CHAPTER 1 Alabama P&C, WC, & Crop Adjuster
Pre-Licensing EXAM QUESTIONS & ANSWERS
SOLUTION 2026 COMPLETE EXAM | 100%
CORRECT
Insurance - CORRECT ANSWERS Financial tool that protects individuals and organizations
from unforeseen and extraordinary financial losses by transferring risk to another party
Principle of Indemnity - CORRECT ANSWERS Restoration to approximate previous financial
condition; no more no less
To prevent an insured from making a profit on a loss - CORRECT ANSWERS The purpose of the
principle of indemnity
The fee paid by the insured in exchange for an insurace policy - CORRECT ANSWERS Which of
the following best describes premium?
A pool of collected premiums that insurer sets aside to pay claims - CORRECT ANSWERS What
is a reserve in terms of insurance?
Repairs to property
Reimbursement for additional living expenses
Rental cars, hotels
Costs directly associated with a loss, as allowed under the policy - CORRECT ANSWERS
Indemnification may include payment for :
Agreement
, Consideration
Competent Parties
Legal Purpose - CORRECT ANSWERS 4 Qualifications of a contract:
Personal
Adhesion
Utmost good faith
Aleatory
Unilateral
Condition - CORRECT ANSWERS 6 Characteristics of Insurance Contracts
Personal Contract - CORRECT ANSWERS What characteristic contract protects the
policyholder from financial losses, covers the person not the property,
Contract of Adhesion - CORRECT ANSWERS The insurer is responsible for the wording of the
contract
The insured has no say in the meaning
Courts favor the insured in the event of ambiguity
Contract of Utmost good faith - CORRECT ANSWERS Applicants are expected to be
completely honest about the risk to the insurer
The insurer must reply on the applicants not to conceal or misinterpret pertinent facts
Aleatory - CORRECT ANSWERS depending on an unknown future event. Neither party can
know future losses
Declarations Page
Pre-Licensing EXAM QUESTIONS & ANSWERS
SOLUTION 2026 COMPLETE EXAM | 100%
CORRECT
Insurance - CORRECT ANSWERS Financial tool that protects individuals and organizations
from unforeseen and extraordinary financial losses by transferring risk to another party
Principle of Indemnity - CORRECT ANSWERS Restoration to approximate previous financial
condition; no more no less
To prevent an insured from making a profit on a loss - CORRECT ANSWERS The purpose of the
principle of indemnity
The fee paid by the insured in exchange for an insurace policy - CORRECT ANSWERS Which of
the following best describes premium?
A pool of collected premiums that insurer sets aside to pay claims - CORRECT ANSWERS What
is a reserve in terms of insurance?
Repairs to property
Reimbursement for additional living expenses
Rental cars, hotels
Costs directly associated with a loss, as allowed under the policy - CORRECT ANSWERS
Indemnification may include payment for :
Agreement
, Consideration
Competent Parties
Legal Purpose - CORRECT ANSWERS 4 Qualifications of a contract:
Personal
Adhesion
Utmost good faith
Aleatory
Unilateral
Condition - CORRECT ANSWERS 6 Characteristics of Insurance Contracts
Personal Contract - CORRECT ANSWERS What characteristic contract protects the
policyholder from financial losses, covers the person not the property,
Contract of Adhesion - CORRECT ANSWERS The insurer is responsible for the wording of the
contract
The insured has no say in the meaning
Courts favor the insured in the event of ambiguity
Contract of Utmost good faith - CORRECT ANSWERS Applicants are expected to be
completely honest about the risk to the insurer
The insurer must reply on the applicants not to conceal or misinterpret pertinent facts
Aleatory - CORRECT ANSWERS depending on an unknown future event. Neither party can
know future losses
Declarations Page
