GEORGIA PROPERTY AND CASUALTY INSURANCE EXAM QUESTIONS AND CORRECT ANSWERS 100% VERIFIED (GRADED A+)

GEORGIA PROPERTY AND
CASUALTY INSURANCE EXAM
QUESTIONS AND CORRECT
ANSWERS 100% VERIFIED
(GRADED A+)

1. Which of the following best defines a "hazard" in insurance
terminology?

 A) An event that causes loss
 B) A condition that increases the likelihood of a loss
 C) The amount of money paid for coverage
 D) The legal right to sue

CORRECT ANSWERS: B) A condition that increases the likelihood of a
loss

 A peril is the cause of loss (fire, theft), while a hazard is a condition that
makes loss more likely.




2. "Moral hazard" most commonly arises from which of the following?

 A) Physical defects in property
 B) The insured's careless behavior after obtaining coverage
 C) Natural disasters
 D) Legal requirements for insurance

, CORRECT ANSWERS: B) The insured's careless behavior after obtaining
coverage

 Moral hazard refers to increased risk caused by the insured's behavior or
character after a policy is in place (e.g., reduced diligence).




3. Which risk-handling method involves the insurer assuming the
financial burden of loss?

 A) Avoidance
 B) Retention
 C) Transfer
 D) Reduction

CORRECT ANSWERS: C) Transfer

 Transfer shifts financial risk to another party (the insurer) through the
purchase of insurance.




4. An insured who keeps a small, low-value tool in a workshop and
does not insure it is exercising which risk-handling technique?

 A) Avoidance
 B) Retention
 C) Sharing
 D) Reduction

CORRECT ANSWERS: B) Retention

 Retention means the insured retains the risk and accepts any loss that may
occur.

, 5. Insurable interest must exist at which point for a property-damage
policy?

 A) At the time the loss occurs
 B) At the time the policy is issued
 C) At the time the claim is filed
 D) At the time the policy is cancelled

CORRECT ANSWERS: A) At the time the loss occurs

 For property and casualty insurance, insurable interest must exist at the
time of loss, not merely at policy inception.




6. Which of the following is NOT a requirement for a valid contract?

 A) Agreement
 B) Competent parties
 C) Legal documents
 D) Consideration

CORRECT ANSWERS: C) Legal documents

 Valid contracts require agreement, competent parties, consideration, and
legal purpose—not necessarily formal documents.




7. An insurance binder is:

 A) A temporary short-term evidence of coverage
 B) A large bound volume of rules, rates, and forms

,  C) A temporary agreement to pay a claim pending final settlement
 D) A rate manual supplied by a rating organization

CORRECT ANSWERS: A) A temporary short-term evidence of coverage

 A binder provides temporary coverage pending policy issuance. No binder
shall be valid beyond 90 days of its effective date.




8. "Commingling" refers to:

 A) Violating state rules on transacting controlled business
 B) Improperly mixing personal funds with insurer or insured's funds
 C) Violating the insurer's privacy protection rules
 D) Improperly mixing funds in the insurer's general and separate accounts

CORRECT ANSWERS: B) Improperly mixing personal funds with insurer
or insured's funds




9. If an insured deliberately hides a material fact, the insurer may deny
the claim based on:

 A) Waiver
 B) Estoppel
 C) Concealment
 D) Representation

CORRECT ANSWERS: C) Concealment

 Concealment of material information is grounds for denial because the
insurer was misled.