Alabama Insurance adjuster exam study guide Exam with
129questions and answers 100%Correctly verified answers
latest update 2026/2027 RATED A+
Which of the following best defines premium? - CORRECT ANSWERS Under an insurance contract,
the insured pays a scheduled and affordable fee, called a premium. In return, the insurer promises to pay
for specified losses if they occur.
What are the four requirements of a legally binding contract? - CORRECT ANSWERS agreement,
consideration, competent parties, and legal purpose.
Melinda's home sustained $6,500 in damage when Jared ran into it with is truck. Melinda received
$6,500 from her insurance company, and Jared also paid her $5,000. Melinda has now profited from this
loss and is in violation of: - CORRECT ANSWERS The principle of indemnity.
An insurance policy's declarations page contains all of the following, except: - CORRECT ANSWERS
The declarations page is always the first page or section of an insurance policy. It gives a general
overview of the policy and will include at least 8 details: the names of both parties, the insurer and the
insured; the policy number; the location and description of the insured item; the value and replacement
value of the insured item; the dates that policy coverage starts and ends (known as the inception and
expiration dates); the amount and limit of insurance coverage; the deductibles on the policy; and the
premium that the insured has to pay.
All of the following pieces of information can be found in the Conditions section of an insurance policy,
except: - CORRECT ANSWERS conditions section. This is where the policy establishes a set of
conditions that the insured must meet in order for the policy to be valid. If the policyholder does not
meet the conditions listed here, the insurer has a right to deny coverage. For example, if a jewelry store
owner wants to purchase an insurance policy, the conditions section may require that a security guard
be present whenever the store is open. Other conditions require a claimant to protect damaged
property from further losses, and that the claimant must submit a proof of loss if the insurer requests it.
The insured must also cooperate with the insurer during any investigations or lawsuits. These and other
conditions are found in the conditions section of the policy.
Janelle is happy with most of the coverage in her Homeowners policy, but she wants to change her
coverage for personal property from ACV to Replacement Cost. She visits her local insurance agent and
asks him to make this change to her policy while keeping all the other details the same. Which section of
her policy would the agent use to make this change? - CORRECT ANSWERS Endorsements. often the
last section of an insurance contract. Like the definitions, this section is optional but very common. An
endorsement is a provision that modifies the coverage of the original contract. It can add or subtract
coverage for people, property, or causes of loss.
,Alabama Insurance adjuster exam study guide Exam with
129questions and answers 100%Correctly verified answers
latest update 2026/2027 RATED A+
Mark belongs to a non-profit organization that engages in charitable activities and provides Mark with
death and disability insurance coverage. To what kind of organization does Mark likely belong? -
CORRECT ANSWERS Fraternal Benefit Societies, or Fraternal Associations, are non-profit, mutual aid
organizations that engage primarily in charitable or benevolent activities. They offer their members
insuranceagainst death, disease, and disability. Members of Fraternal Benefit Societies usually share
common interests, such as religion, occupation, or ethnic background. The Elks, the Masons, The
Catholic Aid Association, and Sons of Norway are all examples of fraternal benefit societies.
A non-profit group of people or organizations that insure each other is called a: - CORRECT ANSWERS
Risk Retention Groups: Groups where the members insure each other, using their own capital to write
insurance policies.
A "binder" is: - CORRECT ANSWERS A binder is a statement providing immediate insurance coverage
for a short period. The binder can be oral or written, and it is meant to give temporary protection until
the final contract is drawn up, or until the insurer decides against issuing a written policy.
Which of the following situations does NOT contain an insurable risk? - CORRECT ANSWERS risk is an
item, person, or organization that has been insured. But not everything is insurable.
First determine insurable risk is whether the insurer can collect enough income from premiums to cover
its two major expenses: claims against policies and the operating costs. Second determining whether a
risk is insurable is threefold. The insurer must be able to define the exact conditions of coverage, must
know the precise dollar value of the risk, and must be able to clearly set out the terms under which a
claim would be paid. insurable risk is that a loss must be unpredictable and caused by circumstances no
one could reasonably prevent-a roof blown off in a tornado, a car accident, a third condition of insurable
risk is that a loss must be unpredictable and caused by circumstances no one could reasonably prevent-a
roof blown off in a tornado, a car accident, a theft, or a fire caused by lightning. Fourth condition of
insurable risk is that the loss must cause substantial economic hardship., Fifth condition for determining
insurable risk is that an insurer must be able to exclude coverage for some disasters considered
significantly catastrophic., Sixth and final qualification of an insurable risk is that an insurer must be able
to cover a large number of similar risks.,
Dale just bought 30 shares of a hot new startup company online.
