USAA LICENSING EXAM: THE MOST COMPRENSIVE A+
QUESTIONS AND ANSWERS BOOOKLET TO ACE THE
EXAM!
Insurance
Transfer of risk from one person or organization to an insurance company
Indemnity
The principle to restore the insured to the pre-loss economic or financial condition.
Law of Large numbers
Mathematical principle used by insurers to predict losses to charge the appropriate
premiums
Insurable Interest
Proof that someone stands to lose financially if a loss occurs; must exist at the time of
the loss in property and casualty insurance
Binder
Temporary insurance contract; commits the company to act as if a policy has been
issued
Peril
Cause of loss
Direct Loss
Immediate actual physical damage to tangible property
Indirect loss
Inability to use property as a result of a direct loss
Risk
Chance of loss; uncertainty of loss
What are the two types of risk?
Speculative and Pure
Speculative Risk
Involves the simultaneous chance of gain or loss: is not insurable
Pure Risk
, a risk that presents the chance of loss but no opportunity for gain (insurable)
What are two examples of speculative risk?
Gambling
Investing
What is an example of your risk?
Car accident
Physical hazards include
Visible condition that increases the chance of loss
Morale Hazard
Attitude of carelessness or indifference to loss
Insurer
The insurance company (a.k.a. second party to the contract)
Named Insured
A party named on the declarations who is purchasing the insurance policy (a.k.a. first
party to the contract)
Insured
Who the insurer promises to protect in addition to the named insured
Limit of Liability
The maximum amount that can be paid for a covered loss
Consideration
An exchange of value between parties to a contract
Waiver
The voluntary relinquishment of a known right
What is Estopple?
When an agent tells an insured/makes the statement there is coverage for a loss when
there is no such coverage, then the insurer is prevented from denying the claim as a
result of what precedent?
Concealment
Insured or prospect deliberately withholding material information from the insurer, this
voids coverage
Material Misrepresentation
QUESTIONS AND ANSWERS BOOOKLET TO ACE THE
EXAM!
Insurance
Transfer of risk from one person or organization to an insurance company
Indemnity
The principle to restore the insured to the pre-loss economic or financial condition.
Law of Large numbers
Mathematical principle used by insurers to predict losses to charge the appropriate
premiums
Insurable Interest
Proof that someone stands to lose financially if a loss occurs; must exist at the time of
the loss in property and casualty insurance
Binder
Temporary insurance contract; commits the company to act as if a policy has been
issued
Peril
Cause of loss
Direct Loss
Immediate actual physical damage to tangible property
Indirect loss
Inability to use property as a result of a direct loss
Risk
Chance of loss; uncertainty of loss
What are the two types of risk?
Speculative and Pure
Speculative Risk
Involves the simultaneous chance of gain or loss: is not insurable
Pure Risk
, a risk that presents the chance of loss but no opportunity for gain (insurable)
What are two examples of speculative risk?
Gambling
Investing
What is an example of your risk?
Car accident
Physical hazards include
Visible condition that increases the chance of loss
Morale Hazard
Attitude of carelessness or indifference to loss
Insurer
The insurance company (a.k.a. second party to the contract)
Named Insured
A party named on the declarations who is purchasing the insurance policy (a.k.a. first
party to the contract)
Insured
Who the insurer promises to protect in addition to the named insured
Limit of Liability
The maximum amount that can be paid for a covered loss
Consideration
An exchange of value between parties to a contract
Waiver
The voluntary relinquishment of a known right
What is Estopple?
When an agent tells an insured/makes the statement there is coverage for a loss when
there is no such coverage, then the insurer is prevented from denying the claim as a
result of what precedent?
Concealment
Insured or prospect deliberately withholding material information from the insurer, this
voids coverage
Material Misrepresentation
