2022 Texas Adjuster Study Guide 367 QUESTIONS ANSWERS ALL CORRECT 1 / 31

2022 Texas Adjuster Study Guide 367 QUESTIONS ANSWERS ALL CORRECT 1 / 31 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 STATISTICS AND 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 THE CURRENT COST TO REPLACE IT MINUS DEPRECIATION. 8. AGREED VALUE: THE AMOUNT THAT THE INSURED AND INSURER AGREE UPON DURING THE TIME OF POLICY INCEPTION. 9. REPLACEMENT COST: THE COST ASSOCIATED WITH REPLACING PROP- ERTY AT CURRENT MARKET PRICES 10. MARKET VALUE: THE AMOUNT THAT THE PROPERTY IS WORTH IN A COMPETITIVE MARKET. THIS AMOUNT IS ACCEPTED BY THE BUYER AND SELLER. 11. TORT: IS A WRONG THAT INVOLVES A BREACH OF CIVIL DUTY OWED TO SOMEONE ELSE. THIS BREACH DETERMINES IF THAT PERSON IS NEG- LIGENCE. 12. ELEMENTS USED TO DETERMINE NEGLIGENCE: A DUTY OWED, A DUTY BREACHED, 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 LOSS ARISING FROM BODILY INJURY OR PROPERTY DAMAGE TO OTHERS 2022 Texas Adjuster Study Guide 367 QUESTIONS ANSWERS ALL CORRECT 2 / 31 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 INSTEAD A 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 TAKEN FROM?: COVERAGE A STRUCTURE POLICY LIMITS OF LIABILITY THAT IS USED ON THE DECLARATION PAGE. 21. CANCELLATION: IS THE TERMINATION OF AN INSURANCE POLICY BY EITHER SIDE AND IT MUST BE DONE IN WRITING 22. LIABILITY: A PERSON IS LEGALLY LIABLE FOR AN ACCIDENT IF THAT PERSON 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 AN INSURABLE 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. 2022 Texas Adjuster Study Guide 367 QUESTIONS ANSWERS ALL CORRECT 3 / 31 29. NOTICE OF LOSS: NOTICE REQUIRED BY THE INSURANCE COMPANY IMMEDIATELY AFTER AN INCIDENT. POLICY HOLDER RESPONSIBILITY AF- TER A LOSS 30. DEPRECIATION: ACT OF LOWERING AN ITEM DUE TO VALUE WEAR AND TEAR IT IS BASED ON AGE, CONDITION, AND LIFE EXPECTANCY. 31. PUNITIVE DAMAGE: THE AMOUNT AWARDED BY THE COURT WHICH IS INTENDED TO REFORM OR DETER THE DEFENDANT FROM ENGAGING IN SIMILAR CONDUCT IN THE FUTURE 32. COMPARATIVE NEGLIGENCE: IS A PARTIAL LEGAL DEFENSE THAT RE- DUCES THE AMOUNT OF DAMAGES THAT A PERSON CAN RECOVER BASED UPON THE AMOUNT THAT THIS PERSON'S OWN NEGLIGENCE CON- TRIBUTED TO THE LOSS 33. CONTRIBUTORY NEGLIGENCE: IS A LAW DEFENSE WHERE A PERSON NEGLIGENCE CONTRIBUTED TO THE HARM THAT HE OR SHE SUSTAINED 34. ASSUMPTION OF RISK: A doctrine under which a plaintiff may not recover for injuries or damage suffered from risks he or she knows of and has voluntarily assumed 35. ADVERSE SELECTION: THE TENDENCY OF INSURED'S WHO PRESENT A HIGHER PROBABILITY OF LOSS TO PURCHASE OR RENEW INSURANCE MORE OFTEN THAN THOSE WHO PRESENT A LOWER PROBABILITY 36. ATTRACTIVE NUISANCE: A dangerous place, condition, or object that is particularly attractive to children. 37. ACCIDENT: UNFORESEEN, UNINTENDED EVENT, SOMETHING UNEX- PECTED 38. OCCURRENCE: AN EVENT THAT RESULTS IN AN INSURED LOSS WHICH RESULTS IN BODILY INJURY OR DAMAGES 39. BETTERMENT: IMPROVEMENT OF PROPERTY THAT PUTS IT IN A BET- TER CONDITION THAN IT WAS BEFORE THE OCCUPANCY OR LOSS 40. ALL RISK INSURANCE: "open perils" insurance - protecting the insured from loss arising from any peril other than those perils specifically excluded by name 41. APPRAISAL: IS A FORM OF DISPUTE RESOLUTION THAT OCCURS WHEN THERE IS A DISPUTE BETWEEN THE INSURED AND THE INSURANCE COMPANY REGARDING THE AMOUNT OF THE CLAIM OR LOSS. BOTH PAR- TIES HIRE AN APPRAISAL AND IF CANT DECIDE THEN THEY WILL HIRE AN UMPIRE