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Real questions in the style of the Georgia Casualty Insurance licensing exam, pulled straight from the TESTivity course, each with a plain-English explanation. Start with the Georgia-specific rules below, then work the rest, and unlock the full simulator when you're ready to drill.
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Question 1
In Georgia, a resident property and casualty agent must complete how many hours of continuing education each 2-year renewal period (including 3 hours of ethics)?
Georgia requires 24 hours of CE every 2 years, including 3 hours of ethics, to renew an agent license. The 40-hour figure is Georgia's pre-licensing requirement, not CE. Hook: Georgia CE is 24 hours every 2 years, 3 of them ethics.
Question 2
Georgia's insurance regulator holds an unusually independent office. Georgia's Insurance Commissioner is:
Georgia's Commissioner is an elected constitutional officer, chosen directly by voters to a four-year term, with the position established in the Georgia Constitution, so the office operates independently of the Governor. Georgia is one of about a dozen states that elect the commissioner. Hook: Georgia's Insurance Commissioner is an elected constitutional officer, not a gubernatorial appointee.
Question 3
Georgia's minimum auto liability limits, set by O.C.G.A. 33-34-4, are:
Georgia requires minimum auto liability of $25,000 per person and $50,000 per occurrence bodily injury, plus $25,000 property damage (25/50/25). The bodily injury limits match Arizona and Colorado, but Georgia's $25,000 property damage minimum is higher than their $15,000. Georgia is a fault-based state with no mandatory PIP. Hook: Georgia auto minimums are 25/50/25, with a higher property damage floor than its neighbors.
Question 4
A Georgia property and casualty insurer becomes insolvent. The state guaranty fund generally protects the policyholders of:
State guaranty funds protect policyholders of admitted insurers that participate in the fund; surplus lines (non-admitted) coverage is generally not protected. Hook: the guaranty fund backs admitted insurers, not surplus lines.
Question 5
Georgia has a distinctive uninsured motorist rule. If a Georgia auto policyholder makes no written selection, the default UM coverage that applies is:
In Georgia, the more protective add-on (broad form) UM applies by default; it pays in addition to whatever the at-fault driver's liability insurance pays. To get the narrower traditional (offset) UM, or to reject UM entirely, the insured must make a signed written selection, so the producer's job is to secure that written choice. Hook: Georgia's default is the broad add-on UM unless the insured selects otherwise in writing.
Question 6
Georgia's workers' compensation coverage threshold differs from most states. Georgia requires an employer to carry workers' compensation insurance once it has:
Georgia requires workers' compensation for employers with three or more employees, unlike California, Arizona, Colorado, and Texas, where one employee can trigger the requirement. Employers with fewer than three employees are not required to carry it in Georgia. Hook: Georgia's workers' comp trigger is 3 or more employees, not 1.
Question 7
The Georgia Insurers Insolvency Pool protects covered claims, per claim, up to:
Covered claims up to the lesser of the policy limits or $300,000. Claims under $50 are excluded; a claim of $50 or more is paid in full up to the cap (there is no traditional per-claim deductible). Workers' compensation claims are paid without the cap. (Authority: O.C.G.A. § 33-36-3(4).)
Question 8
Under the FCRA, when an insurer takes an adverse action (such as declining or rating up a policy) based on information in a consumer report, it must:
The FCRA requires an adverse-action notice telling the consumer that a report influenced the decision and identifying the reporting agency, so the consumer can review and dispute the data. Hook: adverse action based on a report triggers an adverse-action notice to the consumer.
Question 9
An adverse action under the FCRA, in an insurance context, generally means:
Adverse action covers a denial, cancellation, nonrenewal, or any less favorable terms taken because of information in a consumer report. Hook: adverse action is any worse-than-expected outcome driven by a consumer report.
Question 10
Under the FCRA, a consumer who is the subject of a consumer report generally has the right to:
The FCRA gives consumers the right to see their report, dispute inaccuracies, and have errors corrected, which is a core consumer protection of the law. Hook: FCRA lets consumers see and dispute what is in their report.
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Question 1
In insurance terms, a 'peril' refers to:
Keep these three straight and you'll bank easy points all day: a peril is the cause of loss (fire, wind, theft), a hazard is something that increases the chance or severity of that loss, and risk is the uncertainty of loss itself. The peril is the thing that actually does the damage.
