ALABAMA ADJUSTER UPDATED EXAM SCRIPT QUESTIONS
AND ANSWERS GRADED A+
✔✔Agency Authority -
Express - ✔✔Authority that is expressly given to the agent in writing. Allows the agent to
act on behalf of the principal.
✔✔Agency Authority - Implied - ✔✔Authority that an agent possesses by implication of
her behavior, regardless of whether this authority is
granted in writing. For example, a person portraying herself as a representative for an
insurance
company, even though she is not employed by that company.
✔✔Agent (Insurance) - ✔✔Someone who has received authority from an insurer to sell
or service insurance policies.
✔✔Agreed Value - ✔✔A valued policy in which the insurer and the insured agree to a
specific value for an item, appraised at the
inception of the policy. Often used to insure items whose value is difficult to quantify,
such as antiques or
fine art. Also called a Guaranteed Value policy.
✔✔Agreement - ✔✔One of the four requirements of a legally binding contract. All
parties involved must agree to the terms of
the contract. Can also refer to a binder, which is the preliminary substance of a contract.
✔✔Agricultural Producer - ✔✔A business that grows, harvests, and sells crops for profit.
✔✔Aleatory - ✔✔A characteristic of an insurance contract. Means "depending on an
unknown future event." An insurance
contract will only pay IF and WHEN covered damages occur. Neither party knows how
much the contract
will end up paying when they enter into the contract.
✔✔Answer - ✔✔In liability cases, the defendant's response to a complaint. There are
three possible answers: 1) accept
complaint and pay for damages, 2) deny the complaint, or 3) accept the complaint with
a right to insert
evidence into the case.
✔✔Annual Depreciation - ✔✔An item's replacement cost divided by the number of
years in its expected lifespan.
✔✔Annual Transit - ✔✔An uncontrolled inland marine form that covers loss of goods in
transit. It applies to all of the insured's
,shipments during the year.
✔✔Appraisal - ✔✔A dispute resolution method which allows the claimant and the
insurer each to select an appraiser. The
two appraisers in turn select an umpire. The appraisers then work together to determine
a settlement
amount. If they cannot agree, the umpire steps in. Agreement by any two of the three is
binding.
✔✔Arbitration - ✔✔A dispute resolution method in which the opposing parties each
submit their evidence to a mutuallyagreed-
upon and neutral third party, called an arbitrator. The arbitrator reviews the positions of
each
opposing side and makes a final and legally binding decision.
✔✔Arbitrator - ✔✔The mutually-agreed-upon and neutral third party in an arbitration
who reviews the positions of each
opposing side before making a final and legally binding decision.
✔✔Artificially Generated
Current - ✔✔Also called "artificial current." A peril covered in some property insurance
policies. It includes sudden and
accidental damage from any electrical current, except currents that are naturally
generated, such as
lightning or static electricity.
✔✔Auto Policy - ✔✔Insurance policy designed to protect the policyholder while owning,
occupying, or operating a vehicle.
Usually combines liability coverage and property coverage into one policy.
✔✔Automobile - ✔✔In insurance policies, automobile generally means any vehicle
designed for use on public roads.
✔✔Automobile No-Fault Laws - ✔✔Laws in effect in some states that require any owner
of a vehicle to purchase no-fault insurance; that is,
insurance that indemnifies the insured, regardless of who was at fault in an accident.
No-fault laws also
restrict the insured's right to sue the at-fault party.
✔✔Aviation - ✔✔Aviation insurance combines hull insurance for the aircraft and liability
insurance for any damage to
others' property or to people who are not passengers.
✔✔Average Weekly Wage
,(AWW) - ✔✔The average amount of income that an employee earns each week while
able to perform normal job
duties. When an employee is injured on the job, his workers' compensation income
benefits will depend
on his AWW before the injury.
✔✔Bailee - ✔✔An individual or company that receives the property of someone else for
a special purpose and returns
the property after use.
✔✔Bailee Coverage - ✔✔Reimburses a bailee's customer for damage to the customer's
property while in the bailee's control
✔✔Binder - ✔✔A temporary contract provided by an insurer, which ensures coverage
until the complete, permanent
policy is issued
✔✔Black Lung Benefits Act - ✔✔Federal program that provides monthly payments and
medical treatments to coal miners who become
totally disabled from black lung disease or pneumoconiosis
✔✔Bodily Injury (BI) - ✔✔Physical damage to someone's person. Liability insurance
covers bodily injury that the insured might
cause to another person through negligence.
✔✔Boiler & Machinery - ✔✔Insurance coverage designed to indemnify a business for
damages to, and damages by, boilers,
machinery, motors, generators, and a variety of other electrical devices and appliances.
