AL P&C University of Alabama Study Guide Exam
Questions & Answers | Updated 2026
If a company cancels an auto policy mid-term, the refund will be made on a :
A. pro rata basis
B. short rate basis
C. retroactive basis
D. coinsurance basis - CORRECT ANSWER -A. Pro Rata Basis
What is the term used to describe terminating the insurance relationship at the end of the policy
period?
A. Cancellation
B. Nonrenewal
C. Separation
D. Exclusion - CORRECT ANSWER -B. Nonrenewal
Which is the best example of an indirect loss?
A. Sequential loss
B. Liability loss
C. Employee theft
D. Loss of use - CORRECT ANSWER -D. Loss of use
Which is a two party contract?
,A. Property
B. Casualty
C. Liability
D. Auto - CORRECT ANSWER -A. Property
Insurance contracts offset
A. speculative risk
B. pure risk
C. gambling
D. created risk - CORRECT ANSWER -B. Pure risk
Which of the following is a third party contract?
A. Property
B. Casualty
C. Earthquake
D. Theft - CORRECT ANSWER -B. Casualty
Risk is best define as
A. chance of loss
B. certainty of loss
C. financial loss
D. sentimental loss - CORRECT ANSWER -A. chance of loss
,Being subject to a loss is
A. liability
B. indemnity
C. exposure
D. subrogation - CORRECT ANSWER -C. exposure
The ranking insured in a Personal Lines contract is the
A. named insured
B. first named insured
C. mortgagee
D. husband - CORRECT ANSWER -A. named insured
To be paid a claim under a P & C contract, insurable interest must exist
A. At the time of application
B. on the policy date
C. at the time of loss
D. at the time of claim settlement - CORRECT ANSWER -C. at the time of loss
This type of company is run for the benefit of the policyowners:
A. Stock
B. Mutual
, C. Foreign
D. Alien - CORRECT ANSWER -B. Mutual
Ohio Casualty is doing regular business in Indiana. Within the same state of Indiana, Ohio
Casualty would be considered a(n)
A. domestic company
B. nonadmitted company
C. alien company
D. foreign Company - CORRECT ANSWER -D. Foreign
Ohio Casualty is doing regular business in Indiana. Within the state of Indiana, Ohio Casualty
would be considered a(an)
A. admitted company
B. domestic company
C. unauthorized company
D. risk retention group - CORRECT ANSWER -A. admitted company
A company chartered in Guam or Puerto Rico doing regular business in New York would be
considered by New Yorkers to be a(n)
A. domestic compnay
B. foreign company
C. alien company
D. international company - CORRECT ANSWER -B. foreign company
Questions & Answers | Updated 2026
If a company cancels an auto policy mid-term, the refund will be made on a :
A. pro rata basis
B. short rate basis
C. retroactive basis
D. coinsurance basis - CORRECT ANSWER -A. Pro Rata Basis
What is the term used to describe terminating the insurance relationship at the end of the policy
period?
A. Cancellation
B. Nonrenewal
C. Separation
D. Exclusion - CORRECT ANSWER -B. Nonrenewal
Which is the best example of an indirect loss?
A. Sequential loss
B. Liability loss
C. Employee theft
D. Loss of use - CORRECT ANSWER -D. Loss of use
Which is a two party contract?
,A. Property
B. Casualty
C. Liability
D. Auto - CORRECT ANSWER -A. Property
Insurance contracts offset
A. speculative risk
B. pure risk
C. gambling
D. created risk - CORRECT ANSWER -B. Pure risk
Which of the following is a third party contract?
A. Property
B. Casualty
C. Earthquake
D. Theft - CORRECT ANSWER -B. Casualty
Risk is best define as
A. chance of loss
B. certainty of loss
C. financial loss
D. sentimental loss - CORRECT ANSWER -A. chance of loss
,Being subject to a loss is
A. liability
B. indemnity
C. exposure
D. subrogation - CORRECT ANSWER -C. exposure
The ranking insured in a Personal Lines contract is the
A. named insured
B. first named insured
C. mortgagee
D. husband - CORRECT ANSWER -A. named insured
To be paid a claim under a P & C contract, insurable interest must exist
A. At the time of application
B. on the policy date
C. at the time of loss
D. at the time of claim settlement - CORRECT ANSWER -C. at the time of loss
This type of company is run for the benefit of the policyowners:
A. Stock
B. Mutual
, C. Foreign
D. Alien - CORRECT ANSWER -B. Mutual
Ohio Casualty is doing regular business in Indiana. Within the same state of Indiana, Ohio
Casualty would be considered a(n)
A. domestic company
B. nonadmitted company
C. alien company
D. foreign Company - CORRECT ANSWER -D. Foreign
Ohio Casualty is doing regular business in Indiana. Within the state of Indiana, Ohio Casualty
would be considered a(an)
A. admitted company
B. domestic company
C. unauthorized company
D. risk retention group - CORRECT ANSWER -A. admitted company
A company chartered in Guam or Puerto Rico doing regular business in New York would be
considered by New Yorkers to be a(n)
A. domestic compnay
B. foreign company
C. alien company
D. international company - CORRECT ANSWER -B. foreign company
