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GEORGIA PROPERTY AND CASUALTY EXAM
LATEST EXAMS 2024 | 2 DIFFERENT EXAMS |
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GEORGIA PROPERTY & CASUALTY EXAM 1
Which type of agent authority is not intended by the insurer but appears to be granted by the insurer based on the producer's actions or statements? A.) express authority B.) apparent authority C.) implied authority D.) illegal authority ------CORRECT ANSWER---------------B.) apparent authority Apparent authority is authority that the insurer does not grant or even intend for the producer to have, but nonetheless appears to be granted by the insurer based on the producer's statements and the actions (or inactions) of the insurer. Why might Trent Manufacturing Co., which makes household furniture, need equipment breakdown insurance to cover losses to its mechanical and electrical equipment? A.) because such loss is excluded by commercial property insurance B.) to fill gaps in coverage from commercial property insurance C.) to provide coverage for the deductible amount of its commercial property insurance policy D.) to cover damage by lightning, which is often excluded in commercial property insurance ------CORRECT ANSWER---------------A.) because such loss is excluded by commercial property insurance
Mrs. Grant's home suffered a fire. The contractor tells Mrs. Grant it will cost $10,000 to repair the damage and restore her home so it's exactly the same as it was before the fire. What valuation basis did the contractor explain to Mrs. Grant? A.) replacement value B.) market value C.) actual cash value D.) agreed value ------CORRECT ANSWER---------------A.) replacement value Loss valuation based on replacement value calculates the cost to repair or replace property with property of like kind and quality. Bonnie works for an insurance company where she assesses insurance policy applications to determine whether they should be accepted or rejected, a process known as: A.) adverse selection B.) risk transfer C.) risk management D.) underwriting ------CORRECT ANSWER---------------D.) underwriting When an insurance company receives an application for coverage, it begins a process known as underwriting. Underwriting determines if the particular risk that would be insured should be accepted or rejected. When meeting with a prospect to discuss life insurance, Tyler makes disparaging comments about the financial stability and reputation of a competitor to dissuade the prospect from purchasing its policies. Which unfair trade practice has Agent Tyler committed? A.) Defamation
Express authority is explicitly stated (or expressed) by the principal in the insurer's agency agreement. With the commercial property policy, which causes of loss form(s), if any, would cover the insured's exposure to weight of ice and snow? A.) both the basic and broad causes of loss forms B.) no causes of loss form C.) only the broad form causes of loss form D.) only the basic causes of loss form ------CORRECT ANSWER--------------
- C.) only the broad form causes of loss form Losses caused by the weight of ice or snow and collapse are covered under the causes of loss broad form, but not the basic form. Kevin came home from work to find that his house had been vandalized. Under what additional coverage did his homeowners insurance company reimburse him because he incurred expenses to board up the broken windows? A.) Debris Removal B.) Property Removal C.) Fire Department Service Charge D.) Reasonable Repairs ------CORRECT ANSWER---------------D.) Reasonable Repairs Melissa drives to her office every morning. She often gives a ride to Meghan, a co-worker who lives nearby. Meghan buys Melissa a cup of coffee every morning and often pays for gas. Which of the following is correct? A.) The insurer may cancel Melissa's policy because she is car-pooling.
B.) The insurer may cancel Melissa's policy because she is receiving payment for transporting a passenger. C.) The insurer cannot cancel Melissa's policy because she is using her car for a legitimate business purpose. D.) The insurer cannot cancel Melissa's policy because she is not carrying a passenger for payment. ------CORRECT ANSWER---------------D.) The insurer cannot cancel Melissa's policy because she is not carrying a passenger for payment. With respect to workers compensation insurance, what term is used to describe a worker's reduction in his or her ability to perform work, either temporarily or permanently? A.) rehabilitation B.) disability C.) impairment D.) injury ------CORRECT ANSWER---------------C.) impairment Shoveling snow and ice off an icy sidewalk is an example of what type of risk management technique? A.) reduction B.) prevention C.) transfer D.) avoidance ------CORRECT ANSWER---------------B.) prevention Risk prevention is a form of risk control that reduces the likelihood that a loss will occur. With a business auto policy (BAP), what symbol needs to appear on the declarations page to provide coverage for the rental cars used by the business? A.) 1 -- Any Auto
Which of the following accidents occurred outside the policy territory on the personal auto policy? A.) a collision in Nova Scotia, Canada B.) a theft in New York City C.) vandalism in Puerto Rico D.) a hit-and-run in Mexico ------CORRECT ANSWER---------------D.) a hit- and-run in Mexico Personal auto policies cover the USA, their territories, and Canada. Losses from which of the following incidents would be excluded under standard property insurance? A.) Mice chew through electrical wires causing the insulation and rafters in an attic to catch fire. B.) A moderate earthquake collapses gas pipes and causes a fire that damages the insured's home. C.) A furnace malfunctions and shuts off the heat. D.) A furnace explodes and causes structural damage to a building. ------ CORRECT ANSWER---------------C.) A furnace malfunctions and shuts off the heat. Mechanical devices, like a furnace, are expected to wear out and break down. Insurance is better suited to unexpected losses. Some objects, like air conditioning systems, can be separately insured with an equipment breakdown policy. Julia and her family own a large manufacturing business. She convinced her family to set aside funds for a self-insurance program instead of buying a commercial insurance policy. This would be considered what form of risk management? A.) risk retention B.) risk control C.) risk transfer
D.) risk reduction ------CORRECT ANSWER---------------A.) risk retention Risk retention involves the establishment of a formal self-insurance program through which funds are set aside, or other advance arrangements are made, to pay for any losses that occur in the future. Transportation Expenses coverage provides up to what daily limit of coverage for temporary transportation expenses if a private passenger vehicle is stolen? A.) $ B.) $ C.) $ D.) $250 ------CORRECT ANSWER---------------B.) $ A careful driver for many years, William has never been at fault in an auto accident. Interested in reducing the premium as much as possible, he wants the highest deductible available. What is the highest deductible normally available to him? A.) $10, B.) $1, C.) $ D.) $250 ------CORRECT ANSWER---------------B.) $1, Auto liability insurance is available in Georgia with deductibles of $250, $500, or $1,000. Monument Farms Grocery submits a claim under its commercial crime policy because several items of stock are missing. How does the policy respond? A.) It pays the claim under Employee Theft coverage. B.) It pays the claim under Other Property coverage.
