ALABAMA INSURANCE PROPERTY AND
CASUALTY FINAL PAPER 2026 QUESTIONS
AND VERIFIED SOLUTIONS GRADED A+
⩥ Which of the following statements is true regarding a binder?
a. a binder guarantees that a policy will be issued by the insurance
company.
b. a binder guarantees coverage and that a policy will be issued
c. a binder does not guarantee that a policy will be issued; it only
guarantees temporary coverage.
d. a binder does not afford any coverage, it is merely a snapshot of the
coverage in effect at the time it is issued.. Answer: c
⩥ Liability imposed by law when someone is involved in an inherently
dangerous activity or condition is known as. Answer: absolute liability
⩥ Which of the following elements of a contract does the premium
represent?
a. offer and acceptance
b. competent parties
c. valid consideration
d. legal purpose. Answer: c
, ⩥ Contracts written for a specified amount as agreed to by both the
insured and insurer at policy inception are known as. Answer: valued or
stated value contracts
⩥ All of the following must be present to establish negligence except
a. duty owed and breach of that duty
b. a proximate cause of loss
c. damages must exist
d. hazardous operations are involved. Answer: d
⩥ The clause of an insurance contract that provides for equitable
handling of loss settlement disputes is the. Answer: appraisal or
arbitration clause
⩥ The portion of the premium due the insurance company for coverage
afforded under the insurance contract is the. Answer: earned premium
⩥ Coverage C under the dwelling policy
a. will pay for losses to a detached garage
b. will provide worldwide coverage up to 10% of the coverage C amount
c. pays up to 10% of the Coverage A limit for loss of rental value
d. pays for the expense of removing debris resulting from a covered
property loss. Answer: b
CASUALTY FINAL PAPER 2026 QUESTIONS
AND VERIFIED SOLUTIONS GRADED A+
⩥ Which of the following statements is true regarding a binder?
a. a binder guarantees that a policy will be issued by the insurance
company.
b. a binder guarantees coverage and that a policy will be issued
c. a binder does not guarantee that a policy will be issued; it only
guarantees temporary coverage.
d. a binder does not afford any coverage, it is merely a snapshot of the
coverage in effect at the time it is issued.. Answer: c
⩥ Liability imposed by law when someone is involved in an inherently
dangerous activity or condition is known as. Answer: absolute liability
⩥ Which of the following elements of a contract does the premium
represent?
a. offer and acceptance
b. competent parties
c. valid consideration
d. legal purpose. Answer: c
, ⩥ Contracts written for a specified amount as agreed to by both the
insured and insurer at policy inception are known as. Answer: valued or
stated value contracts
⩥ All of the following must be present to establish negligence except
a. duty owed and breach of that duty
b. a proximate cause of loss
c. damages must exist
d. hazardous operations are involved. Answer: d
⩥ The clause of an insurance contract that provides for equitable
handling of loss settlement disputes is the. Answer: appraisal or
arbitration clause
⩥ The portion of the premium due the insurance company for coverage
afforded under the insurance contract is the. Answer: earned premium
⩥ Coverage C under the dwelling policy
a. will pay for losses to a detached garage
b. will provide worldwide coverage up to 10% of the coverage C amount
c. pays up to 10% of the Coverage A limit for loss of rental value
d. pays for the expense of removing debris resulting from a covered
property loss. Answer: b
