Alabama Property and Casualty Sample 100 questions with complete solutions

Alabama Property and Casualty Sample
100 questions with complete solutions


What is a hazard? - answer-an increase in the possibility that a loss might occur
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transfer risk from a person or business to an insurance company that agrees to to pay
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cfor losses in exchange for a premium. - answer-insurance
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The type of insurance company in which the policyholder is considered an owner, with
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the right to vote and share in the profits is a - answer-mutual company
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Jewel Canford's home is insured by XYZ Insurance Company. Last year she made the
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final mortgage payment to FBN Mortgage Company. Jewel is considering selling her
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home to her niece, Cynthia. Who has an insurable interest in the home? - answer-Jewel
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Canford
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Risk of loss is a speculative risk - answer-Which one of the following is NOT an element
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of insurability?
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a. Loss must be calculable
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b. Risk of loss must represent a financial harship
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c. Cost of insurance must be affordable
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d. Risk of loss is a speculative risk
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The principle that states that an insured should be restored to approximately the same
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financial position after a loss as before is known as... - answer-indemnity
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Declarations - answer-What part of an insurance policy personalizes the policy as to who
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and what are insured?
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An insurance policy is prepared by the insurance company, with little or no input from the
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insured. This means that an insurance policy is a/an... - answer-adhesion contract
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An individual who owns and lives in a condominium can obtain broad coverage for
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personal property in the condo under which Homeowners form? - answer-HO-6
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What is the purpose of the Fair Credit Reporting Act? - answer-to give the consumer
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recourse if insurance is denied on the basis of a credit report.
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a fire that was caused by the insureds negligence burns a neighbors building, the owner
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of the building sues the insured. - answer-Which of the following is a liability loss?
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, What rating method involves modifying the premium based on the insured's loss
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experience over a specified period of time? - answer-Experience rating
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Most Flood insurance coverage is provided by - answer-a federal government program
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Which of the following businesses could be eligible for a Business owners policy?
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a. Hometown Bank & Trust
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b. Rest Easy Motel
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c. Family Fun Time Amusement Park
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d. Joe's Bar and Grill - answer-Rest Easy Motel
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Pain and Suffering - answer-Which one of the following types of benefits is generally not
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provided by a state's workers compensation law?
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foreign - answer-Which of the following describes an insurance company doing business
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cin a state other than the one where it is incorporated?
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provide temporary protection for the insured between the time the application is made
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and the policy is issued or the binder expires - answer-The purpose of a binder is to
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Agent Michelle is under contract with the XYZ Insurance Company to represent and sell
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insurance only for XYZ. This is an example of what type of agency system? - answer-
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Exclusive/captive

What type of insurance policy insures against all risks of loss that are not specifically
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excluded by the policy? - answer-Open peril policy
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prior approval state - answer-In a particular state, an insurance company must file policy
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forms and rates with the state insurance department and wait for official approval before
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using the new forms and rates. This is an example of a/an
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According to the Nationwide Definition, imports and exports are - answer-eligible for
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Ocean Marine insurance
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Which Surety bond guarantees that bills for labor and materials will be paid by the
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contractor as they are due? - answer-Payment bond
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What describes actual cash value? - answer-Replacement cost-depreciation
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appraisal condition - answer-The condition that provides a means to settle the amount of
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a loss when the insured and the insurance company cannot agree is the
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An insured purchased new furniture for $6000. At the time of a fire los, it had
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depreciated $2000. The same furniture will cost $7000 to replace. What is the actual
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cash value of the destroyed furniture? - answer-5000
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