Texas Property & Casualty License 2024 All Possible Questions and Answers with complete solution

Property vs Casualty: What is considered property? - Structure & Personal Property Property vs Casualty: What is considered casualty? - Non-property losses. Legal liability to others. 3rd Party Risk - uncertainty of financial loss Pure Risk - Chance of Loss Speculative Risk - Chance of Loss or Gain (Gamble) Insurance (covers which type of risk?) - Pure Risk Only How does the law of large numbers apply in insurance? - Actuaries use the law of large numbers to estimate claims What is the law of large numbers? - as the number of a similar loss exposure increases, the more accurate claims can be predicted from the group. What is a peril? - cause of loss What is a hazard? - things that increase the chance of a peril happening Three types of hazards - Physical: visible characteristic (dead tree) Moral: Dishonest tendencies Morale: Attitude of carelessnessProximate Cause - First cause in an unbroken chain of events Elements of a legal contract (CALC) - C - Competent parties (18/Right frame of mind) A - Agreement (Both parties agree) L - Legal Purpose (The risk is LEGAL) C - Consideration (It has to be fair) What is representation? -Information believed to be true. What is misrepresentation? - Information that is not true. False information. What is material misrepresentation? - Information that is not true but would have caused the insurer not to issue the policy. (4 prev spd tix) What is fraud? - An all out effort by one party to deceive and cheat the other. What is warranty? - Guarantee that an insured will or will not do something