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A comprehensive set of questions and answers related to property and casualty insurance in georgia. It covers key topics such as building coverage, policy limits, endorsements, insurance company types, and regulatory requirements. It also includes information on agent licensing, continuing education, prohibited practices, and various insurance plans specific to georgia. This study guide is designed to help individuals prepare for their property and casualty insurance exam in georgia, offering clear and concise explanations of essential concepts and regulations. It serves as a valuable resource for understanding the intricacies of the insurance industry in georgia and ensuring compliance with state laws and regulations.
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BPP building coverage ✔✔insures the building at the described location, outdoor, fixtures, furnitures, items used to service the property, permanently installed machinery and equipment, and additions under construction, including the materials, supplies, and equipment.
HO limits of property at other residences ✔✔the larger of $1000 or 10% Coverage C. Limit does not apply if property is moved because the residence premise is being repaired or rebuilt. When property is moved to newly acquired residence, the limit shown on declaration will apply on a proportional basis to each residence
Dwellings under construction ✔✔The limit of liability for a dwelling under construction is provisional, and is based on the completed value of the structure. At the time of loss, the applicable limit is a percentage of the provisional limit, based on the proportion of actual cash value of the property at the time of loss. Premium is based on an average amount of insurance during construction.
Water Backup & Sump Pump Endorsement ✔✔Coverage for up to $5,000 in loss or damage, subject to a $250 deductible, can be provided for an additional premium with this endorsement.
Automatic Increase in Insurance Endorsement ✔✔is used to provide at the annual renewal date of the policy, an automatic increase in the Coverage A and B limits of insurance to help offset inflation
Other insurance ✔✔A provision in an insurance policy that defines how the policy will respond if there is another valid insurance policy written on the same risk.
Stock Companies ✔✔Owned by the stockholders who provide the capital necessary to establish and operate the insurance company and who share in any profits or losses.
Mutual companies ✔✔Owned by the policyowners and issue participating policies. Policyowners are entitled to dividends, which are a return of excess premium and are nontaxable.
6 classes of insurance in Georgia ✔✔1. Life, accident, and sickness
How often must the Insurance Commission examine domestic insurers? ✔✔Once every 5 years.
What are the CE requirements for an agent? ✔✔24 CE credit hours every 2 years, including 3 credit hours of ethics.
Agents with licensed for 20 years only need 20 CE credit hours, including ethics.
How long must an agent keep records regarding contracts, premiums, etc.? ✔✔All records must be kept for 5 years after the completion of a transaction or for the term of the contract, whichever is greater.
Misrepresentation ✔✔Issuing, publishing, or circulation and illustration or sales materials that is false, misleading, or deceptive as to policy benefits or terms, the payments of dividends, etc.
False advertising ✔✔advertising that is misleading in some important way, including the failure to reveal facts about possible results from using the advertised products
Rebating ✔✔Any inducement offered in the sale of insurance products that is not specified in the policy. They are illegal in Georgia.
Twisting ✔✔A form of misrepresentation in which an agent persuades an insured/owner to cancel, lapse, or switch policies, even when it's to the insured's disadvantage.
Churning ✔✔Replacing insurance policies for the sole purpose of making commissions. It is illegal to replace existing life or disability policies with new policies if the producer cannot demonstrate that the replacement will benefit the insured.
Coercion ✔✔Unfair trade practice where an agent uses physical or mental force with the intense of inducing an applicant to purchase insurance.
Defamation ✔✔Defamation occurs when an oral or written statement is made that is intended to injure a person engaged in the insurance business. This also applies to statements that are maliciously critical of the financial condition of any person or a company.
Controlled business ✔✔Controlled business is any coverage written on a producer's own life, health or property, and/or that of the producer's immediate family or business associates. A licensee is not allowed to collect commissions on controlled business at rate higher than 25% of the agent' volume per calendar year.
What is a binder ✔✔A temporary insurance contract that goes in effect prior to the policy issue. No binder shall be valid pass the issuance of the policy beyond 90 days of its effective date, whichever period is shorted.
Georgia FAIR ✔✔The Georgia Fair Access to Insurance Requirement provides basic property insurance for those who cannot obtain it in the ordinary market.