✔✔Bond - ✔✔A contract wherein one party guarantees the performance of a third party.
Bonds involve three parties:
(1) the surety agrees to pay the second party, (2) the obligee, if the third party, (3) the
principal, neglects
to carry out an obligation it has to the obligee.
✔✔Breach of Product
Warranty - ✔✔The failure or falsehood of a stated promise of a product stipulation
✔✔Business Auto Policy
(BAP) - ✔✔Provides property damage and liability insurance for automobiles used by a
business
✔✔Business Floater - ✔✔Inland marine coverage form designed for items that are
excluded from most property contracts, such as
, accounts receivable records, manuscripts, blueprints, etc.
✔✔Business Interruption
Coverage - ✔✔Commercial insurance form designed to indemnify a business if a
covered peril leads to lost profits or
revenue. The most common type of Time Element Insurance.
✔✔Business Personal
Property - ✔✔Moveable property used for business
✔✔Cancellation and
Nonrenewal Condition - ✔✔Establishes when and how the insurer or the insured can
terminate an active insurance contract. The
policyholder can cancel at any time by giving a written notice. Typically, the insurer may
only cancel the
policy for a few specific reasons, and it must give written notice of the cancellation or
non-renewal
anywhere between 10 and 60 days in advance
✔✔Capitation - ✔✔An arrangement in which an insurer pays a certain healthcare
provider up front, and in return, the
healthcare provider agrees to treat all of that insurer's members.
✔✔Catastrophe - ✔✔An occurrence or a sequence of occurrences that causes
enormous property losses. Catastrophes are
normally uninsurable by private insurers
✔✔Cause of Loss - ✔✔A form included in a commercial package policy or a commercial
property policy that lists the causes of
loss against which the insured property is covered.
✔✔Certificate of Insurance - ✔✔An official document that contains the details of an
insurance policy. It typically lists the insurance
company, the named insured, what is covered, and the dates of the policy period,
among other things.
Policyholders may be required to present their certificate as proof that insurance
coverage is in effect.
✔✔Commercial General
Liability (CGL) - ✔✔A policy that protects a business against damages and injuries it
may cause to third parties
✔✔Civil Law - ✔✔Observes court cases of one citizen charging another citizen for
damages caused by tort. Differs from
AND ANSWERS GRADED A+
✔✔Agency Authority -
Express - ✔✔Authority that is expressly given to the agent in writing. Allows the agent to
act on behalf of the principal.
✔✔Agency Authority - Implied - ✔✔Authority that an agent possesses by implication of
her behavior, regardless of whether this authority is
granted in writing. For example, a person portraying herself as a representative for an
insurance
company, even though she is not employed by that company.
✔✔Agent (Insurance) - ✔✔Someone who has received authority from an insurer to sell
or service insurance policies.
✔✔Agreed Value - ✔✔A valued policy in which the insurer and the insured agree to a
specific value for an item, appraised at the
inception of the policy. Often used to insure items whose value is difficult to quantify,
such as antiques or
fine art. Also called a Guaranteed Value policy.
✔✔Agreement - ✔✔One of the four requirements of a legally binding contract. All
parties involved must agree to the terms of
the contract. Can also refer to a binder, which is the preliminary substance of a contract.
✔✔Agricultural Producer - ✔✔A business that grows, harvests, and sells crops for profit.
✔✔Aleatory - ✔✔A characteristic of an insurance contract. Means "depending on an
unknown future event." An insurance
contract will only pay IF and WHEN covered damages occur. Neither party knows how
much the contract
will end up paying when they enter into the contract.
✔✔Answer - ✔✔In liability cases, the defendant's response to a complaint. There are
three possible answers: 1) accept
complaint and pay for damages, 2) deny the complaint, or 3) accept the complaint with
a right to insert
evidence into the case.
✔✔Annual Depreciation - ✔✔An item's replacement cost divided by the number of
years in its expected lifespan.
✔✔Annual Transit - ✔✔An uncontrolled inland marine form that covers loss of goods in
transit. It applies to all of the insured's
,shipments during the year.
✔✔Appraisal - ✔✔A dispute resolution method which allows the claimant and the
insurer each to select an appraiser. The
two appraisers in turn select an umpire. The appraisers then work together to determine
a settlement
amount. If they cannot agree, the umpire steps in. Agreement by any two of the three is
binding.
✔✔Arbitration - ✔✔A dispute resolution method in which the opposing parties each
submit their evidence to a mutuallyagreed-
upon and neutral third party, called an arbitrator. The arbitrator reviews the positions of
each
opposing side and makes a final and legally binding decision.