Zoe was injured on the job and collected workers compensation benefits. However, she sues her employer, claiming it is also legally responsible under the dual capacity doctrine. What type of liability coverage does Zoe's employer need to respond to her liability claim? A.) employer's liability B.) general liability C.) auto liability D.) professional liability ------CORRECT ANSWER---------------A.) employer's liability Employer's liability coverage is provided on a workers compensation policy and provides coverage for lawsuits filed that pertain to injuries that are not addressed by WC statute. A business that wants its commercial general liability policy to provide pollution coverage that includes cleanup costs would want the: A.) pollution liability coverage form B.) pollution liability limited coverage form C.) limited fungi or bacteria coverage D.) mold extension coverage ------CORRECT ANSWER---------------A.) pollution liability coverage form The pollution liability coverage form provides insurance for bodily injury and property damage liability arising from covered pollution incidents and includes costs for cleanup costs for which the insured is legally obligated to pay. Mercury Manufacturing is insured under an ISO pollution liability coverage form. The insurer will not renew the policy when it expires. The form provides coverage on a claims-made basis. Mercury is concerned about claims that might be made against it after the policy expires. What might Mercury do to cover that exposure? A.) buy an umbrella liability policy
B.) buy an extended reporting period endorsement C.) declare bankruptcy when the policy expires and form a new company D.) buy a limited fungi or bacteria coverage endorsement ------CORRECT ANSWER---------------B.) buy an extended reporting period endorsement Salvador, a carpenter, is a contractor for Coogan Construction Company, which builds houses. After Salvador completes a large framing job, Coogan has financial problems and cannot pay him. Through which of the following might Salvador recover some payment for his labor? A.) mechanics lien B.) license and permit bond C.) performance bond D.) fiduciary bond ------CORRECT ANSWER---------------A.) mechanics lien Mechanics liens guarantee the contractor payment for work completed. Which of the following parties has insurable interest in a home owned by Frank? A.) Frank's daughter B.) the mortgagee of Frank's home C.) the prior owner of Frank's home D.) the realtor attempting to sell Frank's home ------CORRECT ANSWER--- ------------B.) the mortgagee of Frank's home Which of the following correctly describes a principal difference between a dwelling policy and a homeowners policy? A.) A dwelling policy only covers the dwelling, other structures, personal property, fair rental value, and additional living expenses. It does not cover liability. B.) Both policies are almost identical, except that the homeowners policy focuses on the more expensive homes.
B.) U.S. Congress C.) U.S. Department of Health, Education and Welfare D.) State Government Agencies ------CORRECT ANSWER---------------D.) State Government Agencies Which of the following is an example of adverse selection? A.) an applicant who just bought a new car and wants to buy the least expensive auto policy B.) a homeowner who wants to meet with her agent to discuss her current coverages following some recent home improvements C.) an applicant whose business was recently burglarized deciding he had better buy some commercial crime insurance coverage D.) a business owner who decides to cancel his business owner's policy because he believes he can financially handle any losses that might occur - -----CORRECT ANSWER---------------C.) an applicant whose business was recently burglarized deciding he had better buy some commercial crime insurance coverage When comparing her insurance company's policies to those of Zenith Insurance, Melanie makes a misleading statement to convince an insurance prospect to terminate a policy with Zenith and buy one from Melanie's company. Melanie has engaged in: A.) Twisting B.) Rebating C.) Unfair discrimination D.) Defamation ------CORRECT ANSWER---------------A.) Twisting Stuart receives a notice from his insurance company telling him that his policy will be terminated at the end of the policy period. The notice provides a reason, which can be any of the following EXCEPT: A.) He filed a false claim.
