Texas Property & Casualty Insurance Exam
What are 3 subjects an auto policy covers? -correct answer-1. Body
2. The vehicle
3. Assets
Bodily Injury Types -correct answer-Personal Injury
Med Pay
Uninsured Motorist
No Fault Insurance -correct answer-State stipulates that parties cannot file a claim to the
other persons insurance policy unless required in excess. Instead, each party is required to
file a primary claim against their own insurance regardless who is at fault. EX. Florida
Financial Responsibility Laws -correct answer-State Laws regulating that people are to carry
a minimum coverage amount set by the state to protect themselves, others, and property.
P.A.P -correct answer-Personal Automotive Policy
Negligence -correct answer-The failure to act as a prudent person would under similar
circumstances
Legal Liability -correct answer-Involves proven negligence or fault
Vicarious Liability -correct answer-Being responsible for the negligent acts of someone else.
Ex. Your children
Absolute or Strict Liability -correct answer-Stems from hazardous or dangerous activities
that makes the owner liable WITHOUT the requirement of proof of negligence.
Liability -correct answer-Being responsible for the damages or injury you or someone else
you're responsible for has done.
The 7 Characteristics of a Contract -correct answer-1. Personal Contract
2. Conditional Contract
3. Adhesion
4. Indemnity
5. Aleatory
6. Unilateral
7. Utmost Good Faith
,Personal Contract -correct answer-Is stipulation of a contract that says the contract is for the
name person and cannot be transferred to another.
Conditional Contract -correct answer-Stipulates set by a contract. "You can do this, but...."
Adhesion -correct answer-A stipulation that the contract and it's language is binding, or
"sticks" and the parties agreeing cannot back out so long as the conditions are met.
Indemnity -correct answer-The contract agrees to indemnify, or make whole again the
customer. Makes them no better, nor worse, just whole.
Aleatory -correct answer-The stipulation that the contract must include and unequal transfer
of money. Ex. The insured signed a contract a month ago and has paid a single payment of
$300. The company has only received $300, but it on the hook to pay out $30,000 in the
event of a loss.
Unilateral -correct answer-Stipulation that the contract is one-sided. Ex. The customer
doesn't HAVE to pay the insurance company, but IF they do, then the insurance company
HAS to pay out.
Utmost Good Faith -correct answer-Parties believe that both will deal with eachother
honestly and fairly, without misleading or withholding
Insurance -correct answer-A contract by which an Insurance company agrees to compensate
an insured for a covered loss in return for a premium payment.
Underwriting -correct answer-Process of evaluating policyholders to determine eligibility for
coverage and pricing
Law of Large #'s -correct answer-Principle that the larger the examples of data, the more
accurate the information
Speculative Risk -correct answer-Risk of Gain OR Loss Ex. Gambling or Investment Insurance
Pure Risk -correct answer-No chance of gain or benefit. The only kind that insurance deals
with.
Exposure -correct answer-An opportunity for risk or loss
Risk -correct answer-Possibility of financial loss
Peril -correct answer-The direct cause of a loss
Representation -correct answer-Statements on an insurance contract that the insured
BELIEVES to be true
4 Means of Managing Risk -correct answer-1.Reduction
2.Retain
, 3.Avoid
4.Transfer
Reduction -correct answer-reduce the risk shared by the insured and insurer Ex. Good
maintenance
Retain -correct answer-Taking risks by retaining the risk to ones self. Ex. Not reporting an
accident to the insurance company, or not getting insurance at all.
Avoid -correct answer-Avoiding risk all together. Ex. Not driving at all
Transfer -correct answer-Transferring risk. Ex. Getting insurance in the first place transfers
risk from the insured to the insurer
Insurable Interest -correct answer-To have insurable interest in something it's loss or damage
would have to cause you to suffer financial or economic loss. Must have ownership
Hazards -correct answer-Event increases likelyhood of loss. Ex. Texting while driving,
weather.
Insurance Agreement -correct answer-Agreement by insurance to provide coverage in
exchange for a premium
Conditions in an Insurance Contract -correct answer-Assigns:
Duties after a loss
Defines Policy Terms
Outlines how to cancel
Stipulates on multiple contracts (primary & secondary)
Insurance Exclusions -correct answer-Things not covered. Ex. Intentional Acts
Coverage -correct answer-Defines what is covered and what is insured against within an
insurance contract
Premium -correct answer-Monetary amount charged by insurer in exchange for coverage
Casualty Insurance -correct answer-A broad term for insurance that covers PROPERTY and
LIABILITY losses.
Property Insurance -correct answer-Specifically to protect from financial losses on property
that is owned, damaged or destroyed.
