ALABAMA PROPERTY AND CASUALTY TEST
BANK LATEST 2026 ACTUAL QUESTIONS AND
EXPERT SOLUTIONS GUARANTEED PASS
◉Absolute Liability . Answer: A tort law concept in which an individual
can be found legally responsible without being negligent.
◉Acceptance . Answer: An element of contract law under which one
party accepts the offer of another party.
◉Accident . Answer: An unexpected and unintended chance happening
occurring at a known time and place.
◉Actual Cash Value (ACV) . Answer: A method of valuing loss under
which the insurance company will pay the Replacement Cost Value of an
item minus depreciation.
◉Additional Coverages . Answer: Additional coverages are provided
without additional cost in property contracts. Examples would include
payment for Debris Removal and for a Fire Department Service Charge.
The coverages may pay an amount in addition to the stated limits of the
policy.
,◉Additional Living Expenses . Answer: An indirect loss coverage
designed to offset the additional costs of living in temporary quarters
while a dwelling is being rebuilt or repaired. Found in Homeowners and
Dwelling policies.
◉Admitted Company . Answer: (authorized company) A company that
has sought admission and been approved to conduct the business of
insurance within a particular state.
◉Adverse Selection . Answer: In insurance, Adverse Selection can best
be described as the likelihood of the worst possible risks seeking the best
possible coverage. For example, a person who seeks to buy insurance for
his home following a TV broadcast that a wildfire is three miles away
and blowing his direction.
◉Advertising Injury Liability . Answer: Liability resulting from damage
caused to a business by the misrepresentations of another. Also can
include theft of a copyrighted trademark.
◉Agent . Answer: Insurance Producer
◉Aggregate Limit . Answer: Also known as a General Aggregate Limit,
this is the limit expressed in a Commercial Liability policy indicating
how much an Insurance company will pay in total during any policy
period.
,◉Agreed Value . Answer: A method of valuation in which the insured
and the insurance company agree on the value of an insured item before
a loss occurs. If and when a covered loss does occur, the company pays
the Agreed Value of the item without considering depreciation.
◉Aleatory Contract . Answer: A contract in which both parties will not
benefit equally. For example: you could buy a car, pay car insurance
premiums for ten years, never have an accident, and never file a claim,
then sell the car without ever collecting a cent from the insurance
company. On the other hand, you could buy a car, insure it and then
wreck it three weeks late and collect thousands of dollars.
◉Alien Company . Answer: A company started or chartered in a country
other than the U.S.
◉All Risk . Answer: (Special/Open Peril) The words "All Risk" are
meant to convey the company is providing Special or Open Perils
coverage on a Property Policy. "All Risk" is an antiquated term that is
legally indefensible; because it implies everything is covered when in
actuality there are exclusions even with Special or Open Peril coverage.
◉Appraisal . Answer: More than just having an expert place a value on
an item, in Commercial Property Insurance, Appraisal refers to a process
in which the insured and the company seek to place a value on damaged
property by hiring three appraisers. When two of the three agree on the
value of the damage, it is binding on both parties.
, ◉Appurtenant Structures . Answer: (Other Structure) In a Homeowners
Policy, an Appurtenant Structure is a building or structure, other than a
dwelling. For example, a detached garage or a tool shed would be
referred to as an Appurtenant Structure.
◉Arbitration . Answer: A process under which two parties (the insured
and the insurance company) can settle a claim dispute without the need
to go to court. Three Arbitrators hear arguments from both parties and
set the amount that should be paid under the claim. The determination
made by the Arbitrators may or may not be binding.
◉Assailing Thieves (Piracy) . Answer: A covered peril under an Ocean
Marine policy it covers loss due to pirates.
◉Assignment . Answer: Refers to the assignment of ownership of a
policy from one policy owner to another.
◉Assumption of Risk . Answer: Is a legal defense in a negligence claim.
If the injured party undertook an activity known to involve risk
(skydiving, for example) it may be difficult for the person to collect
damages if they are injured.
◉Audit . Answer: (Audit or Premium Audit) occurs at the end of a
policy period when an insurance company underwrites a risk that varies.
