Georgia Property & Casualty Insurance License, Practice Exams

A home's replacement cost is $250,000, insured for $200,000 (80% would be $200,000). A covered partial roof loss costs $20,000 (ignore deductible). The settlement is:

1. $16,000
2. $18,000
3. $20,000 ✓
4. $10,000

Why: Because the carried amount ($200,000) meets the 80% requirement ($200,000), the partial loss is paid in full at replacement cost: $20,000.

Personal property losses under most Homeowners forms are settled on what basis unless replacement cost is endorsed?

1. Market value
2. Replacement cost
3. Agreed value
4. Actual cash value (ACV) ✓

Why: Coverage C personal property is settled on an actual cash value basis (replacement cost minus depreciation) unless replacement cost coverage is added by endorsement.

Under the PAP, the limit of liability for Part A applies:

1. Separately to each claim with no per-accident cap, so every claimant injured in one collision may collect the full stated limit
2. As the most paid regardless of the number of insureds, claims, vehicles, or persons involved (per the limits shown) ✓
3. Per insured separately, so two insureds riding in one auto double the limit available for that accident
4. Doubled when two or more vehicles are listed on the same declarations page

Why: The Part A limit of liability is the most the insurer will pay for one accident regardless of the number of insureds, claims, vehicles, or persons (subject to split/CSL terms).

An automobile assigned-risk plan is a type of:

1. A private umbrella program that adds excess limits above a driver's personal auto liability
2. A federal reinsurance pool backed by the Department of Transportation
3. Residual (shared) market that distributes hard-to-insure drivers among insurers ✓
4. A voluntary discount program for defensive-driving graduates

Why: Assigned-risk plans are auto residual markets that assign drivers who cannot obtain coverage voluntarily to insurers in proportion to their market share.

Under a Homeowners HO-4 (renters) policy, the Coverage A (Dwelling) limit is typically:

1. Always set at 80% of the Coverage C limit to satisfy the coinsurance requirement
2. Equal to the building's replacement cost, with the landlord's policy applying excess of it
3. Not applicable / minimal, since the tenant does not own the building ✓
4. The largest of the Section I limits

Why: Because tenants do not own the structure, HO-4 has no meaningful Coverage A; the emphasis is on Coverage C personal property and Section II liability.

Insurers require minimum 'underlying limits' for an umbrella because:

1. Umbrellas are written to pay first-dollar losses, so the underlying policies serve only to establish the premium basis for the account
2. Drop-down is prohibited by the insuring agreement, so the umbrella cannot respond until every underlying policy's limits renew
3. The insurer wants more premium from each underlying policy the insured is made to buy
4. The umbrella is meant to sit above primary coverage; the insured must maintain stated underlying limits or pay as though they were in force ✓

Why: Umbrellas require specified underlying limits; if the insured fails to maintain them, the umbrella pays only as if the required underlying limits existed.

Under O.C.G.A. §40-3-36(i), an insurer paying a total loss claim on a vehicle whose owner retains it must, on a form prescribed by the commissioner, notify the owner of what duties?

1. To remove and return the license plate for cancellation and of the inspection requirements for rebuilding or restoring the vehicle ✓
2. Of the duty to register the vehicle in another state before any repairs begin and to file proof of that registration with the Department of Revenue
3. Of the duty to deliver the vehicle to the nearest licensed scrap processor within 72 hours and to surrender the plate to the insurer rather than the state
4. Of the duty to repay any uninsured motorist benefits already received on the same loss

Why: O.C.G.A. §40-3-36(i) requires the insurer paying a total loss to notify the owner of the duty to remove and return the license plate for cancellation and of the inspection requirements for rebuilding or restoring the vehicle.

Under § 33-6-13(a)(1), it is unlawful for a person to enter into a contract, understanding, or combination with another for the purpose of, or having the effect of, doing what?

1. Ceding a Georgia risk to a reinsurer not licensed in this state
2. Exchanging customer lists and policy expiration dates with a competing agency
3. Advertising jointly with another agency under a shared trade name
4. Controlling the rates to be charged for insuring any risk or class of risks in this state ✓

Why: O.C.G.A. § 33-6-13(a)(1) makes it unlawful to enter into a contract, understanding, or combination for the purpose or effect of controlling the rates to be charged for insuring any risk or class of risks in this state.