Ex. Dwelling Insurance
Liability Insurance -correct answer-Protects insured from the risk they might be held legally
liable due to injury, harm or negligence
What are 3 subjects an auto policy covers? -correct answer-1. Body
2. The vehicle
3. Assets
Bodily Injury Types -correct answer-Personal Injury
Med Pay
Uninsured Motorist
No Fault Insurance -correct answer-State stipulates that parties cannot file a claim to the
other persons insurance policy unless required in excess. Instead, each party is required to
file a primary claim against their own insurance regardless who is at fault. EX. Florida
Financial Responsibility Laws -correct answer-State Laws regulating that people are to carry
a minimum coverage amount set by the state to protect themselves, others, and property.
P.A.P -correct answer-Personal Automotive Policy
Negligence -correct answer-The failure to act as a prudent person would under similar
circumstances
Legal Liability -correct answer-Involves proven negligence or fault
Vicarious Liability -correct answer-Being responsible for the negligent acts of someone else.
Ex. Your children
Absolute or Strict Liability -correct answer-Stems from hazardous or dangerous activities
that makes the owner liable WITHOUT the requirement of proof of negligence.
Liability -correct answer-Being responsible for the damages or injury you or someone else
you're responsible for has done.
The 7 Characteristics of a Contract -correct answer-1. Personal Contract
2. Conditional Contract
3. Adhesion
4. Indemnity
5. Aleatory
6. Unilateral
7. Utmost Good Faith
,Personal Contract -correct answer-Is stipulation of a contract that says the contract is for the
name person and cannot be transferred to another.
Conditional Contract -correct answer-Stipulates set by a contract. "You can do this, but...."
Adhesion -correct answer-A stipulation that the contract and it's language is binding, or
"sticks" and the parties agreeing cannot back out so long as the conditions are met.
Indemnity -correct answer-The contract agrees to indemnify, or make whole again the
customer. Makes them no better, nor worse, just whole.
Aleatory -correct answer-The stipulation that the contract must include and unequal transfer
of money. Ex. The insured signed a contract a month ago and has paid a single payment of
$300. The company has only received $300, but it on the hook to pay out $30,000 in the
event of a loss.
Unilateral -correct answer-Stipulation that the contract is one-sided. Ex. The customer
doesn't HAVE to pay the insurance company, but IF they do, then the insurance company
HAS to pay out.
Utmost Good Faith -correct answer-Parties believe that both will deal with eachother
honestly and fairly, without misleading or withholding
Insurance -correct answer-A contract by which an Insurance company agrees to compensate
an insured for a covered loss in return for a premium payment.
Underwriting -correct answer-Process of evaluating policyholders to determine eligibility for
coverage and pricing
Law of Large #'s -correct answer-Principle that the larger the examples of data, the more
accurate the information
Speculative Risk -correct answer-Risk of Gain OR Loss Ex. Gambling or Investment Insurance
Pure Risk -correct answer-No chance of gain or benefit. The only kind that insurance deals
with.
Exposure -correct answer-An opportunity for risk or loss
Risk -correct answer-Possibility of financial loss
Peril -correct answer-The direct cause of a loss
Representation -correct answer-Statements on an insurance contract that the insured
BELIEVES to be true
4 Means of Managing Risk -correct answer-1.Reduction
2.Retain
, 3.Avoid
4.Transfer
Reduction -correct answer-reduce the risk shared by the insured and insurer Ex. Good
maintenance
Retain -correct answer-Taking risks by retaining the risk to ones self. Ex. Not reporting an
accident to the insurance company, or not getting insurance at all.
Avoid -correct answer-Avoiding risk all together. Ex. Not driving at all
Transfer -correct answer-Transferring risk. Ex. Getting insurance in the first place transfers
risk from the insured to the insurer
Insurable Interest -correct answer-To have insurable interest in something it's loss or damage
would have to cause you to suffer financial or economic loss. Must have ownership
Hazards -correct answer-Event increases likelyhood of loss. Ex. Texting while driving,
weather.
Insurance Agreement -correct answer-Agreement by insurance to provide coverage in
exchange for a premium
Conditions in an Insurance Contract -correct answer-Assigns:
Duties after a loss
Defines Policy Terms
Outlines how to cancel
Stipulates on multiple contracts (primary & secondary)
Insurance Exclusions -correct answer-Things not covered. Ex. Intentional Acts
Coverage -correct answer-Defines what is covered and what is insured against within an
insurance contract
Premium -correct answer-Monetary amount charged by insurer in exchange for coverage
Casualty Insurance -correct answer-A broad term for insurance that covers PROPERTY and
LIABILITY losses.
Property Insurance -correct answer-Specifically to protect from financial losses on property
that is owned, damaged or destroyed.
Ex. Dwelling Insurance
Liability Insurance -correct answer-Protects insured from the risk they might be held legally
liable due to injury, harm or negligence
