Alabama - Property and Casualty Exam fully solved & updated 2025-2026(latest version verified for accuracy)
(Questions + Answers) Solved 100% Correct!!
1. Abandonment: an attempt by an insured to receive full value for a partially damaged item by ottering the
damaged property to the insurance company. The company is under no obligation to pay for abandoned property.
2. Absolute Liability: A tort law concept in which an individual can be found legally responsible without being
negligent.
3. Acceptance: An element of contract law under which one party accepts the otter of another party.
4. Accident: An unexpected and unintended chance happening occurring at a known time and place.
5. Actual Cash Value (ACV): A method of valuing loss under which the insurance company will pay the
Replacement Cost Value of an item minus depreciation.
6. Additional Coverages: Additional coverages are provided without additional cost in property contracts.
Examples would include payment for Debris Removal and for a Fire Department Service Charge. The coverages may
pay an amount in addition to the stated limits of the policy.
7. Additional Living Expenses: An indirect loss coverage designed to ottset the additional costs of living
in temporary quarters while a dwelling is being rebuilt or repaired. Found in Homeowners and Dwelling policies.
8. Admitted Company: (authorized company) A company that has sought admission and been approved
to conduct the business of insurance within a particular state.
9. Adverse Selection: In insurance, Adverse Selection can best be described as the likelihood of the worst
possible risks seeking the best possible coverage. For example, a person who seeks to buy insurance for his home
following a TV broadcast that a wildfire is three miles away and blowing his direction.
10. Advertising Injury Liability: Liability resulting from damage caused to a business by the misrepre-
sentations of another. Also can include theft of a copyrighted trademark.
11. Agent: Insurance Producer
12. Aggregate Limit: Also known as a General Aggregate Limit, this is the limit expressed in a Commercial
Liability policy indicating how much an Insurance company will pay in total during any policy period.
13. Agreed Value: A method of valuation in which the insured and the insurance company agree on the value
of an insured item before a loss occurs. If and when a covered loss does occur, the company pays the Agreed Value
of the item without considering depreciation.
14. Aleatory Contract: A contract in which both parties will not benefit equally. For example: you could buy a
car, pay car insurance premiums for ten years, never have an accident, and never file a claim, then sell the car without
,ever collecting a cent from the insurance company. On the other hand, you could buy a car, insure it and then wreck
it three weeks late and collect thousands of dollars.
, 15. Alien Company: A company started or chartered in a country other than the U.S.
16. All Risk: (Special/Open Peril) The words "All Risk" are meant to convey the company is providing Special or
Open Perils coverage on a Property Policy. "All Risk" is an antiquated term that is legally indefensible; because it
implies everything is covered when in actuality there are exclusions even with Special or Open Peril coverage.
17. Appraisal: More than just having an expert place a value on an item, in Commercial Property Insurance,
Appraisal refers to a process in which the insured and the company seek to place a value on damaged property by
hiring three appraisers. When two of the three agree on the value of the damage, it is binding on both parties.
18. Appurtenant Structures: (Other Structure) In a Homeowners Policy, an Appurtenant Structure is a
building or structure, other than a dwelling. For example, a detached garage or a tool shed would be referred to as
an Appurtenant Structure.
19. Arbitration: A process under which two parties (the insured and the insurance company) can settle a claim
dispute without the need to go to court. Three Arbitrators hear arguments from both parties and set the amount that
should be paid under the claim. The determination made by the Arbitrators may or may not be binding.
20. Assailing Thieves (Piracy): A covered peril under an Ocean Marine policy it covers loss due to pirates.
21. Assignment: Refers to the assignment of ownership of a policy from one policy owner to another.
22. Assumption of Risk: Is a legal defense in a negligence claim. If the injured party undertook an activity
known to involve risk (skydiving, for example) it may be diflcult for the person to collect damages if they are injured.
23. Audit: (Audit or Premium Audit) occurs at the end of a policy period when an insurance company underwrites
a risk that varies. For example, in a Workers Compensation Policy, if a company underwrites a carpentry business that
has 12 carpenters and business booms, and the carpentry shop hires 7 more carpenters during the year, then an
Audit at the end of the year would reveal the insurance company is owed premium because the risk is greater than
that which they originally undertook.
24. Authorized Company: Also known as an Admitted Company, an Authorized Company receives a
Certificate of Authority as proof they are admitted to do business in a particular state.
25. Bailee: An individual or company that has care, custody or control of someone else's valuable property. (Auto
shop, dry cleaners, etc)
26. Basic Perils: A peril or cause of loss form in which 11 named Perils can be covered in Commercial Lines
Property Policies and 9 named perils can be covered in Personal Lines Policies.
27. Betterments and Improvements: Protection generally provided tenants against loss to additions
or changes made at their own expense that enhance the value of the property they occupy.
