TEXAS PROPERTY & CASUALTY LICENSE EXAM WITH THE FULL
COVERAGE…..
Property vs Casualty: What is considered property? - correct answer-Structure &
Personal Property
Property vs Casualty: What is considered casualty? - correct answer-Non-property
losses. Legal liability to others. 3rd Party
Risk - correct answer-uncertainty of financial loss
Pure Risk - correct answer-Chance of Loss
Speculative Risk - correct answer-Chance of Loss or Gain (Gamble)
Insurance (covers which type of risk?) - correct answer-Pure Risk Only
How does the law of large numbers apply in insurance? - correct answer-Actuaries
use the law of large numbers to estimate claims
What is the law of large numbers? - correct answer-as the number of a similar loss
exposure increases, the more accurate claims can be predicted from the group.
What is a peril? - correct answer-cause of loss
What is a hazard? - correct answer-things that increase the chance of a peril
happening
Three types of hazards - correct answer-Physical: visible characteristic (dead tree)
Moral: Dishonest tendencies
Morale: Attitude of carelessness
Proximate Cause - correct answer-First cause in an unbroken chain of events
Elements of a legal contract (CALC) - correct answer-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? - correct answer-Information believed to be true.
,What is misrepresentation? - correct answer-Information that is not true. False
information.
What is material misrepresentation? - correct answer-Information that is not true but
would have caused the insurer not to issue the policy. (4 prev spd tix)
What is fraud? - correct answer-An all out effort by one party to deceive and cheat
the other.
What is warranty? - correct answer-Guarantee that an insured will or will not do
something
What are the four major parts to an insurance policy structure? (DICE) - correct
answer-D - Declarations Page (First Page)
I - Insuring Agreement (Insurers promise to pay)
C - Conditions (Rules)
E - Exclusions (Not covered)
What information is on the declarations page? (Remember 6 Ps) - correct answer-
Policy Number
Parties
Property Description/Location
Policy Term
Policy Limits/Deductibles
Premium
What is Limit of Liability? - correct answer-The max amount of coverage agreed to
be paid per loss
What is Aggregate Limit? - correct answer-The max amount of the total of all claims
paid per policy period
Insuring Agreement? - correct answer-Insurers promise to pay
Conditions - correct answer-Contains the duties and rights of both parties
What are the Insured's duties after a loss? - correct answer-Submit a proof of loss or
sworn statement within 91 days. Protect property from further damage. Cooperate
with the insurer.
What is the Mortgage Clause? - correct answer-Nothing the insured does, even
dishonestly, can prevent the mortgagee from collecting under the policy
What are the two types of termination of a policy? - correct answer-Cancellation -
occurs when the insured/insurer cancels the contract before the end of the policy
period.
Non-Renewals - occurs at the end of the policy period.
, Cancellation Requirements - correct answer-Insurer - must provide a 10 day
advance written notice to the insured that the policy will be cancelled.
Insured - no notice required
Non-Renewal Requirements - correct answer-Insurer - must provide a 30 day
advance written notice to the insured.
Insured - no notice required
Arbitration - correct answer-Deal with disagreements on coverage issues
What is "Other Insurance"? - correct answer-This provision applies when the insured
has more than one policy covering the same loss
Primary & Excess - correct answer-Primary pays to limit
Excess pays what is left
Pro Rata - correct answer-Primary pays their percentage of loss
Other insurance pays their percentage of loss
What does vacant mean? - correct answer-Empty building. No people/No contents
for 60 days.
What does unoccupied mean? - correct answer-No people present when loss occurs
but contents still remain.
Abandonment - correct answer-insured cannot abandon partially damaged property
and expect to be paid for its full value
What is salvage value? - correct answer-after paying the insured for a loss as if it
was totally destroyed the insured must give the insured what's left.
What is the most common casualty coverage? - correct answer-Liability (3rd party)
What is the definition of liability? - correct answer-Individual or organizations maybe
held responsible for action resulting in bodily injury or property damage to others.
What are the two types of liability? - correct answer-Criminal & Civil
What is a tort? - correct answer-A civil wrong
Direct Liability - correct answer-Insured is the wrongdoer (Tortfeasor)
Vicarious Liability - correct answer-Insured is responsible for the actions of the
wrongdoer
Contractual Liability - correct answer-Insured assumes another's liability under a
written agreement
Absolute Liability - correct answer-Liability without fault (Child drowns in pool)
COVERAGE…..
