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Georgia Property and Casualty Insurance Exam |
Advanced/Hard Difficulty | Questions 1- 200: 100%
Pass Guaranteed | Graded A+
[1] An insured has a Commercial General Liability (CGL) policy with a General Aggregate limit of
$2,000,000, a Products-Completed Operations Aggregate limit of $2,000,000, and a Personal &
Advertising Injury limit of $1,000,000. During the policy period, a single occurrence leads to a
claim for bodily injury of $750,000 and a separate claim for personal injury of $1.2 million from
the same occurrence. After this single occurrence, and ignoring defense costs, how much of the
General Aggregate limit remains available for other bodily injury claims during the policy
period?
A. $2,000,000
B. $1,250,000
C. $800,000
D. $0
**☑ Correct Answer: D**
*☑ Explanation: The General Aggregate limit applies to all bodily injury and property
damage claims, excluding products-completed operations. A CGL policy is subject to a "per
occurrence" limit as well. However, the Personal & Advertising Injury limit is a separate
aggregate limit. The bodily injury claim of $750,000 erodes the General Aggregate by $750,000,
leaving $1,250,000. The personal injury claim of $1.2 million is paid from the separate Personal
& Advertising Injury aggregate, leaving nothing. The question asks for the General Aggregate
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remaining after this single occurrence. Since the occurrence triggered both the General
Aggregate for BI and the P&A Aggregate for PI, the General Aggregate is reduced by $750,000.
However, the General Aggregate is an annual limit, but more importantly, the General
Aggregate is not a per occurrence limit. The correct technical reading is that the General
Aggregate is reduced by $750,000, leaving $1,250,000. But note: the Personal & Advertising
Injury limit is part of the General Aggregate in most standard forms unless stated otherwise?
Wait, in the ISO CGL, Personal & Advertising Injury is a separate aggregate. The General
Aggregate is for BI and PD. The question states the P&A limit is $1,000,000. The claim is $1.2M.
The policy pays only up to $1M. The remaining General Aggregate for BI is $2M - $750k =
$1.25M. So the answer is B. Let's re-evaluate: The General Aggregate is eroded by BI and PD
claims. The P&A aggregate is separate. So B is correct.*
[2] In the context of Georgia's Fair Access to Insurance Requirements (FAIR) Plan, which of the
following statements accurately describes its function and operation?
A. It provides primary liability coverage for commercial properties that are deemed high-risk by
standard insurers.
B. It is a joint underwriting association that provides basic property insurance to applicants who
have been unable to procure coverage in the voluntary market.
C. It operates as a mandatory state fund that requires all property owners in coastal zones to
purchase coverage for wind and hail damage.
D. It functions as a reinsurance facility for insurers writing property insurance in the state,
guaranteeing solvency in the event of a catastrophic loss.
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☑ Correct Answer: B
☑ Explanation: The Georgia FAIR Plan is a joint underwriting association designed to
provide basic property insurance (fire, extended coverage, vandalism, etc.) to applicants who
are unable to obtain it from standard insurers. It is a market of last resort. Option A is incorrect
because it does not provide liability coverage. Option C is incorrect because it is not a
mandatory fund for all coastal owners, though it does offer wind coverage. Option D is incorrect
because it is a primary insurer, not a reinsurance facility.
[3] An insured owns a commercial building with a replacement cost of $1,000,000. She
purchases a Commercial Property policy with an 80% coinsurance clause. She insures the
building for $700,000. A fire causes a loss of $100,000 to the building. Assuming no deductible,
what is the maximum amount the insurer will pay?
A. $100,000
B. $87,500
C. $70,000
D. $0
**☑ Correct Answer: B**
*☑ Explanation: The coinsurance formula is: (Did Purchase / Should Have Purchased) x
Loss = Amount Paid. Should Have Purchased = 80% x $1,000,000 = $800,000. Did Purchase =
, 4
$700,000. Ratio = 700,,000 = 0.875. 0.875 x $100,000 = $87,500. The insured is a
coinsurer for the remaining $12,500. Option B is correct.*
[4] Which of the following is NOT a characteristic of a "claims-made" liability policy compared to
an "occurrence" policy?
A. The policy covers claims that are reported during the policy period, regardless of when the
incident occurred, provided the incident occurred after the retroactive date.
B. The policy is typically less expensive initially than an occurrence policy.
C. Tail coverage extends the reporting period for claims after the policy expires.
D. The policy covers incidents that occur during the policy period, regardless of when the claim
is reported.
☑ Correct Answer: D
☑ Explanation: Option D describes an occurrence policy, not a claims-made policy. In a
claims-made policy, the claim must be reported during the policy period (or within a specific
extended reporting period). The incident must also occur after the retroactive date. Options A,
B, and C are all characteristics of claims-made policies.
