Alabama Insurance Exam Prep – Chapter
15 (Updated 2025/2026 Study Guide &
Practice Questions)
The Commissioner can extend the time you have to complete your continuing education
requirements for up to how long?
A
90 days
B
60 days
C
30 days
D
120 days - correct answerA.
The Commissioner may extend an agents C.E. requirements for up to 90 days if for a
reason deemed appropriate. If the Commissioner denies the request, the agent has 30
days to get compliant.
If an insurance company accepts business from a person that is not currently appointed
and who is not licensed for that line of business, which of the following applies?
A
Insurer may be fined up to $10,000
B
Insurer may be fined up to 3 times the premium received
C
Insurer may be subject to a fine up to $10,000, imprisonment, or both
D
Insurer may be fined up to 3 times the commission earned - correct answerB.
An insurance company may be fined up to 3 times the premium received if accepting
any business from a person who is not appointed and licensed for that line of insurance.
A $10,000 fine may only be applied when an agent has violated 1 or more of the
grounds for suspension or revocation.
,To confer with or offer advice to a policy buyer about a policy's benefits, terms, or
conditions. - correct answerNegotiate.
(This definition applies only if the person doing the negotiating sells insurance.)
When a producer/agent misleads a person when comparing policies in order to induce
the client to lapse, forfeit, surrender, exchange or convert an existing policy, the
producer/agent is engaging in an unfair trade practice known as:
A
Rebating
B
Twisting
C
Intimidation
D
Coercion - correct answerB.
Twisting is Policy Replacement. It usually includes some coercion tactics and pressure
to exchange a policy in order to purchase a new policy. It is usually not in the insureds
best interest. Replacement is not illegal, but it is not recommended and is highly
scrutinized. If replacement is done to the insureds detriment, the agent would be guilty
of Twisting.
True or False:
The Commissioner may revoke a producer's or insurer's license for failing to pay the
fine. - correct answerTrue.
True or False:
A person is not allowed to advertise or give free insurance to induce the purchase of
property. Free insurance includes insurance for which the charge is less than the cost. -
correct answerTrue.
Know the following Unfair Trade Practices, Prohibited Activities:
Twisting
Defamation
Rebating
Coercion - correct answer
-Must include all usual policy terms and any applicable endorsements
-May be oral or written
-Is valid for up to 90 days until the policy is issued and may, with the Commissioner's
written approval, be extended or renewed
, -Is commonly known as a Temporary Insuring Agreement or a Temporary Insurance
Policy
Does not guarantee that the policy will be issued and may be cancelled at anytime by
the insurance company if the insured is found to be an excessive risk - correct
answerBinder
Which statement concerning a binder is true?
A
A binder is valid for a maximum of 60 days
B
A binder provides only partial coverage of a risk
C
A binder is valid for a maximum of 90 days
D
A binder must be issued in writing to be valid - correct answerC.
A binder is valid for up to 90 days or until the policy is issued, whichever is shorter. The
binder is temporarily the policy until it is issued and the policy effective date is the same
as the effective date of the binder. It does not guarantee the issue of the policy and may
be given orally or in writing.
A person who, for compensation, investigates and negotiates claim settlements on the
insurer's behalf. This term does not include an insurer's salaried employee or an
attorney licensed in Alabama. - correct answerAdjuster.
To be licensed as an adjuster, an applicant must be _______ years old when making
application.
A
20
B
21
C
18
D
19 - correct answerD.
To be a licensed adjuster, you must be at least 19 years old when making application.
True or False:
15 (Updated 2025/2026 Study Guide &
Practice Questions)
The Commissioner can extend the time you have to complete your continuing education
requirements for up to how long?
A
90 days
B
60 days
C
30 days
D
120 days - correct answerA.
The Commissioner may extend an agents C.E. requirements for up to 90 days if for a
reason deemed appropriate. If the Commissioner denies the request, the agent has 30
days to get compliant.
If an insurance company accepts business from a person that is not currently appointed
and who is not licensed for that line of business, which of the following applies?
A
Insurer may be fined up to $10,000
B
Insurer may be fined up to 3 times the premium received
C
Insurer may be subject to a fine up to $10,000, imprisonment, or both
D
Insurer may be fined up to 3 times the commission earned - correct answerB.
An insurance company may be fined up to 3 times the premium received if accepting
any business from a person who is not appointed and licensed for that line of insurance.
A $10,000 fine may only be applied when an agent has violated 1 or more of the
grounds for suspension or revocation.
,To confer with or offer advice to a policy buyer about a policy's benefits, terms, or
conditions. - correct answerNegotiate.
(This definition applies only if the person doing the negotiating sells insurance.)
When a producer/agent misleads a person when comparing policies in order to induce
the client to lapse, forfeit, surrender, exchange or convert an existing policy, the
producer/agent is engaging in an unfair trade practice known as:
A
Rebating
B
Twisting
C
Intimidation
D
Coercion - correct answerB.
Twisting is Policy Replacement. It usually includes some coercion tactics and pressure
to exchange a policy in order to purchase a new policy. It is usually not in the insureds
best interest. Replacement is not illegal, but it is not recommended and is highly
scrutinized. If replacement is done to the insureds detriment, the agent would be guilty
of Twisting.
True or False:
The Commissioner may revoke a producer's or insurer's license for failing to pay the
fine. - correct answerTrue.
True or False:
A person is not allowed to advertise or give free insurance to induce the purchase of
property. Free insurance includes insurance for which the charge is less than the cost. -
correct answerTrue.
Know the following Unfair Trade Practices, Prohibited Activities:
Twisting
Defamation
Rebating
Coercion - correct answer
-Must include all usual policy terms and any applicable endorsements
-May be oral or written
-Is valid for up to 90 days until the policy is issued and may, with the Commissioner's
written approval, be extended or renewed
, -Is commonly known as a Temporary Insuring Agreement or a Temporary Insurance
Policy
Does not guarantee that the policy will be issued and may be cancelled at anytime by
the insurance company if the insured is found to be an excessive risk - correct
answerBinder
Which statement concerning a binder is true?
A
A binder is valid for a maximum of 60 days
B
A binder provides only partial coverage of a risk
C
A binder is valid for a maximum of 90 days
D
A binder must be issued in writing to be valid - correct answerC.
A binder is valid for up to 90 days or until the policy is issued, whichever is shorter. The
binder is temporarily the policy until it is issued and the policy effective date is the same
as the effective date of the binder. It does not guarantee the issue of the policy and may
be given orally or in writing.
A person who, for compensation, investigates and negotiates claim settlements on the
insurer's behalf. This term does not include an insurer's salaried employee or an
attorney licensed in Alabama. - correct answerAdjuster.
To be licensed as an adjuster, an applicant must be _______ years old when making
application.
A
20
B
21
C
18
D
19 - correct answerD.
To be a licensed adjuster, you must be at least 19 years old when making application.
True or False:
