GA PROPERTY AND CASUALTY TEST 2024 NEWEST
EXAM 2 VERSIONS (VERSION A AND B) 450 QUESTIONS
WITH DETAILED VERIFIED ANSWERS AND RATIONALES
(100% CORRECT) /ALREADY GRADED A+
Insurance - ANSWER: a risk management technique that transfers the potential
financial consequences of certain specified loss exposures from the insured to the
insurer
Insurer - ANSWER: a company that sells insurance policies to protect insureds against
financial hardship caused by financial losses
Insured - ANSWER: any person or organization who is insured under an insurance
policy
Premium - ANSWER: The price of the insurance coverage provided for a specified
period
Risk - ANSWER: Uncertainty about outcomes that can be either negative or positive
Loss Exposure - ANSWER: any condition or situation that presents possibility of loss,
whether or not an actual loss occurs
Transfer - ANSWER: in the context of risk management, a risk financing technique by
which the financial responsibility for losses and variability in cash flows is shifted to
another party
Insurance Policy - ANSWER: a contract that states the agreement between and the
rights and duties of the insurer and insured
Pooling - ANSWER: an arrangement that facilitates the grouping together of loss
exposures and the resources to pay for any losses that may occur
Property-Casualty Insurance - ANSWER: one of the two main sectors of the insurance
industry, encompassing numerous types of insurance, most of which cover the
financial consequences of damage to one's own property or legal liability to others
Legal Liability - ANSWER: the legally enforceable obligation of a person or an
organization to pay a sum of money to another person or organization
Homeowners Policy - ANSWER: policy that covers most of the property and liability
loss exposures that arise out of the residential property ownership and occupancy,
as well as property and liability loss exposures that individuals and families may have
while they are away from their residences
,Personal Liability Coverage - ANSWER: coverage for damages, plus costs of any
defense, related to a claim or suit brought against the insured that resulted from
bodily injury or property damage caused by an occurrence covered under a policy
Personal Auto Insurance (PAP) - ANSWER: an insurance policy that covers an
individual or a family against loss exposures arising out of the ownership,
maintenance, or use of automobiles
Personal Watercraft Policy - ANSWER: an insurance policy that covers an individual's
or a family's loss exposures arising out of the ownership, maintenance, or use of
watercraft used principally for recreational or personal transportation purposes
Umbrella Liability Policy - ANSWER: A liability policy that provides excess coverage
above underlying policies and may also provide coverage not available in the
underlying policies, subject to a self-insured retention.
Commercial Package Policy (CPP) - ANSWER: policy that covers two or more lines of
business by combining ISO's commercial lines coverage parts
Businessowners Policy (BOP) - ANSWER: a package policy that combines most of the
property and liability coverages needed by small and medium-size businesses
Commercial Property Insurance - ANSWER: insurance that covers commercial
buildings and their contents against various types of property loss
Commercial Crime Insurance - ANSWER: insurance that covers 1. money & securities
against numerous perils and 2. property other than money and securities against
crime perils, such as employee theft, robbery, theft by outsiders, and extortion
Comercial General Liability Insurance (CGL) - ANSWER: insurance that covers many of
the common liability loss exposures faced by an organization, including its premises,
operations, and products
Commercial Auto Insurance - ANSWER: insurance that covers a business or a not-for-
profit organization against loss exposures arising out of the ownership, maintenance,
or use of automobiles
Workers Compensation Insurance - ANSWER: insurance that provides coverage for
benefits an employer is obligated to pay under workers compensation laws
-risk
-transfer
-pooling - ANSWER: The 3 essential components of the insurance mechanism
because when a mechanism for paying the costs of losses is put into place, the risk of
uncertainty regarding the financial consequences of loss is reduced - ANSWER:
,Explain why transferring risk to an insurer reduces uncertainty for individuals and
businesses
risks are transferred through the use of an insurance policy - ANSWER: Explain how
risks are transferred from an individual to an insurer
-injuries to customers while on the business premises
-injuries to employees that occur in the course of their jobs
-physical damage to owned buildings
-physical damage to owned personal property
-burglary or robbery at the store - ANSWER: Application Question: Joe owns a small
business store and is concerned about the financial consequences of losses that
might arise from the store's operations. Describe THREE loss exposures related to
this store
-personal insurance policies
-commercial insurance policies - ANSWER: Identify the 2 broad categories of
property-casualty insurance policies that are available for families and business
organizations
-homeowners
-personal auto
-personal watercraft
-personal umbrella - ANSWER: List the most common types of personal insurance
policies (4)
protects insureds for damage to the home and its contents by fire, wind, lightning,
and other causes of loss. Most homeowners policies also include coverage for theft
of the contents of the home. - ANSWER: Describe the property coverage provided by
a homeowners policy
-covers losses due to bodily injury to another person or damage to property of
others arising from an auto accident for which the insured is liability.
