Download Alabama Personal Lines Final Exam Review – Comprehensive Practice & Answers. and more Exams Insurance law in PDF only on Docsity!
Alabama Personal Lines Final Exam Review
– Comprehensive Practice & Answers.
Which one of the following is not one of the required elements of a legal contract - Answer. written instrument 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 Which one of the following is NOT an element of insurability? - Answer. Risk of loss is a speculative risk What part of an insurance policy personalized the policy as to who and what are insured? - Answer. Declarations An insurance policy is prepared by the insurance company, with little or no input from the insured. This means that an insurance policy is a - Answer. Adhesion contract An individual who owns and lives in a condominium can obtain broad coverage for personal property in the condo under which homeowners form?
Which of the following is a liability loss? - Answer. A fire that was caused by the insureds negligence burns a neighboring building. The owner of the building sued the insured. What rating method involves modifying the premium based on the insureds loss experience over a specified period of time? - Answer. Experience rating Most flood insurance coverage is provided by: - Answer. a federal government program Which of the following describes an insurance company doing business in a state other than the one where it is incorporated - Answer. Foreign Rhonda is an agent under contract with the Big Insurance Company to represent and sell insurance only for Big. This is an example of what type of agency system? - Answer. Exclusive/captive What type of insurance policy insured against all risks of loss that are not specifically excluded by the policy? - Answer. Open peril policy The condition that provided a means to settle the amount of a loss when the insured and the insurance company cannot agree is the: - Answer. Appraisal condition An insured purchased new furniture for $6,000. At the time of a fire loss, it has depreciated $2,000. The same furniture will costs $7,000 to replace. What is the actual cash value of the destroyed furniture. - Answer. $5,
An additional loss that results from a direct loss of property is called a/an - Answer. Indirect consequential loss 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 Which one of the following losses would be paid under Part D of the personal auto policy? - Answer. A permanently installed tape player was damaged when thieves attempted to remove it from the car The personal auto policy's medical payments coverage would not provide protection for which one of the following? - Answer. Occupants of a car that was struck by the insured. Which of the following is responsible for the licensing of insurance agent - Answer. Individual state department of insurance The insured has two separate Dwelling policies that cover the same property: Policy A for 30k and Policy B for 60k. The insured has a 12k loss. If both policies use the pro rata method to handle other insurance, how much will Policy B pay for this loss? - Answer. $8, Which one of these homeowners endorsements is used to schedule separate coverage for one or more of nine categories of personal property - Answer. Scheduled personal property
The insured has a Personal Auto policy with all cars insured by one company. He sells one of the cars and buys a new one to replace it. Must the insured take any action for the Liability portion of his current policy to apply to the replacement vehicle? - Answer. No the insured does not have to do anything. Liability coverage for a replacement vehicle is automatic. The dwelling special form provides - Answer. Open peril coverage on the building and named peril coverage on personal property In which of the following would you have an insurable interest? - Answer. The house you own but have rented to a tenant Which of these losses would be covered under the personal auto policy's liability coverage - Answer. Will falls asleep at the wheel of his car and strikes and injures a pedestrian Lighting damages several valuable trees on the insureds property. This loss is - Answer. Covered for up to 5% of the coverage A limit Which of the following losses would be covered by a flood policy - Answer. Heavy rains cause a lake to overflow and flood the basement and first floor of a house What constitutes an agreement to enter into a valid contract - Answer. A specific offer by one party and acceptance by the other.
It will cost Gary $5,000 to put a new roof on his home to replace a roof destroyed in a windstorm. Assume that the original roof, which Gary paid $3,500 for 10 years ago, depreciated $300 per year. What was the actual cash value of the roof that was destroyed? A) $5, B) $3, C) $3, D) $2,000 - Answer. $2, All of the following are incorrect concerning insurance binders EXCEPT: - Answer. Are short term interim agreements The part of a policy that contains provisions which qualify or place limitations on the insurers promise to pay or perform is the - Answer. Conditions Which of the following statements is incorrect regarding the liability coverage part of a homeowners policy? - Answer. If the lawsuit is groundless the insurance company has no obligation to defend All of the following are not additional coverages found in the HO-2 except - Answer. Collapse If the states minimum auto liability limits are 25/50/25 a driver with limits of 10/20/10 is considered to be a uninsured motorist - Answer. Uninsured motorist
Which policy would provide the most comprehensive coverage for a 26 foot 200 horsepower bass boat - Answer. Boat owners policy A boat owners policy will cover all of the following EXCEPT: - Answer. Water skis Joe can obtain earthquake coverage for his home by purchasing which of the following - Answer. An earthquK endorsement Authority given to you under your agency contract is what type of authority - Answer. Expressed 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
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 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 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 In ALL states an underendorsed Personal Auto policy's underinsured motorists coverage applies to what type of loss caused by an uninsured motorist? - Answer. Bodily injury Which one of the following accidents would NOT be covered under the Uninsured Motorists coverage of the Personal Auto policy? - Answer. An accident with a driver who carries the minimum liability limits required by law, but whose insurance is not adequate to cover the damages The personal auto policy's medical payments coverage would NOT provide protection for which one of the following? - Answer. Occupants of a car that was struck by the insured The authority specifically given to an agent either orally or in writing by the principal is called - Answer. Express authority Which of the following is responsible for the licensing of insurance agents - Answer. Individual state department of insurance
much would Nicole's policy pay for both the beer and PD losses - Answer. $15, Dwelling special form provides - Answer. (Coverage on the building and named Pearl coverage on personal property In a liability lost the person to whom the insured cause damage is referred to as the - Answer. Third party Which of these losses will be covered under the personal auto policy is liability coverage - Answer. Well falls asleep at the wheel of his car and strikes and injured a pedestrian The insurance contract is considered a contract of indemnity because - Answer. And insured my collect know more than the amount required to restore him or her to the same financial condition that existed prior to the loss If the homeowner wants to maximum protection for home and contents which form should be purchased - Answer. HO- 5
