2022 Texas Adjuster Study Guide 367 QUESTIONS ANSWERS ALL
CORRECT
1. PERILS: A CAUSE OF PROPERTY LOSSES UNDER AN INSURANCE CON-
TRACT EX: WINDSTORM, HURRICANE, EXPLOSION, COLLAPSE OF BUILD-
ING, VANDALISM, ACCIDENTAL DISCHARGE, AND THEFT
2. LAW OF LARGE NUMBERS: A FUNDAMENTAL CONCEPT IN STATISTICS
AND PROBABILITY THAT DESCRIBES HOW THE AVERAGE OF A RANDOM-
LY SELECTED LARGE SAMPLE FROM A POPULATION. IT BASICALLY RE-
LIES ON THE PRINCIPLE THAT THE LARGER THE POOL, THE MORE PRE-
DICTABLE THE AMOUNT OF LOSSES WILL BE IN A GIVEN PERIOD
3. PRINCIPLE OF INDEMNITY: IS AN INSURANCE PRINCIPLE STATING THAT
AN INSURED MAY NOT BE COMPENSATED BY INSURANCE COMPANY IN AN
AMOUNT EXCEEDING THE INSURED'S ECONOMIC LOSS.
4. LIMITS OF LIABILITY: THE MAXIMUM AMOUNT THAT AN INSURANCE POL-
ICY WILL PAY. IT IS SPECIFIED ON THE POLICY DECLARATION PAGE.
5. PROPERTY INSURANCE: COVERAGE FOR REAL AND PERSONAL PROP-
ERTY AGAINST LOSS OR DAMAGE FROM PERILS INSURED AGAINST.
6. LOSS SETTLEMENT: THE PROCESS USED TO DETERMINE THE AMOUNT
OF THE LOSS
7. ACTUAL CASH VALUE: THE VALUE OF THE PROPERTY BASED ON THE
CURRENT COST TO REPLACE IT MINUS DEPRECIATION.
8. AGREED VALUE: THE AMOUNT THAT THE INSURED AND INSURER
AGREE UPON DURING THE TIME OF POLICY INCEPTION.
9. REPLACEMENT COST: THE COST ASSOCIATED WITH REPLACING PROP-
ERTY AT CURRENT MARKET PRICES
10. MARKET VALUE: THE AMOUNT THAT THE PROPERTY IS WORTH IN A
COMPETITIVE MARKET. THIS AMOUNT IS ACCEPTED BY THE BUYER AND
SELLER.
11. TORT: IS A WRONG THAT INVOLVES A BREACH OF CIVIL DUTY OWED
TO SOMEONE ELSE. THIS BREACH DETERMINES IF THAT PERSON IS NEG-
LIGENCE.
12. ELEMENTS USED TO DETERMINE NEGLIGENCE: A DUTY OWED, A DUTY
BREACHED, PROXIMATE CAUSE, AND DAMAGES
13. METHODS TO DETERMINE LOSS ARE:: ACV, MARKET VALUE, REPLACE-
MENT COST, AGREED VALUE
14. CASUALTY INSURANCE: PROTECTS A PERSON FROM FINANCIAL LOSS
ARISING FROM BODILY INJURY OR PROPERTY DAMAGE TO OTHERS
, 2022 Texas Adjuster Study Guide 367 QUESTIONS ANSWERS ALL
CORRECT
15. HAZARD: IS A SITUATION THAT POSES A LEVEL OF THREAT TO LIFE,
HEALTH, PROPERTY, OR ENVIRONMENT.
16. INDIRECT LOSS: TYPE OF LOSS THAT DOES NOT RESULT FROM DI-
RECT DAMAGE OF A COVERED CAUSE OF LOSS OR PERIL BUT IS INSTEAD
A CONSEQUENCE OF THE DIRECT DAMAGE LOSS.
