Property & Casualty

If the premiums for a policy will be increased by more than 15 percent, how much warning must the insured get?

45 days

Authorized insurance companies are examined by the Commissioner at least once every

5 years

An agent must be a resident of the state and be present in the state for at least how many months each year?

6

If a policy has been in effect for at least 60 days or is due for renewal, a cancellation may only be effected for which of the following reasons?

A change in the risk that substantially increases the hazard insured against

A willful violation of an agent's fiduciary responsibility that involved funds exceeding $1,000 will be considered

A felony

An uninsured motor vehicle includes all of the following EXCEPT

A vehicle being used for public livery is a standard exclusion in uninsured motorist coverage, not a category or type of uninsured motor vehicle.

Which of the following conditions must be met for a vehicle to be licensed in Georgia?

A vehicle may not be licensed in Georgia until the owner has furnished proof of auto liability insurance or an approved self-insurance plan. This is in compliance with Georgia's financial responsibility law.

Who are the parties to a bond?

Principal - obligee - surety The principal makes a promise to perform for the obligee; the surety pays loss to obligee if the promise is not kept.

Which of the following symbols is available to an insured with vehicles subject to no-fault coverage?

Symbol 5 covers owned autos subject to no-fault coverage

How is the Commissioner of Insurance selected to be the chief officer of the Department of Insurance?

The Commissioner is elected to office for a term of 4 years.

The valued policy statute applies in which of the following events?

The valued policy statute applies in the event of total loss by fire to a one or two family residential building or structure.

Which of the following would be covered under the crime coverage inside the premises - theft of money and securities?

Theft of money and securities would cover loss or damage to a locked safe, cash register, or vault inside the premises.

Supplementary payments on a CGL provide all of the following EXCEPT

Up to $500 a day for lost earnings and $2,000 for the cost of bail bonds. Supplementary payments will cover only $250 for these.

Which of the following would NOT be covered under the liability section of a personal auto policy?

Vehicles with fewer than four wheels are not eligible for coverage under a PAP

The insured with a claims-made commercial general liability (CGL) policy may request in writing claim and occurrence information from the insurer at any time up to 60 days after the policy period ends. The insurer must provide the information

Within 45 days

Workers compensation rating is developed by applying a rating bureau job classification rate to each

Workers compensation rating is developed by applying a rating bureau job classification rate to each $100 of payroll.

The extension of coverage under the Commercial Fine Arts Floater includes coverage for newly acquired property for a maximum of

$10,000.

If a policy is cancelled due to nonpayment of premium, how many days' advance notice must the insurer give the policyholder before cancellation?

10 days

An insured must get advance warning if the premiums will be increased by more than

15%

An insurance agent has received a request for a hearing from the Commissioner. Within how many days must the hearing be held?

30 days

How many days before a policy is nonrenewed must an insurer deliver or mail written notice to the insured?

30 days

Crime insurance is usually written on what basis?

All-risk or open peril

Which would NOT be covered by the inside the premises - robbery or safe burglary of other property coverage?

An employee is caught stealing cash from the register. Dishonest or criminal acts of any employee or representative are specifically excluded.

Workers compensation statutes provide coverage for diseases that occur as a result of working in the employer's working environment. Which of the following is an example of a disease that would NOT be covered by such provisions?

An employee of a medical facility who suffers from a common cold. Although a cold could have been caught as a result of the working environment, it is not specific enough to that environment for it to be considered causal.

What method of premium computation relates an employer's losses, payroll, and premiums to the rating bureau's classifications of operations?

An experience modification factor is developed by a rating bureau. The calculations relate an employer's losses, payroll, and premiums, segregated according to classifications of operations, all as reported to the bureau by the employer's insurance company.

An agent commingled $500 of insurance premiums collected with new applications with his personal funds. The agent could be found guilty of a

Any willful violation will be considered a misdemeanor unless the amount involved exceeds $1,000, in which case the violation will be considered a felony.

Which of the following types of agent authority is also called "perceived authority"?

Apparent

Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?

Apparent authority (also known as perceived authority) is the appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.

Which of the following statements is true regarding the premium computation for workers compensation insurance?

Because the initial premium calculation is based on estimated payrolls, a premium auditor may inspect actual payrolls paid to ensure that adequate premiums are being paid

All of the following situations would be covered under a professional liability policy EXCEPT

C A. An accountant's error that inflated a bid and caused a client to lose a major account. B. Negligence of an architect who designed an unsafe building. C. The failure of an attorney to properly defend a client due to his personal dislike of the client. D. Failure of a doctor to render the quality of care that is customary in the medical field. a bid

A professional who wants coverage for all liability exposures should purchase what form of liability insurance?