For example, in a Workers Compensation Policy, if a company
BANK LATEST 2026 ACTUAL QUESTIONS AND
EXPERT SOLUTIONS GUARANTEED PASS
◉Absolute Liability . Answer: A tort law concept in which an individual
can be found legally responsible without being negligent.
◉Acceptance . Answer: An element of contract law under which one
party accepts the offer of another party.
◉Accident . Answer: An unexpected and unintended chance happening
occurring at a known time and place.
◉Actual Cash Value (ACV) . Answer: A method of valuing loss under
which the insurance company will pay the Replacement Cost Value of an
item minus depreciation.
◉Additional Coverages . Answer: Additional coverages are provided
without additional cost in property contracts. Examples would include
payment for Debris Removal and for a Fire Department Service Charge.
The coverages may pay an amount in addition to the stated limits of the
policy.
,◉Additional Living Expenses . Answer: An indirect loss coverage
designed to offset the additional costs of living in temporary quarters
while a dwelling is being rebuilt or repaired. Found in Homeowners and
Dwelling policies.
◉Admitted Company . Answer: (authorized company) A company that
has sought admission and been approved to conduct the business of
insurance within a particular state.
◉Adverse Selection . Answer: In insurance, Adverse Selection can best
be described as the likelihood of the worst possible risks seeking the best
possible coverage. For example, a person who seeks to buy insurance for
his home following a TV broadcast that a wildfire is three miles away
and blowing his direction.
◉Advertising Injury Liability . Answer: Liability resulting from damage
caused to a business by the misrepresentations of another. Also can
include theft of a copyrighted trademark.
◉Agent . Answer: Insurance Producer
◉Aggregate Limit . Answer: Also known as a General Aggregate Limit,
this is the limit expressed in a Commercial Liability policy indicating
how much an Insurance company will pay in total during any policy
period.
,◉Agreed Value . Answer: A method of valuation in which the insured
and the insurance company agree on the value of an insured item before
a loss occurs. If and when a covered loss does occur, the company pays
the Agreed Value of the item without considering depreciation.
◉Aleatory Contract . Answer: A contract in which both parties will not
benefit equally. For example: you could buy a car, pay car insurance
premiums for ten years, never have an accident, and never file a claim,
then sell the car without ever collecting a cent from the insurance
company. On the other hand, you could buy a car, insure it and then
wreck it three weeks late and collect thousands of dollars.
◉Alien Company . Answer: A company started or chartered in a country
other than the U.S.
◉All Risk . Answer: (Special/Open Peril) The words "All Risk" are
meant to convey the company is providing Special or Open Perils
coverage on a Property Policy. "All Risk" is an antiquated term that is
legally indefensible; because it implies everything is covered when in
actuality there are exclusions even with Special or Open Peril coverage.
◉Appraisal . Answer: More than just having an expert place a value on
an item, in Commercial Property Insurance, Appraisal refers to a process
in which the insured and the company seek to place a value on damaged
property by hiring three appraisers. When two of the three agree on the
value of the damage, it is binding on both parties.
, ◉Appurtenant Structures . Answer: (Other Structure) In a Homeowners
Policy, an Appurtenant Structure is a building or structure, other than a
dwelling. For example, a detached garage or a tool shed would be
referred to as an Appurtenant Structure.
◉Arbitration . Answer: A process under which two parties (the insured
and the insurance company) can settle a claim dispute without the need
to go to court. Three Arbitrators hear arguments from both parties and
set the amount that should be paid under the claim. The determination
made by the Arbitrators may or may not be binding.
◉Assailing Thieves (Piracy) . Answer: A covered peril under an Ocean
Marine policy it covers loss due to pirates.
◉Assignment . Answer: Refers to the assignment of ownership of a
policy from one policy owner to another.
◉Assumption of Risk . Answer: Is a legal defense in a negligence claim.
If the injured party undertook an activity known to involve risk
(skydiving, for example) it may be difficult for the person to collect
damages if they are injured.
◉Audit . Answer: (Audit or Premium Audit) occurs at the end of a
policy period when an insurance company underwrites a risk that varies.
For example, in a Workers Compensation Policy, if a company
