Alabama Personal Lines Insurance Exams: Practice Questions and Answers, Exams of Insurance Economics

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Alabama Personal Lines Exams Prep 2025- 2026 Success Guide

Alabama Personal Lines Exams Prep 2025- 2026 Success Guide Which Homeowner's policy provides all risk or open peril coverage on the dwelling but broad form coverage on thc personal properly? - CORRECT ANSWER-HO-3 An individual otherwise qualified except for having taken and passed the examination can be issued a temporary insurance producer license, which is valid for a maximum period of - x months Who of the following would have Liability coverage under Chuck's Personal Auto policy? - CORRECT ANSWER-AL of the above The authority given by the company Lo the agent is NOT formally writtcn or communicated is called - CORRECT. ANSWER-implied authority Which of the following correctly identifies common characteristics of Fidelity Bonds? - CORRECT ANSWER-Fidclity Bonds commonly provide cove during the bond period and discovered before the end of the discovery period. go for an insured act occurring An automobile collision would be considered - CORRECT. ANSWER-an accident and an occurrence Which of the following are excluded property losses under all Homeowner’s forms? - CORRECT. ANSWER-AII of the above What type of Ocean Marine insurance covers goods while they are in transit over water? - CORRECT ANSWER-cargo Under the Personal Auto policy, Uninsured Motorists coverage provides coverage for bodily injury for which the insured is legally entitled to recover that results from an accident with - CORR] ANSWER-all of the above Which of the following statements about notice of cancellation of an Alabama automobile polity is CORRECT? - CORRECT ANSWER-For ri insurer must prov Kher than non-payment of premium, the notice of cancellation of an automobile policy. Assume the following items were stolen from the insured’s home. Which one of the these losses would be fully covered under Coverage C (Personal Property? of the Homeowner's policy, assuming the loss was for the full value of the property described? - CORRECT ANSWER-A $1,000 emerald bracelet Coverage D (Lass of Use) Coverage D under a standard Homeowner's policy contains coverage for - CORRECT ‘R-loss of use All of the following are correct statements regarding coverage under a Boatowner’s policy EXCEPT - CORRECT ANSWER-Mosl. Boatowncr'’s polic related to how the boat may 2s have no limilations or oxclusions Under a standard property insurance policy, after the insurer pays in full for damaged property, they gain ownership of the property and have the right to recoup part of their payment through the right of - salvage Which of the following would NOT be covered under the Other Than Collision section of a Personal Auto policy? - CORRECT ANS Under the Personal Auto policy, which of the following losses would be considered a collision loss? - CORR ANSWER-None of the above For the mast part, property insurance policies are considered to be - CORRECT. ANSWER-two- parly contr 3 In addition Lo carthquake, what other perils docs the Earthquake Canscs of Loss form cover? - CORRECT ANSWER-Voleanic eruption Which of the following statements about surplus line brokers is CORRECT? A\. An Alabama residen must be licensed as a property and casually insurance producer Lo hold a surplus line broker license. B. An Alabama resident must post a bond of at least $39,000 to be licensed as a surplus Line broker. C. To be licensed in Alabama as a non-resident surplus line broker, the applicant must be licensed as a surplus line broker in their home state. D. All of the above stalements are correct. ~All of the above staLoments are correct. Under a Personal Auto policy, your duties following a loss include all of the following EXCEPT - CORRECT ANSWER-file a lawsuit against any negligent third party The maximum claim amount covered by the Alabama Insurance Guaranty Association is - CORRECT. ANSWER- An insurer compare what it paid in claims against the amount received in premiums to determine its - CORRECT. ANSWER- Which of the following is NOT a category of the Nationwide Marine Definition? - CORRECT. Private passenger autos A person who for compensation, fee or commissions negotiates settlement of claims under insurance contracts in Alabama is called a/an - CORR ANSWER-adjuster Coverage C under a Dwelling or Standard Homeowner's policy contains coverage for - CORRECT ANSWER personal property What is arbitration? - CORRECT ANSWER-A means of settling disputes between the insured and he insurer Which of the following statements BEST describes a collision - CORRECT ANSWER- An insurance contract is “one-sided” because the insurance company is the only party that is legally bound to perform its part of the contract. This means that an insurance contract is a/an - CORRECT, ANSWER-unilateral contract Every automobile insurance policy sold in Alabama must coverage for uninsured motorist - Under the dwelling policy, personal property away from the premises anywhere in the world - CORRECT ANSWER-is covered for up to 10% of the amount of coverage for personal property. Which of the following is NOT correct regarding the Defense Conditions under the Equipment Breakdown Coverage policy? - CORR! limils The Broad Cause of Loss form for Homeowner's policies includes the Additional Coverage of - CORRECT. ANSWER-collapse You are held responsible when you 13-year-old daughter vandalizes a neighbor's house. This is an oxample of - CORRECT. ANSWER- Vicarious liability Providing misleading comparisons of