Texas Insurance License Exam Prep
P&C
4 Means of Managing Risk - ANS-1.Reduction
2.Retain
3.Avoid
4.Transfer
5 Parts of a legal contract - ANS-Consideration
Legal Purpose
Offer
Acceptance
Competent Parties
5 Parts of an Insurance Policy - ANS-1. Declarations
2. Insuring Agreement
3. Conditions
4. Exclusions
5. Definitions
Absolute or Strict Liability - ANS-Stems from hazardous or dangerous activities that makes the
owner liable WITHOUT the requirement of proof of negligence.
Acceptance - ANS-Company has accepted an insureds offer to pay a premium in exchange for
the company accepting them as a risk and gives them a policy.
Actual Cash Value - ANS-The cost to replace minus depreciation. EX. Most home owners
policies payout using ACB model.
Additional Coverage
HO- Part D Loss of Use - ANS-Additional Coverage at no additional increase in premium:
Debris Removal
Debris Removal- Trees
Reasonable Repairs
Value: Plants, Trees
Fire Department Charge
Property Removed
Credit/Debit Cards/Fake $
Loss Assessment
Collapse
Glass or safety material
Adhesion - ANS-A stipulation that the contract and it's language is binding, or "sticks" and the
parties agreeing cannot back out so long as the conditions are met.
,Agreed Value - ANS-Agreed upon value written for a specific amount. Ex. an appraisal on a
classic car that is expected to increase in value over time.
Aleatory - ANS-The stipulation that the contract must include and unequal transfer of money. Ex.
The insured signed a contract a month ago and has paid a single payment of $300. The
company has only received $300, but it on the hook to pay out $30,000 in the event of a loss.
Alien Insurer - ANS-A company organized under the laws of another country
Appraisal - ANS-Spells out how appraisals are used to settle disputes over the value of items
within a claim.
Ex. will use an appraiser for 1 party, an appraiser for the other party, and an UMPIRE*
appraiser. 2/3 sets the value.
Arbitration - ANS-Companies argue whether or not coverage actually exists
Auto liability coverage - ANS--Pays on behalf of insured for damages insured legally responsible
to pay to others for bodily injury or property
-Pays for defense costs
-Pays only to the NOT at fault party
Avoid - ANS-Avoiding risk all together. Ex. Not driving at all
Blanket Property Coverage - ANS-Policy covers multiple units on 1 property as a whole.
Bodily Injury Types - ANS-Personal Injury
Med Pay
Uninsured Motorist
Broker - ANS-Represents the insured to shop for policies through several insurance companies.
Acts as an agent, but has NO AUTHORITY to bind policies
Business Pursuits - ANS-Endorsement to HO policy to cover an at home business
Casualty Insurance - ANS-A broad term for insurance that covers PROPERTY and LIABILITY
losses.
Certificate of Insurance (C.O.I) - ANS-Evidence of Insurance
Lists:
what's covered
who's covered
How much coverage?
How long the term?
***Doesn't include WHERE coverage applies, that's in the DECLARATIONS***
Coinsurance - ANS-Percentage of insurance that a customer must carry in relationship to the
value of the property in order to receive full claims payment (80%)
Collapse - ANS-Abrupt falling down or caving in of a building or any part of a building with the
result that the building or part of the building cannot be occupied.
Compensatory Damages - ANS-Money paid to compensate the injured party for losses actually
sustained.
Special (Specific) Loss
-Medical
-Lost Wages
, General
-Pain and suffering
Competent Parties - ANS-Having legal capacity to enter into a binding contract
Comprehensive Coverage - ANS-Covers everything other than impact. Can have on policy
without collision coverage.
Coverage includes:
Theft, hail, fire, riot, water, flood, missiles(flying objects), explosion (earthquakes), vandalism
(VMM), Animal hits, glass breakage
Conditional Contract - ANS-Stipulates set by a contract. "You can do this, but...."
Conditions in an Insurance Contract - ANS-Assigns:
Duties after a loss
Defines Policy Terms
Outlines how to cancel
Stipulates on multiple contracts (primary & secondary)
Consideration - ANS-Value exchange for a service that a buyer is willing to pay
Consultant - ANS-Someone who, for a FEE, offers advice. Doesn't work for the insurance
company and cannot sell a policy
Coverage - ANS-Defines what is covered and what is insured against within an insurance
contract
Coverage A- Auto Policy - ANS-Liability
Coverage A, B, C -
Replacing a vehicle on policy - ANS-Vehicle automatically has broadest coverage available on
policy to end of policy term
Coverage A, B, C-
Adding an additional vehicle on a policy - ANS-Insured has 14 days to notify insurer of new
vehicle before losing Liability, Medical Payments and Uninsured Motorist coverage.
Coverage D- Adding a vehicle to a policy without existing Physical Damage Coverage -
ANS-Covered for 4 days only with $500 deductible, then must purchase coverage.
Coverage D- Adding a vehicle to policy with existing Physical Damage Coverage -
ANS-Covered for 14 days with broadest coverage deductible, until specific coverage must be
given to the added vehicle.
Covered Auto - ANS-Any vehicle shown in declarations page and any new acquired auto and
trailer you own.
