Alabama Insurance Property and
Casualty Test Questions and Answers
An incorporated insurance company which is run by a board of directors is known as
-
✅ a capital-stock company
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. -
✅ c
Liability imposed by law when someone is involved in an inherently dangerous
activity or condition is known as -
✅ 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 -
✅ c
Contracts written for a specified amount as agreed to by both the insured and insurer
at policy inception are known as -
✅ 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 -
✅ d
The clause of an insurance contract that provides for equitable handling of loss
settlement disputes is the -
