Alabama Insurance: Property and Casualty Test Questions and Answers Graded A+

Alabama Insurance: Property and Casualty Test Questions and Answers Graded A+ An incorporated insurance company which is run by a board of directors is known as a capital-stock company Which of the following statements is true regarding a binder? a. a binder guarantees that a policy will be issued by the insurance company. b. a binder guarantees coverage and that a policy will be issued c. a binder does not guarantee that a policy will be issued; it only guarantees temporary coverage. d. a binder does not afford any coverage, it is merely a snapshot of the coverage in effect at the time it is issued. c Liability imposed by law when someone is involved in an inherently dangerous activity or condition is known as absolute liability Which of the following elements of a contract does the premium represent? a. offer and acceptance b. competent parties c. valid consideration d. legal purpose c Contracts written for a specified amount as agreed to by both the insured and insurer at policy inception are known as valued or stated value contracts All of the following must be present to establish negligence except a. duty owed and breach of that duty b. a proximate cause of loss c. damages must exist d. hazardous operations are involved d The clause of an insurance contract that provides for equitable handling of loss settlement disputes is the appraisal or arbitration clause The portion of the premium due the insurance company for coverage afforded under the insurance contract is the earned premium Coverage C under the dwelling policy a. will pay for losses to a detached garage b. will provide worldwide coverage up to 10% of the coverage C amount c. pays up to 10% of the Coverage A limit for loss of rental value d. pays for the expense of removing debris resulting from a covered property loss b The coverage provided only by the DP-2 and DP-3 dwelling fire forms is additional living expense Your condominium association assesses your client $5000 for fire damage to the associations laundry building which was not covered by the association property policy. Your clients unendorsed homeowner policy will pay $1000 because this is the max amount available without endorsement The dwelling fire form which affords coverage for only the perils of fire, lightning, and internal explosion is the DP-1 Basic form