also covers damage to the vehicle as the result of a collision, or from fire, theft, wind,
contact with a bird or another animal, and other causes of loss. - ANSWER: Describe
the coverage provided by a personal auto policy (PAP)
-commercial property
-commercial crime
-commercial general liability
-commercial auto
-workers compensation
-commercial umbrella - ANSWER: List the common commercial insurance policies (6)
protects against theft of contents such as cash registers, computers, inventory, and
other business property, and of money that could be stolen in a robbery during
business hours or during a burglary that occurs after business hours. It could also
, include employee dishonesty coverage for crimes committed by employees. -
ANSWER: Describe the coverage provided by commercial crime insurance
many business organizations purchase a commercial package policy (CPP) or a
business owners policy (BOP) - ANSWER: Identify the types of policies purchased by
business organizations that combine property, crime, and liability coverage in one
policy
they are required by law to pay certain benefits to employees who are injured on the
job or who contract a job-related disease. It pays the cost of medical care, lost
wages, and other benefits as specified by state law - ANSWER: Explain why business
organizations purchase workers compensation coverage
provides additional limits beyond those provided under the CGL, commercial auto,
and other policies protecting the insured in the event of a large liability loss -
ANSWER: Explain the benefit to a business organization of purchasing a commercial
umbrella policy
-loss exposures arising from the home and their personal property. Could be covered
by the property coverage of a homeowners policy
-legal liability arising out of the ownership of the home, such as for injuries to a
visitor to the home. Could be covered by the personal liability coverage of the
homeowners policy
-loss exposure arising out of the ownership of 2 vehicles, for which the PAP would
provide liability coverage and coverage for damage to an insured vehicle resulting
from collision, fire, and other causes of loss
-the producer may recommend a personal umbrella policy to provide additional
limits over those provided by the homeowners and PAP policies - ANSWER: Rob and
his wife Laurie own a two-story single-family home in a suburban subdivision. The
home incised an attached garage, where Rob and Laurie park their two-late model
vehicles: a pickup truck and minivan. Rob and Laurie are concerned that damage to
the home could result in substantial financial loss. They have contacted their local
insurance producer to discuss these concerns and to design an insurance program to
meet their personal insurance needs. *Describe Rob and Laurie's personal loss
exposures, and identify the policies that would cover these exposures
indemnifying insureds for covered losses - ANSWER: Describe the major benefit of
insurance for the insured
because insurance reduces the uncertainty regarding payment for losses, more new
businesses are established. Also, existing businesses are more likely to expand into
new operations and to hire more employees. - ANSWER: Explain how business
benefits from the reduction of uncertainty provided by insurance protection
by allowing individuals and businesses to exchange a small,certain premium amount
for what could be much larger, unknown loss amounts. It therefore eliminates the
EXAM 2 VERSIONS (VERSION A AND B) 450 QUESTIONS
WITH DETAILED VERIFIED ANSWERS AND RATIONALES
(100% CORRECT) /ALREADY GRADED A+
Insurance - ANSWER: a risk management technique that transfers the potential
financial consequences of certain specified loss exposures from the insured to the
insurer
Insurer - ANSWER: a company that sells insurance policies to protect insureds against
financial hardship caused by financial losses
Insured - ANSWER: any person or organization who is insured under an insurance
policy
Premium - ANSWER: The price of the insurance coverage provided for a specified
period
Risk - ANSWER: Uncertainty about outcomes that can be either negative or positive
Loss Exposure - ANSWER: any condition or situation that presents possibility of loss,
whether or not an actual loss occurs
Transfer - ANSWER: in the context of risk management, a risk financing technique by
which the financial responsibility for losses and variability in cash flows is shifted to
another party
Insurance Policy - ANSWER: a contract that states the agreement between and the
rights and duties of the insurer and insured
Pooling - ANSWER: an arrangement that facilitates the grouping together of loss
exposures and the resources to pay for any losses that may occur
Property-Casualty Insurance - ANSWER: one of the two main sectors of the insurance
industry, encompassing numerous types of insurance, most of which cover the
financial consequences of damage to one's own property or legal liability to others
Legal Liability - ANSWER: the legally enforceable obligation of a person or an
organization to pay a sum of money to another person or organization
Homeowners Policy - ANSWER: policy that covers most of the property and liability
loss exposures that arise out of the residential property ownership and occupancy,
as well as property and liability loss exposures that individuals and families may have
while they are away from their residences
,Personal Liability Coverage - ANSWER: coverage for damages, plus costs of any
defense, related to a claim or suit brought against the insured that resulted from
bodily injury or property damage caused by an occurrence covered under a policy
Personal Auto Insurance (PAP) - ANSWER: an insurance policy that covers an
individual or a family against loss exposures arising out of the ownership,
maintenance, or use of automobiles
Personal Watercraft Policy - ANSWER: an insurance policy that covers an individual's
or a family's loss exposures arising out of the ownership, maintenance, or use of
watercraft used principally for recreational or personal transportation purposes
Umbrella Liability Policy - ANSWER: A liability policy that provides excess coverage
above underlying policies and may also provide coverage not available in the
underlying policies, subject to a self-insured retention.
