Alabama Insurance: Property and Casualty Test Questions with correct answers

An incorporated insurance company which is run by a board of directors is known as CORRECT ANSWER a capital-stock company Which of the following statements is true regarding a binder? a. a binder guarantees that a policy will be issued by the insurance company. b. a binder guarantees coverage and that a policy will be issued c. a binder does not guarantee that a policy will be issued; it only guarantees temporary coverage. d. a binder does not afford any coverage, it is merely a snapshot of the coverage in effect at the time it is issued. CORRECT ANSWER c Liability imposed by law when someone is involved in an inherently dangerous activity or condition is known as CORRECT ANSWER absolute liability Which of the following elements of a contract does the premium represent? a. offer and acceptance b. competent parties c. valid consideration d. legal purpose CORRECT ANSWER c Contracts written for a specified amount as agreed to by both the insured and insurer at policy inception are known as CORRECT ANSWER valued or stated value contracts