Texas All lines adjuster license insurance terms and related concepts Chapter 1

Law of Large Numbers Correct Answer: the more examples used to develop any statistic, the more reliable the statistic will be Underwriting Correct Answer: The process and insurance company uses to decide whether to except or reject an application for a policy insurance. underwriters evaluate the risk and exposure of a potential policyholders they decide how much coverage the policyholder should receive how much they should pay for it or whether even to except the risk and insure them. underwriting involves measuring risk exposure and determining the premium that needs to be charged to ensure that risk. peril Correct Answer: A cause of property losses I.E, fire, lightning, explosion, windstorm, hurricane, collapse of building, vandalism, accidental discharge, theft. hazard Correct Answer: Is a situation that poses a level of threat to life, Heath, property, or environment. Direct loss Correct Answer: Direct physical loss to property Indirect loss Correct Answer: A loss that arises as a result of damage to property, other than the direct loss to the property. If you own a taxi and someone totals out your taxi, you can't make money because you can't drive your taxi for fares. Principle of indemnity Correct Answer: Insurance will not pay more than the cost of the incident Property insurance Correct Answer: Covers the loss of real and personal property from perils such as fire, theft, windstorm