Question 2
A hazard is best defined as:
A hazard doesn't cause the loss itself; it just makes a loss more likely or more severe. Icy steps, frayed wiring, a careless attitude: none of those start the fire or the fall, but they tip the odds. Causes of loss are perils; hazards just stack the deck.
Question 3
Which of the following is the best example of a moral hazard?
Moral hazard equals dishonesty. It's the risk that someone deliberately causes or exaggerates a loss to profit, like torching a failing business for the payout. Don't mix it up with morale hazard (carelessness, choice B) or physical hazard (the actual physical conditions in A and D).
Question 4
Which of the following is a characteristic of an ideally insurable risk?
Insurers like risks that are accidental (due to chance, not intentional) and definite and measurable (you can pin down when, where, and how much). Add in 'predictable for large groups,' 'not catastrophic to the insurer,' and 'affordable premium,' and you've got the recipe for an insurable risk. A loss someone causes on purpose? Not insurable.
Question 5
Adverse selection refers to the tendency of:
Adverse selection is the insurer's headache: the people most likely to have a loss are also the most eager to buy and keep coverage. If underwriting didn't push back, the risk pool would fill up with bad risks and the math would collapse. It's exactly why underwriting and exclusions exist.
Question 6
A reinsurance arrangement in which the reinsurer automatically accepts all risks of a certain type from the ceding insurer is called:
Treaty reinsurance is the automatic, blanket deal: the reinsurer agrees in advance to take a whole category of risks. Facultative is the opposite, case-by-case, where the reinsurer can accept or decline each risk individually. Treaty equals automatic and broad; facultative equals optional and specific.
Question 7
For the law of large numbers to work effectively, the exposures in a group should be:
The law of large numbers needs lots of similar exposures to make predictions reliable. A big pool of comparable homes lets the insurer forecast losses; a handful of wildly different ones doesn't. And concentrating them all in one spot is actually bad: one hurricane could wipe out the whole pool at once.
Question 8
The authority that the public reasonably believes an agent has, based on the insurer's actions, is called:
Apparent authority is about appearances: what a reasonable customer believes the agent can do based on how the insurer let the agent act (business cards, signage, company applications). Express authority is spelled out in the contract; implied is what's needed to carry out the express. Apparent is the 'looks legit' bucket.
Question 9
An insurance broker legally represents the:
A broker works for the insured, shopping the market on the client's behalf, while an agent works for the insurer. Same exam, different masters: keep them straight. Broker equals the buyer's side; agent equals the company's side.
Question 10
Which of the following is NOT one of the four essential elements of a valid contract?
The four elements are agreement (offer and acceptance), consideration, competent parties, and legal purpose. A notarized signature isn't on the list, so it's the odd one out. Consideration, by the way, is what each side brings to the table: the insured's premium and the insurer's promise to pay.
Question 1
Actual cash value (ACV) is generally calculated as what?
ACV pays what the damaged property was actually worth at the time of loss: replacement cost minus depreciation for age and wear. It leaves the insured to absorb the depreciation. Hook: ACV equals replacement cost minus depreciation, today's worn-down value.
Question 2
A replacement cost policy pays a property loss based on what?
Replacement cost coverage pays to rebuild or replace with new property of like kind and quality, with no depreciation subtracted, so the insured isn't out-of-pocket for wear and tear. It usually requires meeting a coinsurance or insurance-to-value condition. Hook: replacement cost pays new-for-old, depreciation ignored.
Question 3
In property insurance, depreciation refers to what?
Depreciation is the loss in a property's value from age, use, and obsolescence. It's subtracted from replacement cost to arrive at actual cash value. Hook: depreciation is the wear-and-tear value the insurer subtracts under ACV.
Question 4
A named perils property policy covers losses caused by what?
A named perils policy covers only the perils it specifically lists, such as fire, lightning, windstorm, or theft. If the cause isn't named, there's no coverage. Hook: named perils covers only what's on the list.
Question 5
The coinsurance clause in a property policy is designed to do what?
The coinsurance clause pushes insureds to insure their property to an agreed percentage of value (commonly 80%). Carry less, and a penalty reduces partial-loss payments. It keeps premiums fair across policyholders. Hook: coinsurance nudges you to insure to value, or share the loss.
Question 6
The policy limit (limit of insurance) represents what?
