CHAPTER 1. Property and Casualty
Exam Texas with qualified answers.
loss among a large number of people. When spreading the risk reduces the financial
impact of an individual loss.
INSURANCE COMPANY - CORRECT ANSWER.entity that agrees to indemnify
(make financially whole again) Insureds against covered losses
PROPERTY - CORRECT ANSWER.Various types of insurance designed to insure
property from financial loss. D.H.C.I.O.C
1.Dwelling
2.Homeowners
3.Commerical Property
4.Inland marine
5.Ocean marine
6.Crime
Actuaries - CORRECT ANSWER.1.insurance statistician: a statistician who
calculates insurance premiums, risks, dividends, and annuity rates
CASULTY INSURANCE - CORRECT ANSWER.Protects you against liabilty for
BODILY INJURY (BI) and PROPERTY DAMAGE (PD)
LIABILITY OR CASUALTY COVERAGE - CORRECT ANSWER.Will pay for
accidental damage you cause to another person or their property. There are three
parties to Liability insurance contract.
1.you
2.your insurance company
3.the injured party
PERSONAL LINES INSURANCE - CORRECT ANSWER.Property and casualty
insurance for an individual. Policies include Property and Casualty coverages.
COMMERCIAL LINES INSURANCE - CORRECT ANSWER.Refers to property and
casualty insurance to cover a BUSINESS as opposed to personal lines
PURCHASING INSURANCE - CORRECT ANSWER.The money you pay in
exchange for insurance coverage is known as the CONSIDERATION. It is also the
PREMIUM, and the statements you make in the application along with the payment
of the initial premium are part of the consideration.
, DEDUCTIBLE - CORRECT ANSWER.Portion of covered loss that is not paid by the
insurance company.The company will pay for the remaining portion up to the policy
limits. The higher the deductible, the lower premium.
BINDER - CORRECT ANSWER.An ORAL or WRITTEN agreement that provides
TEMPORARY evidence of insurance until a policy can be issued. It does not
guarantee that a policy will be issued, but it is temporary until a contract can be
underwritten from home or office.
Insured on a policy - CORRECT ANSWER.Person or entity that is listed first on the
declarations page is referred to as the first named insured. The first named insured
is the primary and holds the highest rank and has broader rights and obligations
under the contract.
RISK - CORRECT ANSWER.Possibility or Uncertainty of loss. It is not actual loss. It
is the possibility (risk) that an accident may occur.
SPECULATIVE RISK VS PURE RISK - CORRECT ANSWER.SPECULATIVE RISK
offers the chance of loss as well as the oppurtunity for gain. PURE RISK offers only
the chance of loss no gain. Only PURE RISKS are insurable.
CHARACTERISTICS (ELEMENTS) OF INSURABLE RISKS - CORRECT
ANSWER.To be Insurable, the risk must:
1.Be PREDICTABLE-an insurer must be capable of statistically predicting the
possibility of loss.
2.Be a CHANCE OCCURRENCE- the risk must be outside the insureds control. It
must be unexpected, accidental, or uncertain.
3.Not be CATASTROPHIC-Insurers typically will not insure risks that will expose
them to losses that may occur to large number of insureds at the same time.
4.Be MEASURABLE and DEFINITIVE- an insurable risk is a loss that has a definite
monetary value. The insurer must be able to measure or value a potential loss.
5.Be AFFORDABLE- Loss must cause a financial or economic hardship to the
insured or to the insureds family.
INDIRECT LOSS - CORRECT ANSWER.(or consequential) loss occurs as the result
of a direct loss. For example your home burns down and you have to stay in a
temporary place until it is fixed.
LAW OF LARGE NUMBERS - CORRECT ANSWER.To accurately predict what will
happen to a large group of similiar risks. The larger the group becomes, the more
accurate the predictions become.