Commercial general liability excludes professional liability, and professional liability does not cover premises liability.

With regards to a homeowners policy, which coverage provides for indirect or consequential losses?

Coverage D

Which of the following is a common exclusion found in Part D: Coverage for Damage to Your Auto of a PAP?

Damage due to wear and tear, freezing, mechanical or electrical breakdown, and road damage to tires is a common exclusion to the physical damage coverage section

Which of the following special liability coverages will provide protection to managers of a corporation for claims arising from a wrongful act committed by the manager while in an official capacity?

Directors and officers liability policies will pay those damages that the corporation or nonprofit entity would, under the law, be required to reimburse the individual director or officer for judgments arising from actions alleging wrongful acts.

In this state, no automobile insurance policy issued as proof of financial responsibility will be issued with bodily injury and property damage limits less than

In Georgia, the limits are 25/50/25: no less than $25,000 for bodily injury or death of one person; $50,000 for bodily injury or death of two or more people; and $25,000 for damage to property of others.

An auto dealer reported $500,000 worth of automobiles on its lot as the end of May to its insurer. On June 10, it received $200,000 worth of cars. By June 20, the dealership sold $100,000 worth of cars. A hail storm on June 21 caused $50,000 worth of damage to the inventory. Without considering any deductibles, how much will the insurer pay for damages? (Dollar amounts are rounded to the nearest hundred.)

Inventory at the time of the damage exceeded the reported inventory at the end of the previous month. Therefore, the insurer will pay only a portion of the total damages. Reported inventory = $500,000 + $200,000 = $700,000. $700,000 - $100,000 worth of cars sold = $600,000. Therefore, the insurer will pay $50,000 X 5/6 = $41,667 (or $41,700 rounded up)

All of the following are factors in rating workers compensation insurance EXCEPT

Sales. The hazard of the work, the amount of payroll, and the employer's prior loss experience are all rating factors.

In a personal umbrella policy, the amount paid by the insured for certain losses no covered under the primary coverage is called

Self-insured retention

Which of the following would be covered under personal injury liability?

Slander

How are surety bonds different from insurance?

Surety bonds guarantee specific duties or obligations will be fulfilled; insurance pays for losses.

An auto owner in this state has motor vehicle coverage with the limits of 25/50/25. All of the following are true EXCEPT

The driver must obtain new insurance

Which professional liability form provides coverage for liability arising out of error or mistakes made in rendering medical services?

The physicians, surgeons and dentists malpractice form provides coverage for liability arising out of malpractice, error, or mistakes made in rendering or failing to render professional medical services.

A plasterer has finished a job. What kind of liablilty coverage would protect him if the plaster falls and hurts someone because he did not do the job correctly?

The plasterer's completed operations pays because his negligence led to the loss. It does not pay to redo the job.

Which of the following is NOT a responsibility of an insurance agent?

Underwriting the contract

An insurer decides to stop issuing auto policies in this state, and is planning to cancel the existing policies. Along with a notice of nonrenewal, the insurer must send which of the following to its policyholders?

When an auto policy is nonrenewed for a reason other than nonpayment of premium, the insurer must notify the policyowners of their eligibility for the Automobile Insurance Plan.

When would uninsured motorist coverage apply?

When the other party is legally liable but has no insurance

The bankruptcy provision found in the personal auto policy states that bankruptcy of the insured

Will not relieve the insurer of its policy obligations; the insurer must provide the coverage stated in the policy.

Any insurer who issues a crop insurance policy, other than federal crop insurance, for tobacco crops grown in Georgia, shall make available coverage for what until the crop is harvested?

Wind and/or hail

A binder is effective for a period of

90 days

Professional photographers and musicians may insure their equipment with

A commercial articles floater.

Coverage for medical payments under a Personal Auto Policy applies to expenses following a covered accident that are incurred and services rendered within what time period?

A coverage requirement in the policy states that medical expenses must be incurred within 3 years of the accident. The services also must be rendered within that time period.

With respect to auto insurance, the term owned autos includes all of the following EXCEPT

A pickup or can titled to and used in the named insured's business

The primary purpose of a surety bond is to

A surety bond guarantees the performance of the principal

The Georgia Workers Compensation Assigned Risk Plan exists to provide worker compensation coverage to

Employers who do not qualify for coverage in the voluntary market.

An insurance producer fails to obtain automobile insurance for a client after agreeing to do so. The client is involved in an automobile accident after running a red light and is found to be at fault. the damage to the other vehicle totals $5,000. Which statement regarding the producer's errors and omissions liability policy is true?