The limit of insurance is the most the insurer will pay for a covered loss; amounts above it are the insured's responsibility. Hook: the limit is the ceiling on what the insurer pays.
Question 7
Negligence is best defined as what?
Negligence is the failure to act with the care a reasonable, prudent person would under the same circumstances. It's the foundation of most liability claims and is unintentional, unlike an intentional tort. Hook: negligence is falling short of the reasonable-person standard of care.
Question 8
Under an excess other insurance provision, a policy pays how?
An excess provision makes that policy pay only after other primary coverage has been used up; it sits on top as a second layer. Hook: excess coverage waits its turn, paying only after the primary is exhausted.
Question 9
A physical hazard is best illustrated by which of the following?
A physical hazard is a tangible condition of property or environment that increases risk, like icy steps, faulty wiring, or stored chemicals. It exists in the physical world, unlike moral or morale hazards. Hook: a physical hazard is a real-world condition you could point to.
Question 10
A moral hazard refers to what?
A moral hazard arises from a person's character, a dishonest tendency that increases risk, such as someone who would intentionally cause or exaggerate a loss to collect. Hook: moral hazard is dishonesty, the intent to cheat the insurer.
Question 1
The Personal Auto Policy (PAP) is divided into several parts. Part A provides which coverage?
Part A is Liability Coverage, the part that pays for bodily injury and property damage the insured causes to others. It is the core of the auto policy and the coverage states require. Hook: Part A is liability, what you owe others, and it comes first in the PAP.
Question 2
Part B of the Personal Auto Policy provides:
Part B is Medical Payments coverage, which pays reasonable medical expenses for the insured and passengers hurt in an auto accident, regardless of fault. Hook: Part B is for bodies, the medical payments part.
Question 3
An auto liability limit shown as 100/300/50 means the policy will pay up to:
In split limits the first number is the per-person bodily injury cap, the second is the per-accident bodily injury cap, and the third is the property damage cap per accident. So 100/300/50 is 100,000 per person, 300,000 per accident, 50,000 for property. Hook: split limits read per person, per accident, then property damage.
Question 4
In addition to paying damages up to the limit, auto liability coverage typically also provides:
Liability coverage includes the insurer's duty to defend the insured against covered claims, and those defense costs are usually paid in addition to the policy limits, not subtracted from them. Hook: liability buys you a lawyer, and the defense cost normally sits on top of your limit.
Question 5
Other-than-collision (comprehensive) coverage pays for losses such as:
Other-than-collision, often called comprehensive, covers the non-crash perils: theft, fire, hail, falling objects, vandalism, glass breakage, and animal strikes. Crashing or overturning is collision, not comprehensive. Hook: comprehensive is everything but the crash, fire, theft, hail, and Bambi.
Question 6
An insured's car has an actual cash value of $8,000. It is damaged in a collision with repairs estimated at $9,500, and the collision deductible is $500. The insurer will most likely:
When repair cost exceeds the vehicle's actual cash value, the insurer totals the car and pays the ACV rather than the higher repair bill, less the deductible. Here that is 8,000 minus 500, or 7,500. Hook: if repairs cost more than the car is worth, you get ACV minus deductible, not the repair bill.
Question 7
The newly acquired auto provision in the PAP:
The newly acquired auto rule automatically extends the policy to a car the insured buys during the term, for a limited window (commonly up to 14 days), so the insured is not driving uninsured before reporting it. Hook: buy a new car and you get an automatic grace period to add it.
Question 8
A temporary substitute auto, such as a loaner driven while the insured's car is in the shop, is generally:
A temporary substitute auto used because the insured's vehicle is out of service for repair, service, breakdown, or loss is treated as a covered auto, so the policy's coverages extend to it. Hook: a loaner while yours is being fixed is covered like your own car.
Question 9
An insured wants coverage for the cost of a tow truck after a breakdown on the highway. They should add:
Towing and labor coverage, sometimes called roadside assistance, pays for towing and on-site labor costs after a disablement. It is a low-cost optional endorsement. Hook: towing and labor is the tow-truck and roadside endorsement.
Question 10
The Personal Auto Policy generally excludes coverage when the covered auto is used:
The PAP excludes vehicles used as a public or livery conveyance, meaning carrying people or property for a fee. Personal use, commuting, and vacations are fine; for-hire driving needs commercial or ride-share coverage. Hook: the PAP is personal use, driving for a fee needs a different policy.
