ALABAMA PERSONAL LINES EXAM Questions with Verified Answers
100% Correct | New Update
insurance - Answer: transfer of risk from a person or business to an insurer
risk - Answer: uncertainty/possibility of a loss
Speculative Risk - Answer: A chance of loss, no loss, or gain.
Pure Risk - Answer: chance of loss only insurance companies will insure
exposure - Answer: possibility that a loss will occur
peril - Answer: The cause of a loss (Fire)
direct - Answer: physical loss
hazard - Answer: Increases the chance of loss
Physical Hazard - Answer: The hazard can be seen
moral hazard - Answer: dishonesty
Morale Hazard - Answer: carelessness
Method of handling risk - Answer: STARR
Sharing
Transfer
, ALABAMA PERSONAL LINES EXAM Questions with Verified Answers
100% Correct | New Update
Avoidance
Retention
Reduction
contract (policy) - Answer: an agreement between the insured and the insurer
1st party - Answer: Insured (customer)
2nd party - Answer: insurer, insurance company
Law of Large Numbers - Answer: the large the group, the more accurately losses can be
predicted
Elements of an Insurable Risk - Answer: CANHAM: Calculable, affordable, Non-catastrophic,
Homogenous (similar exposures), Accidental, Measurable
Adverse Selection - Answer: risks that have a greater than average chance of loss
Reinsurance - Answer: an insurance company (the ceding company) paying another insurance
company (reinsurer) to take some of the companies risk of catastrophic loss
Stock Insurer - Answer: a corporation owned by stockholders
Mutual Insurer - Answer: An insurer that is owned by its policyholders and formed as a
corporation for the purpose of providing insurance to them.
100% Correct | New Update
insurance - Answer: transfer of risk from a person or business to an insurer
risk - Answer: uncertainty/possibility of a loss
Speculative Risk - Answer: A chance of loss, no loss, or gain.
Pure Risk - Answer: chance of loss only insurance companies will insure
exposure - Answer: possibility that a loss will occur
peril - Answer: The cause of a loss (Fire)
direct - Answer: physical loss
hazard - Answer: Increases the chance of loss
Physical Hazard - Answer: The hazard can be seen
moral hazard - Answer: dishonesty
Morale Hazard - Answer: carelessness
Method of handling risk - Answer: STARR
Sharing
Transfer
, ALABAMA PERSONAL LINES EXAM Questions with Verified Answers
100% Correct | New Update
Avoidance
Retention
Reduction
contract (policy) - Answer: an agreement between the insured and the insurer
1st party - Answer: Insured (customer)
2nd party - Answer: insurer, insurance company
Law of Large Numbers - Answer: the large the group, the more accurately losses can be
predicted
Elements of an Insurable Risk - Answer: CANHAM: Calculable, affordable, Non-catastrophic,
Homogenous (similar exposures), Accidental, Measurable
Adverse Selection - Answer: risks that have a greater than average chance of loss
Reinsurance - Answer: an insurance company (the ceding company) paying another insurance
company (reinsurer) to take some of the companies risk of catastrophic loss
Stock Insurer - Answer: a corporation owned by stockholders
Mutual Insurer - Answer: An insurer that is owned by its policyholders and formed as a
corporation for the purpose of providing insurance to them.