A Supplemental Extended Reporting Period (supplemental tail) differs from the basic ERP in that it:

1. Is furnished automatically at no charge for 60 days after the policy expires
2. Applies only to occurrence policies, since claims-made forms already report on a delayed basis
3. Cuts the General Aggregate in half for every claim reported during the tail
4. Must be purchased for additional premium and provides an unlimited reporting period ✓

Why: The supplemental ERP requires an extra premium and a written request, providing an unlimited reporting window for covered occurrences.

The standard mortgage clause in a Homeowners or Dwelling policy protects the mortgagee by:

1. Increasing the Coverage A limit automatically to the outstanding loan balance whenever the mortgagee reports a higher payoff figure
2. Covering the unpaid mortgage balance as a liability of the insured
3. Allowing the mortgagee to collect even if the insured's act voids coverage, and requiring notice of cancellation ✓
4. Eliminating the deductible on losses paid to the lender

Why: The standard (union) mortgage clause preserves the mortgagee's right to recover despite acts of the insured and entitles the lender to advance notice of cancellation or nonrenewal.

A PAP insured rents a car on vacation and damages it. Which coverage most directly responds to the damage to the rented car?

1. Part C — Uninsured Motorists, since the rental company carries no liability insurance on its fleet
2. Part D — Coverage for Damage to Your Auto (non-owned auto) ✓
3. Part A — Liability, which pays for damage to any auto in the insured's custody
4. Part B — Medical Payments, applied to the rental damage

Why: Damage to a non-owned auto in the insured's custody, such as a rental, is covered under Part D at the broadest physical damage coverage on the policy.

Market value as a basis of valuation refers to:

1. The cost to rebuild the property new at today's prices, excluding the land
2. The price the property would bring in a sale, including land ✓
3. The face amount of the policy shown on the declarations page
4. Replacement cost less an allowance for depreciation and obsolescence

Why: Market value is what a buyer would pay a seller in an open market and can differ substantially from replacement cost because it includes land and location factors.

A producer who exceeds the actual authority granted by the insurer but acts within the authority the public reasonably believes the producer has may still bind the insurer because of:

1. Express authority
2. Subrogation
3. Apparent authority ✓
4. The law of large numbers

Why: Apparent authority can bind the insurer when a third party reasonably relies on the appearance of authority the insurer permitted to exist.

The Homeowners Policy program differs from the Dwelling Policy primarily because it:

1. Excludes personal property entirely, leaving contents to be insured on a separate inland marine form
2. Is a package combining property and liability coverage ✓
3. Covers only the structure, because Section ii liability must be bought as a stand-alone personal liability policy
4. Never includes theft of personal property, which is available only by endorsement to a Dwelling Policy

Why: Homeowners policies are package policies bundling Section I property coverages with Section II liability coverages, whereas the basic Dwelling Policy is monoline property.

The Special Causes of Loss form is best characterized as:

1. An open-perils (all-risk) form covering risks of direct physical loss unless excluded ✓
2. A form that excludes theft, so a separate crime coverage part must be purchased for stolen stock
3. A named-peril form covering only fire and lightning, with all other causes added by endorsement
4. A liability form protecting the insured against third-party claims arising from the premises

Why: The Special form is open-perils: it covers risk of direct physical loss unless specifically excluded or limited, shifting the burden of proof to the insurer.

Particular average differs from general average in that particular average is:

1. A partial loss borne solely by the owner of the property that was damaged ✓
2. Always a total loss of the whole venture, requiring the underwriter to pay the full policy limit
3. A discount off the premium earned when a shipper insures more than one voyage in a policy year
4. Shared proportionally by the ship, cargo, and freight interests according to their saved values

Why: A particular average loss is a partial loss that falls only on the owner of the specific property damaged, unlike general average which is shared among all interests.

Grouping similar exposures together and charging all members of the group the same base rate is known as:

1. Schedule rating
2. Judgment rating
3. Retrospective rating
4. Class (manual) rating ✓

Why: Class rating (manual rating) applies the same rate to all members of a homogeneous group of similar risks.