17. DIRECT LOSS: DIRECT PHYSICAL LOSS TO PROPERTY
18. INSURING AGREEMENT: THIS SECTION OF THE INSURANCE POLICY
SPECIFIES WHAT THE INSURANCE WILL PROVIDE COVERAGE FOR IN EX-
CHANGE FOR PREMIUM PAYMENTS BY THEIR CUSTOMER.
19. DEDUCTIBLE: THE AMOUNT THE INSURED MUST PAY IN A LOSS BE-
FORE ANY PAYMENT IS DUE FROM THE INSURANCE COMPANY.
20. WHERE IS A HOMEOWNER PERCENTAGE DEDUCTIBLE ALWAYS TAKEN
FROM?: COVERAGE A STRUCTURE POLICY LIMITS OF LIABILITY THAT IS
USED ON THE DECLARATION PAGE.
21. CANCELLATION: IS THE TERMINATION OF AN INSURANCE POLICY BY
EITHER SIDE AND IT MUST BE DONE IN WRITING
22. LIABILITY: A PERSON IS LEGALLY LIABLE FOR AN ACCIDENT IF THAT
PERSON IS FOUND RESPONSIBLE FOR BODILY INJURY OR PROPERTY
DAMAGE TO ANOTHER PARTY.
23. NEGLIGENCE: THE FAILURE TO EXERCISE THE CARE THAT A REASON-
ABLY PRUDENT PERSON CAN BE CHARACTERIZED BY THE AVERAGE PER-
SON.
24. ADDITIONAL LIVING EXPENSES: CHARGES COVERED BY HOMEOWN-
ERS POLICY OVER AND ABOVE POLICY HOLDERS CUSTOMARY LIVING
DUE TO DAMAGE BY A COVERED PERIL AND MAKES THE HOME TEMPO-
RARY UNINHABITABLE.
25. EXPOSURE: THE MEASURE OF THE POSSIBILITY OF THE LOSS
26. INSURED: THE PARTY TO AN INSURANCE ARRANGEMENT THAT HAS AN
INSURABLE INTEREST IN THE PROPERTY THAT IS BEING INSURED.
27. INSURER: INSURANCE COMPANY
28. LOSS HISTORY: IS THE INSURED HISTORY OF LOSSES WITH OTHER
COMPANIES. INSURANCE COMPANY VIEWS THIS AS INDICATION OF IN-
SURED PROPENSITY FOR A CLAIM IN FUTURE.
, 2022 Texas Adjuster Study Guide 367 QUESTIONS ANSWERS ALL
CORRECT
29. NOTICE OF LOSS: NOTICE REQUIRED BY THE INSURANCE COMPANY
IMMEDIATELY AFTER AN INCIDENT. POLICY HOLDER RESPONSIBILITY AF-
TER A LOSS
30. DEPRECIATION: ACT OF LOWERING AN ITEM DUE TO VALUE WEAR AND
TEAR IT IS BASED ON AGE, CONDITION, AND LIFE EXPECTANCY.
31. PUNITIVE DAMAGE: THE AMOUNT AWARDED BY THE COURT WHICH IS
INTENDED TO REFORM OR DETER THE DEFENDANT FROM ENGAGING IN
SIMILAR CONDUCT IN THE FUTURE
32. COMPARATIVE NEGLIGENCE: IS A PARTIAL LEGAL DEFENSE THAT RE-
DUCES THE AMOUNT OF DAMAGES THAT A PERSON CAN RECOVER
BASED UPON THE AMOUNT THAT THIS PERSON'S OWN NEGLIGENCE CON-
TRIBUTED TO THE LOSS
33. CONTRIBUTORY NEGLIGENCE: IS A LAW DEFENSE WHERE A PERSON
NEGLIGENCE CONTRIBUTED TO THE HARM THAT HE OR SHE SUSTAINED
34. ASSUMPTION OF RISK: A doctrine under which a plaintiff may not recover
for injuries or damage suffered from risks he or she knows of and has voluntarily
assumed
35. ADVERSE SELECTION: 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
36. ATTRACTIVE NUISANCE: A dangerous place, condition, or object that is
particularly attractive to children.