B.) He failed to disclose information necessary to properly rate the risk. C.) He failed to pay the premium. D.) He was in a traffic accident caused by another driver. ------CORRECT ANSWER---------------D.) He was in a traffic accident caused by another driver. Which type of insurance company pays policy dividends to its policyowners? A.) stock insurance company B.) mutual insurance company C.) captive insurance company D.) reinsurance company ------CORRECT ANSWER---------------B.) mutual insurance company Which of the following would be recognized as a residence employee under the liability section of a homeowners policy? A.) the insured's CPA who is meeting at the insured's home to review business tax plans B.) the insured's gardener who lives in a small cottage on the insured's land C.) the insured who works out of her home D.) an independent contractor hired by the insured to construct a new addition to the insured's home ------CORRECT ANSWER---------------B.) the insured's gardener who lives in a small cottage on the insured's land What are the two types of compensatory damages? A.) special and punitive B.) special and general C.) general and punitive D.) specific and general ------CORRECT ANSWER---------------B.) special and general
When Mr. Huan's piano was damaged by vandals who broke into his house, the insurance company subtracted $200 for depreciation when it made its settlement offer. On what basis did the insurer value Mr. Huan's loss? A.) replacement value B.) market value C.) actual cash value D.) agreed value ------CORRECT ANSWER---------------C.) actual cash value Loss valuation based on actual cash value calculates the replacement cost of property and subtracts physical depreciation. All of the following types of business personal property can be insured by an unendorsed business owners policy (BOP) EXCEPT: A.) the business's furniture and office equipment B.) a client's property in the business's care C.) the business's guard dog D.) improvements made to the business property ------CORRECT ANSWER---------------C.) the business's guard dog A standard flood insurance policy includes all the following coverage forms EXCEPT: A.) loss of use form B.) dwelling form C.) general property form D.) residential condominium building association policy form ------ CORRECT ANSWER---------------A.) loss of use form
Jack is selling his home to Sue and wants to transfer his homeowners policy to her. Can Jack transfer his policy? A.) Yes, insurance policies have a certain portability to them which makes this possible. B.) No, this cannot be done under any circumstances. C.) No, unless the insurer gives written consent to do so. D.) Yes, if Jack and Sue became joint insureds. - -----CORRECT ANSWER- --------------C.) No, unless the insurer gives written consent to do so. Mary offers piano and guitar lessons in her home on a part-time basis and wants liability coverage to cover the risk of a student's parents suing her for some reason. If she wants additional liability coverage than her homeowners policy provides, which of the following is the most practical solution? A.) add the Home Day Care Coverage endorsement B.) purchase a second homeowners policy C.) add the permitted incidental occupancies endorsement D.) purchase a dwelling policy ------CORRECT ANSWER---------------C.) add the permitted incidental occupancies endorsement All of the following are commonly excluded from coverage in a property insurance policy EXCEPT: A.) water damage B.) earthquake C.) wear and tear D.) lightning ------CORRECT ANSWER---------------D.) lightning Which of the following types of insurance company only covers the risks of the parent organization that owns it? A.) stock insurance company
How does an insurance rate differ from an insurance premium? A.) A rate is the price of insurance for each unit of exposure. A premium is a periodic payment for insurance coverage. B.) There is essentially no difference between them. C.) A rate is the final calculation of what the cost of insurance will be. D.) Premiums include loss costs and expenses, but rates do not. ------ CORRECT ANSWER---------------A.) A rate is the price of insurance for each unit of exposure. A premium is a periodic payment for insurance coverage. With respect to property insurance underwriting, what type of rating system is used when insureds share similar characteristics? A.) individual rating B.) class rating C.) group rating D.) state-based rating ------CORRECT ANSWER---------------B.) class rating An insurer's profitability is determined by its combined ratio, which is equal to the insurer's: A.) incurred losses minus premium reserves B.) expense ratio minus net reserves C.) incurred expenses plus written premium D.) loss ratio plus expense ratio - -----CORRECT ANSWER---------------D.) loss ratio plus expense ratio Jackson Hardware has a basic property policy. Which of the following perils is NOT typically covered under such a policy? A.) riot
B.) earthquake C.) smoke D.) sprinkler leakage ------CORRECT ANSWER---------------B.) earthquake In a commercial property policy, fire is a named peril that may be designated as "friendly" or "hostile." All of the following would be considered a hostile fire EXCEPT: A.) fire that burns a kettle hanging in a fireplace B.) fire from a fireplace that ignites draperies in the living room C.) flames on a gas stove that set the ceiling on fire D.) fire in an outdoor pit that ignites a nearby tree ------CORRECT ANSWER---------------A.) fire that burns a kettle hanging in a fireplace A hostile fire is one that burns where it was not to burn. Coverage is provided only for hostile fires. What business owners policy (BOP) endorsement provides coverage for loss of business income and extra expenses incurred if the described location suffers an interruption of electrical service? A.) Utility Services - Time Element B.) Utility Services - Direct Damage C.) Protective Safeguards D.) Identity Fraud Expense Coverage ------CORRECT ANSWER--------------- A.) Utility Services - Time Element Which of the following property insurance policy clauses ensures that a loss payee will be included in any claim payment related to the insured property? A.) loss payable clause B.) mortgage clause C.) additional insured endorsement
