Alabama Insurance Personal Lines Exam
Questions and Answers
When the insurance company terminates your policy at the
end of the policy period, this is called: - Correct Answer ✅
Nonrenewal
A covered peril causes the insured premises to become
uninhabitable until repairs can be made. What type of loss
does this describe? - Correct Answer ✅ Indirect Loss
The primary insured in an insurance contract is the: - Correct
Answer ✅ First named insured
The process of classification, rating, and selection of risks is
called: - Correct Answer ✅ Underwriting
Which risk management method is used when you decide to
purchase insurance to cover a risk? - Correct Answer ✅
None of the above
A risk management method where one party agrees to
release the other party from any liability or damage that
,Alabama Insurance Personal Lines Exam
Questions and Answers
might arise out of the transaction involved is called: -
Correct Answer ✅ A hold-harmless agreement
The type of company organized for the benefit of the policy
owners is a: - Correct Answer ✅ Mutual company
Canada Life doing business in North Carolina would be
considered what type of company? - Correct Answer ✅
Alien company
Joe decides to give up his two favorite hobbies, skydiving,
and scuba diving, because they are too risky and could lead
to his premature death. The method of dealing with risk is
called: - Correct Answer ✅ Risk Avoidance
A peril is defined as: - Correct Answer ✅ The cause of loss
Anthony is severely injured in an automobile accident
because he refused to wear his seat belt. This is an example
of a: - Correct Answer ✅ Morale Hazard
, Alabama Insurance Personal Lines Exam
Questions and Answers
A mechanism used to spread the potential financial losses of
an individual among a large number of people describes: -
Correct Answer ✅ Insurance
The law of large numbers is primarily used for what purpose
by insurance companies? - Correct Answer ✅ To estimate
the future losses of a particular group
As a captive agent, who do you represent in an insurance
transaction? - Correct Answer ✅ The insurer
Of the following. Which is not considered to be a risk
management tool? - Correct Answer ✅ Obligatory
The tendency for people with a greater than average risk to
purpose insurance is called: - Correct Answer ✅ Adverse
selection
A morale hazard is defined as - Correct Answer ✅
Something that occurs through an individuals carelessness or
irrespobsinke actions
Questions and Answers
When the insurance company terminates your policy at the
end of the policy period, this is called: - Correct Answer ✅
Nonrenewal
A covered peril causes the insured premises to become
uninhabitable until repairs can be made. What type of loss
does this describe? - Correct Answer ✅ Indirect Loss
The primary insured in an insurance contract is the: - Correct
Answer ✅ First named insured
The process of classification, rating, and selection of risks is
called: - Correct Answer ✅ Underwriting
Which risk management method is used when you decide to
purchase insurance to cover a risk? - Correct Answer ✅
None of the above
A risk management method where one party agrees to
release the other party from any liability or damage that
,Alabama Insurance Personal Lines Exam
Questions and Answers
might arise out of the transaction involved is called: -
Correct Answer ✅ A hold-harmless agreement
The type of company organized for the benefit of the policy
owners is a: - Correct Answer ✅ Mutual company
Canada Life doing business in North Carolina would be
considered what type of company? - Correct Answer ✅
Alien company
Joe decides to give up his two favorite hobbies, skydiving,
and scuba diving, because they are too risky and could lead
to his premature death. The method of dealing with risk is
called: - Correct Answer ✅ Risk Avoidance
A peril is defined as: - Correct Answer ✅ The cause of loss
Anthony is severely injured in an automobile accident
because he refused to wear his seat belt. This is an example
of a: - Correct Answer ✅ Morale Hazard
, Alabama Insurance Personal Lines Exam
Questions and Answers
A mechanism used to spread the potential financial losses of
an individual among a large number of people describes: -
Correct Answer ✅ Insurance
The law of large numbers is primarily used for what purpose
by insurance companies? - Correct Answer ✅ To estimate
the future losses of a particular group
As a captive agent, who do you represent in an insurance
transaction? - Correct Answer ✅ The insurer
Of the following. Which is not considered to be a risk
management tool? - Correct Answer ✅ Obligatory
The tendency for people with a greater than average risk to
purpose insurance is called: - Correct Answer ✅ Adverse
selection
A morale hazard is defined as - Correct Answer ✅
Something that occurs through an individuals carelessness or
irrespobsinke actions
