ALABAMA PERSONAL LINES INSURANCE
EXAM QUESTIONS AND ANSWERS (VERIFIED AND WELL
DETAILED ANSWERS) LATEST 2025/2026
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 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
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
A written modification that either adds or deletes coverage in a policy is
called - CORRECT ANSWER- An exclusion
A continuous or repeated exposure which results in bodily injury or
property damage which is not expected or intended defines what? -
CORRECT ANSWER- Occurrence
Vacancy means only the absence of peolel - CORRECT ANSWER- False
Specific insurance provides coverage for different classes of property
under on policy - CORRECT ANSWER- False
EXAM QUESTIONS AND ANSWERS (VERIFIED AND WELL
DETAILED ANSWERS) LATEST 2025/2026
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 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
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
A written modification that either adds or deletes coverage in a policy is
called - CORRECT ANSWER- An exclusion
A continuous or repeated exposure which results in bodily injury or
property damage which is not expected or intended defines what? -
CORRECT ANSWER- Occurrence
Vacancy means only the absence of peolel - CORRECT ANSWER- False
Specific insurance provides coverage for different classes of property
under on policy - CORRECT ANSWER- False
