Texas Adjuster License Test Review 3000 Solved 100%

Insurance History and Regulation: Insurance - Answer Coverage by contract whereby one party undertakes to indemnity (hold harmless) or guarantee another against loss by a specified contingency or peril. Insurance History and Regulation: NAIC - Answer An organization whose purpose is to organize the regulatory and supervisory efforts of the various state insurance commissioners from around the United States. Protection of Consumer Interests: The Texas Department of Insurance (TDI) - Answer Regulates the consumer interest in regard to insurance. Protection of Consumer Interests: Head of the Texas Department of Insurance - Answer Insurance Commissioner Protection of Consumer Interests: Chapter 541 -Unfair and Deceptive Insurance Practices - Answer was set up by the State of Texas to establish certain practices which constitute unfair and/or deceptive insurance acts. Protection of Consumer Interests: Texas Insurance Code requires what within how many days of receipt of a claim that the insurer? - Answer within 15 days 1) acknowledge receipt of a claim 2) begin investigation 3) request items from the claimant. Insurance: What is the purpose of insurance? - Answer to provide a way to spread risk over a large group of people Insurance: Principle of Indemnity - Answer IS AN INSURANCE PRINCIPLE STATING THAT AN INSURED MAY NOT BE COMPENSATED BY INSURANCE COMPANY IN AN AMOUNT EXCEEDING THE INSURED'S ECONOMIC LOSS. It is a principle that returns the insured to their previous financial condition. Insurance: What are the two purposes of indemnity? - Answer 1) to prevent the insured from profiting from a loss 2) to reduce moral hazard Insurance: what is risk? - Answer (1) the potential for a financial loss or the statistical chance of danger from exposure to a hazard or peril (2) the uncertainty about loss that exists whenever more than one outcome is possible Insurance: Proximate Cause - Answer is the first event in an uninterrupted chain of events that leads to a loss Insurance: What are the 2 types of risk? - Answer Speculative: affords the opportunity for gain as well as the possibility of loss Pure: a risk where there is the potential of real loss due to exposure to a peril Insurance: example of risk avoidance - Answer to avoid risks associated with swimming pools, don't buy a home with a pool. Insurance: example of risk reduction - Answer to reduce fire damage, install a sprinkler system in home Insurance: Example of risk retention - Answer insurance company accepts risk when they've accepted the insured. Insurance: example of risk transference - Answer purchasing insurance, transfers the risk from insured to insurance company. Insurance: what is a peril? - Answer The actual cause of a loss. Insurance: what are the two types of perils? - Answer 1) named peril -- specifies which perils are insured against 2) open peril / all risk peril -- insures against all perils unless specifically excluded in the policy Insurance: 14 most common named perils - Answer 1. lightning/fire 2. sudden & accidental damage from smoke 3. explosions 4. windstorms, hurricane or hail 5. theft 6. vehicle damage 7. aircraft damage 8. vandalism/malicious mischief (V/MM) 9. falling objects 10. weight of snow, ice or sleet 11. sudden and accidental water damage from plumbing, heating, or A/C overflow 12. freezing damage to plumbing 13. riots 14. civil disobedience Insurance: What is a hazard? - Answer situations or behaviors that increase the risk of loss of property Insurance: Name the three kinds of hazards and give an example of each - Answer 1) Physical -- large hole in the front yard where someone could step in and hurt themselves 2) Morale -- leaving a home with the doors unlocked and the windows opened 3) Moral -- embezzlement Insurance: List and define the 2 types of losses - Answer 1) Direct loss -- damage that is a direct result of a covered peril such as a fire destroying a home 2) Indirect loss -- consequential loss resulting indirectly from a direct loss due to a covered peril such as loss of business income or loss of use Claims Adjuster: What is a Staff/Company Adjuster? - Answer work for the insurance company such as State Farm and handle claims on behalf of the insurer; they are paid a salary with benefits. Claims Adjuster: What is an Independent Adjuster? - Answer work for the insurance companies to handle and evaluate certain claims on an as-needed basis; they are paid a percentage of the claims they settle Claims Adjuster: What is a Public Adjuster? - Answer