Personal Lines Alabama State Exam study guide, Most Recent
Exam 2026 Actual Complete Real Exam Questions And Correct
Answers (Verified Answers) Already Graded A+ / Newest Exam
/ Just Released!!
The law of large numbers is used by insurance companies to
help determine what rates to charge. Which of the following
statements is most correct? - ANSWER-The larger the number
of risks combined into one group, the less uncertainty there will
be as to the amount of loss that will be incurred.
A risk that involves both the chance of loss or gain is -
ANSWER-Speculative
risk
If you wreck your car and cause $5,000 worth of damage the
value of your car
will be reduced. This example best illustrates what
insurance principle? -
ANSWER-Insurable
interest
Joe purchases a new home with a replacement value of
$420,000. He then insures it for $300,000 with a $500 deductible.
If Joe has a covered loss of
, $30,000. How much will his insurance company pay? -
ANSWER-$26,200
A nonexclusive agent represents: - ANSWER-More than
one insurance
company
A hazard is defined as: - ANSWER-A condition that increases
the chance that a
loss will
occur.
Insureds who meet the financial requirements and are approved
to transact business in the state are considered _________ or
________ into the state as a legal insurer. - ANSWER-
Authorized/Admitted
Of the following, which is not considered to be a risk
management tool? -
ANSWER-
Obligatory
The tendency for people with a greater-than average risk to
purchase insurance
is called: - ANSWER-Adverse
selection
A written modification that either adds or deletes coverage in a
policy is called: -
Exam 2026 Actual Complete Real Exam Questions And Correct
Answers (Verified Answers) Already Graded A+ / Newest Exam
/ Just Released!!
The law of large numbers is used by insurance companies to
help determine what rates to charge. Which of the following
statements is most correct? - ANSWER-The larger the number
of risks combined into one group, the less uncertainty there will
be as to the amount of loss that will be incurred.
A risk that involves both the chance of loss or gain is -
ANSWER-Speculative
risk
If you wreck your car and cause $5,000 worth of damage the
value of your car
will be reduced. This example best illustrates what
insurance principle? -
ANSWER-Insurable
interest
Joe purchases a new home with a replacement value of
$420,000. He then insures it for $300,000 with a $500 deductible.
If Joe has a covered loss of
, $30,000. How much will his insurance company pay? -
ANSWER-$26,200
A nonexclusive agent represents: - ANSWER-More than
one insurance
company
A hazard is defined as: - ANSWER-A condition that increases
the chance that a
loss will
occur.
Insureds who meet the financial requirements and are approved
to transact business in the state are considered _________ or
________ into the state as a legal insurer. - ANSWER-
Authorized/Admitted
Of the following, which is not considered to be a risk
management tool? -
ANSWER-
Obligatory
The tendency for people with a greater-than average risk to
purchase insurance
is called: - ANSWER-Adverse
selection
A written modification that either adds or deletes coverage in a
policy is called: -