37. ACCIDENT: UNFORESEEN, UNINTENDED EVENT, SOMETHING UNEX-
PECTED
38. OCCURRENCE: AN EVENT THAT RESULTS IN AN INSURED LOSS WHICH
RESULTS IN BODILY INJURY OR DAMAGES
39. BETTERMENT: IMPROVEMENT OF PROPERTY THAT PUTS IT IN A BET-
TER CONDITION THAN IT WAS BEFORE THE OCCUPANCY OR LOSS
40. ALL RISK INSURANCE: "open perils" insurance - protecting the insured from
loss arising from any peril other than those perils specifically excluded by name
41. APPRAISAL: IS A FORM OF DISPUTE RESOLUTION THAT OCCURS
WHEN THERE IS A DISPUTE BETWEEN THE INSURED AND THE INSURANCE
COMPANY REGARDING THE AMOUNT OF THE CLAIM OR LOSS. BOTH PAR-
TIES HIRE AN APPRAISAL AND IF CANT DECIDE THEN THEY WILL HIRE AN
UMPIRE
, 2022 Texas Adjuster Study Guide 367 QUESTIONS ANSWERS ALL
CORRECT
42. BREACH OF CONTRACT: THE FAILURE TO COMPLY WITH TERMS OR
CONDITIONS OF AN INSURANCE POLICY THAT MAY RESULT IN RESTRICT-
ED COVERAGE OR VOID THE POLICY.
43. BODILY INJURY: Physical pain, illness or any impairment of physical condition
44. CONCEALMENT: The withholding of known facts which, if material, can void
a contract or not pay out on claims related to that material information
45. DAMAGES: THE AMOUNT CLAIMED BY OR AWARDED TO AN INJURED
PARTY AS COMPENSATION FOR LIABILITY OWING TO BODILY INJURY OR
PROPERTY DAMAGE
46. FRAUD: INTENTIONAL LYING OR MISREPRESENTATION BY POLICY
HOLDER OR CLAIM ADJUSTERS OF A MATERIAL FACT IN ORDER TO IN-
FLATE A CLAIM PAYMENT OR RECEIVE A CLAIM PAYMENT THAT WOULD
OTHERWISE NOT BE PAID OR VOID THE CONTRACT
47. INCURRED EXPENSES: EXPENSES THAT HAVE ALREADY BEEN SUS-
TAINED AND HAVE NOT BEEN PAID EX: AN ADDITIONAL LIVING EXPENSE
CLAIM IS A REIMBURSEMENT OF INCURRED EXPENSES.
48. LOSS PAYEE: the person designated on an insurance policy as the one to be
paid in case the property is damaged/destroyed
49. CLAIMANT: IS A PARTY WHO MAKES A CLAIM
50. CO INSURANCE CLAUSE: A clause in an insurance policy under which the
insured agrees to maintain insurance equal to some specified percentage of the
property value or otherwise to assume a portion of any loss
51. COLLISION: COVERAGE THAT PAYS FOR DAMAGES TO YOUR CAR WITH-
OUT REGARDS TO WHO CAUSED THE ACCIDENT. Covers a collision with
another object, car, or from a rollover.