It will provide coverage because the damage to the client resulted from the producer's negligence. Errors and omissions coverage protects insurance producers and brokers from financial losses they may suffer if an insured sues to recover his or her financial loss due to the producer giving incorrect advice or not informing the insured of important issues.

The type of professional liability coverage a medical doctor needs is

Malpractice coverage

Workers compensation benefits are provided for an employee injury or death that arises out of the course of normal employment in all of the following situations EXCEPT

On his evening stroll, an employee of an advertising company is injured while watching a competitor's billboard sign being removed from an advertising site. Workers compensation provides coverage for injuries that occur in the course of normal employment, activities that add to the employer's goodwill and interests, and activities that an employee normally would engage in during the course of employment.

A bond is written for a set limit, and the surety will be liable only for this amount of the limit. This limit is known as the

Penalty

A customer was injured in a supermarket parking lot when a grocery cart collided with the customer's leg. Coverage for this claim would be provided under

Premises and operations would cover claims arising from injuries that occur on the insured's premises or because of the insured's business operations.

Crunchy Flakes Cereal Company shipped some of its product in faulty containers that caused spoilage. This resulted in some consumers becoming ill. If the company is sued for this event, it would be an example of a

Product liability claim; provides coverage against loss arising out of the legal liability incurred by a manufacturer, merchant, or distributor due to injury or damage resulting from the use of a covered product

Under the personal auto policy, liability for bodily injury resulting from the insured's use of a nonowned automobile is

Provided by the insured's policy on an excess basis. Automobile insurance follows the insured auto, so the coverage written on the auto is primary. Automobile insurance also follows the insured as excess over the collectible insurance

The Standard Fire Insurance policy DOES NOT apply to which type of insurance?

The Standard Fire Insurance policy does not apply to casualty insurance, marine or transportation insurance, or insurance on growing crops.

An insurance agency could purchase an errors and omission insurance policy which would provide protection in the event of any of the following events EXCEPT

The agency loses commission income from policies that were not issued by the insurer. E & O insurane does not cover claims arising out of criminal wrongs.

If the insurer pays an amount less than the amount insured under the policy in the event of a total loss to property, how much of the insured's premium must the insurer return?

The amount of premium actually paid and the premium that would have been charged for a policy with an amount of insurance equal to the amount paid by the insurer for the loss

A dealership loans a car to its customer to use while the dealership is repairing the customer's car. If the dealership has business auto physical damage coverage and a customer's automobile insurance does not cover damages to loaner cars, which of the following is true?

The loaner vehicle is covered by the business auto policy.

Which of the following statements is true concerning a bonded contractor who defaults on a construction performance contract?

The obligee may engage another contractor and then seek reimbursement from the surety. The bonding company would have to see that the job was completed and then seek recovery for its expenses from the bonded contractor (principal).

The occurrence form trigger is based on which of the following?

The occurrence form trigger is based on the date when the injury or damage occurs and covers claims made at any time for injuries that occur during the policy period.

B&B Market was sued when an employee detained a person he believed to be a shoplifter, but the person turned out to be the meter reader. Which coverage would apply to this suit?

This suit would fall under the coverage of personal injury, damage to the character of the claimant

Prior to state-directed workers compensation statutes being enacted, employees had

To sue an employer for the "loss" and prove that the employer was at fault

Workers compensation benefits in Georgia are limited to what amount of a worker's average weekly wage?

Two-thirds, up to $575/week

All of the following are supplemental payments included in the liability section of a personal auto policy EXCEPT

Up to $100 for the cost to secure the release of a vehicle from an impoundment lot following a covered accident.

Georgia requires that all owners and operators of motor vehicles in the state carry which type of auto insurance as evidence of security in complying with the state's financial responsibility law?

Auto liability coverage

With respect to the personal auto policy, which of the following vehicles could be classified as a nonowned auto?

Because the personal auto policy provides coverage on both owned and nonowned autos, situations will exist in which two or more policies will apply in a given situation. If the auto is owned and insured by someone other than the operator, then that policy will be primary coverage for that auto, and the operator's insurance would act as excess.

In any case where there is a controversy or dispute between the insurance company and the insured, the soliciting agent is the agent of the

Company. An agent's license authorizes them to represent an insurance company, not the insured.

If an employer in a state with elective workers compensation laws chooses not to be subject to those laws, what does the employer lose?

Elective law means the employer does not have to be subject to the state's workers compensation laws, but if the employer chooses not to be subject to the laws, it loses its common law defenses against liability suits.

Directors and officers liability insurance defends actions against a corporation or its officers and directors alleging wrongful acts. With regard to the coverage provided, wrongful acts include any of the following EXCEPT

Embezzlement is a criminal act. There is no "standard" director and officers policy; however, most policies specifically exclude coverage for defense or payment of claims resulting in fines or penalties resulting from criminal acts, nor will they pay punitive damages.