✔✔Arbitrator - ✔✔The mutually-agreed-upon and neutral third party in an arbitration
who reviews the positions of each
opposing side before making a final and legally binding decision.
✔✔Artificially Generated
Current - ✔✔Also called "artificial current." A peril covered in some property insurance
policies. It includes sudden and
accidental damage from any electrical current, except currents that are naturally
generated, such as
lightning or static electricity.
✔✔Auto Policy - ✔✔Insurance policy designed to protect the policyholder while owning,
occupying, or operating a vehicle.
Usually combines liability coverage and property coverage into one policy.
✔✔Automobile - ✔✔In insurance policies, automobile generally means any vehicle
designed for use on public roads.
✔✔Automobile No-Fault Laws - ✔✔Laws in effect in some states that require any owner
of a vehicle to purchase no-fault insurance; that is,
insurance that indemnifies the insured, regardless of who was at fault in an accident.
No-fault laws also
restrict the insured's right to sue the at-fault party.
✔✔Aviation - ✔✔Aviation insurance combines hull insurance for the aircraft and liability
insurance for any damage to
others' property or to people who are not passengers.
✔✔Average Weekly Wage
,(AWW) - ✔✔The average amount of income that an employee earns each week while
able to perform normal job
duties. When an employee is injured on the job, his workers' compensation income
benefits will depend
on his AWW before the injury.
✔✔Bailee - ✔✔An individual or company that receives the property of someone else for
a special purpose and returns
the property after use.
✔✔Bailee Coverage - ✔✔Reimburses a bailee's customer for damage to the customer's
property while in the bailee's control
✔✔Binder - ✔✔A temporary contract provided by an insurer, which ensures coverage
until the complete, permanent
policy is issued
✔✔Black Lung Benefits Act - ✔✔Federal program that provides monthly payments and
medical treatments to coal miners who become
totally disabled from black lung disease or pneumoconiosis
✔✔Bodily Injury (BI) - ✔✔Physical damage to someone's person. Liability insurance
covers bodily injury that the insured might
cause to another person through negligence.
✔✔Boiler & Machinery - ✔✔Insurance coverage designed to indemnify a business for
damages to, and damages by, boilers,
machinery, motors, generators, and a variety of other electrical devices and appliances.
✔✔Bond - ✔✔A contract wherein one party guarantees the performance of a third party.
Bonds involve three parties:
(1) the surety agrees to pay the second party, (2) the obligee, if the third party, (3) the
principal, neglects
to carry out an obligation it has to the obligee.
✔✔Breach of Product
Warranty - ✔✔The failure or falsehood of a stated promise of a product stipulation
✔✔Business Auto Policy
(BAP) - ✔✔Provides property damage and liability insurance for automobiles used by a
business
✔✔Business Floater - ✔✔Inland marine coverage form designed for items that are
excluded from most property contracts, such as
, accounts receivable records, manuscripts, blueprints, etc.
✔✔Business Interruption
Coverage - ✔✔Commercial insurance form designed to indemnify a business if a
covered peril leads to lost profits or
revenue. The most common type of Time Element Insurance.
✔✔Business Personal
Property - ✔✔Moveable property used for business
✔✔Cancellation and
Nonrenewal Condition - ✔✔Establishes when and how the insurer or the insured can
terminate an active insurance contract. The
policyholder can cancel at any time by giving a written notice. Typically, the insurer may
only cancel the
policy for a few specific reasons, and it must give written notice of the cancellation or
non-renewal
anywhere between 10 and 60 days in advance
✔✔Capitation - ✔✔An arrangement in which an insurer pays a certain healthcare
provider up front, and in return, the
healthcare provider agrees to treat all of that insurer's members.
✔✔Catastrophe - ✔✔An occurrence or a sequence of occurrences that causes
enormous property losses. Catastrophes are
normally uninsurable by private insurers
✔✔Cause of Loss - ✔✔A form included in a commercial package policy or a commercial
property policy that lists the causes of
loss against which the insured property is covered.
✔✔Certificate of Insurance - ✔✔An official document that contains the details of an
insurance policy. It typically lists the insurance
company, the named insured, what is covered, and the dates of the policy period,
among other things.
Policyholders may be required to present their certificate as proof that insurance
coverage is in effect.
✔✔Commercial General
Liability (CGL) - ✔✔A policy that protects a business against damages and injuries it
may cause to third parties
✔✔Civil Law - ✔✔Observes court cases of one citizen charging another citizen for
damages caused by tort. Differs from
