Alabama Property and Casualty Sample Quiz 100 questions What is a hazard verified answer an increase in the possibility that a loss might occur transfer risk from a person or business to an insurance company that agrees to to pay for losses in exchange for a premium verified answer insurance The type of insurance company in which the policyholder is considered an owner with the right to vote and share in the profits is a verified answer mutual company Jewel Canford s home is insured by XYZ Insurance Company Last year she made the final mortgage payment to FBN Mortgage Company Jewel is considering selling her home to her niece Cynthia Who has an insurable interest in the home verified answer Jewel Canford Risk of loss is a speculative risk verified answer Which one of the following is NOT an element of insurability a Loss must be calculable b Risk of loss must represent a financial harship c Cost of insurance must be affordable d Risk of loss is a speculative risk The principle that states that an insured should be restored to approximately the same financial position after a loss as before is known as verified answer indemnity Declarations verified answer What part of an insurance policy personalizes the policy as to who and what are insured 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 an verified 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 verified answer HO 6 What is the purpose of the Fair Credit Reporting Act verified answer to give the consumer recourse if insurance is denied on the basis of a credit report a fire that was caused by the insureds negligence burns a neighbors building the owner of the building sues the insured verified answer Which of the following is a liability loss What rating method involves modifying the premium based on the insured s loss experience over a specified period of time verified answer Experience rating Most Flood insurance coverage is provided by verified answer a federal government program Which of the following businesses could be eligible for a Business owners policy a Hometown Bank Trust b Rest Easy Motel c Family Fun Time Amusement Park d Joe s Bar and Grill verified answer Rest Easy Motel Pain and Suffering verified answer Which one of the following types of benefits is generally not provided by a state s workers compensation law foreign verified answer Which of the following describes an insurance company doing business in a state other than the one where it is incorporated provide temporary protection for the insured between the time the application is made and the policy is issued or the binder expires verified answer The purpose of a binder is to Agent Michelle is under contract with the XYZ Insurance Company to represent and sell insurance only for XYZ This is an example of what type of agency system verified answer Exclusive captive What type of insurance policy insures against all risks of loss that are not specifically excluded by the policy verified answer Open peril policy prior approval state verified answer In a particular state an insurance company must file policy forms and rates with the state insurance department and wait for official approval before using the new forms and rates This is an example of a an According to the Nationwide Definition imports and exports are verified answer eligible for Ocean Marine insurance Which Surety bond guarantees that bills for labor and materials will be paid by the contractor as they are due verified answer Payment bond What describes actual cash value verified answer Replacement cost depreciation appraisal condition verified answer The condition that provides a means to settle the amount of a loss when the insured and the insurance company cannot agree is the An insured purchased new furniture for 6000 At the time of a fire los it had depreciated 2000 The same furniture will cost 7000 to replace What is the actual cash value of the destroyed furniture verified answer 5000 Which of the following can be insured under an unendorsed Homeowners policy a Farm b Mobile Home c Dwelling that the owner rents to his cousin d Private residence in which the owner occupant also maintains an office for her accounting business verified answer d The primary purpose of the Business Income coverage forms is to reimburse the insured for verified answer loss of income resulting from property damage at the insureds property Coverage for sums an employer becomes legally obligated to pay under common law as a result of a work related injury to an employee is provided by verified answer Part two Employers liability section of the Workers Comp policy The homeowners form that provides open peril coverage on the dwelling and broad coverage on personal property is the verified answer HO 3 What is the a coverage extension that is available in the Building and Personal Property coverage form verified answer Property off premises Which of the following losses to covered equipment would be covered under the Equipment Breakdown Protection coverage form a Damage that occurs while the equipment is undergoing a pressure test b Damage caused by fire c Damage resulting from a windstorm d Damage from an explosion caused by the centrifugal force of moving parts verified answer d In PURE contributory negligence states when an individual is found to have contributed to his or her own loss in any way another property verified answer may not be held liable Which of the following would NOT generally be included in the Supplementary Payments portion of a Liability policy a Loss of earnings b Damage to property owned by the insure c First aid toothers at the time of an accident d Expenses the insured incurs at the companys request as part of an investigation verified answer b According to the cancellation condition in the Common Policy Conditions form if the insurance company is cancelling a Commercial Package policy for nonpayment of premium the insured must be given at least days notice of cancellation verified answer 10 Which of the following overages IS included in the Homeowners policy but is NOT included in an unendorsed Dwelling policy verified answer Liability Trailer Interchange coverage is a part of the verified answer Truckers coverage form and Motor Carrier coverage form Open peril coverage for both the