Alabama Personal Lines Exam || QUESTIONS WITH
100% CORRECT ANSWERS.
What is a hazard? correct answers An increase in the possibility that a loss might occur
The purpose of insurance is to: correct answers Transfer risk from a person, business or
organization to an insurance company that agrees to pay for losses in exchange for a premium
When the policyholder is considered an owner with the right to vote and share in the profits the
type of insurance company is a: correct answers Mutual company
Martha's home is insured by Big Insurance Company. Martha has recently made the final
mortgage payment to Large Mortgage Company. Martha is contemplating selling her home to
her best friend, Bernice. Which of the following has an insurable interest in the home? correct
answers Martha
Which of the following is not an element of insurability correct answers Risk of loss is a
speculative risk
The principle that states that an insured should be restored to approximately the same financial
position after a loss as before is known as correct answers Indemnity
An individual who owns and lives in a condominium can obtain broad coverage for personal
property in the condo under which homeowners form correct answers HO-6
And insurance what is the primary purpose for the Fair Credit Reporting Act correct answers
Together consumer recourse if insurance is denied on the basis of a credit report
Which of the following describes an insurance company doing business in a state other than the
one where it is incorporated correct answers Foreign
The purpose of a binder is to correct answers Provide temporary protection for the insured
between the time of the application is made in the policy is issued or the binder expires
Which of the following describes actual cash value correct answers Replacement cost minus
appreciation
Which of the following can be insured under an unendorsed Homeowners policy? correct
answers Private residence in which the owner occupant also maintains an office for her
accounting business
Which of the following coverages is included in the Homeowners policy but is NOT included in
an under endorsed Dwelling policy? correct answers Liability
, Open peril coverage for both the dwelling and personal property is provided by the: correct
answers HO-5
Coverage for which of the following is excluded by a Dwelling policy? correct answers Coin
Collection
Which of the following perils is covered by the HO-2 and HO-3? correct answers Sudden and the
accidental rupture of a heating system
Under a pure no-fault plan, each party to an auto accident: correct answers Is reimbursed by his
or her own insurance company
An additional loss that results from a direct loss to property is called a/an: correct answers
Indirect/consequential loss
Assume the following items were stolen from the insureds home. Which one of these losses
would be fully covered under Coverage C of the Homeowners policy, assuming the loss was for
the full value of the property described? correct answers A $2,000 laptop computer the insured
used for her in-home accounting business.
Both the structure and the contents of a mobile home can be insured by purchasing: correct
answers Either a mobile home package policy or an HO-2 or HO-3 with the Mobile
Homeowners endorsement
In ALL states an underendorsed Personal Auto policy's underinsured motorists coverage applies
to what type of loss caused by an uninsured motorist? correct answers Bodily injury
Which one of the following accidents would NOT be covered under the Uninsured Motorists
coverage of the Personal Auto policy? correct answers An accident with a driver who carries the
minimum liability limits required by law, but whose insurance is not adequate to cover the
damages
The personal auto policy's medical payments coverage would NOT provide protection for which
one of the following? correct answers Occupants of a car that was struck by the insured
The authority specifically given to an agent either orally or in writing by the principal is called
correct answers Express authority
Which of the following is responsible for the licensing of insurance agents correct answers
Individual state department of insurance
Which one the following list all the required elements for establishing a charge of negligence
correct answers Legal duty owed breach of legal duty out proximate cause damages
In liability policy supplementary payments are correct answers Payable in addition to the policy
limits of liability
100% CORRECT ANSWERS.
What is a hazard? correct answers An increase in the possibility that a loss might occur
The purpose of insurance is to: correct answers Transfer risk from a person, business or
organization to an insurance company that agrees to pay for losses in exchange for a premium
When the policyholder is considered an owner with the right to vote and share in the profits the
type of insurance company is a: correct answers Mutual company
Martha's home is insured by Big Insurance Company. Martha has recently made the final
mortgage payment to Large Mortgage Company. Martha is contemplating selling her home to
her best friend, Bernice. Which of the following has an insurable interest in the home? correct
answers Martha
Which of the following is not an element of insurability correct answers Risk of loss is a
speculative risk
The principle that states that an insured should be restored to approximately the same financial
position after a loss as before is known as correct answers Indemnity
An individual who owns and lives in a condominium can obtain broad coverage for personal
property in the condo under which homeowners form correct answers HO-6
And insurance what is the primary purpose for the Fair Credit Reporting Act correct answers
Together consumer recourse if insurance is denied on the basis of a credit report
Which of the following describes an insurance company doing business in a state other than the
one where it is incorporated correct answers Foreign
The purpose of a binder is to correct answers Provide temporary protection for the insured
between the time of the application is made in the policy is issued or the binder expires
Which of the following describes actual cash value correct answers Replacement cost minus
appreciation
Which of the following can be insured under an unendorsed Homeowners policy? correct
answers Private residence in which the owner occupant also maintains an office for her
accounting business
Which of the following coverages is included in the Homeowners policy but is NOT included in
an under endorsed Dwelling policy? correct answers Liability
, Open peril coverage for both the dwelling and personal property is provided by the: correct
answers HO-5
Coverage for which of the following is excluded by a Dwelling policy? correct answers Coin
Collection
Which of the following perils is covered by the HO-2 and HO-3? correct answers Sudden and the
accidental rupture of a heating system
Under a pure no-fault plan, each party to an auto accident: correct answers Is reimbursed by his
or her own insurance company
An additional loss that results from a direct loss to property is called a/an: correct answers
Indirect/consequential loss
Assume the following items were stolen from the insureds home. Which one of these losses
would be fully covered under Coverage C of the Homeowners policy, assuming the loss was for
the full value of the property described? correct answers A $2,000 laptop computer the insured
used for her in-home accounting business.
Both the structure and the contents of a mobile home can be insured by purchasing: correct
answers Either a mobile home package policy or an HO-2 or HO-3 with the Mobile
Homeowners endorsement
In ALL states an underendorsed Personal Auto policy's underinsured motorists coverage applies
to what type of loss caused by an uninsured motorist? correct answers Bodily injury
Which one of the following accidents would NOT be covered under the Uninsured Motorists
coverage of the Personal Auto policy? correct answers An accident with a driver who carries the
minimum liability limits required by law, but whose insurance is not adequate to cover the
damages
The personal auto policy's medical payments coverage would NOT provide protection for which
one of the following? correct answers Occupants of a car that was struck by the insured
The authority specifically given to an agent either orally or in writing by the principal is called
correct answers Express authority
Which of the following is responsible for the licensing of insurance agents correct answers
Individual state department of insurance
Which one the following list all the required elements for establishing a charge of negligence
correct answers Legal duty owed breach of legal duty out proximate cause damages
In liability policy supplementary payments are correct answers Payable in addition to the policy
limits of liability
