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Alabama Insurance: Property and Casualty
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An incorporated insurance company which is run by a board of directors is
known as
Ans: 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.
Ans: c
Liability imposed by law when someone is involved in an inherently dangerous
activity or condition is known as
Ans: 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
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Ans: c
Contracts written for a specified amount as agreed to by both the insured and
insurer at policy inception are known as
Ans: 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
Ans: d
The clause of an insurance contract that provides for equitable handling of loss
settlement disputes is the
Ans: appraisal or arbitration clause
The portion of the premium due the insurance company for coverage afforded
under the insurance contract is the
Ans: 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
Ans: b
The coverage provided only by the DP-2 and DP-3 dwelling fire forms is
Ans: additional living expense