Property vs Casualty: What is considered property? - correct answer-Structure &
Personal Property
Property vs Casualty: What is considered casualty? - correct answer-Non-property
losses. Legal liability to others. 3rd Party
Risk - correct answer-uncertainty of financial loss
Pure Risk - correct answer-Chance of Loss
Speculative Risk - correct answer-Chance of Loss or Gain (Gamble)
Insurance (covers which type of risk?) - correct answer-Pure Risk Only
How does the law of large numbers apply in insurance? - correct answer-Actuaries
use the law of large numbers to estimate claims
What is the law of large numbers? - correct answer-as the number of a similar loss
exposure increases, the more accurate claims can be predicted from the group.
What is a peril? - correct answer-cause of loss
What is a hazard? - correct answer-things that increase the chance of a peril
happening
Three types of hazards - correct answer-Physical: visible characteristic (dead tree)
Moral: Dishonest tendencies
Morale: Attitude of carelessness
Proximate Cause - correct answer-First cause in an unbroken chain of events
Elements of a legal contract (CALC) - correct answer-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? - correct answer-Information believed to be true.
,What is misrepresentation? - correct answer-Information that is not true. False
information.
What is material misrepresentation? - correct answer-Information that is not true but
would have caused the insurer not to issue the policy. (4 prev spd tix)
What is fraud? - correct answer-An all out effort by one party to deceive and cheat
the other.
What is warranty? - correct answer-Guarantee that an insured will or will not do
something
What are the four major parts to an insurance policy structure? (DICE) - correct
answer-D - Declarations Page (First Page)
I - Insuring Agreement (Insurers promise to pay)
C - Conditions (Rules)
E - Exclusions (Not covered)
What information is on the declarations page? (Remember 6 Ps) - correct answer-
Policy Number
Parties
Property Description/Location
Policy Term
Policy Limits/Deductibles
Premium
What is Limit of Liability? - correct answer-The max amount of coverage agreed to
be paid per loss
What is Aggregate Limit? - correct answer-The max amount of the total of all claims
paid per policy period
Insuring Agreement? - correct answer-Insurers promise to pay
Conditions - correct answer-Contains the duties and rights of both parties
What are the Insured's duties after a loss? - correct answer-Submit a proof of loss or
sworn statement within 91 days. Protect property from further damage. Cooperate
with the insurer.
What is the Mortgage Clause? - correct answer-Nothing the insured does, even
dishonestly, can prevent the mortgagee from collecting under the policy
What are the two types of termination of a policy? - correct answer-Cancellation -
occurs when the insured/insurer cancels the contract before the end of the policy
period.
Non-Renewals - occurs at the end of the policy period.
, Cancellation Requirements - correct answer-Insurer - must provide a 10 day
advance written notice to the insured that the policy will be cancelled.
Insured - no notice required
Non-Renewal Requirements - correct answer-Insurer - must provide a 30 day
advance written notice to the insured.
Insured - no notice required
Arbitration - correct answer-Deal with disagreements on coverage issues
What is "Other Insurance"? - correct answer-This provision applies when the insured
has more than one policy covering the same loss
Primary & Excess - correct answer-Primary pays to limit
Excess pays what is left
Pro Rata - correct answer-Primary pays their percentage of loss
Other insurance pays their percentage of loss
What does vacant mean? - correct answer-Empty building. No people/No contents
for 60 days.
What does unoccupied mean? - correct answer-No people present when loss occurs
but contents still remain.
Abandonment - correct answer-insured cannot abandon partially damaged property
and expect to be paid for its full value
What is salvage value? - correct answer-after paying the insured for a loss as if it
was totally destroyed the insured must give the insured what's left.
What is the most common casualty coverage? - correct answer-Liability (3rd party)
What is the definition of liability? - correct answer-Individual or organizations maybe
held responsible for action resulting in bodily injury or property damage to others.
What are the two types of liability? - correct answer-Criminal & Civil
What is a tort? - correct answer-A civil wrong
Direct Liability - correct answer-Insured is the wrongdoer (Tortfeasor)
Vicarious Liability - correct answer-Insured is responsible for the actions of the
wrongdoer
Contractual Liability - correct answer-Insured assumes another's liability under a
written agreement
Absolute Liability - correct answer-Liability without fault (Child drowns in pool)
