Texas Insurance License Exam Prep P&C Questions with Detailed Verified Answers

Page | 1



Texas Insurance License Exam Prep
P&C Questions with Detailed Verified
Answers

Question: What are 3 subjects an auto policy covers?


Ans: 1. Body


2. The vehicle


3. Assets


Question: Bodily Injury Types


Ans: Personal Injury


Med Pay


Uninsured Motorist


Question: No Fault Insurance


Ans: State stipulates that parties cannot file a claim to the other persons
insurance policy unless required in excess. Instead, each party is required to
file a primary claim against their own insurance regardless who is at fault. EX.
Florida

, Page | 2

Question: Financial Responsibility Laws


Ans: State Laws regulating that people are to carry a minimum coverage
amount set by the state to protect themselves, others, and property.


Question: P.A.P


Ans: Personal Automotive Policy


Question: Negligence


Ans: The failure to act as a prudent person would under similar circumstances


Question: Legal Liability


Ans: Involves proven negligence or fault


Question: Vicarious Liability


Ans: Being responsible for the negligent acts of someone else. Ex. Your
children


Question: Absolute or Strict Liability


Ans: Stems from hazardous or dangerous activities that makes the owner
liable WITHOUT the requirement of proof of negligence.


Question: Liability

, Page | 3

Ans: Being responsible for the damages or injury you or someone else you're
responsible for has done.


Question: The 7 Characteristics of a Contract


Ans: 1. Personal Contract


2. Conditional Contract


3. Adhesion


4. Indemnity


5. Aleatory


6. Unilateral


7. Utmost Good Faith


Question: Personal Contract


Ans: Is stipulation of a contract that says the contract is for the name person
and cannot be transferred to another.


Question: Conditional Contract


Ans: Stipulates set by a contract. "You can do this, but...."


Question: Adhesion

, Page | 4

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.


Question: Indemnity


Ans: The contract agrees to indemnify, or make whole again the customer.
Makes them no better, nor worse, just whole.


Question: 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.


Question: Unilateral


Ans: Stipulation that the contract is one-sided. Ex. The customer doesn't
HAVE to pay the insurance company, but IF they do, then the insurance
company HAS to pay out.


Question: Utmost Good Faith


Ans: Parties believe that both will deal with eachother honestly and fairly,
without misleading or withholding


Question: Insurance