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Alabama Insurance Personal Lines EXAM (2025/2026)
Updated: EXAM QUESTIONS WITH ACCURATE
ANSWERS | GET IT RIGHT!!
When the insurance company terminates your policy at the end of the policy
period, this is called: - (ANSWER)Nonrenewal
A covered peril causes the insured premises to become uninhabitable until repairs
can be made. What type of loss does this describe? - (ANSWER)Indirect Loss
The primary insured in an insurance contract is the: - (ANSWER)First named
insured
The process of classification, rating, and selection of risks is called: -
(ANSWER)Underwriting
Which risk management method is used when you decide to purchase insurance
to cover a risk? - (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: - (ANSWER)A hold-harmless agreement
The type of company organized for the benefit of the policy owners is a: -
(ANSWER)Mutual company
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Canada Life doing business in North Carolina would be considered what type of
company? - (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: - (ANSWER)Risk Avoidance
A peril is defined as: - (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: - (ANSWER)Morale Hazard
A mechanism used to spread the potential financial losses of an individual among
a large number of people describes: - (ANSWER)Insurance
The law of large numbers is primarily used for what purpose by insurance
companies? - (ANSWER)To estimate the future losses of a particular group
As a captive agent, who do you represent in an insurance transaction? -
(ANSWER)The insurer
Of the following. Which is not considered to be a risk management tool? -
(ANSWER)Obligatory
Alabama Insurance Personal Lines EXAM (2025/2026)
Updated: EXAM QUESTIONS WITH ACCURATE
ANSWERS | GET IT RIGHT!!
When the insurance company terminates your policy at the end of the policy
period, this is called: - (ANSWER)Nonrenewal
A covered peril causes the insured premises to become uninhabitable until repairs
can be made. What type of loss does this describe? - (ANSWER)Indirect Loss
The primary insured in an insurance contract is the: - (ANSWER)First named
insured
The process of classification, rating, and selection of risks is called: -
(ANSWER)Underwriting
Which risk management method is used when you decide to purchase insurance
to cover a risk? - (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: - (ANSWER)A hold-harmless agreement
The type of company organized for the benefit of the policy owners is a: -
(ANSWER)Mutual company
, 2
Canada Life doing business in North Carolina would be considered what type of
company? - (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: - (ANSWER)Risk Avoidance
A peril is defined as: - (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: - (ANSWER)Morale Hazard
A mechanism used to spread the potential financial losses of an individual among
a large number of people describes: - (ANSWER)Insurance
The law of large numbers is primarily used for what purpose by insurance
companies? - (ANSWER)To estimate the future losses of a particular group
As a captive agent, who do you represent in an insurance transaction? -
(ANSWER)The insurer
Of the following. Which is not considered to be a risk management tool? -
(ANSWER)Obligatory