52. COMMERCIAL GENERAL LIABILITY: Insurance that covers many of the
common commercial general liability loss exposures faced by an organization,
including its premises, operations, and products. An employee working in a cus-
tomer's home trips and injures the customer causing property damage the employ-
ee and business would be covered under
53. CATASTROPHE: A SEVERE DISASTER THAT INVOLVES A LARGE POPU-
LATION AND GENERATES LARGE AMOUNT OF PROPERTY DAMAGE
54. COMPREHENSIVE COVERAGE: Insurance that pays for damage to your car
caused by something other than a collision, such as damage from storms, FIRE,
CORRECT
1. PERILS: A CAUSE OF PROPERTY LOSSES UNDER AN INSURANCE CON-
TRACT EX: WINDSTORM, HURRICANE, EXPLOSION, COLLAPSE OF BUILD-
ING, VANDALISM, ACCIDENTAL DISCHARGE, AND THEFT
2. LAW OF LARGE NUMBERS: A FUNDAMENTAL CONCEPT IN STATISTICS
AND PROBABILITY THAT DESCRIBES HOW THE AVERAGE OF A RANDOM-
LY SELECTED LARGE SAMPLE FROM A POPULATION. IT BASICALLY RE-
LIES ON THE PRINCIPLE THAT THE LARGER THE POOL, THE MORE PRE-
DICTABLE THE AMOUNT OF LOSSES WILL BE IN A GIVEN PERIOD
3. PRINCIPLE OF INDEMNITY: IS AN INSURANCE PRINCIPLE STATING THAT
AN INSURED MAY NOT BE COMPENSATED BY INSURANCE COMPANY IN AN
AMOUNT EXCEEDING THE INSURED'S ECONOMIC LOSS.
4. LIMITS OF LIABILITY: THE MAXIMUM AMOUNT THAT AN INSURANCE POL-
ICY WILL PAY. IT IS SPECIFIED ON THE POLICY DECLARATION PAGE.
5. PROPERTY INSURANCE: COVERAGE FOR REAL AND PERSONAL PROP-
ERTY AGAINST LOSS OR DAMAGE FROM PERILS INSURED AGAINST.
6. LOSS SETTLEMENT: THE PROCESS USED TO DETERMINE THE AMOUNT
OF THE LOSS
7. ACTUAL CASH VALUE: THE VALUE OF THE PROPERTY BASED ON THE
CURRENT COST TO REPLACE IT MINUS DEPRECIATION.
8. AGREED VALUE: THE AMOUNT THAT THE INSURED AND INSURER
AGREE UPON DURING THE TIME OF POLICY INCEPTION.
9. REPLACEMENT COST: THE COST ASSOCIATED WITH REPLACING PROP-
ERTY AT CURRENT MARKET PRICES
10. MARKET VALUE: THE AMOUNT THAT THE PROPERTY IS WORTH IN A
COMPETITIVE MARKET. THIS AMOUNT IS ACCEPTED BY THE BUYER AND
SELLER.
11. TORT: IS A WRONG THAT INVOLVES A BREACH OF CIVIL DUTY OWED
TO SOMEONE ELSE. THIS BREACH DETERMINES IF THAT PERSON IS NEG-
LIGENCE.
12. ELEMENTS USED TO DETERMINE NEGLIGENCE: A DUTY OWED, A DUTY
BREACHED, PROXIMATE CAUSE, AND DAMAGES
13. METHODS TO DETERMINE LOSS ARE:: ACV, MARKET VALUE, REPLACE-
MENT COST, AGREED VALUE
14. CASUALTY INSURANCE: PROTECTS A PERSON FROM FINANCIAL LOSS
ARISING FROM BODILY INJURY OR PROPERTY DAMAGE TO OTHERS
, 2022 Texas Adjuster Study Guide 367 QUESTIONS ANSWERS ALL
CORRECT
15. HAZARD: IS A SITUATION THAT POSES A LEVEL OF THREAT TO LIFE,
HEALTH, PROPERTY, OR ENVIRONMENT.
16. INDIRECT LOSS: TYPE OF LOSS THAT DOES NOT RESULT FROM DI-
RECT DAMAGE OF A COVERED CAUSE OF LOSS OR PERIL BUT IS INSTEAD
A CONSEQUENCE OF THE DIRECT DAMAGE LOSS.