work for the insured to make an evaluation of loss to be presented to the insurer; they are paid on a fee basis (usually 10%) and are usually required to carry an adjuster bond Claims Adjuster: CAT ( catastrophic) Adjusters - Answer represent the insurance company that hired the catastrophic adjusting company that you are doing claims for Claims Adjuster: 11 things that a claims adjuster may do - Answer 1) Determine coverage 2) determine amount of damage 3) prepare report of findings 4) Try to work out a fair settlement 5) prepare a claim file 6) interview with insured and/or witnesses 7) inspect and estimate property damage or loss 8) consult police, fire dept. and medical reports 9) take pictures and draw diagrams 10) make advance settlement payments 11) attend court hearings if necessary Claims Adjuster: 4 educational requirements that are suggested for adjusters to have - Answer 1) a combination of related education and on-the-job experience 2) at least a high school diploma 3) some post high school education is an asset 4) a valid driver's license Claims Adjuster: Initial contact with the insured should be within __________ of receiving the claim. - Answer 24 hours Claims Adjuster: The insurer has _________ to respond to a claim during non-catastrophic situations. - Answer 15 days Claims Adjuster: During catastrophic situations, the insurer has _________ to respond to a claim. - Answer 30 days Claims Adjuster: Adjusters are __________________ for they act in the best interest of the principle and not in their own best interest. - Answer Fiduciary Agents Claims Adjuster: Can adjusters be sued by the client/insured ? - Answer Yes, adjusters can be sued personally for unfair claims practices. Claims Adjuster: Define Utmost Good Faith - Answer When the adjuster and the insured are working together with honesty and integrity Claims Adjuster: Is it considered ethical for an adjuster to adjust for family members and/or friends? - Answer No -- this would be considered a conflict of interest Licensing Requirements: Name the 6 licensing requirements according to the Texas Statutes for a Texas Adjuster License? - Answer 1) must be at least 18 years of age or older 2) must be trustworthy 3) must reside in the state practicing in or in one that has reciprocity 4) must submit appropriate application and fees to the state of Texas 5) must complete an approved pre-licensing course 6) must successfully pass a state approved examination Licensing Requirements: Persons holding which 2 designations are exempt from the requirements of an adjuster's license examination? - Answer chartered property casualty underwriter or associate in claims Licensing Requirements: list the 3 adjuster licenses available in Texas - Answer 1) all-lines adjuster 2) property & casualty adjuster 3) Worker's Compensation Adjuster Licensing Requirements: How many CE hours are required every two years? - Answer 24 hours (at least 12 of them must be from classroom equivalent approved courses) Licensing Requirements: How many of the 24 CE hours have to be Ethics or Consumer Protection? - Answer 2 hours Licensing Requirements: How often is the Texas Adjuster's License to be renewed? - Answer Every 2 years and the renewal date is the licensee's birthdate Licensing Requirements: If you have an expired license of less than _________ then you do not have to retake the exam or reapply for a new license. - Answer 90 Days Licensing Requirements: What is the fine per hour for deficient CE credits? - Answer $50/CE hour Licensing Requirements: What is the grace period for deficient CE hours? - Answer there is no grace period, you would just pay a fine of $50 per hour, but you are still required to complete all 24 of CE before your license can be renewed. Licensing Requirements: If extra CE credits are earned above and beyond the required number in a reporting period, can those be carried over to the next reporting period? - Answer no -- the required 24 hours must be earned within the 2 year reporting period Licensing Requirements: Name 6 reasons for an adjuster's license to be revoked - Answer 1) has communicated fraudulent information on his licensing application 2) has had his adjuster's license revoked in another state 3) has misrepresented the terms of a policy to an insured while working a claim 4) makes a false statement on a claim 5) has committed a felony 6) has committed a misdemeanor in connection with his duties as an adjuster Contracts: What 5 things does a legally enforceable contract include? - Answer 1) offer 2) acceptance 