ALABAMA PERSONAL LINES
Alabama Personal Lines Exam Questions
with Verified Answers 100% Correct | New
Update 2025
insurance -Correct Answers ✔-transfer of risk from a person or business to an
insurer
risk -Correct Answers ✔-uncertainty/possibility of a loss
Speculative Risk -Correct Answers ✔-A chance of loss, no loss, or gain.
Pure Risk -Correct Answers ✔-chance of loss only insurance companies will
insure
exposure -Correct Answers ✔-possibility that a loss will occur
peril -Correct Answers ✔-The cause of a loss (Fire)
direct -Correct Answers ✔-physical loss
hazard -Correct Answers ✔-Increases the chance of loss
Physical Hazard -Correct Answers ✔-The hazard can be seen
moral hazard -Correct Answers ✔-dishonesty
Morale Hazard -Correct Answers ✔-carelessness
Method of handling risk -Correct Answers ✔-STARR
Sharing
Transfer
ALABAMA PERSONAL LINES
, ALABAMA PERSONAL LINES
Avoidance
Retention
Reduction
contract (policy) -Correct Answers ✔-an agreement between the insured and the
insurer
1st party -Correct Answers ✔-Insured (customer)
2nd party -Correct Answers ✔-insurer, insurance company
Law of Large Numbers -Correct Answers ✔-the large the group, the more
accurately losses can be predicted
Elements of an Insurable Risk -Correct Answers ✔-CANHAM: Calculable,
affordable, Non-catastrophic, Homogenous (similar exposures), Accidental,
Measurable
Adverse Selection -Correct Answers ✔-risks that have a greater than average
chance of loss
Reinsurance -Correct Answers ✔-an insurance company (the ceding company)
paying another insurance company (reinsurer) to take some of the companies risk
of catastrophic loss
Stock Insurer -Correct Answers ✔-a corporation owned by stockholders
Mutual Insurer -Correct Answers ✔-An insurer that is owned by its policyholders
and formed as a corporation for the purpose of providing insurance to them.
Fraternal Insurer -Correct Answers ✔-provides insurance and other benefits
must be a member of the society to get the benefits
ALABAMA PERSONAL LINES
Alabama Personal Lines Exam Questions
with Verified Answers 100% Correct | New
Update 2025
insurance -Correct Answers ✔-transfer of risk from a person or business to an
insurer
risk -Correct Answers ✔-uncertainty/possibility of a loss
Speculative Risk -Correct Answers ✔-A chance of loss, no loss, or gain.
Pure Risk -Correct Answers ✔-chance of loss only insurance companies will
insure
exposure -Correct Answers ✔-possibility that a loss will occur
peril -Correct Answers ✔-The cause of a loss (Fire)
direct -Correct Answers ✔-physical loss
hazard -Correct Answers ✔-Increases the chance of loss
Physical Hazard -Correct Answers ✔-The hazard can be seen
moral hazard -Correct Answers ✔-dishonesty
Morale Hazard -Correct Answers ✔-carelessness
Method of handling risk -Correct Answers ✔-STARR
Sharing
Transfer
ALABAMA PERSONAL LINES
, ALABAMA PERSONAL LINES
Avoidance
Retention
Reduction
contract (policy) -Correct Answers ✔-an agreement between the insured and the
insurer
1st party -Correct Answers ✔-Insured (customer)
2nd party -Correct Answers ✔-insurer, insurance company
Law of Large Numbers -Correct Answers ✔-the large the group, the more
accurately losses can be predicted
Elements of an Insurable Risk -Correct Answers ✔-CANHAM: Calculable,
affordable, Non-catastrophic, Homogenous (similar exposures), Accidental,
Measurable
Adverse Selection -Correct Answers ✔-risks that have a greater than average
chance of loss
Reinsurance -Correct Answers ✔-an insurance company (the ceding company)
paying another insurance company (reinsurer) to take some of the companies risk
of catastrophic loss
Stock Insurer -Correct Answers ✔-a corporation owned by stockholders
Mutual Insurer -Correct Answers ✔-An insurer that is owned by its policyholders
and formed as a corporation for the purpose of providing insurance to them.
Fraternal Insurer -Correct Answers ✔-provides insurance and other benefits
must be a member of the society to get the benefits
ALABAMA PERSONAL LINES