the Lerms and benefits of an insurance policy for the purpose of inducing the policyholder to change to another policy is known as - CORRECT Which of the following is NOT a Supplementary Payment under a Personal Auto policy? - CORRECT ANSWER- The definition of “Casualty” insurance includes - CORRECT ANSWER-hability insurance Which of the following is normally NOT an exclusion under the Equipment Breakdown Coverage S$ policy? - CORRI An insured who needs coverage for her home and its contents against loss caused by earthquake can obtain it with - CORRECT ANSWER: Homeowner's policy with an Earthquak ither a separate Earthquake policy or a Dwelling or ndorsement attached. Which of the following is INCORRECT concerning premiums collected by an insurance producer in Alabama? - CORRECT ANSWER-Premium payment|s become the properly of lhe produccr All of the following are requirements to ret an Alabama insurance producer license EXCEPT: - CORRECT. ANSWER-An applicant must have a diploma from an approved college or university. if yon have not met the Continuing Education requirement when il is time Lo renew your license, youmay? ‘ ANSWER-request and extension and continue to do business until your request is accepted or denied Submitting false proof of insurance to the state can result in the suspension of the owner's vehicle registration for - CORRECT ANSWER-three months The Valuable Papers and Records Inland Marine coverage for reimburses the insured for replacing all of the following EXCEPT - CORRECT. ANSWER-damaged securities and paper moncy When the insured’s home is damaged in a tornado, she is forced to move into a hotel for several days while repairs are made. The additional expenses the insured incurs for the hotel are considered a/an - CORRECT ANSWER-indirect/conseqnential loss Which one of the following Lerms describes a contract where the insurer drafis the contract and "R-Adhesion the applicant must accept or reject it? - CORRE! an excess basis. Which statement regarding insurance producer license appointments is TRUE? ANSWER- In Alabama, The Commissioner of Insurance may hold a hearing upon written demand by an aggrieved person within __days after receipt of demand. - © NSWER-30 Which statement is FALSE about Medical Payment coverage under a Personal Auto Policy? - Legal duty owed, breach of legal duty owed, proximate cause, and damages are all elements required Lo establish a charge of - C negligence Under the Personal Auto policy, Liability coverage EXCLUDES - CORRECT ANSWER- damage of injury done intentionally by the insured In an Umbrella Liability Policy, the amount the insured must satisfy before payment may be made under the Umbrella for a loss NOT covered by an underlying policy is called the - Bid bonds, performance bonds, payment bonds, and completion bonds are all examples of what YORRECT. ANSWER-contract bonds type of surety bonds? - C ‘R-The neighbor's Personal Auto policy would be primary; Hank’s policy would apply on Under the standard Homeowner’s policy, Coverage F - Medical Payments to others, the policy will cover the necessary expenses medical expenses incurred for up to from the date of the accident. three years Which of the following describes an insurance company authorized to do business in a state? - CORRECT ANSWER admittod In what department of an insurance company are decisions made to accept or reject applicants? - CORRI ANSWER-Underwriting Ifan insurance company intentionally prolongs the claims process, forcing the policyowner to suc for damages, the company has violated the principle of- CORRECT ANSWER-Utmost Good Faith Who may cancel an insurance policy, assuming cancellation is not contrary to the law? - CORRECT ANSWER-Either A or B {the insured, the insurance company) The minimum limits in Alabama for automobile liability are - CORRECT ANSWER-23/30/25 The type of hazard represented by slick floors is called a- CORR! ANSWER-physical hazard The Declarations Page ina Homeowner's Policy contains all of the following EXCEPT - The make and model ycar of your auLomobile Providing misleading - CORRECT. ANSWER- Who must meet Alabama’s requirement to earn 24 hours of continuing education hours every two years? - CORRECT ANSWER-a producer who only sells property and casualty insurance Establishing a premium based partially, ifnot exclusively, on the underwriter’s evaluation of an individual risk and its loss potential is called - CORRECT ANSWER-judgement rating Which of the following is the correct statement regarding the rights of the insurer to suspend R-If any is found to be in a unsafe condition, the insurer can immediately suspend coverage under the Equipment Breakdown Coverage policy? - CORR! covered objce coverage on the equipment in question. How much coverage does the Equipment Breakdown Coverage policy automatically provide for losses arising out of water damage? - $25,000 per breakdown \ financial institution has an insurable interest in your properly if they lend you money and the ris collateral for the loan. Which property insurance provision is designed to prote taf the financial institution? - CORRECT ANSWER-mortgage clause propert insurable intere! In addition to paying legal damages. the Personal Auto policy will pay for - CORRECT. The insurance industry is, for the most part. regulated by the - CORR! Restate government, Coverage E (Personal Liability) limits in a Homeowner’s policy are expressed on - per occurrence basis Contracts in which only one party makes a legally enforceable promise are called - CORRECT ANSWER-unilateral contracts. Acclient tripping and falling