[5] The Georgia Commissioner of Insurance has the authority to do all of the following EXCEPT:
A. Issue cease and desist orders.
B. Revoke or suspend an insurer's certificate of authority.
Georgia Property and Casualty Insurance Exam |
Advanced/Hard Difficulty | Questions 1- 200: 100%
Pass Guaranteed | Graded A+
[1] An insured has a Commercial General Liability (CGL) policy with a General Aggregate limit of
$2,000,000, a Products-Completed Operations Aggregate limit of $2,000,000, and a Personal &
Advertising Injury limit of $1,000,000. During the policy period, a single occurrence leads to a
claim for bodily injury of $750,000 and a separate claim for personal injury of $1.2 million from
the same occurrence. After this single occurrence, and ignoring defense costs, how much of the
General Aggregate limit remains available for other bodily injury claims during the policy
period?
A. $2,000,000
B. $1,250,000
C. $800,000
D. $0
**☑ Correct Answer: D**
*☑ Explanation: The General Aggregate limit applies to all bodily injury and property
damage claims, excluding products-completed operations. A CGL policy is subject to a "per
occurrence" limit as well. However, the Personal & Advertising Injury limit is a separate
aggregate limit. The bodily injury claim of $750,000 erodes the General Aggregate by $750,000,
leaving $1,250,000. The personal injury claim of $1.2 million is paid from the separate Personal
& Advertising Injury aggregate, leaving nothing. The question asks for the General Aggregate
,2
remaining after this single occurrence. Since the occurrence triggered both the General
Aggregate for BI and the P&A Aggregate for PI, the General Aggregate is reduced by $750,000.
However, the General Aggregate is an annual limit, but more importantly, the General
Aggregate is not a per occurrence limit. The correct technical reading is that the General
Aggregate is reduced by $750,000, leaving $1,250,000. But note: the Personal & Advertising
Injury limit is part of the General Aggregate in most standard forms unless stated otherwise?
Wait, in the ISO CGL, Personal & Advertising Injury is a separate aggregate. The General
Aggregate is for BI and PD. The question states the P&A limit is $1,000,000. The claim is $1.2M.
The policy pays only up to $1M. The remaining General Aggregate for BI is $2M - $750k =
$1.25M. So the answer is B. Let's re-evaluate: The General Aggregate is eroded by BI and PD
claims. The P&A aggregate is separate. So B is correct.*
[2] In the context of Georgia's Fair Access to Insurance Requirements (FAIR) Plan, which of the
following statements accurately describes its function and operation?
A. It provides primary liability coverage for commercial properties that are deemed high-risk by
standard insurers.
B. It is a joint underwriting association that provides basic property insurance to applicants who
have been unable to procure coverage in the voluntary market.
C. It operates as a mandatory state fund that requires all property owners in coastal zones to
purchase coverage for wind and hail damage.
D. It functions as a reinsurance facility for insurers writing property insurance in the state,
guaranteeing solvency in the event of a catastrophic loss.
,3
☑ Correct Answer: B
☑ Explanation: The Georgia FAIR Plan is a joint underwriting association designed to
provide basic property insurance (fire, extended coverage, vandalism, etc.) to applicants who
are unable to obtain it from standard insurers. It is a market of last resort. Option A is incorrect
because it does not provide liability coverage. Option C is incorrect because it is not a
mandatory fund for all coastal owners, though it does offer wind coverage. Option D is incorrect
because it is a primary insurer, not a reinsurance facility.
[3] An insured owns a commercial building with a replacement cost of $1,000,000. She
purchases a Commercial Property policy with an 80% coinsurance clause. She insures the
building for $700,000. A fire causes a loss of $100,000 to the building. Assuming no deductible,
what is the maximum amount the insurer will pay?
A. $100,000
B. $87,500
C. $70,000
D. $0
**☑ Correct Answer: B**
*☑ Explanation: The coinsurance formula is: (Did Purchase / Should Have Purchased) x
Loss = Amount Paid. Should Have Purchased = 80% x $1,000,000 = $800,000. Did Purchase =
, 4
$700,000. Ratio = 700,,000 = 0.875. 0.875 x $100,000 = $87,500. The insured is a
coinsurer for the remaining $12,500. Option B is correct.*
[4] Which of the following is NOT a characteristic of a "claims-made" liability policy compared to
an "occurrence" policy?
A. The policy covers claims that are reported during the policy period, regardless of when the
incident occurred, provided the incident occurred after the retroactive date.
B. The policy is typically less expensive initially than an occurrence policy.
C. Tail coverage extends the reporting period for claims after the policy expires.
D. The policy covers incidents that occur during the policy period, regardless of when the claim
is reported.
☑ Correct Answer: D
☑ Explanation: Option D describes an occurrence policy, not a claims-made policy. In a
claims-made policy, the claim must be reported during the policy period (or within a specific
extended reporting period). The incident must also occur after the retroactive date. Options A,
B, and C are all characteristics of claims-made policies.
[5] The Georgia Commissioner of Insurance has the authority to do all of the following EXCEPT:
A. Issue cease and desist orders.
B. Revoke or suspend an insurer's certificate of authority.
