10/15/25, 8:11 AM ALABAMA PERSONAL LINES EXAM Questions with Verified Answers 100% Correct | New Update Flashcards | Quizlet
ALABAMA PERSONAL LINES EXAM Questions
with Verified Answers 100% Correct | New Update
Save
Practice questions for this set
Terms in this set (108)
insurance transfer of risk from a person or business to an insurer
1/9
, 10/15/25, 8:11 AM ALABAMA PERSONAL LINES EXAM Questions with Verified Answers 100% Correct | New Update Flashcards | Quizlet
risk uncertainty/possibility of a loss
Speculative Risk A chance of loss, no loss, or gain.
Pure Risk chance of loss only insurance companies will insure
exposure possibility that a loss will occur
peril The cause of a loss (Fire)
direct physical loss
hazard Increases the chance of loss
Physical Hazard The hazard can be seen
moral hazard dishonesty
Morale Hazard carelessness
STARR
Sharing
Transfer
Method of handling risk
Avoidance
Retention
Reduction
contract (policy) an agreement between the insured and the insurer
1st party Insured (customer)
2nd party insurer, insurance company
the large the group, the more accurately losses can
Law of Large Numbers
be predicted
CANHAM: Calculable, affordable, Non-catastrophic,
Elements of an Insurable
Homogenous (similar exposures), Accidental,
Risk
Measurable
Adverse Selection risks that have a greater than average chance of loss
an insurance company (the ceding company) paying
Reinsurance another insurance company (reinsurer) to take some
of the companies risk of catastrophic loss
2/9
ALABAMA PERSONAL LINES EXAM Questions
with Verified Answers 100% Correct | New Update
Save
Practice questions for this set
Terms in this set (108)
insurance transfer of risk from a person or business to an insurer
1/9
, 10/15/25, 8:11 AM ALABAMA PERSONAL LINES EXAM Questions with Verified Answers 100% Correct | New Update Flashcards | Quizlet
risk uncertainty/possibility of a loss
Speculative Risk A chance of loss, no loss, or gain.
Pure Risk chance of loss only insurance companies will insure
exposure possibility that a loss will occur
peril The cause of a loss (Fire)
direct physical loss
hazard Increases the chance of loss
Physical Hazard The hazard can be seen
moral hazard dishonesty
Morale Hazard carelessness
STARR
Sharing
Transfer
Method of handling risk
Avoidance
Retention
Reduction
contract (policy) an agreement between the insured and the insurer
1st party Insured (customer)
2nd party insurer, insurance company
the large the group, the more accurately losses can
Law of Large Numbers
be predicted
CANHAM: Calculable, affordable, Non-catastrophic,
Elements of an Insurable
Homogenous (similar exposures), Accidental,
Risk
Measurable
Adverse Selection risks that have a greater than average chance of loss
an insurance company (the ceding company) paying
Reinsurance another insurance company (reinsurer) to take some
of the companies risk of catastrophic loss
2/9