(Questions + Answers) Solved 100% Correct!!
1. Abandonment: an attempt by an insured to receive full value for a partially damaged item by ottering the
damaged property to the insurance company. The company is under no obligation to pay for abandoned property.
2. Absolute Liability: A tort law concept in which an individual can be found legally responsible without being
negligent.
3. Acceptance: An element of contract law under which one party accepts the otter of another party.
4. Accident: An unexpected and unintended chance happening occurring at a known time and place.
5. Actual Cash Value (ACV): A method of valuing loss under which the insurance company will pay the
Replacement Cost Value of an item minus depreciation.
6. Additional Coverages: Additional coverages are provided without additional cost in property contracts.
Examples would include payment for Debris Removal and for a Fire Department Service Charge. The coverages may
pay an amount in addition to the stated limits of the policy.
7. Additional Living Expenses: An indirect loss coverage designed to ottset the additional costs of living
in temporary quarters while a dwelling is being rebuilt or repaired. Found in Homeowners and Dwelling policies.
8. Admitted Company: (authorized company) A company that has sought admission and been approved
to conduct the business of insurance within a particular state.
9. Adverse Selection: In insurance, Adverse Selection can best be described as the likelihood of the worst
possible risks seeking the best possible coverage. For example, a person who seeks to buy insurance for his home
following a TV broadcast that a wildfire is three miles away and blowing his direction.
10. Advertising Injury Liability: Liability resulting from damage caused to a business by the misrepre-
sentations of another. Also can include theft of a copyrighted trademark.
11. Agent: Insurance Producer
12. Aggregate Limit: Also known as a General Aggregate Limit, this is the limit expressed in a Commercial
Liability policy indicating how much an Insurance company will pay in total during any policy period.
13. Agreed Value: A method of valuation in which the insured and the insurance company agree on the value
of an insured item before a loss occurs. If and when a covered loss does occur, the company pays the Agreed Value
of the item without considering depreciation.
14. Aleatory Contract: A contract in which both parties will not benefit equally. For example: you could buy a
car, pay car insurance premiums for ten years, never have an accident, and never file a claim, then sell the car without
,ever collecting a cent from the insurance company. On the other hand, you could buy a car, insure it and then wreck
it three weeks late and collect thousands of dollars.
, 15. Alien Company: A company started or chartered in a country other than the U.S.
16. All Risk: (Special/Open Peril) The words "All Risk" are meant to convey the company is providing Special or
Open Perils coverage on a Property Policy. "All Risk" is an antiquated term that is legally indefensible; because it
implies everything is covered when in actuality there are exclusions even with Special or Open Peril coverage.
17. Appraisal: More than just having an expert place a value on an item, in Commercial Property Insurance,
Appraisal refers to a process in which the insured and the company seek to place a value on damaged property by
hiring three appraisers. When two of the three agree on the value of the damage, it is binding on both parties.
18. Appurtenant Structures: (Other Structure) In a Homeowners Policy, an Appurtenant Structure is a
building or structure, other than a dwelling. For example, a detached garage or a tool shed would be referred to as
an Appurtenant Structure.
19. Arbitration: A process under which two parties (the insured and the insurance company) can settle a claim
dispute without the need to go to court. Three Arbitrators hear arguments from both parties and set the amount that
should be paid under the claim. The determination made by the Arbitrators may or may not be binding.
20. Assailing Thieves (Piracy): A covered peril under an Ocean Marine policy it covers loss due to pirates.
21. Assignment: Refers to the assignment of ownership of a policy from one policy owner to another.
22. Assumption of Risk: Is a legal defense in a negligence claim. If the injured party undertook an activity
known to involve risk (skydiving, for example) it may be diflcult for the person to collect damages if they are injured.
23. Audit: (Audit or Premium Audit) occurs at the end of a policy period when an insurance company underwrites
a risk that varies. For example, in a Workers Compensation Policy, if a company underwrites a carpentry business that
has 12 carpenters and business booms, and the carpentry shop hires 7 more carpenters during the year, then an
Audit at the end of the year would reveal the insurance company is owed premium because the risk is greater than
that which they originally undertook.
24. Authorized Company: Also known as an Admitted Company, an Authorized Company receives a
Certificate of Authority as proof they are admitted to do business in a particular state.
25. Bailee: An individual or company that has care, custody or control of someone else's valuable property. (Auto
shop, dry cleaners, etc)
26. Basic Perils: A peril or cause of loss form in which 11 named Perils can be covered in Commercial Lines
Property Policies and 9 named perils can be covered in Personal Lines Policies.
27. Betterments and Improvements: Protection generally provided tenants against loss to additions
or changes made at their own expense that enhance the value of the property they occupy.
