Alabama Adjusters License Exam Questions And
Answers
Agency Authority - ANSWER The agent's authority to act on behalf of someone else
(the principal), usually an insurer. This authority is
derived from the agent's contract with the principal. It can be apparent, express, or
implied
Agency Authority -
Apparent - ANSWER Indirect authority that the agent can reasonably be assumed to
have, based on appearances. If an
adjuster is equipped to represent an insurer (with the insurer's permission), then
an individual can assume that the adjuster has the authority to act on the insurer's
behalf.
Agency Authority -
Express - ANSWER Authority that is expressly given to the agent in writing. Allows the
agent to act on behalf of the principal.
Agency Authority - Implied - ANSWER Authority that an agent possesses by implication
of her behavior, regardless of whether this authority is
granted in writing. For example, a person portraying herself as a representative for an
insurance
company, even though she is not employed by that company.
Agent (Insurance) - ANSWER Someone who has received authority from an insurer to
sell or service insurance policies.
Supplementary Payments - ANSWER Coverage provided in liability policies to help
with a variety of expenses that the insured may incur at the
request of the insurer in the event of a claim or lawsuit, such as lost wages, bail
bonds, and records filing fees. It is separate from, and not restricted by, the liability
limits of the policy.
Surety Bonds - ANSWER An arrangement where one party promises to perform for
another party, and a third party guarantees this
,promise. Then, if the party making the promise does not perform, the third-party steps
in to fulfill the
obligation. This is not insurance because it involves three parties instead of two. Also
known as a
"Suretyship." See also: "Principal," "Obligee" and "Surety (Guarantor)."
Surety (Guarantor) - ANSWER With regard to a surety bond, the surety is the party
(often an insurance or bonding company) that
guarantees the obligee that the principal will fulfill its contractual obligations. If the
principal fails to
perform, the surety will pay the bond amount to the obligee and then go after the
principal to recover their
losses. See also: "Principal" and "Obligee."
Surgical Expense
Insurance - ANSWER Provides indemnification for physician costs associated with
surgical procedures.
Third Party Administrator
(TPA) - ANSWER A licensed organization that collects premiums and processes
claims for an insurer; basically, a company
doing another company's outsourced administrative tasks. The risk of loss remains with
the insurer, not
the TPA.
Third Party Claim - ANSWER A claim filed against an insurance policy by a third party
not named on that policy. Used for liability claims
Time Element Coverage - ANSWER Provides coverage for an indirect loss that occurs
as the result of a direct loss, when covered property
can't be used and therefore causes an indirect loss. Usually an endorsement within a
commercial
package policy
Tort - ANSWER Any civil wrongdoing, whether intentional or unintentional, resulting in
a court action to remedy.
Tort - Intentional - ANSWER A premeditated wrongful act that causes intentional or
intentional damages to another party.
,Tort - Negligent - ANSWER When a negligent act causes unintentional damages to
another party.
Tort law - ANSWER The body of law that addresses and provides remedies for any civil
wrongdoing performed on another
party.
Tortfeasor - ANSWER The defendant in a court case who committed the tort; also
known as the defendant
Transitional yield - ANSWER County 10-year yield average as determined by the
National Agricultural Statistical Service. Used when issuing a crop insurance policy to a
farmer who lacks four years of yield records on which to base coverage and premium
amounts.
Transportations Form - ANSWER An Inland Marine form designed to cover businesses
that ship or receive merchandise, as well as cargo
while in transit. This can include travel by truck, train, ship, mail, or plane
Agreed Value - ANSWER A valued policy in which the insurer and the insured agree to
a specific value for an item, appraised at the
inception of the policy. Often used to insure items whose value is difficult to quantify,
such as antiques or
fine art. Also called a Guaranteed Value policy.
Agreement - ANSWER One of the four requirements of a legally binding contract. All
parties involved must agree to the terms of
the contract. Can also refer to a binder, which is the preliminary substance of a contract.
Agricultural Producer - ANSWER A business that grows, harvests, and sells crops for
profit.
Aleatory - ANSWER A characteristic of an insurance contract. Means "depending on
an unknown future event." An insurance
contract will only pay IF and WHEN covered damages occur. Neither party knows
how much the contract will end up paying when they enter into the contract.
ANSWER - ANSWER In liability cases, the defendant's response to a complaint. There
are three possible ANSWERs: 1) accept
, complaint and pay for damages, 2) deny the complaint, or 3) accept the complaint
with a right to insert evidence into the case.
Annual Depreciation - ANSWER An item's replacement cost divided by the number of
years in its expected lifespan.
Annual Transit - ANSWER An uncontrolled inland marine form that covers loss of
goods in transit. It applies to all of the insured's
shipments during the year.
Appraisal - ANSWER A dispute resolution method which allows the claimant and the
insurer each to select an appraiser. The
two appraisers in turn select an umpire. The appraisers then work together to determine
a settlement
amount. If they cannot agree, the umpire steps in. Agreement by any two of the three is
binding.
Arbitration - ANSWER A dispute resolution method in which the opposing parties each
submit their evidence to a mutuallyagreed-
upon and neutral third party, called an arbitrator. The arbitrator reviews the positions of
each
opposing side and makes a final and legally binding decision.
Arbitrator - ANSWER The mutually-agreed-upon and neutral third party in an arbitration
who reviews the positions of each
opposing side before making a final and legally binding decision.
Artificially Generated
Current - ANSWER Also called "artificial current." A peril covered in some property
insurance policies. It includes sudden and
accidental damage from any electrical current, except currents that are
naturally generated, such as lightning or static electricity.
Auto Policy - ANSWER Insurance policy designed to protect the policyholder while
owning, occupying, or operating a vehicle.
Usually combines liability coverage and property coverage into one policy.