The policy provision that states the insurer's promise to pay covered losses is the:

1. Conditions
2. Insuring agreement ✓
3. Definitions
4. Declarations

Why: The insuring agreement is the insurer's core promise describing what coverage is provided in exchange for premium.

Which of the following best distinguishes FELA from a typical state workers' compensation system?

1. FELA is fault-based requiring proof of negligence, while state WC is no-fault ✓
2. FELA provides automatic no-fault benefits, while state WC is fault-based
3. FELA covers only federal civilian employees
4. FELA caps medical benefits at a fixed amount

Why: Unlike no-fault state WC systems, FELA requires the injured railroad worker to prove the employer's negligence to recover damages.

Under §33-6-34(6), it is an unfair claims settlement practice for an insurer to:

1. Paying a claim in full before a proof of loss is filed
2. Providing claim forms within two working days
3. Acknowledging a claim within two business days
4. Refuse to pay claims without conducting a reasonable investigation ✓

Why: §33-6-34(6) makes refusing to pay claims without conducting a reasonable investigation an unfair claims settlement practice.

Which federal law would a producer most likely consult to determine whether a previously convicted individual may lawfully work in the insurance business?

1. The can-SPAM Act
2. The Fair Credit Reporting Act
3. 18 U.S.C. §§ 1033 and 1034 ✓
4. The Terrorism Risk Insurance Act

Why: 18 U.S.C. 1033 and 1034 govern whether persons convicted of crimes involving dishonesty may engage in the business of insurance and the penalties for violations.

Custom furnishings or equipment installed in a pickup or van (e.g., custom murals, special carpeting) under the unendorsed PAP are:

1. Covered automatically up to the actual cash value of the furnishings, with no endorsement needed
2. Covered in full with no dollar limit, because they are permanently attached to the vehicle
3. Generally excluded from Part D unless coverage is added by endorsement ✓
4. Covered only under Part A liability, and only if the equipment injures a passenger

Why: The PAP excludes custom furnishings or equipment in pickups and vans unless coverage is specifically added, often by endorsement.

Under the PAP, when an insured has two PAPs from DIFFERENT insurers covering the same liability loss on a non-owned auto, coverage is generally coordinated as:

1. Both primary, with each insurer paying its full limit until the loss is satisfied
2. Each excess, sharing on the basis stated in the other-insurance provision ✓
3. The newer policy is void for concealment
4. Neither pays, since the auto owner's policy is the only coverage

Why: When the insured's coverage is excess (as on a non-owned auto) under two policies, they typically share the excess pro rata as provided in the other-insurance clause.

Medical Payments coverage typically pays expenses incurred within what time frame after the accident?

1. Within 30 days
2. Indefinitely with no limit
3. Within 1 year
4. Within 3 years ✓

Why: PAP Part B generally pays covered medical and funeral expenses incurred within three years of the date of the accident.

The CGL 'Other Insurance' condition typically makes the CGL coverage:

1. Primary, but excess over certain other coverages in specified situations ✓
2. Always pro rata with all other collectible insurance, regardless of type
3. Void from inception if other insurance covers the loss
4. Always excess over every other policy the insured carries

Why: The CGL is generally primary but becomes excess in specified situations (e.g., certain additional-insured or fire scenarios) per the Other Insurance condition.

Errors and omissions (E&O) insurance protects a producer against:

1. Flood damage to the agency building and to the client files stored in its basement records room
2. Physical damage to the producer's own car while driving between client appointments, including collision and theft losses
3. Health expenses of the producer and the agency staff
4. Liability arising from negligent acts, errors, or omissions in providing professional insurance services ✓

Why: E&O coverage responds to claims that the producer was professionally negligent, such as failing to obtain requested coverage, and is a key protection against the producer's professional liability exposure.

Under O.C.G.A. §34-9-260, if an employee worked substantially the whole of the 13 weeks immediately preceding the injury, the average weekly wage is generally:

1. The state-wide average weekly wage published by the Department of Labor
2. One-half of the employee's annual salary divided by 26 pay periods
3. The highest single week of earnings in that period
4. One-thirteenth of the total wages earned during those 13 weeks ✓

Why: O.C.G.A. §34-9-260(1) computes the average weekly wage as one-thirteenth of the total wages earned in the employment during the 13 weeks immediately preceding the injury.

