Property insurance principles (perils, hazards, ACV versus replacement cost, coinsurance, policy conditions) are in the national Property Insurance Basics guide. This guide adds the Alabama contract rules that appear on the Property and Property & Casualty exams: binders, policy delivery, representations, and policyholder rights. Alabama's windstorm programs are in the Homeowners guide.

Binders (Ala. Code 27-14-18)

• A binder for temporary property or casualty insurance may be oral or written.
• It includes the usual terms of the policy and any endorsements it names, unless the binder clearly says otherwise.
• It is not valid after the policy is issued, or after 90 days from its effective date, whichever is shorter.
• It can be extended past 90 days only with the Commissioner's written approval or under the Commissioner's rules.
• The binder statute does not apply to life or disability insurance.

Delivery and electronic notices

• A policy must be mailed or delivered within a reasonable time after issuance, unless premium is unpaid or an insurer condition hasn't been met (27-14-19).
• A property or casualty insurer may deliver policies and notices electronically only if the insured has affirmatively consented after clear disclosures, including the right to withdraw consent and get paper (27-14-19.1).
• A contract for which the application was taken in Alabama is made in Alabama and governed by its law (27-14-22).

Application statements

• Statements in an application are representations, not warranties.
• A misstatement prevents recovery only if it was fraudulent, material to the risk, or would have changed the insurer's good-faith decision to issue the policy on the same terms (27-14-7).

Policyholder rights

Under the Policyholders Bill of Rights (27-22-42), a policyholder may:

• choose the licensed contractor to repair or rebuild covered property
• reject a settlement offer
• receive written notice of contract language changes at renewal
• file a complaint with the Department and have it reviewed

Standard loss conditions

These conditions come from ISO HO 00 03 05 11 and are tested with Alabama property questions:

• Duties after loss: give prompt notice, protect the property from further damage, and provide an inventory and proof of loss.
• Appraisal: each side picks an appraiser, the appraisers choose an umpire, and any two can set the amount of loss.
• No abandonment: the insured can't abandon damaged property to the insurer.
• Pair or set: for loss to part of a pair or set, the insurer may repair or replace the part, or pay the difference in value before and after the loss.

Residual market

The Alabama Insurance Underwriting Association provides property coverage in the coastal Beach Area of Baldwin and Mobile Counties when the voluntary market doesn't (27-1-24). Every insurer writing direct fire and extended coverage must belong to it.

Common exam traps

• Binders may be oral and last no more than 90 days without approval.
• Electronic delivery requires the insured's affirmative consent.
• Application statements are representations.
• The insured can't abandon property to the insurer.