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
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period, this is called: - CORRECT ANSWER- Nonrenewal
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Acovered peril causes the insured premises to become uninhabitable until
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repairs can be made. What type of loss does this describe? - CORRECT
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ANSWER- Indirect Loss
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The primary insured in an insurance contract is the: - CORRECT ANSWER-
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First named insured
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The process of classification, rating, and selection of risks is called: -
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CORRECT ANSWER- Underwriting
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Which risk management method is used when you decide to purchase
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insurance to cover a risk? - CORRECT ANSWER- None of the above
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A risk management method where one party agrees to release the other
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party from any liability or damage that might arise out of the transaction
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involved is called: - CORRECT ANSWER- A hold-harmless agreement
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,The type of company organized for the benefit of the policy owners is a:
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- CORRECT ANSWER- Mutual company
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Canada Life doing business in North Carolina would be considered what
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type of company? - CORRECT ANSWER- Alien company
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Joe decides to give up his two favorite hobbies, skydiving, and scuba
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diving, because they are too risky and could lead to his premature death. The
| | | | | | | | | | | | |
method of dealing with risk is called: - CORRECT ANSWER- Risk
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Avoidance
Aperil is defined as: - CORRECT ANSWER- The cause of loss
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Anthony is severely injured in an automobile accident because he
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refused to wear his seat belt. This is an example of a: - CORRECT
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ANSWER- Morale Hazard
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A mechanism used to spread the potential financial losses of an
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individual among a large number of people describes: - CORRECT
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ANSWER- Insurance
| |
The law of large numbers is primarily used for what purpose by
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insurance companies? - CORRECT ANSWER- To estimate the future losses of
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a particular group
| | |
, As a captive agent, who do you represent in an insurance transaction? -
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CORRECT ANSWER- The insurer
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Of the following. Which is not considered to be a risk management tool?
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- CORRECT ANSWER- Obligatory
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The tendency for people with a greater than average risk to purpose
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insurance is called: - CORRECT ANSWER- Adverse selection
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Amorale hazard is defined as - CORRECT ANSWER- Something that occurs
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through an individuals carelessness or irrespobsinke actions
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Awritten modification that either adds or deletes coverage in a policy is
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called - CORRECT ANSWER- An exclusion
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A continuous or repeated exposure which results in bodily injury or
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property damage which is not expected or intended defines what? -
| | | | | | | | | | |
CORRECT ANSWER- Occurrence
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Vacancy means only the absence of peolel - CORRECT ANSWER- False
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Specific insurance provides coverage for different classes of property
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under on policy - CORRECT ANSWER- False
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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
| | | | | | | |
Acovered 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
Aperil 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
| | | | | | | |
Amorale hazard is defined as - CORRECT ANSWER- Something that occurs
| | | | | | | | | | |
through an individuals carelessness or irrespobsinke actions
| | | | | | |
Awritten 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
| | | | | | |