Which of the following best describes how the Broad form's limited collapse provision works relative to the Basic form?

1. Neither form addresses collapse, which is available only by separate endorsement
2. The Basic form already covers collapse from any cause, so the Broad form adds nothing on that point
3. Collapse provisions appear only in inland and ocean marine forms
4. Broad adds coverage for collapse from specified causes that Basic does not provide ✓

Why: The Broad (and Special) forms add a specified-cause collapse provision; the Basic form does not include collapse coverage.

A manufacturer wants to avoid any coinsurance penalty at the time of loss and is willing to agree on the property's value in advance. The best option is:

1. Spoilage endorsement
2. Reporting form
3. Peak Season endorsement
4. Agreed Value option ✓

Why: The Agreed Value option suspends the coinsurance condition based on a value agreed upon by insurer and insured, avoiding any coinsurance penalty.

Under §33-32-4, if an insurer pays a total-loss claim in an amount less than the maximum authorized under the policy, the insurer must:

1. Pay the insured a penalty of 25 percent of the difference between the policy maximum and the amount actually paid, together with interest at 18 percent a year from the date of loss
2. Cancel the policy retroactively to its inception date and return to the insured every dollar of premium collected for the entire policy term, without any pro rata adjustment
3. Refund the difference between premiums actually paid and premiums that would have been charged for a policy with a maximum equal to the amount actually paid ✓
4. Reinstate the policy at its original maximum for the balance of the term and forgo any additional premium for the coverage restored after the total loss payment

Why: §33-32-4 requires the insurer to refund the premium difference reflecting the lower amount actually paid on a total loss.

A homeowner fails to clear ice from their walkway and a visitor slips and breaks an arm. Which negligence element is satisfied by the homeowner's failure to maintain the walkway?

1. Duty
2. Proximate cause
3. Damages
4. Breach of duty ✓

Why: Failing to act as a reasonably prudent person would (clearing the ice) is the breach of the duty of care owed to the visitor.

Defense costs under the standard CGL are:

1. Paid in addition to the limits as a Supplementary Payment ✓
2. Paid within the limits of insurance, reducing them
3. Never covered
4. Subject to a separate aggregate only

Why: Under the standard CGL, defense costs are paid in addition to the limits as part of Supplementary Payments (unlike many specialty 'defense-within-limits' policies).

Because WC premium depends on actual payroll, which the insurer estimates at the start of the term, what process is performed after the policy period to determine final premium?

1. An experience modification
2. A residual market assignment
3. A premium audit ✓
4. A loss reserve study

Why: A premium audit reviews the insured's actual payroll records after the policy period so the final premium can be adjusted up or down from the estimate.

A lender requires flood insurance as a condition of a mortgage because the property is in a Special Flood Hazard Area. This requirement comes from:

1. The federal Do-Not-Call rules
2. State law, which conditions the recording of every mortgage on proof of flood insurance before the closing may occur
3. TRIA's make-available requirement
4. Federal flood law requiring federally regulated lenders to mandate flood coverage in high-risk zones ✓

Why: Federal law requires lenders regulated or insured by the federal government to require flood insurance on properties located in Special Flood Hazard Areas.

With auto liability split limits of 50/100/25, the maximum paid for bodily injury to any one person in an accident is:

1. $100,000
2. $50,000 ✓
3. $175,000
4. $25,000

Why: The first number (50) is the per-person bodily injury limit: $50,000.

Under §33-33-2, the FAIR Plan's underwriting association is authorized on behalf of its members to do what?

1. Adjudicate coverage disputes between members and applicants as a court of record, with binding effect
2. Cause property insurance policies to be issued and reinsure them in whole or in part ✓
3. Set statewide homeowners rates and bind every licensed property insurer in Georgia to them
4. License the insurance producers who sell association policies and set their commission scale

Why: §33-33-2 authorizes the association to cause property insurance policies to be issued, to reinsure them in whole or part, and to cede reinsurance.

Authority that the public reasonably assumes a producer has, based on the producer's actions and the insurer's failure to correct them, is called:

1. Fiduciary authority
2. Express authority
3. Apparent authority ✓
4. Implied authority

Why: Apparent or ostensible authority arises when the insurer's actions lead the public to reasonably believe the agent has authority the agent may not actually possess.

