Georgia Navigator Practice Exam

Which of the following is NOT a reason for insurance non-renewal?

1. Nonpayment of premium

2. Fraudulent act by the insured

3. Insured moves outside coverage area

4. Insurance policy has reached its maximum payout

The correct answer is: Insurance policy has reached its maximum payout

The reason "Insurance policy has reached its maximum payout" is not a typical reason for insurance non-renewal because it pertains to the limits of the coverage rather than the conduct of the insured or conditions outside their control. Insurance policies generally have specific terms and conditions that dictate their limits, and these terms are agreed upon when the policy is written. Reaching the maximum payout is part of the coverage terms but does not reflect negatively on the insured or their insurability. Non-renewal usually occurs due to factors that indicate a higher risk or a change in the insured's situation, such as nonpayment of premiums, fraudulent activities, or changes in residency that place the insured outside the insurance company’s service area.