3) consideration -- premium paid 4) capacity to contract 5) legality of purpose of contract Contracts: What is a "contract of adhesion"? - Answer a contract in which one party composes the contract and the other party agrees to adhere to it -- the party that agrees cannot negotiate the terms of the contract Contracts: What is fraud? - Answer intentional concealment or a false statement to obtain more money from an insurance settlement Contracts: What is concealment? - Answer failure to disclose information on the policy application form Contracts: What is indemnity? - Answer Restores insured to the same financial position held before the loss Contracts: what is a waiver? - Answer when you voluntarily surrender a right or privilege Contracts: List and define the 2 types of waivers - Answer 1) Express Waiver -- to knowingly surrender a right or privilege 2) Implied Waiver -- is inferred by the actions or inactions of the parties involved Contracts: What is negligence? - Answer Failing to use reasonable care which results in damage or injury to others Contracts: What are the 4 basic elements of negligence? - Answer Was the act a)unreasonable? b) imprudent? c) unintentional? d) an act of omission? Contracts: What are the 4 questions to ask when determining negligence? - Answer 1) Was it a legal duty to act or not act? 2) Was there a breach of that duty? 3) Was there injury or damage to another? 4) Was the act part of a chain of events that caused a loss? Contracts: What is estoppel? - Answer Prevents someone from arguing something contrary to a claim made or act performed by that person previously -- i.e., if an insured pays his premium late for the past year and is never notified of the problem, then the insurance company cannot cancel their policy because of the lateness of the premium. Because the insurance company never made an issue of the lateness of the premium for the past year, they are estopped from canceling the policy based on lateness of premium. Contracts: What is a breach of contract? - Answer failing to perform any term of a contract, written, or oral without a legitimate legal excuse. Insurance Policy: What is an insurance binder? - Answer Proof of insurance given to the insured by the insurer until the actual policy can be created and delivered. Insurance Policy: An insurance binder provides evidence of coverage for up to _________ - Answer 30 days Insurance Policy: list the 6 basic contents of an insurance policy - Answer DDICEE Declarations Page, Definitions, Insuring Agreement, Conditions, Exclusions, Endorsements Insurance Policy: What is a unilateral contract? - Answer a contract where only one of the participating parties makes a promise to perform Insurance Policy: What 9 items are found on the declarations page of most insurance policies - Answer 1) Name of insured 2) Address of insured 3) Limits of Coverage 4) Description 5) Valuation and Location of Property 6) Cost of the Policy 7) Premium amounts 8) Deductibles 9) Policy number and dates of coverage Insurance Policy: Who receives any premium refund, cancellation and/or non-renewal notices of the insurance policy? - Answer 1st Named Insured -- they are responsible for upholding the duties and obligations of the policy agreement too Insurance Policy: List 3 other people who are covered under an insurance policy as "insured" - Answer 1) spouse who resides in insured's home 2) resident relatives 3) any person under the age of 21 who is in the care, or custody of any insured or named insured Insurance Policy: What is meant by "policy territory"? - Answer this is the geographic area in which the property must be damaged ( in inland marine policies) or where injury or damage must occur (liability policies) for coverage to apply. Insurance Policy: What is the significance of the "definitions" section in an insurance policy? - Answer This section outlines the specific meaning of certain terms that are contained in the policy and are there to provided clarification of the intent of the contract. Insurance Policy: What is meant by "conditions" in an insurance policy? - Answer This is the section of the insurance policy that details the responsibilities, limitations and obligations of the insurer and the insured. Insurance Policy: List two people who would have an insurable interest in the insured property - Answer 1) the insured 2) the mortgage or loan company if the property is being financed Insurance Policy: What does "insurable interest" refer to ? - Answer The financial loss a person will suffer when an event occurs