In a policy with more than one named insured, the 'first named insured' is generally responsible for:

1. Personally defending any lawsuit brought against a co-insured before the insurer's duty to defend attaches
2. Nothing beyond the duties of any other named insured
3. Adjusting and settling every claim, since the other named insureds may not deal directly with the adjuster
4. Paying premiums and receiving cancellation notices, and may act on behalf of others ✓

Why: The first named insured has specific duties and rights, such as paying premiums, receiving notices, and requesting changes on behalf of all insureds.

When an applicant submits a completed application with the initial premium, the applicant is generally making the:

1. Consideration only
2. Counteroffer by the insurer
3. Offer ✓
4. Acceptance

Why: In insurance, the applicant typically makes the offer by submitting the application and premium; the insurer accepts by issuing the policy.

The RETROACTIVE DATE on a claims-made policy:

1. Establishes the earliest date of loss for which a claim will be covered ✓
2. Is always the same as the policy expiration date shown in the declarations
3. Doubles the general aggregate limit for the first year
4. Extends the window for reporting claims for sixty days after the policy expires

Why: The retroactive date sets the earliest injury/damage date that can be covered; losses occurring before it are excluded.

Under §33-36-3(4)(K), a covered claim for unearned premium is limited to a maximum of:

1. $300,000
2. $20,000 ✓
3. $50,000
4. $10,000

Why: §33-36-3(4)(K)(i) excludes any portion of an unearned-premium claim exceeding $20,000.

A homeowner stores a guest's furniture temporarily. Property of others while on the residence premises is:

1. Covered only under Section ii liability, since the guest is not an insured
2. Subject to the $200 special limit for money
3. Never covered while owned by a non-insured
4. Coverable at the insured's option under Coverage C ✓

Why: Coverage C may, at the insured's option, apply to property of others while on the part of the residence premises occupied by an insured.

The coinsurance formula for the amount payable is:

1. Loss × Coinsurance percentage, minus deductible
2. (Amount required ÷ Amount carried) × Loss, plus deductible
3. Loss ÷ Coinsurance percentage, then minus deductible
4. (Amount carried ÷ Amount required) × Loss, then minus deductible ✓

Why: Payment = (insurance carried ÷ insurance required) × loss, minus any deductible, never exceeding the policy limit.

With auto liability split limits of 50/100/25, the maximum total paid for bodily injury to all persons in one accident is:

1. $25,000
2. $100,000 ✓
3. $150,000
4. $50,000

Why: The second number (100) is the per-accident bodily injury limit: $100,000.

When an insurer's actions lead an insured to believe a right exists, and the insurer is later prevented from denying that the right exists, the legal principle is:

1. Indemnity
2. Estoppel ✓
3. Subrogation
4. Waiver

Why: Estoppel prevents a party from asserting a right or fact inconsistent with a previous position when another party has relied on that position.

The primary purpose of a coinsurance clause in property insurance is to:

1. Increase the deductible automatically whenever property values rise during the term
2. Lower every insured's premium by a fixed percentage regardless of the amount carried
3. Extend liability protection to others who share ownership of the insured property
4. Encourage insureds to carry coverage close to the full value of the property ✓

Why: Coinsurance encourages insureds to insure to value (e.g., 80%, 90%, or 100%) by penalizing underinsurance at the time of a loss.

Under O.C.G.A. §34-9-18, a person who willfully fails to file a required form or report, or violates a board rule, may be assessed a civil penalty in what range per violation?

1. Not less than $500 nor more than $5,000
2. A flat $5,000
3. Not less than $100 nor more than $1,000 ✓
4. Not less than $1,000 nor more than $10,000

Why: O.C.G.A. §34-9-18(a) sets a civil penalty of not less than $100 nor more than $1,000 per violation for willfully failing to file a required form or violating a board rule.

Under O.C.G.A. § 33-6-1, Georgia's Unfair Trade Practices article is enacted to regulate trade practices in the business of insurance in accordance with the intent of which federal enactment?