An insured is involved in an auto accident in another state. The state has a financial responsibility law that specifies limits of liability higher than the limits shown in the declarations. What amount will the insured's policy pay?

Higher limits

Who is NOT considered an employee in a commercial general liability (CGL) policy?

In a CGL policy, a temporary worker is not considered an employee

Professional liability coverage protects against legal liability resulting from

In fields other than medical, professional liability is classified as errors and omission insurance.

CGL Coverage B (Personal and Advertising Injury) will cover

Inadvertent injury to others caused in the course of advertising the insured's product

If an insured needs protection on a property other than money and securities inside the premises from losses caused by breaking and entering after business hours, which of the Crime Coverage forms should be purchased?

Inside Premises - Robbery or Burglary of Other Property covers taking of property, other than money or securities, when there is visible sign of forcible entry or exit from the premises.

Which of the following statements is NOT true regarding a personal umbrella liability policy?

It provides errors and omissions coverage for an agency; personal umbrella policies cover the personal exposure of the insured.

Which of the following liability policies is usually written on a "claims-made" form?

Most professional liability policies are written on a claims-made form which means that coverage may not be provided for claims arising from acts that occurred prior to the inception of the policy and for claims arising for acts that occur during the coverage period, but where the claim is not made until after the expiration of the policy, will not be covered, unless an "extended reporting period" (tail-coverage) is purchased.

When an insurance policy does not offer a continuation or replacement at its expiration date, it is considered a

Nonrenewal.

On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are

Not taxable since the IRS treats them as a return of a portion of the premium paid.

When ABC Appliance's marketing stated that its mowing machine was the only safe mower available for purchase in town, ABC was sued by XYZ Lawn and Garden. ABC's coverage would come from which part of its general liability coverage?

Personal and advertising injury liability responds to claims resulting from oral or written publication of material. It is included automatically in the Insurance Services Office, Inc. (ISO) commercial general liability coverage as Coverage B.

Surety bonds are written for a definite limit called

The bond penalty. If the specific obligation guaranteed by the bond is not fulfilled, a sum of money, known as a penalty, becomes payable as damages.

The claims-made trigger is based on which of the following?

The claims-made trigger is based on the date the claim is first made in writing against an insured for injury or damage that occurred on or after the policy's retroactive date.

The employee theft crime policy includes a coverage extension that applies to employees temporarily outside of the coverage territory for up to

The coverage includes a coverage extension that applies to employees temporarily outside the coverage territory for up to 90 days

What is the business auto coverage territory for?

The defined coverage territory for both business auto policies and personal auto policies is the United States, its territories and possessions, and Canada, or worldwide for private passenger hired autos.

When an umbrella policy is broader than underlying insurance and it pays a loss that is not covered by the underlying policy, it usually only pays

The excess over the self-insured retention. Retention is the equivalent of a deductible in property insurance.

All of the following conditions must exist for injury or damage to be included in the products and completed operations hazard of a commercial general liability policy EXCEPT

The injury or damage must occur within 90 days after the insured's work is completed. There is no time limit on the injury or damage

According to the standard workers compensation and employer liability policy form, a state should be listed Part Three - other states' insurance of the workers compensation and employers liability policy when

The insured expects to extend operations to that state. By naming a state in Part Three of a workers compensation and employers liability (WC&EL) policy, an employer provides that company operations may be conducted in that state.

In a participation plan, the insured may be eligible for which of the following?

The insured is eligible for dividends (partial premium refund) if the experience during the policy term falls within guidelines established by the insurer at the inception of the policy term. Dividends are not guaranteed, and to be eligible for participation, the account must generate a minimum amount of premium.

What is the primary objective of workers compensation?

The payment of benefits to employees for injuries arising out of their employment

A professional liability policy will provide coverage for loss in all of the following cases, except, when the insured doctor was shown to be

The policy will not cover criminal acts of an insured

An insured has a personal auto policy with both comprehensive (other-than-collision) and collision coverage. His car is stolen and recovered five days later. If the insured claims transportation expenses of $20/day, how much will his policy pay?

The policy will pay $20/day after 48 hours, not to exceed 30 days in total; $60

All of the following statements concerning liability coverage are true EXCEPT

The policyholder can sue the insurer whether or not all conditions and provisions of the policy have been met.

The party of a surety or fidelity bond who promises to fulfill the obligation is the

The prinicipal purchases the bond and promises to perform

If an insured has an umbrella liability policy in addition to his personal auto policy, which would be considered the underlying policy?

The underlying policy is the primary liability policy; auto policy