Personal Lines Alabama State Exam
Questions and Answers
What type of risk is insuring your home or auto? - Correct
Answer ✅ Pure risk
A good definition for risk is: - Correct Answer ✅ The chance
of loss
The primary insured in an insurance contract is the: - Correct
Answer ✅ First named insured
In property insurance, coinsurance is designed to: - Correct
Answer ✅ Cover all losses in full if you purchase at least
80% insurance to value
All of the following are correct about binders EXCEPT: -
Correct Answer ✅ The binder is good for a set number of
days, or until the policy is issued, whichever is longer.
Which risk management method is used when you decide to
purchase insurance to cover a risk? - Correct Answer ✅
None of the above
, Personal Lines Alabama State Exam
Questions and Answers
A risk management method where one party agrees to
release the other party from any liability or damage that
might arise out of the transaction involved is called: -
Correct Answer ✅ A hold-harmless agreement
In the lesson chapter, two types of risk were discussed. What
is the only type of risk that insurance companies want to
insure? - Correct Answer ✅ Pure risk
Roger is a single parent with a young son and daughter. He
has decided to give up his two favorite hobbies, mountain
climbing and scuba diving, because they are too risky and
could lead to his premature death. This method of dealing
with risk is called risk: - Correct Answer ✅ Avoidance
Of the following statements, which one best summarizes the
purpose of insurance? - Correct Answer ✅ It spreads
financial risk of loss over a large group to minimize the loss to
any one individual
The law of large numbers is used by insurance companies to
help determine what rates to charge. Which of the following
Questions and Answers
What type of risk is insuring your home or auto? - Correct
Answer ✅ Pure risk
A good definition for risk is: - Correct Answer ✅ The chance
of loss
The primary insured in an insurance contract is the: - Correct
Answer ✅ First named insured
In property insurance, coinsurance is designed to: - Correct
Answer ✅ Cover all losses in full if you purchase at least
80% insurance to value
All of the following are correct about binders EXCEPT: -
Correct Answer ✅ The binder is good for a set number of
days, or until the policy is issued, whichever is longer.
Which risk management method is used when you decide to
purchase insurance to cover a risk? - Correct Answer ✅
None of the above
, Personal Lines Alabama State Exam
Questions and Answers
A risk management method where one party agrees to
release the other party from any liability or damage that
might arise out of the transaction involved is called: -
Correct Answer ✅ A hold-harmless agreement
In the lesson chapter, two types of risk were discussed. What
is the only type of risk that insurance companies want to
insure? - Correct Answer ✅ Pure risk
Roger is a single parent with a young son and daughter. He
has decided to give up his two favorite hobbies, mountain
climbing and scuba diving, because they are too risky and
could lead to his premature death. This method of dealing
with risk is called risk: - Correct Answer ✅ Avoidance
Of the following statements, which one best summarizes the
purpose of insurance? - Correct Answer ✅ It spreads
financial risk of loss over a large group to minimize the loss to
any one individual
The law of large numbers is used by insurance companies to
help determine what rates to charge. Which of the following