1. The Gramm-Leach-Bliley Act, which moved insurance regulation to federal banking agencies
2. The McCarran-Ferguson Act of March 9, 1945 (Public Law 15, 79th Congress) ✓
3. The Dodd-Frank Act, which created the Federal Insurance Office to license insurers
4. The Sherman Antitrust Act of 1890

Why: O.C.G.A. § 33-6-1 provides that the Unfair Trade Practices article regulates trade practices in accordance with the intent of Congress in the McCarran-Ferguson Act of March 9, 1945 (Public Law 15, 79th Congress).

A Difference in Conditions (DIC) policy is generally purchased to:

1. Covers only automobile liability arising from vehicles the insured owns, hires, or borrows anywhere in the United States and Canada
2. Replaces the underlying property policy entirely, so the insured may cancel the primary form once the difference in conditions coverage is bound
3. Provides statutory workers compensation benefits in any state the insured has not listed on the information page of its own policy
4. Provide broad, all-risk coverage that fills gaps and covers perils excluded by underlying policies, such as flood and earthquake ✓

Why: DIC coverage supplements an insured's underlying property program by broadening perils and filling coverage gaps, frequently adding flood and earthquake.

Under O.C.G.A. §40-3-36(d), a certificate of title issued for a salvage motor vehicle must display what on its face?

1. The letters 'N/A' where the VIN would appear
2. A red 'flood' watermark
3. The word 'salvage' ✓
4. The word 'junk'

Why: O.C.G.A. §40-3-36(d) requires that a salvage vehicle's certificate of title contain the word 'salvage' on its face, clearly indicating the vehicle is a salvage motor vehicle.

A bar overserves a patron who then injures a third party in a fight. Which coverage is designed to respond to the bar's liability?

1. Workers compensation, because the bartender was on duty when the fight started
2. Liquor Liability / Dram Shop coverage ✓
3. A surety bond posted with the state liquor control board
4. CGL Coverage A, because the patron's injury is bodily injury on the premises

Why: Because the CGL excludes the liquor business's liability, the bar needs liquor liability/dram shop coverage for injuries connected to serving alcohol.

Under the Business Auto Coverage Form, the covered "auto" definition generally includes:

1. Mobile equipment such as forklifts kept entirely on the insured's premises
2. Company aircraft and watercraft used to carry employees
3. Railcars operated on a private siding
4. Land motor vehicles, trailers, and semitrailers designed for use on public roads ✓

Why: A covered auto is a land motor vehicle, trailer, or semitrailer designed for travel on public roads, including attached machinery, but not most mobile equipment.

An insurer pulls a credit-based report on an applicant to underwrite an auto policy. Under the FCRA this is permitted because the insurer has:

1. Signed authorization from three neighbors willing to vouch for the applicant's driving history
2. A permissible purpose (underwriting the consumer's insurance) ✓
3. A federal subpoena issued by a United States district court before any credit file may be released
4. A standing court order, which the FCRA makes the only lawful route to any consumer's credit file

Why: The FCRA allows access to consumer reports for a permissible purpose, which includes underwriting insurance involving the consumer.

The policy section that defines the rights and duties of both parties, such as duties after a loss and cancellation, is the:

1. Insuring agreement
2. Declarations
3. Conditions ✓
4. Definitions

Why: The conditions section spells out the rules, rights, and duties governing how the policy operates for both insurer and insured.

A risk retention group is an insurer formed to provide liability coverage for:

1. Federal government employees and their immediate dependents only
2. Members engaged in similar businesses with similar exposures ✓
3. Individual homeowners who cannot obtain coverage in the admitted market
4. The general public on a statewide basis

Why: A risk retention group is a liability insurer owned by members with similar or related liability exposures who share that risk.

A delivery driver uses his personal car to deliver pizzas for a restaurant. Under his unendorsed PAP, a liability claim during a delivery is likely:

1. Subject to the public/livery conveyance exclusion and may be denied ✓
2. Covered under Part D only, because delivery use changes the physical damage rate but never the liability insuring agreement
3. Covered under Part B only, since medical payments carries no business-use restriction on the driver
4. Fully covered, because the restaurant's commercial policy is required by law to sit excess of the driver's pap

Why: Using a vehicle to carry property/persons for a fee (delivery for hire) can trigger the livery/business-use exclusion, so the claim may not be covered without commercial coverage.

