Texas Property and Casualty Exam Questions With Correct Answers

HO-2 - Answer Broad Form; owner occupant HO-3 - Answer Special Form; owner occupant HO-4 - Answer Tenants/Renters HO-5 - Answer Comprehensive Form; owner occupant HO-6 - Answer Condo owners HO-8 - Answer Modified form DP-1 - Answer Fire, lightning, internal explosion (Basic Form) DP-2 - Answer BIG AFFECT: Burglary, Ice/sleet/snow, Glass breakage, Accidental discharge of water, Freezing objects, Falling objects, Electrical Current, Collapse, Tearing asunder (Broad) DP-3 - Answer Risks of direct physical loss (Special) Law of large numbers - Answer principle that states that the more examples used to develop any statistic, the more reliable the statistic will be Insurable interest - Answer any actual, lawful, and substantial economic interest in the safety or preservation of the subject of the insurance from loss or destruction or financial damage or impairment Risk - Answer The chance or uncertainty of loss Pure Risk - Answer a risk in which there is no chance of gain, only loss Speculative risk - Answer a risk that may result in a loss or gain Hazard - Answer something that increases the chance of loss Moral Hazard - Answer hazard created by an individual who would be willing to create a loss situation on purpose just to collect from the insurance company Morale hazard - Answer hazard created by an individual's tendency to contribute to a loss through his own irresponsible actions or carelessness Physical Hazard - Answer hazard that arises from the condition, occupancy, or use of the property itself Peril - Answer The cause of loss Direct Loss - Answer financial loss resulting directly from a loss to property Indirect loss - Answer loss that is the result or consequence of a direct loss; also called a consequential loss Actual Cash Value (ACV) - Answer the cost to replace an item of property at the time of loss, less an allowance for depreciation; often used to determine the amount of reimbursement for a loss