17. DIRECT LOSS: DIRECT PHYSICAL LOSS TO PROPERTY
18. INSURING AGREEMENT: THIS SECTION OF THE INSURANCE POLICY
SPECIFIES WHAT THE INSURANCE WILL PROVIDE COVERAGE FOR IN EX-
CHANGE FOR PREMIUM PAYMENTS BY THEIR CUSTOMER.
19. DEDUCTIBLE: THE AMOUNT THE INSURED MUST PAY IN A LOSS BE-
FORE ANY PAYMENT IS DUE FROM THE INSURANCE COMPANY.
20. WHERE IS A HOMEOWNER PERCENTAGE DEDUCTIBLE ALWAYS TAKEN
FROM?: COVERAGE A STRUCTURE POLICY LIMITS OF LIABILITY THAT IS
USED ON THE DECLARATION PAGE.
21. CANCELLATION: IS THE TERMINATION OF AN INSURANCE POLICY BY
EITHER SIDE AND IT MUST BE DONE IN WRITING
22. LIABILITY: A PERSON IS LEGALLY LIABLE FOR AN ACCIDENT IF THAT
PERSON IS FOUND RESPONSIBLE FOR BODILY INJURY OR PROPERTY
DAMAGE TO ANOTHER PARTY.
23. NEGLIGENCE: THE FAILURE TO EXERCISE THE CARE THAT A REASON-
ABLY PRUDENT PERSON CAN BE CHARACTERIZED BY THE AVERAGE PER-
SON.
24. ADDITIONAL LIVING EXPENSES: CHARGES COVERED BY HOMEOWN-
ERS POLICY OVER AND ABOVE POLICY HOLDERS CUSTOMARY LIVING
DUE TO DAMAGE BY A COVERED PERIL AND MAKES THE HOME TEMPO-
RARY UNINHABITABLE.
25. EXPOSURE: THE MEASURE OF THE POSSIBILITY OF THE LOSS
26. INSURED: THE PARTY TO AN INSURANCE ARRANGEMENT THAT HAS AN
INSURABLE INTEREST IN THE PROPERTY THAT IS BEING INSURED.
27. INSURER: INSURANCE COMPANY
28. LOSS HISTORY: IS THE INSURED HISTORY OF LOSSES WITH OTHER
COMPANIES. INSURANCE COMPANY VIEWS THIS AS INDICATION OF IN-
SURED PROPENSITY FOR A CLAIM IN FUTURE.
, 2022 Texas Adjuster Study Guide 367 QUESTIONS ANSWERS ALL
CORRECT
29. NOTICE OF LOSS: NOTICE REQUIRED BY THE INSURANCE COMPANY
IMMEDIATELY AFTER AN INCIDENT. POLICY HOLDER RESPONSIBILITY AF-
TER A LOSS
30. DEPRECIATION: ACT OF LOWERING AN ITEM DUE TO VALUE WEAR AND
TEAR IT IS BASED ON AGE, CONDITION, AND LIFE EXPECTANCY.
31. PUNITIVE DAMAGE: THE AMOUNT AWARDED BY THE COURT WHICH IS
INTENDED TO REFORM OR DETER THE DEFENDANT FROM ENGAGING IN
SIMILAR CONDUCT IN THE FUTURE
32. COMPARATIVE NEGLIGENCE: IS A PARTIAL LEGAL DEFENSE THAT RE-
DUCES THE AMOUNT OF DAMAGES THAT A PERSON CAN RECOVER
BASED UPON THE AMOUNT THAT THIS PERSON'S OWN NEGLIGENCE CON-
TRIBUTED TO THE LOSS
33. CONTRIBUTORY NEGLIGENCE: IS A LAW DEFENSE WHERE A PERSON
NEGLIGENCE CONTRIBUTED TO THE HARM THAT HE OR SHE SUSTAINED
34. ASSUMPTION OF RISK: A doctrine under which a plaintiff may not recover
for injuries or damage suffered from risks he or she knows of and has voluntarily
assumed
35. ADVERSE SELECTION: 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
36. ATTRACTIVE NUISANCE: A dangerous place, condition, or object that is
particularly attractive to children.
