State RegulationsGA specificDifficulty 2/5
A person purchases a policy from a Georgia mutual insurance company. In contrast to a buyer of stock-company coverage, this policyholder typically:
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under O.C.G.A. § 33-14-2, a mutual insurer is owned by its policyholders, so a mutual policyholder holds an ownership interest with membership rights — such as participating in governance as the company's articles provide. A stock insurer's policyholders, by contrast, are simply customers; ownership there belongs to the shareholders.
Why the other options are wrong
- A) Mutual companies issue no capital stock, so there are no publicly tradable shares; that describes a stock insurer under O.C.G.A. § 33-14-2.
- C) The policyholder's relationship goes beyond claims payment — as a member of the mutual under O.C.G.A. § 33-14-2, the policyholder has ownership rights a stock-company customer lacks.
- D) O.C.G.A. § 33-14-2 imposes no rule requiring policyholders to surrender coverage; the defining mutual trait is policyholder ownership, not forced surrender.
Memory hook
Buy mutual, become an owner — membership comes with the policy.