PERIL - CORRECT ANSWER.a PERIL is the cause of a LOSS
some examples
Fire
Accidents
Explosions
Flood
Disease
Death
Exam Texas with qualified answers.
loss among a large number of people. When spreading the risk reduces the financial
impact of an individual loss.
INSURANCE COMPANY - CORRECT ANSWER.entity that agrees to indemnify
(make financially whole again) Insureds against covered losses
PROPERTY - CORRECT ANSWER.Various types of insurance designed to insure
property from financial loss. D.H.C.I.O.C
1.Dwelling
2.Homeowners
3.Commerical Property
4.Inland marine
5.Ocean marine
6.Crime
Actuaries - CORRECT ANSWER.1.insurance statistician: a statistician who
calculates insurance premiums, risks, dividends, and annuity rates
CASULTY INSURANCE - CORRECT ANSWER.Protects you against liabilty for
BODILY INJURY (BI) and PROPERTY DAMAGE (PD)
LIABILITY OR CASUALTY COVERAGE - CORRECT ANSWER.Will pay for
accidental damage you cause to another person or their property. There are three
parties to Liability insurance contract.
1.you
2.your insurance company
3.the injured party
PERSONAL LINES INSURANCE - CORRECT ANSWER.Property and casualty
insurance for an individual. Policies include Property and Casualty coverages.
COMMERCIAL LINES INSURANCE - CORRECT ANSWER.Refers to property and
casualty insurance to cover a BUSINESS as opposed to personal lines
PURCHASING INSURANCE - CORRECT ANSWER.The money you pay in
exchange for insurance coverage is known as the CONSIDERATION. It is also the
PREMIUM, and the statements you make in the application along with the payment
of the initial premium are part of the consideration.
, DEDUCTIBLE - CORRECT ANSWER.Portion of covered loss that is not paid by the
insurance company.The company will pay for the remaining portion up to the policy
limits. The higher the deductible, the lower premium.
BINDER - CORRECT ANSWER.An ORAL or WRITTEN agreement that provides
TEMPORARY evidence of insurance until a policy can be issued. It does not
guarantee that a policy will be issued, but it is temporary until a contract can be
underwritten from home or office.
Insured on a policy - CORRECT ANSWER.Person or entity that is listed first on the
declarations page is referred to as the first named insured. The first named insured
is the primary and holds the highest rank and has broader rights and obligations
under the contract.
RISK - CORRECT ANSWER.Possibility or Uncertainty of loss. It is not actual loss. It
is the possibility (risk) that an accident may occur.
SPECULATIVE RISK VS PURE RISK - CORRECT ANSWER.SPECULATIVE RISK
offers the chance of loss as well as the oppurtunity for gain. PURE RISK offers only
the chance of loss no gain. Only PURE RISKS are insurable.
CHARACTERISTICS (ELEMENTS) OF INSURABLE RISKS - CORRECT
ANSWER.To be Insurable, the risk must:
1.Be PREDICTABLE-an insurer must be capable of statistically predicting the
possibility of loss.
2.Be a CHANCE OCCURRENCE- the risk must be outside the insureds control. It
must be unexpected, accidental, or uncertain.
3.Not be CATASTROPHIC-Insurers typically will not insure risks that will expose
them to losses that may occur to large number of insureds at the same time.
4.Be MEASURABLE and DEFINITIVE- an insurable risk is a loss that has a definite
monetary value. The insurer must be able to measure or value a potential loss.
5.Be AFFORDABLE- Loss must cause a financial or economic hardship to the
insured or to the insureds family.
INDIRECT LOSS - CORRECT ANSWER.(or consequential) loss occurs as the result
of a direct loss. For example your home burns down and you have to stay in a
temporary place until it is fixed.
LAW OF LARGE NUMBERS - CORRECT ANSWER.To accurately predict what will
happen to a large group of similiar risks. The larger the group becomes, the more
accurate the predictions become.
PERIL - CORRECT ANSWER.a PERIL is the cause of a LOSS
some examples
Fire
Accidents
Explosions
Flood
Disease
Death