Georgia Workers Compensation Assigned Risk Plan ✔✔The Georgia Workers Compensation Assigned Risk Plan exists to provide required Workers Compensation coverage for employers who do not qualify for coverage in the voluntary market. Liability is apportioned among all insurers authorized to write Workers Compensation and Employers Liability in the state.
How often must an insurer update their rate filings? ✔✔Every 2 years
All insurers must file their rates 45 days before their effective date.
When a rate increases more than 10$ or more within 12 months, the Commissioner will order and examination.
What is the Commissioner's term of office? ✔✔4 years
When does an agent have to notify the Commissioner of a change of address? ✔✔Within 30 days
How many days are allowed to report a criminal prosecution against a licensee? ✔✔30 days
What is the total liability of the Georgia Life and Health Insurance Guaranty Association for any one life? ✔✔$300,
PAP Section II Part B: Medical Expenses Coverage ✔✔-covers all reasonable medical costs and funeral expenses incurred, by the insured or the insured's family members within 3 years of an accident -recommended coverage of $50,
Cancellation and Nonrenewal of Policies other than PA and PP ✔✔For all insurance other than that covering a personal automobile or personal property, a notice of termination, including a notice of cancellation or nonrenewal, a notice of increase in premiums that exceeds 15% of the current policy's premium unless due to a change in risk or exposure or a notice of change in any policy provision which limits or restricts coverage must be delivered or mailed to the insured at least 45 days before the effective date of such termination or change. Failure to comply with this requirement entitles the policyholder to purchase a policy for an additional 30 days beyond the current expiration date (on the same terms and conditions and with the same premium as the expiring policy). If the policy will incur a premium increase of more than 15%, the dollar amount of that increase must be stated in the notice.
Valuation of Loss For a 1-2 family residence ✔✔Georgia law contains a valued policy statute. An insurer is required to value the property at the amount of insurance in effect at the time of the loss, minus any depreciation. If the loss occurs within 30 days of policy issuance, the actual loss sustain up to the LOL will be paid.
What does the valued policy statute exclude? ✔✔This valuation provision does not apply to the following situations:
$50K for BI to 2 more persons in any one accident.
$25K for property damage in any one accident.
What is uninsured motorist coverage? ✔✔Can be offered up to the LOL for BI and PD, but in no event less than the financial responsibility limit. The limits cannot be less than 25/50/
Commissioner of Insurance ✔✔Elected for 4 years Regulates the internal affairs of the Dept. of Insurance Does not write laws Examines all authorized insurers.
Producer regulations ✔✔Licenses may be issued only to individuals Only one license of the same business type is allowed per agent. Must be licensed in the first line of authority for the agent transacts business Avoid unfair trade practices.
Company Regulations ✔✔obtain a certificate of authority remain solvent have all policy forms and rates approved by the Dept. Avoid unfair trade practices and unfair claim settlement practices.
Insurance Guaranty Association ✔✔Protects policyowners, insureds, and beneficiaries against insolvent insurers
All admitted insurers must be members of the Association
Unfair trade practice: stating that the insurer's policies are guaranteed by the existence of the Association
Licensing Requirements ✔✔Meet age and residency requirements (18 years old; reside in the state at least 6 months a year) Pass examination Submit application and fees Be of good character
Types of licenses ✔✔Individuals - resident and nonresident
Temporary license - valid for 6 months; issued to maintain the existing business
Exposure ✔✔susceptibility to risk
Implied warranty ✔✔a legal term meaning that a product is suitable for its intended purpose and that it fits an ordinary buyer's expectations
Peril ✔✔a specific cause of loss.
What are the perils insured against in a standard property policy? ✔✔fire, wind, hail, and explosions.
Hazards ✔✔Conditions or situations that increase the probability of an insured loss occurring.
3 types of hazards ✔✔Physical, Moral, Morale
Physical hazard ✔✔Physical hazards are those arising from the material, structural, or operational features of the risk, apart from the persons owning or managing it.
Moral hazard ✔✔Moral hazards refer to those applicants that may lie on an application for insurance, or in the past, have submitted fraudulent claims against an insurer.
Morale hazard ✔✔A condition of carelessness or indifference that increases the frequency or severity of loss.
Loss ✔✔The reduction, decrease, or disappearance of value of the person or property insured in a policy, by a peril insured against.