Deductibles - ANS-AKA S.I.R (Self Insured Retention) is the portion of the loss paid by the
insured
Direct Loss - ANS-A loss where physical hard to tangible property has occurred. Ex. Car is
wrecked
Domestic Insurer - ANS-A company doing business in the same state as their Headquarters
Dwelling Policies - ANS-**HAS NO LIABILITY OR MED PAY***
A- Dwelling
B- Other Structures
P&C
4 Means of Managing Risk - ANS-1.Reduction
2.Retain
3.Avoid
4.Transfer
5 Parts of a legal contract - ANS-Consideration
Legal Purpose
Offer
Acceptance
Competent Parties
5 Parts of an Insurance Policy - ANS-1. Declarations
2. Insuring Agreement
3. Conditions
4. Exclusions
5. Definitions
Absolute or Strict Liability - ANS-Stems from hazardous or dangerous activities that makes the
owner liable WITHOUT the requirement of proof of negligence.
Acceptance - ANS-Company has accepted an insureds offer to pay a premium in exchange for
the company accepting them as a risk and gives them a policy.
Actual Cash Value - ANS-The cost to replace minus depreciation. EX. Most home owners
policies payout using ACB model.
Additional Coverage
HO- Part D Loss of Use - ANS-Additional Coverage at no additional increase in premium:
Debris Removal
Debris Removal- Trees
Reasonable Repairs
Value: Plants, Trees
Fire Department Charge
Property Removed
Credit/Debit Cards/Fake $
Loss Assessment
Collapse
Glass or safety material
Adhesion - ANS-A stipulation that the contract and it's language is binding, or "sticks" and the
parties agreeing cannot back out so long as the conditions are met.
,Agreed Value - ANS-Agreed upon value written for a specific amount. Ex. an appraisal on a
classic car that is expected to increase in value over time.
Aleatory - ANS-The stipulation that the contract must include and unequal transfer of money. Ex.
The insured signed a contract a month ago and has paid a single payment of $300. The
company has only received $300, but it on the hook to pay out $30,000 in the event of a loss.
Alien Insurer - ANS-A company organized under the laws of another country
Appraisal - ANS-Spells out how appraisals are used to settle disputes over the value of items
within a claim.
Ex. will use an appraiser for 1 party, an appraiser for the other party, and an UMPIRE*
appraiser. 2/3 sets the value.
Arbitration - ANS-Companies argue whether or not coverage actually exists
Auto liability coverage - ANS--Pays on behalf of insured for damages insured legally responsible
to pay to others for bodily injury or property
-Pays for defense costs
-Pays only to the NOT at fault party
Avoid - ANS-Avoiding risk all together. Ex. Not driving at all
Blanket Property Coverage - ANS-Policy covers multiple units on 1 property as a whole.
Bodily Injury Types - ANS-Personal Injury
Med Pay
Uninsured Motorist
Broker - ANS-Represents the insured to shop for policies through several insurance companies.
Acts as an agent, but has NO AUTHORITY to bind policies
Business Pursuits - ANS-Endorsement to HO policy to cover an at home business
Casualty Insurance - ANS-A broad term for insurance that covers PROPERTY and LIABILITY
losses.
Certificate of Insurance (C.O.I) - ANS-Evidence of Insurance
Lists:
what's covered
who's covered
How much coverage?
How long the term?
***Doesn't include WHERE coverage applies, that's in the DECLARATIONS***
Coinsurance - ANS-Percentage of insurance that a customer must carry in relationship to the
value of the property in order to receive full claims payment (80%)
Collapse - ANS-Abrupt falling down or caving in of a building or any part of a building with the
result that the building or part of the building cannot be occupied.
Compensatory Damages - ANS-Money paid to compensate the injured party for losses actually
sustained.
Special (Specific) Loss
-Medical
-Lost Wages
, General
-Pain and suffering
Competent Parties - ANS-Having legal capacity to enter into a binding contract
Comprehensive Coverage - ANS-Covers everything other than impact. Can have on policy
without collision coverage.
Coverage includes:
Theft, hail, fire, riot, water, flood, missiles(flying objects), explosion (earthquakes), vandalism
(VMM), Animal hits, glass breakage
Conditional Contract - ANS-Stipulates set by a contract. "You can do this, but...."
Conditions in an Insurance Contract - ANS-Assigns:
Duties after a loss
Defines Policy Terms
Outlines how to cancel
Stipulates on multiple contracts (primary & secondary)
Consideration - ANS-Value exchange for a service that a buyer is willing to pay
Consultant - ANS-Someone who, for a FEE, offers advice. Doesn't work for the insurance
company and cannot sell a policy
Coverage - ANS-Defines what is covered and what is insured against within an insurance
contract
Coverage A- Auto Policy - ANS-Liability
Coverage A, B, C -
Replacing a vehicle on policy - ANS-Vehicle automatically has broadest coverage available on
policy to end of policy term
Coverage A, B, C-
Adding an additional vehicle on a policy - ANS-Insured has 14 days to notify insurer of new
vehicle before losing Liability, Medical Payments and Uninsured Motorist coverage.
Coverage D- Adding a vehicle to a policy without existing Physical Damage Coverage -
ANS-Covered for 4 days only with $500 deductible, then must purchase coverage.
Coverage D- Adding a vehicle to policy with existing Physical Damage Coverage -
ANS-Covered for 14 days with broadest coverage deductible, until specific coverage must be
given to the added vehicle.
Covered Auto - ANS-Any vehicle shown in declarations page and any new acquired auto and
trailer you own.
Deductibles - ANS-AKA S.I.R (Self Insured Retention) is the portion of the loss paid by the
insured
Direct Loss - ANS-A loss where physical hard to tangible property has occurred. Ex. Car is
wrecked
Domestic Insurer - ANS-A company doing business in the same state as their Headquarters
Dwelling Policies - ANS-**HAS NO LIABILITY OR MED PAY***
A- Dwelling
B- Other Structures
