Alabama Personal Lines Insurance License Exam — All Questions

What are the minimum auto liability limits a personal auto policy must carry to satisfy Alabama's financial-responsibility law?

• a.$15,000 per person / $30,000 per accident bodily injury and $5,000 property damage
• b.$25,000 per person / $50,000 per accident bodily injury and $25,000 property damage✓
• c.$50,000 per person / $100,000 per accident bodily injury and $50,000 property damage
• d.$30,000 per person / $60,000 per accident bodily injury and $25,000 property damage

Alabama sets minimum auto liability limits of 25/50/25 — that is, $25,000 per person / $50,000 per accident for bodily injury, and $25,000 for property damage. Producers should quote at least these limits and offer higher coverage. Source: Alabama DOI (https://www.aldoi.gov/). Verify current figures with the Alabama DOI before advising a client.

How does Alabama handle liability for auto accidents?

• a.It is a pure no-fault state; each driver's own insurer pays regardless of fault
• b.It is an add-on no-fault state requiring mandatory PIP on every policy
• c.It is a traditional at-fault (tort) state; the at-fault driver is responsible for the other party's injuries and damage✓
• d.It bars all lawsuits between drivers and routes claims through a state fund

Alabama is a traditional at-fault (tort) state: the driver responsible for a crash is liable for the other party's injuries and property damage, which is why liability limits matter. It does not use a no-fault/PIP system. Source: Alabama DOI (https://www.aldoi.gov/).

How are cancellation and nonrenewal of a personal auto or homeowners policy regulated in Alabama?

• a.An insurer may cancel any personal policy at any time for any reason with no notice
• b.Only the policyholder may ever cancel; insurers can never cancel mid-term
• c.There are no notice rules; cancellation is governed solely by the contract
• d.State law limits the reasons an insurer may cancel or nonrenew and requires advance written notice to the insured; confirm the exact notice period with the Alabama Department of Insurance✓

Alabama, like other states, restricts mid-term cancellation of personal auto and homeowners policies to specified reasons (such as nonpayment or material misrepresentation) and requires advance written notice of cancellation or nonrenewal. The exact number of days varies by reason and line — verify the current Alabama notice periods with the Alabama Department of Insurance.

With respect to uninsured/underinsured motorist (UM/UIM) coverage on a Alabama personal auto policy, which is generally true?

• a.UM/UIM is prohibited in the state
• b.UM/UIM automatically replaces liability coverage
• c.Insurers must make UM/UIM coverage available; the insured may typically accept, reject, or adjust it in writing✓
• d.UM/UIM is only available to commercial fleets

State auto laws generally require insurers to offer uninsured/underinsured motorist coverage; the applicant may accept it or reject/adjust it, often with a signed election. UM/UIM protects the insured when the at-fault driver has no or insufficient coverage — important in an at-fault state like Alabama. Confirm the current UM/UIM rules with the Alabama Department of Insurance.

Which best describes the body that writes and enforces Alabama's insurance regulations affecting personal lines policies?

• a.The Alabama Department of Insurance, a state agency led by an appointed insurance official✓
• b.A private trade association of insurers with no government authority
• c.The federal Department of Insurance in Washington, D.C.
• d.The county clerk's office where the policy is issued

Insurance in Alabama is regulated at the state level by the Alabama Department of Insurance. There is no federal department of insurance; each state (including Alabama) supervises its own market, licenses producers, and enforces cancellation, rating, and coverage rules. Source: Alabama DOI (https://www.aldoi.gov/).