State RegulationsVA specificDifficulty 1/5
A Virginia licensee violates an insurance provision without knowing of the violation and without any reason to know of it. What is the maximum civil penalty per act?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Va. Code § 38.2-218 imposes a civil penalty of up to $1,000 per act where the violator did not know, and had no reasonable basis to know, of the violation. This is the baseline tier of the penalty ladder; the $5,000 tier is reserved for knowing or negligently blind violations, and both tiers feed into a $10,000 aggregate cap per act. The two-tier design lets the Commission calibrate discipline to culpability rather than punishing honest mistakes like deliberate misconduct.
Why the other options are wrong
- B) $5,000 is the knowing-or-should-have-known tier under Va. Code § 38.2-218; it does not apply to a genuinely unknowing violation.
- C) $10,000 is the aggregate cap per act, not the per-act penalty for an unknowing violation.
- D) $2,000 is not a civil penalty figure in Virginia's enforcement framework.
Memory hook
Innocent mistake, $1,000; knowing breach, $5,000 — knowledge sets the price.