Georgia Property & Casualty Practice Exam

What penalty may be imposed on a policyholder who misuses premiums for personal gain?

1. License suspension for up to six months

2. Restitution

3. Felony conviction

4. Fine of up to $50,000

The correct answer is: Felony conviction

When a policyholder misuses premiums for personal gain, it often constitutes a serious offense that can be classified as fraud. Such actions not only violate the terms of the insurance contract but also breach state laws governing insurance practices. A felony conviction can result from serious fraudulent activities, including the misuse of premiums, as these actions are typically designed to deceive the insurer and unlawfully benefit the individual. The consequences of committing insurance fraud are severe and may include criminal prosecution, loss of licensing, significant financial penalties, and potentially imprisonment depending on the jurisdiction. In Georgia, these violations are treated seriously, underscoring the importance of ethical conduct and integrity within the insurance industry. Therefore, the possibility of receiving a felony conviction is a correct answer due to the gravity of the offense and the legal implications associated with it.