Chapter176D/Section3
  3. M.G.L. c. 175, s. 182: https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXXII/Chapter175/Section182
  4. M.G.L. c. 175, s. 183: https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXXII/Chapter175/Section183
  5. M.G.L. c. 176D, s. 6: https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXXII/Chapter176D/Section6
  6. M.G.L. c. 176D, s. 7: https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXXII/Chapter176D/Section7
  7. M.G.L. c. 176D, s. 10: https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXXII/Chapter176D/Section10
  8. M.G.L. c. 175, s. 181: https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXXII/Chapter175/Section181
  9. M.G.L. c. 175, s. 186: https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXXII/Chapter175/Section186

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