Texas Insurance License Exam Prep P&C Questions And Answers

Agreed Value - ANSWER Agreed upon value written for a specific amount. Ex. an appraisal on a classic car that is expected to increase in value over time. Salvage Value - ANSWER Sales value of damaged goods without replacement or exchange Market Value - ANSWER What the product can be sold for at the time of loss (before damage) Actual Cash Value - ANSWER The cost to replace minus depreciation. EX. Most home owners policies payout using ACB model. Replacement Cost - ANSWER What is would cost to repair or replace your item at todays prices without depreciation Direct Loss - ANSWER A loss where physical hard to tangible property has occurred. Ex. Car is wrecked Indirect Loss - ANSWER Economic Loss as result of a direct loss. Ex. Rental costs accumulated as result of vehicle being totaled. Unoccupied - ANSWER No PEOPLE on the premises HO Forms: Basic Perils - ANSWER Windstorm Civil Commotion Smoke Hail Aircraft Vehicles Volcanoe Explosion Riot Fire/Lightning Theft Vandilism HO Forms: Broad Coverage - ANSWER Discharge/overflow of water or heat Falling objects Weight of ice/snow or sleet Freezing of systems Accidental discharge Rupture of systems HO-2 - ANSWER Single-family (not common) Provides broad coverage on Dwelling (A) and structures (B) and broad coverage on personal property (C) HO-8 - ANSWER Bare-Bones Policy Provides Basic Dwelling/Structures coverage (A)(B) and Basic Personal Property (C) HO-6 - ANSWER Condo Owner Policy Provides broad coverage on personal property (C) and limited* coverage on dwelling (A)(Most policies will specify exact expectations of owner responsibilities within dwelling) HO-4 - ANSWER Renters/Tenant Policy Provides broad coverage ONLY for personal property (C) on HO Policy HO-5 - ANSWER Cadillac Policy for homeowners Provides special coverage for Dwelling (A) and other structures (B) and special coverage for Personal property (C) HO-3 - ANSWER Most common form of HO Policy for owners/landlords who reside on property Provides special coverage on dwelling (A) and other structures (B) and Broad coverage on personal items (C) Auto liability coverage - ANSWER -Pays on behalf of insured for damages insured legally responsible to pay to others for bodily injury or property -Pays for defense costs -Pays only to the NOT at fault party Person(s) Covered under Auto Liability - ANSWER -Named Insured -Family Members using vehicle -Anyone given permission to use the vehicle Texas Auto Liability Minimum - ANSWER 30/60/25 or CSL or 85k -30k per person -Max 60k per incident -25k property damage Coverage A- Auto Policy - ANSWER Liability Exclusions to Coverage A- Auto - ANSWER NOT Covered: -Personal Property -Damage to rented dwellings owned by insured -Intentional Acts -Business use -Theft -Racing -Livery -Auto business (selling, parking, service, storing) Less than 4 wheels -Off road vehicles -Vehicles used regularly without being insured on policy Coverage A, B, C - Replacing a vehicle on policy - ANSWER Vehicle automatically has broadest coverage available on policy to end of policy term Coverage A, B, C- Adding an additional vehicle on a policy - ANSWER Insured has 14 days to notify insurer of new vehicle before losing Liability, Medical Payments and Uninsured Motorist coverage. Coverage D- Adding a vehicle to policy with existing Physical Damage Coverage - ANSWER Covered for 14 days with broadest coverage deductible, until specific coverage must be given to the added vehicle. Coverage D- Adding a vehicle to a policy without existing Physical Damage Coverage - ANSWER Covered for 4 days only with $500 deductible, then must purchase coverage. Policy Supplementary Payments - ANSWER Doesn't reduce coverage available and doesn't increase the premium PAP Supplementary Payments - ANSWER Bail Bonds Appeal Bonds Loss of Earnings PAP Bail Bond - ANSWER Will pay up to $250 when bond is required due to detaining for accident resulting in bodily injury or property damage as covered by the policy PAP Appeal Bond - ANSWER Insurer will pay premiums of appeal bonds and accruing interest after a judgment is entered on any suit after a judgment is entered on any suit the insurance company defends on behalf of the insured PAP Loss of earnings - ANSWER Will pay up to $200 per day PAP- B: Medical Payments - ANSWER 1st party bodily injury coverage. Pays regardless of fault. Acts as PRIMARY in YOUR CAR. EXCESS if you are a passenger in another car. Payout is per person: $1000-$10,000 No restrictions on amount of people can receive payment Covers You and people in your vehicle. Ex. You get in an accident and hurt yourself and your 2 kids. Your Med Pay is 5000. Every person in the car will get up to 5000 for med. What is covered by PAP Med Pay - ANSWER -Reasonable or necessary medical and funeral expenses. -Dental work -Claims have to be made within 3 years PAP Med Pay- Exclusions - ANSWER The Insurer CANNOT: Theft- stolen the vehicle Race Livery Has to have 4 wheels Vehicle cannot be used as home Workers comp Company Vehicles Order of Insurance Payout - ANSWER 1. Workers Comp 2. PIP 3. Med Pay 4. Liability 5. Uninsured Motorist Part C of PAP - ANSWER Uninsured Motorist Underinsured Motorist Uninsured Motorist Property Damage How many nationwide are uninsured? - ANSWER 12.6% How many uninsured in Texas? - ANSWER 20% What does Uninsured Motor coverage do? - ANSWER Covers insurer and passengers for BODILY INJURY, SPECIAL & GENERAL DAMAGES (pain&suffering) if insurer is struck by an uninsured motorist. Limits to PAP Part C - ANSWER Per person, per occurrence. Coverage limits CANNOT be higher than coverage A-Liability UIM - ANSWER Underinsured Motorist UMPD - ANSWER Uninsured Motorist Property Damage $250 Deductible PAP Part C- Exclusions - ANSWER Wont pay for: Theft, livery, offroad (except non-owned golfcarts), vehicle residence, punitive damages, company vehicles, disability Do NOT pay, Do NOT admit fault. Must not be at fault. PAP- Part D - ANSWER Physical Damage Physical Damage - ANSWER Coverage for direct and accidental damage to insured's covered VEHICLE in 2 ways: -Collision -Comprehensive AKA (OTC- other than collision) -Also covers travel expenses DO NOT COVER PERSONAL PROPERTY*** What is covered under PAP Part D - ANSWER You, family, non-owned autos Does NOT cover pedestrians* Limits to PAP Part D- Physical Damage - ANSWER -Payout is Actual Cash Value OR Repair and Replace less your deductible (Per Occurrence) Whichever is cheaper* PAP Part D- Physical Damage Trailers - ANSWER Max payout to NON-owned trailers is 1500 under part D coverage PAP Part D- Physical Damage Electronic Equipment - ANSWER Electronic equipment permanently installed in different location other than manufacturer MAX PAYOUT: $1000