in a doctor’s office is an example of -CORRECT ANSWER- Premises Liability The act of transferring an insurance policy to another interest is - WER-known as assignment, and may be done only with the insurance company’s written consent. A consequential loss can be described as - an indirect loss Which of the following formulas expresses how actual cash value (ACV) is determined? - CORRECT ANSWER-Replacement cost minus depreciation equals ACV A. document altached Lo an insurance policy thal amends the original contract is called - CORRECT ANSWER-an endorsement. The type of risk that oxi: a consequence of an individual's personal actions toward others is afan - © ANSWER-Hability risk. What law gives consumers recourse if they are denied insurance on the basis of information contained in their credit reports? Fair Credit Reporting Act Which of the following would be considered an indirect, or consequential loss under a SORRECT, ANSWER-The cost of a hotel room after an insured loss to Homeowner's polic the home. Offering to give a prospect anything of value not specified in the contract to persuade the prospect to purchase the insurance is: - CORRECT. ANSWER-rebating. An insurance producer must inform the Alabama Commissioner of Insurance of a change in the licensee's legal name or address within _ days of change - CORRECT ANSWER. Which of the following would be covered under the Other Than Collision portion of the Personal Auto policy? Damages to the vehicle caused by -All of the Above Which of the following describes an insurance company doing business in a state other than the state where it is incorporated? - CORR! A insurance producer must keep complete records pertaining to transactions under the producer’s license Lor at leas ER-three ycars For which extended reporting period arrangement is the insured required Lo pay an additional premium?- CORRECT. The term that refers ta coverage for the cost of removing damaged property from a site of loss is - CORRECT. ANSWER-debris removal Which one of the following losses would NOT be paid under the Medical Payments coverage of - CORRECT ANSWER- driving a car she stole from the school parking | Willa Doan’s Personal Auto policy? la's daughter was injured while To have insurable interest, an individual must - -have a chance of suffering a financial loss. A person who needs coverage for his or her professional liability exposure can obtain it by purchasing - CORRECT ANSWER-a Professional Liability policy tailored to the specific occupational need. Which of the following statements is correct? A. Every automobile insurance policy sold in Alabama must offer coverage for uninsured motorists. B. Uninsured motorist coverage is always included in an automobile Liability policy unless it is specifically rejected by the insured in writing. of uninsured motoris! coverage for bodily injury are $25,000 C. In Alabama, the minimum limits per person and $50,000 per accident D. All of the abave R-All of the abave Which of the following is truce concerning insurable interest in a policy providing properly °° - CORRECT. ANSWER- insurance Hired autos and non-owned autos - CORRECT ANSWER-are covered by the by the Business Auto policy at the insured's option by adding the appropriate symbols, 8 & $. Which of the following would NOT be considered a covered auto under the Personal Auto policy? - CORRECT ANSWER-A car owned by the insured’s employer that the insured drives while making sales calls. Under a Personal Auto policy with NO ENDORESEMENT, when the insured’s car breaks down and the car must be towed at a cost of $50, the loss is covered as A\. an Other Than Collision loss B. a Collision loss C. Either A or B In an Homeowner's policy, wall-to-wall carpeting is insured under which coverage? - CORRECT ANSWER-Dwelling What type of surety bond is used to bond guardians, administrators, and executors appointed by a court to manage the property or affairs of others? a. contract bond b. fidelity bond ¢. fiduciary bond d. public officials bond - CORRECT AN. Homeowner's endorsement. In Alabama, a candidate for a Property & Casualty insurance producer license must complete a pre-licensing course consisLing of __hours, unless exempt from this requirement. - R40 Coverage B under a standard Homeowner's policy contains coverage for A. the dwelling and all permanent attachments. B. other structures on the insured premises. C. personal property. D. loss of use. - CORRECT. ANSWER-other structure on the insured premises Under a standard property insurance policy, after the insurance company pays in full for stolen property, what should the INSURED do if the property is later recovered? - CORRECT ANSWER-The insurance company has the option to allow the insured to keep the property and return the insurance payment. Astock insurance company - is owned by stockholders or shareholders When an Alabama automobile policy is cancelled, unless the reason is non-payment of premium, the insurer must advise the named insured of their possible eligibility for a. COBRA continuation benefits b. uninsured motorists coverage c¢. caverage under Alabama Assigned Risk Plan d. all of the above - CORRECT ANSWER-coverage under the Alabama Assigned Risk Plans The top priority of ANY level of FORTIFIED designation is: - CORRECT ANSWER-The roof Coverage A under a standard Homeowner's policy contains coverage for - CORRECT Mary was injured whon she was struck by a car. The driver, who cannot be identified, lel. the scene of the accident. hich part of Mary’s Personal Auto policy will pay for her medical bills? NSWER-Uninsured Motorists