Georgia Property & Casualty Practice Exam

Stuart receives a notice from his insurance company telling him that his policy will be terminated at the end of the policy period. The notice provides a reason, which can be any of the following EXCEPT:

1. He filed a false claim.

2. He failed to disclose information necessary to properly rate the risk.

3. He failed to pay the premium.

4. He was in a traffic accident caused by another driver.

The correct answer is: He was in a traffic accident caused by another driver.

In the context of insurance policies, the termination of coverage can occur for various reasons, typically related to the insured's actions or circumstances that affect their risk profile. The correct answer highlights a condition that does not typically warrant termination of a policy. When an insured person files a false claim or fails to disclose pertinent information, the insurer has legitimate grounds to terminate the policy because these actions directly impact the insurer's ability to assess and manage risk accurately. Similarly, non-payment of premiums is a direct violation of the policy agreement and justifies termination. On the other hand, being involved in a traffic accident caused by another driver does not necessarily indicate that Stuart did anything wrong regarding his own policy. Accidents are generally a part of risk in using vehicles, and a single incident caused by another party typically should not lead to termination of insurance coverage. It does not reflect on Stuart’s behavior or a breach of his insurance contract terms. Thus, the insurance company cannot justifiable terminate his policy solely based on such an event.