Answers
Agency Authority - ANSWER The agent's authority to act on behalf of someone else
(the principal), usually an insurer. This authority is
derived from the agent's contract with the principal. It can be apparent, express, or
implied
Agency Authority -
Apparent - ANSWER Indirect authority that the agent can reasonably be assumed to
have, based on appearances. If an
adjuster is equipped to represent an insurer (with the insurer's permission), then
an individual can assume that the adjuster has the authority to act on the insurer's
behalf.
Agency Authority -
Express - ANSWER Authority that is expressly given to the agent in writing. Allows the
agent to act on behalf of the principal.
Agency Authority - Implied - ANSWER Authority that an agent possesses by implication
of her behavior, regardless of whether this authority is
granted in writing. For example, a person portraying herself as a representative for an
insurance
company, even though she is not employed by that company.
Agent (Insurance) - ANSWER Someone who has received authority from an insurer to
sell or service insurance policies.
Supplementary Payments - ANSWER Coverage provided in liability policies to help
with a variety of expenses that the insured may incur at the
request of the insurer in the event of a claim or lawsuit, such as lost wages, bail
bonds, and records filing fees. It is separate from, and not restricted by, the liability
limits of the policy.
Surety Bonds - ANSWER An arrangement where one party promises to perform for
another party, and a third party guarantees this
,promise. Then, if the party making the promise does not perform, the third-party steps
in to fulfill the
obligation. This is not insurance because it involves three parties instead of two. Also
known as a
"Suretyship." See also: "Principal," "Obligee" and "Surety (Guarantor)."
Surety (Guarantor) - ANSWER With regard to a surety bond, the surety is the party
(often an insurance or bonding company) that
guarantees the obligee that the principal will fulfill its contractual obligations. If the
principal fails to
perform, the surety will pay the bond amount to the obligee and then go after the
principal to recover their
losses. See also: "Principal" and "Obligee."
Surgical Expense
Insurance - ANSWER Provides indemnification for physician costs associated with
surgical procedures.
Third Party Administrator
(TPA) - ANSWER A licensed organization that collects premiums and processes
claims for an insurer; basically, a company
doing another company's outsourced administrative tasks. The risk of loss remains with
the insurer, not
the TPA.
Third Party Claim - ANSWER A claim filed against an insurance policy by a third party
not named on that policy. Used for liability claims
Time Element Coverage - ANSWER Provides coverage for an indirect loss that occurs
as the result of a direct loss, when covered property
can't be used and therefore causes an indirect loss. Usually an endorsement within a
commercial
package policy
Tort - ANSWER Any civil wrongdoing, whether intentional or unintentional, resulting in
a court action to remedy.
Tort - Intentional - ANSWER A premeditated wrongful act that causes intentional or
intentional damages to another party.
,Tort - Negligent - ANSWER When a negligent act causes unintentional damages to
another party.
Tort law - ANSWER The body of law that addresses and provides remedies for any civil
wrongdoing performed on another
party.
Tortfeasor - ANSWER The defendant in a court case who committed the tort; also
known as the defendant
Transitional yield - ANSWER County 10-year yield average as determined by the
National Agricultural Statistical Service. Used when issuing a crop insurance policy to a
farmer who lacks four years of yield records on which to base coverage and premium
amounts.
Transportations Form - ANSWER An Inland Marine form designed to cover businesses
that ship or receive merchandise, as well as cargo
while in transit. This can include travel by truck, train, ship, mail, or plane
Agreed Value - ANSWER A valued policy in which the insurer and the insured agree to
a specific value for an item, appraised at the
inception of the policy. Often used to insure items whose value is difficult to quantify,
such as antiques or
fine art. Also called a Guaranteed Value policy.
Agreement - ANSWER One of the four requirements of a legally binding contract. All
parties involved must agree to the terms of
the contract. Can also refer to a binder, which is the preliminary substance of a contract.
Agricultural Producer - ANSWER A business that grows, harvests, and sells crops for
profit.
Aleatory - ANSWER A characteristic of an insurance contract. Means "depending on
an unknown future event." An insurance
contract will only pay IF and WHEN covered damages occur. Neither party knows
how much the contract will end up paying when they enter into the contract.
ANSWER - ANSWER In liability cases, the defendant's response to a complaint. There
are three possible ANSWERs: 1) accept
, complaint and pay for damages, 2) deny the complaint, or 3) accept the complaint
with a right to insert evidence into the case.
Annual Depreciation - ANSWER An item's replacement cost divided by the number of
years in its expected lifespan.
Annual Transit - ANSWER An uncontrolled inland marine form that covers loss of
goods in transit. It applies to all of the insured's
shipments during the year.
Appraisal - ANSWER A dispute resolution method which allows the claimant and the
insurer each to select an appraiser. The
two appraisers in turn select an umpire. The appraisers then work together to determine
a settlement
amount. If they cannot agree, the umpire steps in. Agreement by any two of the three is
binding.
Arbitration - ANSWER A dispute resolution method in which the opposing parties each
submit their evidence to a mutuallyagreed-
upon and neutral third party, called an arbitrator. The arbitrator reviews the positions of
each
opposing side and makes a final and legally binding decision.
Arbitrator - ANSWER The mutually-agreed-upon and neutral third party in an arbitration
who reviews the positions of each
opposing side before making a final and legally binding decision.
Artificially Generated
Current - ANSWER Also called "artificial current." A peril covered in some property
insurance policies. It includes sudden and
accidental damage from any electrical current, except currents that are
naturally generated, such as lightning or static electricity.
Auto Policy - ANSWER Insurance policy designed to protect the policyholder while
owning, occupying, or operating a vehicle.
Usually combines liability coverage and property coverage into one policy.
