Texas All lines Adjuster license Insurance Terms and Related Concepts Chapter 1 Solved 100%

Law of Large Numbers - Answer the more examples used to develop any statistic, the more reliable the statistic will be Underwriting - 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 - Answer A cause of property losses I.E, fire, lightning, explosion, windstorm, hurricane, collapse of building, vandalism, accidental discharge, theft. hazard - Answer Is a situation that poses a level of threat to life, Heath, property, or environment. Direct loss - Answer Direct physical loss to property Indirect loss - 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 - Answer Insurance will not pay more than the cost of the incident Property insurance - Answer Covers the loss of real and personal property from perils such as fire, theft, windstorm Insuring Agreement - Answer Summarizes the major promises of the insurer in exchange for premium payments by their customer. Deductible - Answer Amount you must pay before you begin receiving any benefits from your insurance company Cancellation - Answer Termination of an insurance policy by insurance company or insurer before the renewal date. All notices must be done in writing. Limit of Liability - Answer The maximum amount for which an insurer is liable. The policy of declarations specifies limits. Loss settlement - Answer The process used to determine the amount of the loss. Methods used to settle losses - Answer Actual cash value- value of the property, based on the current cost to replace it, minus applicable depreciation. Replacement cost- the cost associated with replacing property at current market prices. Agreed value- the amount that the insured and insurer agree upon during the time of policy inception. Market value- the amount the property is worth in a competitive market. This amount is accepted by the buyer and seller. Casualty insurance - Answer Protects a person from financial loss arising from bodily injury or property damage to others arising out of : ownership of property, operation of a motor vehicle, personal activities, business activities, robbery, and Worker's comp. liability - Answer A person is legally liable for an accident if that person is found responsible for bodily injury or property damage to another party. Usually based upon the negligent acts of that person. negligence (n) - Answer carelessness Tort - Answer A civil wrong committed against someone else. This breach would determine if that person is negligent. The essential elements used to determine negligence : duty owed Duty breached Proximate cause Damages Punitive Damages - Answer Money a court requires a defendant to pay in order to punish and make an example of the defendant. "Punitive" (punished or punishment by the court) Comparative Negligence - Answer Is a partial legal defense that reduces the amount of damages that a person can recover based upon the amount that this person's own negligence contributed to the loss. (Two or more people Sharing fault in a negligent situation) Contributory Negligence - Answer Is a law defense where a person's own negligence contributed to the harm that he or she sustained assumption of risk - Answer Is a defense which bars a person that voluntarily and knowingly subjected oneself to danger. 3 types of negligent defenses / acts - Answer Comparative negligence (compare or compared two or more) Contributory negligence (contribute, you contributed to negligent acts causing harm.) Assumption of risk (assume, taking on responsibility) Accident - Answer An unexpected happening that may result in injury, loss, or damage. Act of god - Answer An event arising out of natural causes with no human intervention which could not have been prevented by reasonable care or foresight. Examples of "acts of god" - Answer Floods, windstorms, hurricane, hail, lightning. Additional Living Expenses - Answer Those expenses sustained by insured household in order to maintain its normal standard of living. An insurance company would pay for a hotel but not pay for mortgage payment or cable bill if something happened to your home and needed repairs. adverse selection - Answer The tendency of insured's who present a higher probability of loss to purchase or renew insurance more often than those who present a lower probability. All Risk Insurance - Answer Insurance that covers loss caused by all perils except those specifically excluded in the contract. Appraisal - Answer A form of dispute between the insured and the insurance company regarding the amount of the claim. Both parties hire appraisers to settle the dispute. If appraisers cannot settle the dispute, they will hire an umpire to settle it. attractive nuisance - Answer a dangerous place, condition, or object that is particularly attractive to children that has to have warning or danger signs betterment - Answer An improvement to property that puts it in a better condition than it was before the occupancy or loss breach of contract - Answer The failure to comply with terms or conditions of an insurance policy that may result in restricted coverage or void the policy. Bodily injury - Answer Physical injury to a person, including sickness, disease, and death. Claimant (n) - Answer a person making a claim catastrophe - Answer a large-scale disaster, misfortune, or failure that normally generates a large amount of property damage and / or bodily injury. coinsurance clause - Answer A provision requiring a specified amount of insurance based on the value of the insured property. collision coverage - Answer insurance that pays for damage to your car caused by colliding with another car or object without regard to who caused the accident. Commercial General Liability - Answer insurance coverage type typically issued to contractors. It includes premises and operations, products and completed operations and other liability options comprehensive coverage - Answer This coverage pays for damage to or loss of your automobile from causes other than accidents examples include flooding hail damage vandalism fires and deft Concealment - Answer The act of purposefully not reporting information that would affect the issuance or rate of an insurance contract. Concurrent Causation - Answer The insurance theory stating that if loss or damages occur as a result of of more than one cause , one of which is covered and the other is not covered, the insurer will still cover the claim Conditions - Answer The part of the insurance policy that details the rights and duties of the insured and the insurance company in the policy