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