What is an interline endorsement in a CPP?

1. A separate stand-alone policy
2. An endorsement that applies to a single coverage part only
3. A type of declarations page
4. An endorsement affecting more than one coverage part ✓

Why: Interline endorsements modify provisions that apply to more than one coverage part, such as common policy changes affecting both property and liability.

A crew member (seaman) injured aboard a vessel in navigation would most likely pursue a claim under which law?

1. The Defense Base Act
2. The Jones Act ✓
3. FECA
4. FELA

Why: The Jones Act protects seamen (crew members of vessels in navigation), allowing them to sue their employer for injuries caused by negligence, borrowing FELA's fault-based framework.

In a CPP, which provision governs cancellation, transfer of rights, and examination of books for ALL coverage parts?

1. The Causes of Loss form
2. The Declarations only
3. The Common Policy Conditions ✓
4. The BPP

Why: The Common Policy Conditions apply to every coverage part in the package and address cancellation, changes, inspections, premiums, and transfer of rights.

Under §33-24-46(c)(1) and (g), how must return of any unearned premium on a canceled residential property policy be processed?

1. On a short-rate basis under the FAIR Plan rules
2. By crediting the mortgagee only
3. Only after the policyholder files a written claim
4. In accordance with §33-24-44 ✓

Why: §33-24-46(g) directs that return of unearned premium be processed in accordance with §33-24-44 (the pro rata refund rules).

Under O.C.G.A. §34-9-82, if the employer furnished remedial treatment on account of the injury, a claim may be filed within:

1. One year after the date the employer first furnished treatment
2. Two years after the last remedial treatment furnished by the employer
3. One year after the date of the last remedial treatment furnished by the employer ✓
4. Five years after the injury, regardless of any treatment

Why: O.C.G.A. §34-9-82(a) allows filing within one year after the date of the last remedial treatment furnished by the employer.

An insured who leaves a car unlocked with keys inside because insurance will cover it demonstrates:

1. A legal hazard
2. A morale hazard ✓
3. A physical hazard
4. A moral hazard

Why: A morale hazard arises from carelessness or indifference to loss because insurance exists, increasing the likelihood of loss.

A medical professional wants protection against patient claims of negligent treatment. The correct policy is:

1. Medical Professional Liability (malpractice) / E&O ✓
2. Employee Benefits Liability, which covers errors in administering benefit plans
3. Commercial General Liability, since the patient suffered bodily injury
4. A performance bond for medical work

Why: Patient injury from professional treatment is excluded by the CGL and covered by medical professional liability (malpractice) insurance.

Actual cash value is generally calculated as:

1. The face amount of the policy
2. Market value plus profit
3. Replacement cost minus depreciation ✓
4. Replacement cost plus appreciation

Why: ACV is typically replacement cost less depreciation, reflecting the property's depreciated value at the time of loss.

Under O.C.G.A. §40-3-36(a)(4)(C)(i), if an insurer cannot obtain the certificate of title within how many days after the owner accepts a total loss claim, it may apply to the department for a salvage certificate of title?

1. 10 days
2. 30 days ✓
3. 90 days
4. 60 days

Why: O.C.G.A. §40-3-36(a)(4)(C)(i) allows the insurer (or authorized agent) to apply for a salvage certificate of title if it is unable to obtain the certificate within 30 days after the owner's acceptance of the total loss claim, upon showing settlement and two verifiable communications with the owner.

Under § 33-6-4(b)(8)(A)(iv)(II), an intentional violation of the prohibition on race-based discrimination may give rise to which additional remedy in a civil action?

1. Automatic license revocation by a jury
2. Criminal felony imprisonment
3. A federal cause of action only
4. Punitive or exemplary damages ✓

Why: O.C.G.A. § 33-6-4(b)(8)(A)(iv)(II) provides that an intentional violation of the race-based discrimination prohibition may give rise to punitive or exemplary damages in a civil action.

A loss resulting from physical damage that occurs immediately from the action of a peril is a:

1. Indirect loss
2. Net loss
3. Consequential loss
4. Direct loss ✓

Why: A direct loss is the immediate physical damage to property caused by a covered peril.