Commercial Package Policy (CPP) - ANSWER: policy that covers two or more lines of
business by combining ISO's commercial lines coverage parts
Businessowners Policy (BOP) - ANSWER: a package policy that combines most of the
property and liability coverages needed by small and medium-size businesses
Commercial Property Insurance - ANSWER: insurance that covers commercial
buildings and their contents against various types of property loss
Commercial Crime Insurance - ANSWER: insurance that covers 1. money & securities
against numerous perils and 2. property other than money and securities against
crime perils, such as employee theft, robbery, theft by outsiders, and extortion
Comercial General Liability Insurance (CGL) - ANSWER: insurance that covers many of
the common liability loss exposures faced by an organization, including its premises,
operations, and products
Commercial Auto Insurance - ANSWER: insurance that covers a business or a not-for-
profit organization against loss exposures arising out of the ownership, maintenance,
or use of automobiles
Workers Compensation Insurance - ANSWER: insurance that provides coverage for
benefits an employer is obligated to pay under workers compensation laws
-risk
-transfer
-pooling - ANSWER: The 3 essential components of the insurance mechanism
because when a mechanism for paying the costs of losses is put into place, the risk of
uncertainty regarding the financial consequences of loss is reduced - ANSWER:
,Explain why transferring risk to an insurer reduces uncertainty for individuals and
businesses
risks are transferred through the use of an insurance policy - ANSWER: Explain how
risks are transferred from an individual to an insurer
-injuries to customers while on the business premises
-injuries to employees that occur in the course of their jobs
-physical damage to owned buildings
-physical damage to owned personal property
-burglary or robbery at the store - ANSWER: Application Question: Joe owns a small
business store and is concerned about the financial consequences of losses that
might arise from the store's operations. Describe THREE loss exposures related to
this store
-personal insurance policies
-commercial insurance policies - ANSWER: Identify the 2 broad categories of
property-casualty insurance policies that are available for families and business
organizations
-homeowners
-personal auto
-personal watercraft
-personal umbrella - ANSWER: List the most common types of personal insurance
policies (4)
protects insureds for damage to the home and its contents by fire, wind, lightning,
and other causes of loss. Most homeowners policies also include coverage for theft
of the contents of the home. - ANSWER: Describe the property coverage provided by
a homeowners policy
-covers losses due to bodily injury to another person or damage to property of
others arising from an auto accident for which the insured is liability.
also covers damage to the vehicle as the result of a collision, or from fire, theft, wind,
contact with a bird or another animal, and other causes of loss. - ANSWER: Describe
the coverage provided by a personal auto policy (PAP)
-commercial property
-commercial crime
-commercial general liability
-commercial auto
-workers compensation
-commercial umbrella - ANSWER: List the common commercial insurance policies (6)
protects against theft of contents such as cash registers, computers, inventory, and
other business property, and of money that could be stolen in a robbery during
business hours or during a burglary that occurs after business hours. It could also
, include employee dishonesty coverage for crimes committed by employees. -
ANSWER: Describe the coverage provided by commercial crime insurance
many business organizations purchase a commercial package policy (CPP) or a
business owners policy (BOP) - ANSWER: Identify the types of policies purchased by
business organizations that combine property, crime, and liability coverage in one
policy
they are required by law to pay certain benefits to employees who are injured on the
job or who contract a job-related disease. It pays the cost of medical care, lost
wages, and other benefits as specified by state law - ANSWER: Explain why business
organizations purchase workers compensation coverage
provides additional limits beyond those provided under the CGL, commercial auto,
and other policies protecting the insured in the event of a large liability loss -
ANSWER: Explain the benefit to a business organization of purchasing a commercial
umbrella policy
-loss exposures arising from the home and their personal property. Could be covered
by the property coverage of a homeowners policy
-legal liability arising out of the ownership of the home, such as for injuries to a
visitor to the home. Could be covered by the personal liability coverage of the
homeowners policy
-loss exposure arising out of the ownership of 2 vehicles, for which the PAP would
provide liability coverage and coverage for damage to an insured vehicle resulting
from collision, fire, and other causes of loss
-the producer may recommend a personal umbrella policy to provide additional
limits over those provided by the homeowners and PAP policies - ANSWER: Rob and
his wife Laurie own a two-story single-family home in a suburban subdivision. The
home incised an attached garage, where Rob and Laurie park their two-late model
vehicles: a pickup truck and minivan. Rob and Laurie are concerned that damage to
the home could result in substantial financial loss. They have contacted their local
insurance producer to discuss these concerns and to design an insurance program to
meet their personal insurance needs. *Describe Rob and Laurie's personal loss
exposures, and identify the policies that would cover these exposures
indemnifying insureds for covered losses - ANSWER: Describe the major benefit of
insurance for the insured
because insurance reduces the uncertainty regarding payment for losses, more new
businesses are established. Also, existing businesses are more likely to expand into
new operations and to hire more employees. - ANSWER: Explain how business
benefits from the reduction of uncertainty provided by insurance protection
by allowing individuals and businesses to exchange a small,certain premium amount
for what could be much larger, unknown loss amounts. It therefore eliminates the
