USAA Licensing Exam QUESTIONS AND ANSWERS | VERIFIED UPDATE

USAA Licensing Exam QUESTIONS AND ANSWERS | VERIFIED UPDATE Insurance - ANSWER Transfer of risk from one person or organization to an insurance company Indemnity - ANSWER The principle to restore the insured to the pre-loss economic or financial condition. Law of Large numbers - ANSWER Mathematical principle used by insurers to predict losses to charge the appropriate premiums Insurable Interest - ANSWER Proof that someone stands to lose financially if a loss occurs; must exist at the time of the loss in property and casualty insurance Binder - ANSWER Temporary insurance contract; commits the company to act as if a policy has been issued Peril - ANSWER Cause of loss Direct Loss - ANSWER Immediate actual physical damage to tangible property Indirect loss - ANSWER Inability to use property as a result of a direct loss Risk - ANSWER Chance of loss; uncertainty of loss What are the two types of risk? - ANSWER Speculative and Pure Speculative Risk - ANSWER Involves the simultaneous chance of gain or loss: is not insurable Pure Risk - ANSWER a risk that presents the chance of loss but no opportunity for gain (insurable) What are two examples of speculative risk? - ANSWER Gambling Investing What is an example of your risk? - ANSWER Car accident Physical hazards include - ANSWER Visible condition that increases the chance of loss Morale Hazard - ANSWER Attitude of carelessness or indifference to loss Insurer - ANSWER The insurance company (a.k.a. second party to the contract) Named Insured - ANSWER A party named on the declarations who is purchasing the insurance policy (a.k.a. first party to the contract) Insured - ANSWER Who the insurer promises to protect in addition to the named insured Limit of Liability - ANSWER The maximum amount that can be paid for a covered loss Consideration - ANSWER An exchange of value between parties to a contract Waiver - ANSWER The voluntary relinquishment of a known right What is Estopple? - ANSWER When an agent tells an insured/makes the statement there is coverage for a loss when there is no such coverage, then the insurer is prevented from denying the claim as a result of what precedent? Concealment - ANSWER Insured or prospect deliberately withholding material information from the insurer, this voids coverage Material Misrepresentation - ANSWER Insured or prospect giving incorrect material information to the insurer, this voids coverage Warranty - ANSWER A written condition in the policy that must be true at the time of the loss Texas Department of Insurance - ANSWER In Texas, the insurance industry is regulated by the Commissioner - ANSWER The (_______) is appointed by the governor and heads the Texas Department of Insurance Adjuster - ANSWER According to the Texas Insurance Code, any person who investigates or adjusts losses, or any person who supervises the handling of claims must be licensed as an (_______________) A Staff Adjuster - ANSWER A (_____) is on the payroll of an insurance company and is paid a salary or by the hour Independent Adjuster - ANSWER A (___) handles claims for one or more insurance companies and receives a fee based on time and expense. Public Adjuster - ANSWER A (__) works on behalf of the insured in negotiating a claim settlement. In Texas a (______) requires another separate license called a "pu