Georgia Property & Casualty Exam
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.
C.) A dwelling policy requires that the owner occupy the dwelling.
D.) Although any one- to four-family dwelling is eligible for a homeowners policy, only a
one-family dwelling is eligible for a dwelling policy. - correct answer-A.) A dwelling policy only
covers the dwelling, other structures, personal property, fair rental value, and additional living
expenses. It does not cover liability.
All of the following statements regarding the dwelling policy are correct EXCEPT:
A.) There are six dwelling policy forms.
B.) An unendorsed dwelling policy provides property coverage only; it does not include
liability coverage.
C.) The dwelling policy can cover a residence for less cost than a homeowners policy.
D.) The dwelling policy covers personal property as well as the dwelling itself. - correct
answer-A.) There are six dwelling policy forms.
There are actually only three: basic, broad, and special.
What endorsement should Jeffrey's Flowers add to its commercial property policy if it wants
coverage for breakdown or contamination and power outage?
A.) Ordinance or Law
B.) Peak Season
C.) Spoilage Coverage
D.) Value Reporting Form - correct answer-C.) Spoilage Coverage
Most insurance regulation is conducted by the:
A.) Federal Insurance Office
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
Smith received $20,000 in premiums from his clients and used half of the funds to buy a new
entertainment system for his office. Which of the following penalties may be imposed for this
misconduct?
A.) License suspension for up to six months
B.) Restitution
C.) Felony conviction
D.) Fine of up to $50,000 - correct answer-C.) Felony conviction
Fire is a named peril that may be designated as "friendly" or "hostile." All of the following
would be considered a friendly fire EXCEPT:
A.) a fire in a wood-burning fireplace
B.) a fire in a barbecue pit
C.) a fire in a forest
D.) a fire in an incinerator - correct answer-C.) a fire in a forest
Hart Food Supply was forced to shut down when the electrical service to its building was
disrupted due to a motor vehicle accident that took place on the other side of town. How will
the Special Causes of Loss Form on Hart's commercial property policy respond to its claim
for spoiled inventory?
A.) It will pay the claim after applying the deductible.
B.) It will pay the claim; no deductible applies to coverage for power failure.
C.) It will deny the claim under the Loss of Market exclusion.
D.) It will deny the claim under the Off-Premises Utility Service Interruption exclusion. -
correct answer-D.) It will deny the claim under the Off-Premises Utility Service Interruption
exclusion.
No coverage is provided for interruption of utility services that originates off the insured
premises.
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:
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