Question 1
Which of the following is a common advantage of writing coverages in a package policy rather than separate monoline policies?
Packaging usually lowers the premium (a package credit) and reduces the chance of gaps or overlaps between separately written policies. It does not erase deductibles, conditions, or exclusions. Hook: packages save money and close the gaps between separate policies.
Question 2
The Common Policy Declarations in a CPP show:
The common declarations identify who and what is insured: named insured, mailing address, policy period, a list of the coverage parts in the package, and the premium for each. Hook: the common dec is the who, when, and what of the whole package.
Question 3
The Common Policy Conditions apply to:
The common policy conditions, things like cancellation, changes, inspections, and transfer of rights, govern every coverage part in the package, while each part also has its own specific conditions. Hook: common conditions are common to all parts; specific conditions live in each part.
Question 4
Under the BPP, property of others left in the insured's care, custody, or control is:
The BPP has a separate Personal Property of Others category for property of others in the insured's care, custody, or control, such as customers' goods left for service. Hook: customers' property in your care goes under Personal Property of Others.
Question 5
A coinsurance clause in commercial property insurance is designed to:
Coinsurance rewards insuring to value: carry at least the required percentage (often 80, 90, or 100 percent) of value and losses are paid in full up to the limit; carry less and a penalty applies. Hook: coinsurance pushes you to insure to value or take a penalty.
Question 6
A building valued at $500,000 carries an 80% coinsurance clause. The insured carries $300,000 of coverage and has a $50,000 loss (ignore the deductible). How much will the insurer pay?
Required coverage is 80% of 500,000, or 400,000. Divide carried by required (300,000 / 400,000 = 0.75) and apply that to the loss: 0.75 times 50,000 equals 37,500. Hook: coinsurance pays did over should, times the loss, here 300/400 of 50,000 = 37,500.
Question 7
Commercial General Liability (CGL) Coverage A insures:
CGL Coverage A is the core: bodily injury and property damage liability arising out of the insured's premises, operations, products, and completed operations. Hook: CGL Coverage A is bodily injury and property damage liability.
Question 8
CGL Coverage C (Medical Payments) pays:
Coverage C is goodwill medical payments: it pays reasonable medical bills for others injured on the premises or by the insured's operations, no fault required, which can prevent a larger liability claim. Hook: CGL Coverage C pays small injury bills no-fault, just like home med pay.
Question 9
CGL Coverage B insures:
Coverage B covers personal and advertising injury offenses: libel, slander, false arrest, wrongful eviction, and infringing on copyright or slogans in the insured's advertising. Hook: Coverage B is the reputation and advertising offenses, libel and slander.
Question 10
A business with a fleet of delivery trucks would insure those vehicles under which CPP coverage part?
Company vehicles are insured under the commercial (business) auto coverage part, which provides liability and physical damage on the business's autos. Hook: company trucks go on the commercial auto coverage part.
Question 1
Workers compensation insurance provides benefits to:
Workers compensation pays benefits to employees who are injured or become ill because of their job. It is employee coverage, not customer or personal coverage. Hook: workers comp is for employees hurt on the job.
Question 2
Workers compensation is described as a no-fault system because:
Under workers compensation, an injured worker collects benefits without proving the employer was negligent, and benefits are generally owed even if the worker was careless. Fault is set aside. Hook: no-fault means benefits flow without proving blame.
Question 3
An employee is hurt while intoxicated and violating a clear safety rule. Under many state workers compensation laws, benefits may be:
Although comp is no-fault, most statutes still allow benefits to be reduced or denied where the injury results from the worker's intoxication or willful misconduct. No-fault does not mean no defenses. Hook: no-fault still has limits, intoxication and willful misconduct can cut benefits.
Question 4
Medical benefits under workers compensation are typically:
Workers compensation medical benefits generally cover the full reasonable cost of treating the job injury, with no deductible and no overall dollar cap, unlike most health plans. Hook: comp medical is usually first-dollar and unlimited for the work injury.
Question 5
Part Two (Employers Liability) of the policy covers:
Part Two protects the employer against lawsuits for work-related injuries that escape the exclusive-remedy bar, such as a third-party-over action or a consequential injury claim by a family member. It backstops the gaps Part One does not address. Hook: Part Two catches the work-injury suits that slip past exclusive remedy.
