Texas Property & Casualty License Questions With Correct Answers

Property vs Casualty: What is considered property? - Answer Structure & Personal Property Property vs Casualty: What is considered casualty? - Answer Non-property losses. Legal liability to others. 3rd Party Risk - Answer uncertainty of financial loss Pure Risk - Answer Chance of Loss Speculative Risk - Answer Chance of Loss or Gain (Gamble) Insurance (covers which type of risk?) - Answer Pure Risk Only How does the law of large numbers apply in insurance? - Answer Actuaries use the law of large numbers to estimate claims What is the law of large numbers? - Answer as the number of a similar loss exposure increases, the more accurate claims can be predicted from the group. What is a peril? - Answer cause of loss What is a hazard? - Answer things that increase the chance of a peril happening Three types of hazards - Answer Physical: visible characteristic (dead tree) Moral: Dishonest tendencies Morale: Attitude of carelessness Proximate Cause - Answer First cause in an unbroken chain of events Elements of a legal contract (CALC) - Answer C - Competent parties (18/Right frame of mind) A - Agreement (Both parties agree) L - Legal Purpose (The risk is LEGAL) C - Consideration (It has to be fair) What is representation? - Answer Information believed to be true. What is misrepresentation? - Answer Information that is not true. False information. What is material misrepresentation? - Answer Information that is not true but would have caused the insurer not to issue the policy. (4 prev spd tix) What is fraud? - Answer An all out effort by one party to deceive and cheat the other. What is warranty? - Answer Guarantee that an insured will or will not do something What are the four major parts to an insurance policy structure? (DICE) - Answer D - Declarations Page (First Page) I - Insuring Agreement (Insurers promise to pay) C - Conditions (Rules) E - Exclusions (Not covered) What information is on the declarations page? (Remember 6 Ps) - Answer Policy Number Parties Property Description/Location Policy Term Policy Limits/Deductibles Premium What is Limit of Liability? - Answer The max amount of coverage agreed to be paid per loss What is Aggregate Limit? - Answer The max amount of the total of all claims paid per policy period Insuring Agreement? - Answer Insurers promise to pay Conditions - Answer Contains the duties and rights of both parties What are the Insured's duties after a loss? - Answer Submit a proof of loss or sworn statement within 91 days. Protect property from further damage. Cooperate with the insurer. What is the Mortgage Clause? - Answer Nothing the insured does, even dishonestly, can prevent the mortgagee from collecting under the policy What are the two types of termination of a policy? - Answer Cancellation - occurs when the insured/insurer cancels the contract before the end of the policy period. Non-Renewals - occurs at the end of the policy period. Cancellation Requirements - Answer Insurer - must provide a 10 day advance written notice to the insured that the policy will be cancelled. Insured - no notice required Non-Renewal Requirements - Answer Insurer - must provide a 30 day advance written notice to the insured. Insured - no notice required Arbitration - Answer Deal with disagreements on coverage issues What is "Other Insurance"? - Answer This provision applies when the insured has more than one policy covering the same loss Primary & Excess - Answer Primary pays to limit Excess pays what is left Pro Rata - Answer Primary pays their percentage of loss Other insurance pays their percentage of loss What does vacant mean? - Answer Empty building. No people/No contents for 60 days. What does unoccupied mean? - Answer No people present when loss occurs but contents still remain. Abandonment - Answer insured cannot abandon partially damaged property and expect to be paid for its full value What is salvage value? - Answer after paying the insured for a loss as if it was totally destroyed the insured must give the insured what's left. What is the most common casualty coverage? - Answer Liability (3rd party) What is the definition of liability? - Answer Individual or organizations maybe held responsible for action resulting in bodily injury or property damage to others. What are the two types of liability? - Answer Criminal & Civil What is a tort? - Answer A civil wrong Direct Liability - Answer Insured is the wrongdoer (Tortfeasor) Vicarious Liability - Answer Insured is responsible for the actions of the wrongdoer Contractual Liability - Answer Insured assumes another's liability under a written agreement