Under O.C.G.A. §33-24-44(d), when a policy is canceled for nonpayment of premium, or when a policy in effect less than 60 days is canceled for any reason, the minimum notice may be reduced to:

1. At least 5 days prior to the effective date, if the notice is hand delivered
2. At least 20 days prior to the effective date shown in the notice
3. No advance notice is required for nonpayment
4. At least 10 days prior to the effective date of cancellation ✓

Why: O.C.G.A. §33-24-44(d) permits satisfying the notice requirement by mailing/delivering written notice at least 10 days before the effective date when cancellation is for nonpayment or when the policy has been in effect less than 60 days.

Which is a standard exclusion under the Business Auto Coverage Form liability coverage?

1. Liability arising from an owned auto shown in the Declarations
2. Bodily injury to any member of the public who is struck by a covered auto on a public street
3. Workers compensation obligations / injury to an employee in the course of employment ✓
4. Property damage to a customer's building struck by a covered auto

Why: The BACF excludes liability covered by workers compensation and injury to an employee arising out of and in the course of employment, among other exclusions.

A building worth $250,000 has a 90% coinsurance requirement and is insured for $225,000. A $20,000 loss occurs (no deductible). The insurer pays:

1. $22,500
2. $18,000
3. $20,000 ✓
4. $16,000

Why: Required = 90% × $250,000 = $225,000. Insurance carried equals the requirement, so the full $20,000 loss is paid.

A business wants the broadest possible liability protection covering owned, hired, and non-owned autos under one symbol. Which symbol accomplishes this?

1. Symbol 8, hired autos only
2. Symbol 2, owned autos only
3. Symbol 1 (Any Auto) ✓
4. Symbol 7, scheduled

Why: Symbol 1, "Any Auto," is the broadest designation, covering owned, hired, and non-owned autos for liability.

A tenant rents space and is contractually responsible for fire damage to the landlord's building. The best coverage is:

1. Legal Liability Coverage (fire legal/property) ✓
2. Personal property of others under Coverage C
3. Business income
4. Builders Risk

Why: Legal Liability Coverage protects a tenant against liability for fire (or other covered peril) damage to property of others in their care, such as a leased building.

Business property on the residence premises is subject to a Coverage C special limit of approximately:

1. $5,000
2. $2,500 ✓
3. $200
4. $1,500

Why: Property used for business while on the residence premises carries a special limit (commonly $2,500) under Coverage C.

Under the PAP, liability coverage for property damage applies to damage to:

1. Property the insured rents, occupies, or has in its care, such as a leased garage
2. Cargo the insured hauls for a fee, up to its invoice value
3. Property of others that the insured is legally liable for damaging ✓
4. The insured's own covered auto after a collision

Why: Part A property damage liability covers damage to others' property the insured is legally responsible for, not the insured's own property.

A key function of the MCS-90 endorsement is that the insurer:

1. Automatically extends the policy to freight the carrier is hauling, up to the value shown on the bill of lading, with no cargo form
2. Is released from any further obligation once the declared policy limits are paid, even where the federal minimum for that cargo class is higher
3. Lets the carrier drop liability limits from the policy and rely on the endorsement alone
4. Must pay judgments for public liability even if the loss would otherwise be excluded, then may seek reimbursement from the insured ✓

Why: The MCS-90 obligates the insurer to pay covered public liability judgments even if the policy would not otherwise respond, with a right to recover those payments from the insured.

A mutual insurer is owned by its:

1. Policyholders ✓
2. Reinsurers
3. Producers
4. Stockholders

Why: A mutual insurer is owned by its policyholders, who may receive policy dividends from divisible surplus.

Under § 33-6-4(b)(8)(A)(iii), it is unfair discrimination to vary the issuance, premium, or rates for insurance against direct loss to residential property based solely upon which factor, without regard to objective loss experience?

1. The number of paid claims filed on the property in the preceding three years
2. The age or geographical location of the property within a rated fire district ✓
3. Whether the applicant maintained continuous property coverage for the prior 12 months
4. The type of construction and the presence of an approved fire alarm

Why: O.C.G.A. § 33-6-4(b)(8)(A)(iii) makes it unfair discrimination to vary residential property insurance based solely upon the age or geographical location of the property within a rated fire district, without regard to objective loss experience.