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Alabama Property & Casualty Practice Exam

20 exam-style questions drawn from the same bank as our full Alabama Property & Casualty course (Alabama Insurance Producer — Property and Casualty — Exam Prep). Answer all 20, then grade yourself — most state exams require 70% to pass. Explanations for every question are part of the full course.

1. A homeowner leaves an unfenced swimming pool unsecured. A 6-year-old neighbor child wanders onto the property, falls into the pool, and is injured. The doctrine that holds the homeowner liable despite the child being a trespasser is called:
Attractive nuisance.Vicarious liability.Res ipsa loquitur.Strict liability.
2. Under the Terrorism Risk Insurance Act (TRIA) as currently reauthorized, what is a commercial P&C insurer's obligation to its commercial insureds regarding terrorism coverage?
The insurer must make terrorism coverage available on substantially the same terms as the underlying policy; the insured may accept or reject, and the premium for terrorism coverage must be separately and conspicuously disclosed.The insurer is prohibited from offering terrorism coverage on commercial policies, because the federal government pays certified terrorism losses directly to the affected policyholders.The insurer must offer terrorism coverage only to commercial insureds located in designated high-risk cities, with the terrorism premium set by a federal rate schedule rather than the insurer.The insurer must include terrorism coverage automatically in every commercial policy at no additional premium, and the commercial insured has no right to reject or decline that coverage.
3. Inland marine insurance evolved to cover what general category of property?
Livestock and farm produce only, including cattle, poultry, growing crops, and harvested grain stored on the insured's premisesProperty in transit, property held by bailees, 'instrumentalities of transportation/communication,' and mobile/portable propertyOcean cargo outside territorial waters, covering containerized goods aboard vessels engaged in international maritime commerceReal property and buildings only, such as commercial offices, retail stores, warehouses, and other permanently affixed structures
4. A 'forgery or alteration' crime insuring agreement covers:
Loss resulting from counterfeit currency the insured accepts in good faith from customers in exchange for merchandise, services, or change during regular business hours.Loss resulting from an employee who forges the insured's signature to embezzle funds, which is covered only under this agreement and never under the employee theft agreement.Loss resulting directly from forgery or alteration of checks, drafts, promissory notes, or similar written promises/orders/directions to pay money (that the insured issues or that purport to be issued).Loss resulting from the insured's acceptance of a customer's forged check in payment for goods, including any related bank fees and the merchandise released to the customer.
5. A homeowners policy lists Coverage A at $300,000 and provides Coverage B (other structures) with no scheduled limit. What is the Coverage B limit?
$30,000, 10% of Coverage A$150,000, 50% of Coverage A$60,000, 20% of Coverage A$300,000, equal to Coverage A
6. The National Flood Insurance Program (NFIP) is administered by which federal agency?
The Federal Deposit Insurance Corporation (FDIC)The Federal Emergency Management Agency (FEMA)The Small Business Administration (SBA)The Department of Housing and Urban Development (HUD)
7. Which of the following is an 'additional coverage' typically provided on a homeowners policy at no additional premium (subject to sublimits)?
Business pursuits liability and incidental business use of the insured's homeDebris removal, trees/shrubs/plants, and fire-department service chargeFlood, surface water, and sewer backup arising from heavy rainfall on or near the insured premisesEarthquake and earth movement, including landslide, mudslide, and ground subsidence
8. A homeowner comes home to find a burst pipe has flooded the kitchen. Which of the following is NOT an insured duty after loss under a standard ISO homeowners policy?
Give prompt notice to the insurance company or its agentCooperate with the insurer's investigation, including submitting to a sworn examination under oath if requiredIndependently hire a contractor and complete permanent repairs before the insurer can inspectProtect the property from further damage, making reasonable and necessary temporary repairs
9. In an insurance contract, the INSURED's 'consideration' usually takes the form of:
The promise to pay future claims.A down payment only, with representations being irrelevant.The signed acceptance of the policy.The premium payment and the accurate statements on the application.
10. A warehouse worker is seriously injured on the job and collects statutory workers' compensation benefits from his employer's WC policy. His spouse then files a separate loss-of-consortium lawsuit against the employer. Which part of the standard Workers' Compensation and Employers Liability policy responds to the spouse's suit, if any?
Part One, Workers Compensation Insurance, because the spouse's claim arises from the same injury.Part Two, Employers Liability, because consortium claims by a spouse are one of the gaps EL is designed to cover.Part Three, Other States Insurance, because it expands coverage to third parties.Neither part responds; exclusive remedy bars every claim arising out of the injury.
