Texas Insurance License Exam Prep P&C Questions and Answers Graded A

Texas Insurance License Exam Prep P&C Questions and Answers Graded A What are 3 subjects an auto policy covers? - ANSWER 1. Body 2. The vehicle 3. Assets Bodily Injury Types - ANSWER Personal Injury Med Pay Uninsured Motorist No Fault Insurance - ANSWER 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 Financial Responsibility Laws - ANSWER State Laws regulating that people are to carry a minimum coverage amount set by the state to protect themselves, others, and property. P.A.P - ANSWER Personal Automotive Policy Negligence - ANSWER The failure to act as a prudent person would under similar circumstances Legal Liability - ANSWER Involves proven negligence or fault Vicarious Liability - ANSWER Being responsible for the negligent acts of someone else. Ex. Your children Absolute or Strict Liability - ANSWER Stems from hazardous or dangerous activities that makes the owner liable WITHOUT the requirement of proof of negligence. Liability - ANSWER Being responsible for the damages or injury you or someone else you're responsible for has done. The 7 Characteristics of a Contract - ANSWER 1. Personal Contract 2. Conditional Contract 3. Adhesion 4. Indemnity 5. Aleatory 6. Unilateral 7. Utmost Good Faith Personal Contract - ANSWER Is stipulation of a contract that says the contract is for the name person and cannot be transferred to another. Conditional Contract - ANSWER Stipulates set by a contract. "You can do this, but...." Adhesion - ANSWER 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. Indemnity - ANSWER The contract agrees to indemnify, or make whole again the customer. Makes them no better, nor worse, just whole. Aleatory - ANSWER 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. Unilateral - ANSWER 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. Utmost Good Faith - ANSWER Parties believe that both will deal with eachother honestly and fairly, without misleading or withholding Insurance - ANSWER A contract by which an Insurance company agrees to compensate an insured for a covered loss in return for a premium payment. Underwriting - ANSWER Process of evaluating policyholders to determine eligibility for coverage and pricing Law of Large #'s - ANSWER Principle that the larger the examples of data, the more accurate the information Speculative Risk - ANSWER Risk of Gain OR Loss Ex. Gambling or Investment Insurance Pure Risk - ANSWER No chance of gain or benefit. The only kind that insurance deals with. Exposure - ANSWER An opportunity for risk or loss Risk - ANSWER Possibility of financial loss Peril - ANSWER The direct cause of a loss Representation - ANSWER Statements on an insurance contract that the insured BELIEVES to be true 4 Means of Managing Risk - ANSWER 1.Reduction 2.Retain 3.Avoid