Texas Adjuster Study Guide/ 367 Q

REAL Texas Adjuster Study Guide2023- 2024/ 367 QUESTIONS AND ANSWERS 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 statisticsand 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 thecurrent cost to replace it minus depreciation. 8. agreed value: the amount that the insured and insureragree upon during the time of policy inception. 9. replacement cost: the cost associatedwith replacing prop-erty at current market prices 10. market value: the amount that the property is worth in acompetitive market. this amount is accepted by the buyer andseller. 11. tort: is a wrong that involves a breach of civil duty owedto someone else. this breach determines if that person is neg-ligence. 12. elements used to determine negligence: a duty owed, a dutybreached, 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 lossarising from bodily injury or property 2 / 31 damage to others 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 insteada 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 takenfrom?: coverage a structure policy limits of liability that is used on the declaration page. 21. cancellation: is the termination of an insurance policy byeither side and it must be done in writing 22. liability: a person is legally liable for an accident if thatperson 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 aninsurable 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.