37. ACCIDENT: UNFORESEEN, UNINTENDED EVENT, SOMETHING UNEX-
PECTED
38. OCCURRENCE: AN EVENT THAT RESULTS IN AN INSURED LOSS WHICH
RESULTS IN BODILY INJURY OR DAMAGES
39. BETTERMENT: IMPROVEMENT OF PROPERTY THAT PUTS IT IN A BET-
TER CONDITION THAN IT WAS BEFORE THE OCCUPANCY OR LOSS
40. ALL RISK INSURANCE: "open perils" insurance - protecting the insured from
loss arising from any peril other than those perils specifically excluded by name
41. APPRAISAL: IS A FORM OF DISPUTE RESOLUTION THAT OCCURS
WHEN THERE IS A DISPUTE BETWEEN THE INSURED AND THE INSURANCE
COMPANY REGARDING THE AMOUNT OF THE CLAIM OR LOSS. BOTH PAR-
TIES HIRE AN APPRAISAL AND IF CANT DECIDE THEN THEY WILL HIRE AN
UMPIRE
, 2022 Texas Adjuster Study Guide 367 QUESTIONS ANSWERS ALL
CORRECT
42. BREACH OF CONTRACT: THE FAILURE TO COMPLY WITH TERMS OR
CONDITIONS OF AN INSURANCE POLICY THAT MAY RESULT IN RESTRICT-
ED COVERAGE OR VOID THE POLICY.
43. BODILY INJURY: Physical pain, illness or any impairment of physical condition
44. CONCEALMENT: The withholding of known facts which, if material, can void
a contract or not pay out on claims related to that material information
45. DAMAGES: THE AMOUNT CLAIMED BY OR AWARDED TO AN INJURED
PARTY AS COMPENSATION FOR LIABILITY OWING TO BODILY INJURY OR
PROPERTY DAMAGE
46. FRAUD: INTENTIONAL LYING OR MISREPRESENTATION BY POLICY
HOLDER OR CLAIM ADJUSTERS OF A MATERIAL FACT IN ORDER TO IN-
FLATE A CLAIM PAYMENT OR RECEIVE A CLAIM PAYMENT THAT WOULD
OTHERWISE NOT BE PAID OR VOID THE CONTRACT
47. INCURRED EXPENSES: EXPENSES THAT HAVE ALREADY BEEN SUS-
TAINED AND HAVE NOT BEEN PAID EX: AN ADDITIONAL LIVING EXPENSE
CLAIM IS A REIMBURSEMENT OF INCURRED EXPENSES.
48. LOSS PAYEE: the person designated on an insurance policy as the one to be
paid in case the property is damaged/destroyed
49. CLAIMANT: IS A PARTY WHO MAKES A CLAIM
50. CO INSURANCE CLAUSE: A clause in an insurance policy under which the
insured agrees to maintain insurance equal to some specified percentage of the
property value or otherwise to assume a portion of any loss
51. COLLISION: COVERAGE THAT PAYS FOR DAMAGES TO YOUR CAR WITH-
OUT REGARDS TO WHO CAUSED THE ACCIDENT. Covers a collision with
another object, car, or from a rollover.
52. COMMERCIAL GENERAL LIABILITY: Insurance that covers many of the
common commercial general liability loss exposures faced by an organization,
including its premises, operations, and products. An employee working in a cus-
tomer's home trips and injures the customer causing property damage the employ-
ee and business would be covered under
53. CATASTROPHE: A SEVERE DISASTER THAT INVOLVES A LARGE POPU-
LATION AND GENERATES LARGE AMOUNT OF PROPERTY DAMAGE
54. COMPREHENSIVE COVERAGE: Insurance that pays for damage to your car
caused by something other than a collision, such as damage from storms, FIRE,