, Alabama Insurance adjuster exam study guide Exam with
129questions and answers 100%Correctly verified answers
latest update 2026/2027 RATED A+
An insurance company may consider each of the following a risk, except: - CORRECT ANSWERS a
school bus.
Risk: In the insurance industry, risk can have two meanings: 1) the potential for financial loss; being
exposed or open to damage, 2) an insured item.
All of the following are true about the Law of Large Numbers in the insurance industry, except: -
CORRECT ANSWERS The larger the number of units insured, the more an insurer will have to pay
out. Simply put, the Law of Large Numbers says that statistics are more accurate and predictable when
there is a larger group of units involved.
Monica's home is located in a flood zone. In insurance terms, the location of Monica' home is
considered: - CORRECT ANSWERS a hazard: Anything that increases the chance of loss.
Which of the following is true about risk management in the insurance industry? - CORRECT ANSWERS
Risk management begins before a policy is purchased.
Darla works for XYZ Insurance and has Eddie in her office, who is applying for an auto insurance policy.
During the application process, Darla discovers that Eddie has been reported for fraudulent insurance
activity. What risk management technique would Darla most likely use in this situation? - CORRECT
ANSWERS Risk Reduction in three main ways: it can insure a risk but charge highert han usual
premiums, or it can require the policyholder to perform some action to reduce risk, or it can provide less
coverage than the applicant wants.
Francine recently started her own insurance company. She has already sold several homeowners
policies, but realizes that if a major storm were to hit her area, she would not have enough reserve to
pay out for all of the potential claims. What risk management technique would be the best option in
Francine's current situation? - CORRECT ANSWERS Risk transference: The risk-sharer is called a re-
insurer, essentially a provider of insurance for an insurer.
Acme Paper Co. is wanting to purchase commercial property insurance for its new warehouse. The
insurance company is willing to sell them a policy, but only if Acme Paper Co installs an automatic
sprinkler system inside the warehouse. What type of risk management technique is the insurer
employing in this case? - CORRECT ANSWERS Risk Reduction in three main ways: it can insure a risk
129questions and answers 100%Correctly verified answers
latest update 2026/2027 RATED A+
Which of the following best defines premium? - CORRECT ANSWERS Under an insurance contract,
the insured pays a scheduled and affordable fee, called a premium. In return, the insurer promises to pay
for specified losses if they occur.
What are the four requirements of a legally binding contract? - CORRECT ANSWERS agreement,
consideration, competent parties, and legal purpose.
Melinda's home sustained $6,500 in damage when Jared ran into it with is truck. Melinda received
$6,500 from her insurance company, and Jared also paid her $5,000. Melinda has now profited from this
loss and is in violation of: - CORRECT ANSWERS The principle of indemnity.
An insurance policy's declarations page contains all of the following, except: - CORRECT ANSWERS
The declarations page is always the first page or section of an insurance policy. It gives a general
overview of the policy and will include at least 8 details: the names of both parties, the insurer and the
insured; the policy number; the location and description of the insured item; the value and replacement
value of the insured item; the dates that policy coverage starts and ends (known as the inception and
expiration dates); the amount and limit of insurance coverage; the deductibles on the policy; and the
premium that the insured has to pay.
All of the following pieces of information can be found in the Conditions section of an insurance policy,
except: - CORRECT ANSWERS conditions section. This is where the policy establishes a set of
conditions that the insured must meet in order for the policy to be valid. If the policyholder does not
meet the conditions listed here, the insurer has a right to deny coverage. For example, if a jewelry store
owner wants to purchase an insurance policy, the conditions section may require that a security guard
be present whenever the store is open. Other conditions require a claimant to protect damaged
property from further losses, and that the claimant must submit a proof of loss if the insurer requests it.
The insured must also cooperate with the insurer during any investigations or lawsuits. These and other
conditions are found in the conditions section of the policy.
Janelle is happy with most of the coverage in her Homeowners policy, but she wants to change her
coverage for personal property from ACV to Replacement Cost. She visits her local insurance agent and
asks him to make this change to her policy while keeping all the other details the same. Which section of
her policy would the agent use to make this change? - CORRECT ANSWERS Endorsements. often the
last section of an insurance contract. Like the definitions, this section is optional but very common. An
endorsement is a provision that modifies the coverage of the original contract. It can add or subtract
coverage for people, property, or causes of loss.
