Tennessee Insurance Practice Exam

Which federal law allows insurers to obtain inspection reports on potential insured individuals?

1. Fair Credit Reporting Act

2. Health Insurance Portability and Accountability Act

3. Truth in Lending Act

4. Affordable Care Act

The correct answer is: Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) is the federal law that allows insurers to obtain inspection reports on potential insured individuals. This legislation was enacted to promote accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies. Under the FCRA, insurers can request consumer reports, which may include inspection reports, to assess the risk of insuring an individual and to make informed underwriting decisions. The FCRA ensures that consumers are informed when reports are obtained for purposes such as insurance underwriting, and it provides consumers with the right to dispute inaccuracies in their reports. This is crucial for maintaining ethical practices in the insurance industry and protecting consumer rights. The other laws listed serve different purposes: the Health Insurance Portability and Accountability Act (HIPAA) primarily protects the privacy of medical information, the Truth in Lending Act focuses on ensuring consumers are aware of the terms and costs associated with credit, and the Affordable Care Act primarily addresses healthcare coverage and access rather than specific insurer practices regarding inspection reports.