Alabama Personal Lines Exam
Questions and Answers 100% Correct
What is a hazard? - ANSWER - An increase in the possibility that a loss might occur
The purpose of insurance is to: - ANSWER - Transfer risk from a person, business or
organization to an insurance company that agrees to pay for losses in exchange for a premium
When the policyholder is considered an owner with the right to vote and share in the profits the
type of insurance company is a: - ANSWER - Mutual company
Martha's home is insured by Big Insurance Company. Martha has recently made the final
mortgage payment to Large Mortgage Company. Martha is contemplating selling her home to
her best friend, Bernice. Which of the following has an insurable interest in the home? -
ANSWER - Martha
Which of the following is not an element of insurability - ANSWER - Risk of loss is a speculative
risk
The principle that states that an insured should be restored to approximately the same financial
position after a loss as before is known as - ANSWER - Indemnity
An individual who owns and lives in a condominium can obtain broad coverage for personal
property in the condo under which homeowners form - ANSWER - HO-6
And insurance what is the primary purpose for the Fair Credit Reporting Act - ANSWER -
Together consumer recourse if insurance is denied on the basis of a credit report
Coverage for which of the following is excluded by a Dwelling policy? - ANSWER - Coin
Collection
Which of the following perils is covered by the HO-2 and HO-3? - ANSWER - Sudden and the
accidental rupture of a heating system
, Under a pure no-fault plan, each party to an auto accident: - ANSWER - Is reimbursed by his or
her own insurance company
An additional loss that results from a direct loss to property is called a/an: - ANSWER -
Indirect/consequential loss
Which of the following describes an insurance company doing business in a state other than the
one where it is incorporated - ANSWER - Foreign
The purpose of a binder is to - ANSWER - Provide temporary protection for the insured between
the time of the application is made in the policy is issued or the binder expires
Which of the following describes actual cash value - ANSWER - Replacement cost minus
appreciation
Which of the following can be insured under an unendorsed Homeowners policy? - ANSWER -
Private residence in which the owner occupant also maintains an office for her accounting
business
Which of the following coverages is included in the Homeowners policy but is NOT included in
an under endorsed Dwelling policy? - ANSWER - Liability
Open peril coverage for both the dwelling and personal property is provided by the: - ANSWER -
HO-5
Assume the following items were stolen from the insureds home. Which one of these losses
would be fully covered under Coverage C of the Homeowners policy, assuming the loss was for
the full value of the property described? - ANSWER - A $2,000 laptop computer the insured
used for her in-home accounting business.
Both the structure and the contents of a mobile home can be insured by purchasing: - ANSWER
- Either a mobile home package policy or an HO-2 or HO-3 with the Mobile Homeowners
endorsement
Questions and Answers 100% Correct
What is a hazard? - ANSWER - An increase in the possibility that a loss might occur
The purpose of insurance is to: - ANSWER - Transfer risk from a person, business or
organization to an insurance company that agrees to pay for losses in exchange for a premium
When the policyholder is considered an owner with the right to vote and share in the profits the
type of insurance company is a: - ANSWER - Mutual company
Martha's home is insured by Big Insurance Company. Martha has recently made the final
mortgage payment to Large Mortgage Company. Martha is contemplating selling her home to
her best friend, Bernice. Which of the following has an insurable interest in the home? -
ANSWER - Martha
Which of the following is not an element of insurability - ANSWER - Risk of loss is a speculative
risk
The principle that states that an insured should be restored to approximately the same financial
position after a loss as before is known as - ANSWER - Indemnity
An individual who owns and lives in a condominium can obtain broad coverage for personal
property in the condo under which homeowners form - ANSWER - HO-6
And insurance what is the primary purpose for the Fair Credit Reporting Act - ANSWER -
Together consumer recourse if insurance is denied on the basis of a credit report
Coverage for which of the following is excluded by a Dwelling policy? - ANSWER - Coin
Collection
Which of the following perils is covered by the HO-2 and HO-3? - ANSWER - Sudden and the
accidental rupture of a heating system
, Under a pure no-fault plan, each party to an auto accident: - ANSWER - Is reimbursed by his or
her own insurance company
An additional loss that results from a direct loss to property is called a/an: - ANSWER -
Indirect/consequential loss
Which of the following describes an insurance company doing business in a state other than the
one where it is incorporated - ANSWER - Foreign
The purpose of a binder is to - ANSWER - Provide temporary protection for the insured between
the time of the application is made in the policy is issued or the binder expires
Which of the following describes actual cash value - ANSWER - Replacement cost minus
appreciation
Which of the following can be insured under an unendorsed Homeowners policy? - ANSWER -
Private residence in which the owner occupant also maintains an office for her accounting
business
Which of the following coverages is included in the Homeowners policy but is NOT included in
an under endorsed Dwelling policy? - ANSWER - Liability
Open peril coverage for both the dwelling and personal property is provided by the: - ANSWER -
HO-5
Assume the following items were stolen from the insureds home. Which one of these losses
would be fully covered under Coverage C of the Homeowners policy, assuming the loss was for
the full value of the property described? - ANSWER - A $2,000 laptop computer the insured
used for her in-home accounting business.
Both the structure and the contents of a mobile home can be insured by purchasing: - ANSWER
- Either a mobile home package policy or an HO-2 or HO-3 with the Mobile Homeowners
endorsement