Question 6
Part Three (Other States Insurance) of the workers compensation policy:
Part Three provides coverage if the employer begins operations in a state listed there during the policy period, protecting against gaps when the business expands into new states. Hook: Part Three is the just-in-case coverage for states you might expand into.
Question 7
Workers compensation premium is primarily based on:
Workers compensation premium is driven by payroll and the job classifications of the workers, since riskier classes carry higher rates. Premium is typically a rate applied to payroll. Hook: comp premium rides on payroll and job classification.
Question 8
In a monopolistic fund state, an employer must buy workers compensation insurance from:
In a monopolistic state, workers compensation must be purchased from the state fund, and private insurers do not write the coverage there. Hook: monopolistic means one seller, the state fund.
Question 9
A Second Injury Fund (subsequent injury fund) is designed to:
Second Injury Funds limit an employer's liability when a new work injury combines with a worker's prior impairment to cause a greater disability, removing a disincentive to hire workers with pre-existing conditions. Hook: second injury funds make it safer to hire workers with prior impairments.
Question 10
The fundamental trade-off at the heart of workers compensation is that the employee receives prompt, guaranteed benefits in exchange for:
The core bargain is certainty for the worker (guaranteed no-fault benefits) traded for giving up the right to sue the employer, which also caps the employer's exposure. Hook: certain benefits for the worker, no lawsuit for the employer, that is the deal.
Question 1
A personal umbrella policy is designed to:
An umbrella sits on top of the home and auto policies, adding a high layer of liability limits and broadening coverage for some claims the underlying policies exclude. It is excess liability, not property coverage. Hook: the umbrella is extra liability stacked above your home and auto.
Question 2
Before an umbrella policy will pay, the insured usually must:
Umbrellas require the insured to carry stated minimum underlying limits (for example on auto and homeowners liability). The umbrella then picks up above those limits. Hook: keep your required underlying limits, or the umbrella will not sit on top.
Question 3
If a covered umbrella claim is not covered at all by the underlying policy, the umbrella may still respond after the insured pays:
When a loss is covered by the umbrella but not the underlying policy, the insured pays a self-insured retention (much like a deductible) and the umbrella covers the rest. Hook: no underlying coverage means the umbrella kicks in after your self-insured retention.
Question 4
A commercial umbrella policy provides excess limits over which underlying coverages?
A commercial umbrella adds limits above primary liability lines like CGL, business auto liability, and employers liability. It is excess liability, not excess property coverage. Hook: the commercial umbrella tops up the liability lines, not property.
Question 5
A new flood insurance policy through the NFIP generally has a waiting period before coverage takes effect of about:
NFIP flood coverage typically does not take effect until about 30 days after purchase, which discourages buying only when a flood is imminent. Limited exceptions apply (such as loan-related purchases). Hook: NFIP usually makes you wait about 30 days, no buying ahead of the storm.
Question 6
Liability for a large yacht or high-powered boat is best insured under:
Large or powerful vessels exceed the homeowners watercraft limits and exclusions, so their liability and physical damage belong on a dedicated boatowners or yacht policy. Hook: the bigger the boat, the more it needs its own watercraft policy.
Question 7
When a surety pays a loss because the principal failed to perform, the surety generally:
Unlike insurance, a surety expects the principal to ultimately bear the loss, so after paying the obligee the surety can seek reimbursement from the principal. Hook: the surety pays, then comes back to the principal to be repaid.
Question 8
A FAIR Plan (Fair Access to Insurance Requirements) exists to:
FAIR Plans are state residual-market programs that make basic property insurance available to applicants who cannot get it in the voluntary market, often because of location or risk. Hook: FAIR Plans are the property safety net for hard-to-insure risks.
Question 9
Title insurance protects a property owner or lender against:
Title insurance covers losses from title defects, such as liens, errors in records, or competing ownership claims, that already existed but surface after the property is bought. Hook: title insurance protects against ownership defects hiding in the property's past.
Question 10
Farm and ranch coverage is distinctive because it can combine, in one program:
A farm policy blends personal and business exposures, covering the farm dwelling and personal property along with barns, equipment, livestock, and farm liability, because a farm is both a home and a business. Hook: farm coverage mixes the home and the business under one roof.
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