Georgia Property & Casualty Questions
Exam Questions and Verified Answers
Question 1
States obtained the principal right to regulate the business of insurance through the:
A.) Jones Act
B.) Federal Trade Commission Act
C.) McCarran Ferguson Act
D.) Gramm-Leach-Bliley Act
Correct Answer
C.) McCarran Ferguson Act
The McCarran-Ferguson Act of 1945 gave states jurisdiction over insurance
regulation, with limited applicability of certain federal laws.
Question 2
Lenny's auto insurance company responded to a lawsuit filed against him after he was
involved in an accident. The insurer also hired an attorney to represent Lenny in court.
For which of the following reasons would Lenny's insurer terminate its defense of the
lawsuit?
A.) Lenny was at fault.
B.) Lenny was not at fault.
C.) Lenny didn't like the insurance company's attorney.
D.) The insurer paid the limit of liability on Lenny's policy.
Correct Answer
D.) The insurer paid the limit of liability on Lenny's policy.
Page 1 of 278
,Question 3
Manny wants to establish a business that transports the goods of others for a fee. If
he only wants to insure his legal liability for damage to his customers' property, what
type of commercial inland marine insurance would be most suitable?
A.) trip transit policy
B.) annual transit policy
C.) motor truck cargo policy
D.) installation floater
Correct Answer
C.) motor truck cargo policy
Question 4
Someone broke into Mr. Johnson's house and stole $5,000 worth of firearms. What
Coverage C special limit of liability applies to the loss?
A.) No special limit applies to firearms.
B.) $500
C.) $1,000
D.) $2,500
Correct Answer
D.) $2,500
Question 5
The air conditioning unit at Iggy's Ice Cream Shop failed, causing its frozen inventory
to melt. How did Iggy's unendorsed commercial property policy respond to the loss
of frozen inventory?
A.) It paid for the loss under Business Personal Property coverage.
B.) It paid for the loss under Building Property coverage.
C.) It denied coverage under the Mechanical Breakdown exclusion.
D.) It denied coverage under the Power Failure exclusion.
Correct Answer
C.) It denied coverage under the Mechanical Breakdown exclusion.
Page 2 of 278
,Question 6
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
Question 7
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
D.) bailee provision
Correct Answer
A.) loss payable clause
Question 8
For which of the following acts may the Commissioner suspend or revoke an insurer's
certificate of authority?
A.) Permitting agents to sell replacement policies
B.) Refusing to be examined
C.) Advertising its policies in other states
D.) Transacting surplus lines insurance
Correct Answer
B.) Refusing to be examined
Refusing to allow the Commissioner to examine an agencies records and accounts
can result in the insurer's certificate of authority being revoked.
Page 3 of 278
, Question 9
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
Question 10
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
Question 11
Which of the following is most appropriate for a home that is under construction and
not yet inhabited?
A.) homeowners policy
B.) dwelling policy
C.) umbrella policy
D.) personal liability policy
Correct Answer
B.) dwelling policy
Page 4 of 278
Exam Questions and Verified Answers
Question 1
States obtained the principal right to regulate the business of insurance through the:
A.) Jones Act
B.) Federal Trade Commission Act
C.) McCarran Ferguson Act
D.) Gramm-Leach-Bliley Act
Correct Answer
C.) McCarran Ferguson Act
The McCarran-Ferguson Act of 1945 gave states jurisdiction over insurance
regulation, with limited applicability of certain federal laws.
Question 2
Lenny's auto insurance company responded to a lawsuit filed against him after he was
involved in an accident. The insurer also hired an attorney to represent Lenny in court.
For which of the following reasons would Lenny's insurer terminate its defense of the
lawsuit?
A.) Lenny was at fault.
B.) Lenny was not at fault.
C.) Lenny didn't like the insurance company's attorney.
D.) The insurer paid the limit of liability on Lenny's policy.
Correct Answer
D.) The insurer paid the limit of liability on Lenny's policy.
Page 1 of 278
,Question 3
Manny wants to establish a business that transports the goods of others for a fee. If
he only wants to insure his legal liability for damage to his customers' property, what
type of commercial inland marine insurance would be most suitable?
A.) trip transit policy
B.) annual transit policy
C.) motor truck cargo policy
D.) installation floater
Correct Answer
C.) motor truck cargo policy
Question 4
Someone broke into Mr. Johnson's house and stole $5,000 worth of firearms. What
Coverage C special limit of liability applies to the loss?
A.) No special limit applies to firearms.
B.) $500
C.) $1,000
D.) $2,500
Correct Answer
D.) $2,500
Question 5
The air conditioning unit at Iggy's Ice Cream Shop failed, causing its frozen inventory
to melt. How did Iggy's unendorsed commercial property policy respond to the loss
of frozen inventory?
A.) It paid for the loss under Business Personal Property coverage.
B.) It paid for the loss under Building Property coverage.
C.) It denied coverage under the Mechanical Breakdown exclusion.
D.) It denied coverage under the Power Failure exclusion.
Correct Answer
C.) It denied coverage under the Mechanical Breakdown exclusion.
Page 2 of 278
,Question 6
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
Question 7
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
D.) bailee provision
Correct Answer
A.) loss payable clause
Question 8
For which of the following acts may the Commissioner suspend or revoke an insurer's
certificate of authority?
A.) Permitting agents to sell replacement policies
B.) Refusing to be examined
C.) Advertising its policies in other states
D.) Transacting surplus lines insurance
Correct Answer
B.) Refusing to be examined
Refusing to allow the Commissioner to examine an agencies records and accounts
can result in the insurer's certificate of authority being revoked.
Page 3 of 278
, Question 9
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
Question 10
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
Question 11
Which of the following is most appropriate for a home that is under construction and
not yet inhabited?
A.) homeowners policy
B.) dwelling policy
C.) umbrella policy
D.) personal liability policy
Correct Answer
B.) dwelling policy
Page 4 of 278
