Alabama Personal Lines Exam
Questions and Answers 100% Correct
What is a hazard? - ANSWER - An increase in the possibility that a loss might occur
The purpose of insurance is to: - ANSWER - 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: - ANSWER - 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? -
ANSWER - Martha
Which of the following is not an element of insurability - ANSWER - 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 - ANSWER - Indemnity
An individual who owns and lives in a condominium can obtain broad coverage for personal
property in the condo under which homeowners form - ANSWER - HO-6
And insurance what is the primary purpose for the Fair Credit Reporting Act - ANSWER -
Together consumer recourse if insurance is denied on the basis of a credit report
Coverage for which of the following is excluded by a Dwelling policy? - ANSWER - Coin
Collection
Which of the following perils is covered by the HO-2 and HO-3? - ANSWER - Sudden and the
accidental rupture of a heating system
, Under a pure no-fault plan, each party to an auto accident: - ANSWER - Is reimbursed by his or
her own insurance company
An additional loss that results from a direct loss to property is called a/an: - ANSWER -
Indirect/consequential loss
Which of the following describes an insurance company doing business in a state other than the
one where it is incorporated - ANSWER - Foreign
Which one of the following accidents would NOT be covered under the Uninsured Motorists
coverage of the Personal Auto policy? - ANSWER - 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? - ANSWER - 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 -
ANSWER - Express authority
The purpose of a binder is to - ANSWER - 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 - ANSWER - Replacement cost minus
appreciation
Which of the following can be insured under an unendorsed Homeowners policy? - ANSWER -
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? - ANSWER - Liability
Questions and Answers 100% Correct
What is a hazard? - ANSWER - An increase in the possibility that a loss might occur
The purpose of insurance is to: - ANSWER - 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: - ANSWER - 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? -
ANSWER - Martha
Which of the following is not an element of insurability - ANSWER - 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 - ANSWER - Indemnity
An individual who owns and lives in a condominium can obtain broad coverage for personal
property in the condo under which homeowners form - ANSWER - HO-6
And insurance what is the primary purpose for the Fair Credit Reporting Act - ANSWER -
Together consumer recourse if insurance is denied on the basis of a credit report
Coverage for which of the following is excluded by a Dwelling policy? - ANSWER - Coin
Collection
Which of the following perils is covered by the HO-2 and HO-3? - ANSWER - Sudden and the
accidental rupture of a heating system
, Under a pure no-fault plan, each party to an auto accident: - ANSWER - Is reimbursed by his or
her own insurance company
An additional loss that results from a direct loss to property is called a/an: - ANSWER -
Indirect/consequential loss
Which of the following describes an insurance company doing business in a state other than the
one where it is incorporated - ANSWER - Foreign
Which one of the following accidents would NOT be covered under the Uninsured Motorists
coverage of the Personal Auto policy? - ANSWER - 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? - ANSWER - 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 -
ANSWER - Express authority
The purpose of a binder is to - ANSWER - 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 - ANSWER - Replacement cost minus
appreciation
Which of the following can be insured under an unendorsed Homeowners policy? - ANSWER -
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? - ANSWER - Liability