,Alabama Insurance adjuster exam study guide Exam with
129questions and answers 100%Correctly verified answers
latest update 2026/2027 RATED A+
Mark belongs to a non-profit organization that engages in charitable activities and provides Mark with
death and disability insurance coverage. To what kind of organization does Mark likely belong? -
CORRECT ANSWERS Fraternal Benefit Societies, or Fraternal Associations, are non-profit, mutual aid
organizations that engage primarily in charitable or benevolent activities. They offer their members
insuranceagainst death, disease, and disability. Members of Fraternal Benefit Societies usually share
common interests, such as religion, occupation, or ethnic background. The Elks, the Masons, The
Catholic Aid Association, and Sons of Norway are all examples of fraternal benefit societies.
A non-profit group of people or organizations that insure each other is called a: - CORRECT ANSWERS
Risk Retention Groups: Groups where the members insure each other, using their own capital to write
insurance policies.
A "binder" is: - CORRECT ANSWERS A binder is a statement providing immediate insurance coverage
for a short period. The binder can be oral or written, and it is meant to give temporary protection until
the final contract is drawn up, or until the insurer decides against issuing a written policy.
Which of the following situations does NOT contain an insurable risk? - CORRECT ANSWERS risk is an
item, person, or organization that has been insured. But not everything is insurable.
First determine insurable risk is whether the insurer can collect enough income from premiums to cover
its two major expenses: claims against policies and the operating costs. Second determining whether a
risk is insurable is threefold. The insurer must be able to define the exact conditions of coverage, must
know the precise dollar value of the risk, and must be able to clearly set out the terms under which a
claim would be paid. insurable risk is that a loss must be unpredictable and caused by circumstances no
one could reasonably prevent-a roof blown off in a tornado, a car accident, a third condition of insurable
risk is that a loss must be unpredictable and caused by circumstances no one could reasonably prevent-a
roof blown off in a tornado, a car accident, a theft, or a fire caused by lightning. Fourth condition of
insurable risk is that the loss must cause substantial economic hardship., Fifth condition for determining
insurable risk is that an insurer must be able to exclude coverage for some disasters considered
significantly catastrophic., Sixth and final qualification of an insurable risk is that an insurer must be able
to cover a large number of similar risks.,
Dale just bought 30 shares of a hot new startup company online.
, Alabama Insurance adjuster exam study guide Exam with
129questions and answers 100%Correctly verified answers
latest update 2026/2027 RATED A+
An insurance company may consider each of the following a risk, except: - CORRECT ANSWERS a
school bus.
Risk: In the insurance industry, risk can have two meanings: 1) the potential for financial loss; being
exposed or open to damage, 2) an insured item.
All of the following are true about the Law of Large Numbers in the insurance industry, except: -
CORRECT ANSWERS The larger the number of units insured, the more an insurer will have to pay
out. Simply put, the Law of Large Numbers says that statistics are more accurate and predictable when
there is a larger group of units involved.
Monica's home is located in a flood zone. In insurance terms, the location of Monica' home is
considered: - CORRECT ANSWERS a hazard: Anything that increases the chance of loss.
Which of the following is true about risk management in the insurance industry? - CORRECT ANSWERS
Risk management begins before a policy is purchased.
Darla works for XYZ Insurance and has Eddie in her office, who is applying for an auto insurance policy.
During the application process, Darla discovers that Eddie has been reported for fraudulent insurance
activity. What risk management technique would Darla most likely use in this situation? - CORRECT
ANSWERS Risk Reduction in three main ways: it can insure a risk but charge highert han usual
premiums, or it can require the policyholder to perform some action to reduce risk, or it can provide less
coverage than the applicant wants.
Francine recently started her own insurance company. She has already sold several homeowners
policies, but realizes that if a major storm were to hit her area, she would not have enough reserve to
pay out for all of the potential claims. What risk management technique would be the best option in
Francine's current situation? - CORRECT ANSWERS Risk transference: The risk-sharer is called a re-
insurer, essentially a provider of insurance for an insurer.
Acme Paper Co. is wanting to purchase commercial property insurance for its new warehouse. The
insurance company is willing to sell them a policy, but only if Acme Paper Co installs an automatic
sprinkler system inside the warehouse. What type of risk management technique is the insurer
employing in this case? - CORRECT ANSWERS Risk Reduction in three main ways: it can insure a risk