11. Which of the following is a characteristic of an INSURABLE risk?
The loss must be intentional, so the insurer can verify the cause and amount of loss.The loss must be fortuitous (accidental), measurable, and not catastrophic to the insurer.The loss must be speculative, offering the insured a chance of gain or loss from the event.The loss must be catastrophic, affecting many insureds at once so premiums can be pooled.
12. A general contractor is named as an additional insured on a subcontractor's CGL policy for a jobsite project. Which statement BEST describes the GC's insurable interest in the sub's CGL?
The AI endorsement itself creates the insurable interest where none existed beforeThe GC's insurable interest arises from its legal exposure to suits stemming from the sub's operations on the projectThe GC has no insurable interest because it does not own the sub's operations or equipmentThe GC's insurable interest is limited to the physical property on the jobsite, not liability exposure
13. Section II of a homeowners policy provides coverage for:
Personal property and loss of usePersonal liability and medical payments to othersAdditional living expense and fair rental valueDwelling and other structures
14. A CGL 'claims-made' form differs from an 'occurrence' form in what fundamental way?
Claims-made has substantially higher per-occurrence and aggregate limits than the equivalent occurrence form, reflecting the broader trigger of coverageClaims-made covers only claims arising from injuries that occur during the policy period, even if the claim itself is not reported to the insurer until years laterClaims-made requires no retroactive date because the policy period itself defines the entire window of liability the insurer acceptsClaims-made covers claims first MADE against the insured during the policy period (with an optional retro date), regardless of when the underlying injury occurred
15. The DP-3 Special Form writes the dwelling and other structures on what peril basis?
Open perils (risks of direct physical loss) subject to exclusionsNamed perils, drawn from the same expanded list of perils that appears on the HO-2 Broad FormExtended Coverage plus VMM only, mirroring the standard add-on package available on the DP-1 Basic FormFire and lightning only, with no other perils available unless added as scheduled endorsements
16. On the BOP property section, which statement about theft coverage is MOST accurate?
Theft is covered only when there are visible marks of forced entry, and only for property located inside a locked safe at the time of loss.Theft is covered without any sublimits, so money, securities, jewelry, and patterns are all covered up to the full business personal property limit shown on the declarations.Theft is excluded entirely on the BOP and must be purchased separately on a commercial crime policy, along with coverage for any employee dishonesty losses.Theft is covered, but SUBLIMITS apply to certain categories of property (money, securities, jewelry, patterns, etc.), these are common exam-tested sublimits.
17. In a liability policy, when must the insured have an insurable interest?
At the time of loss onlyNever, insurable interest is a property concept onlyAt BOTH the inception of the policy and the time of lossAt the inception of the policy only
18. Which statement correctly describes the key structural difference between a commercial umbrella policy and a pure follow-form excess liability policy?
An umbrella and a follow-form excess policy are identical in structure; the only difference is that an umbrella is sold to individuals and excess policies are sold to businesses.An umbrella can drop down (subject to a self-insured retention) to cover some losses the underlying excluded; a pure follow-form excess mirrors the underlying's exclusions and only provides higher limits.An umbrella pays losses before the underlying policies respond, while a follow-form excess policy pays only after the insured has personally paid a self-insured retention for each claim.A follow-form excess policy can drop down to cover losses the underlying excluded, while an umbrella mirrors the underlying exclusions exactly and only adds higher limits above them.
19. Which of the following is an INTENTIONAL tort rather than negligence?
Running a stop sign and colliding with another car.Punching another person in a bar fight.Failing to salt an icy sidewalk before customers arrive.A bartender over-serving a patron who then injures a bystander.
20. An insured owns a seasonal cabin that is unoccupied more than 60 consecutive days each year. Which dwelling-form limitation most directly affects coverage?
Theft coverage automatically doubles to compensate for the increased vacancy risk, subject to a higher percentage deductibleFire coverage drops to 50% of Coverage A after 60 days of vacancy, with proportional reductions applied to other coveragesCoverage is void entirely while the cabin is unoccupied for any period exceeding 60 consecutive days during the policy termVandalism and Malicious Mischief (VMM) and glass breakage are excluded after 60 consecutive days of vacancy

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