Georgia Adjuster Practice Test

What happens if there is a total loss to a dwelling insured under Georgia's valued policy law?

1. The insurer must provide a replacement property

2. The insurer must pay the insured the policy amount

3. The policy is canceled

4. The insured receives market value

The correct answer is: The insurer must pay the insured the policy amount

Under Georgia's valued policy law, in the event of a total loss to a dwelling, the insurer is obligated to pay the insured the full face value of the insurance policy. This law is designed to ensure that in cases of total loss, such as a complete destruction of the home, the policyholder receives an amount equal to the insurable value noted in their policy, rather than a settlement based on the market value or some other calculation. This provision protects policyholders by guaranteeing a predetermined payout, which can be crucial for rebuilding or replacing their home without additional financial strain. Other choices do not align with the stipulations within the valued policy law — for example, the expectation that an insurer provides a replacement property is not a requirement under this law, and neither is the policy cancellation or payouts based solely on market value calculations. Thus, the requirement for the insurer to pay the insured the policy amount reflects the assurance given to policyholders regarding their investments in home insurance in Georgia.