State RegulationsNJ specificDifficulty 1/5
Under New Jersey's insurance information privacy rules, when may an insurer collect personal information about an applicant?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
New Jersey's privacy rules for the insurance business, found in the New Jersey Administrative Code at N.J.A.C. 11:2-22 and administered by the New Jersey Department of Banking and Insurance, limit the collection of personal information to what is relevant to the insurance transaction — underwriting the risk, processing the claim, or carrying out the policy relationship. An insurer may not go fishing through an applicant's personal life simply out of curiosity; every item gathered must have a legitimate insurance purpose connected to the coverage being sought.
Why the other options are wrong
- A) Open-ended collection from any source is precisely what the relevance limitation forbids.
- C) Collection happens at application and throughout the transaction, not only after a claim arises.
- D) There is no fee mechanism that authorizes collection; the authorization is the insurance purpose itself.
Memory hook
Collect only what the transaction needs — insurance purpose is the gatekeeper.