Indemnity ✔✔Indemnity (sometimes referred to as reimbursement) is a provision in an insurance policy that states that in the event of loss, an insured or a beneficiary is permitted to collect only to the extent of the financial loss, and is not allowed to gain financially because of the existence of an insurance contract.
Subrogation ✔✔The process by which an insurer can, after it has paid a loss under the policy, recover the amount paid from any party (other than the insured) who caused the loss or is otherwise legally liable for the loss.
Accident ✔✔An unexpected happening that may result in injury, loss, or damage.
Occurrence ✔✔those losses caused by continuous or repeated exposure to conditions resulting in injury to persons or damage to property that is neither intended nor expected.
Direct loss ✔✔Loss that is a direct result of a peril, such as fire.
Indirect loss ✔✔Loss that is a result or consequence of a direct loss
Named peril ✔✔A specific cause of loss listed and described in an insurance policy. Also used to describe policies containing named perils.
Robbery ✔✔the unlawful taking of property from a person's immediate possession by force or intimidation
Theft ✔✔Any act of stealing and encompasses both burglary and robbery.
Mysterious Disappearance ✔✔A disappearance of property that cannot be explained as to the location, time or the manner of property loss.
Vacancy ✔✔Vacancy refers to an insured structure in which no people have been living or working, and no property has been stored for the period of time required as stated in the policy (usually 60 days).
Unoccupied ✔✔A property that has contents or furnishings in it, but is not being used or lived in.
Blanket insurance ✔✔A single property insurance policy that provides coverage for multiple classes of property at one location, or provides coverage for one or more classes of property at multiple locations.
Specific insurance ✔✔A property insurance policy that covers a specific kind or unit of property for a specific amount of insurance.
Loss evaluation for property insurance ✔✔a factor in determining the premium charged and the amount of insurance required.
Actual Cash Value (ACV) ✔✔Cost to replace property with new property of like kind and quality less depreciation.
Replacement Cost ✔✔The cost to repair or replace property using new materials of like kind and quality with no deduction for depreciation.
Market value ✔✔the price at which property would sell
Stated value ✔✔an amount of insurance scheduled in a property policy that is not subject to any coinsurance requirements in the event of a covered loss. This scheduled amount is the maximum amount the insurer will pay in the event of a loss.
Salvage value ✔✔Salvage value is the estimated value an asset will realize upon its sale at the end of its useful life.
Absolute liability ✔✔A type of liability that occurs due to extremely dangerous operations, such as the use of explosives or working at extreme heights. The injured party does not need to prove negligence.
Split limits ✔✔separate limits for bodily injury and property damage liability coverage
Combined single limit ✔✔The most the policy will pay for all losses of all types resulting from any one occurrence, regardless of other limits.
Bodily injury liability ✔✔Legal liability arising from death or physical trauma to a person as a result of a negligent or purposeful act and omissions by an insured.
Property damage liability ✔✔Legal liability arising from physical damage to tangible property of others caused by the negligence of an insured.
Personal injury liability ✔✔Legal responsibility for an injury to the character of another person caused by libel, slander, false arrest, invasion of privacy and other acts.
Proximate cause ✔✔An act or event that is the immediate or actual cause of a loss. The negligence must have been the proximate cause of the damage if the injured party is to collect for the damages. An unbroken chain of events that caused the loss. Also referred to as direct liability.
Coinsurance ✔✔The coinsurance clause states that, in consideration of a reduced rate, the insured agrees to maintain a minimum amount of insurance on the insured property.
(insurance carried/insurance required) x loss amount = loss payment.
Insurance-to-value provision ✔✔A provision in property insurance policies that encourages insureds to purchase an amount of insurance that is equal to, or close to, the value of the covered property.
Deposit premium ✔✔estimated premium paid in advance at the time the policy is issued that may be adjusted based on actual exposures.
Deposit premium audit ✔✔A condition that allows the insurer to audit the insured's books or records at the end of the policy term to make sure adequate premium has been collected for the exposure. Insurer usually has 3 years to perform audit.
Certificate of Insurance ✔✔Written evidence showing that an insurance policy has been written.
Underwriting ✔✔Risk selection; the process of reviewing applications for insurance to determine eligibility for coverage.
Elements of a contract ✔✔agreement, consideration, competent parties, legality
Agreement ✔✔Offer and acceptance.