TEXAS Personal Lines Insurance ACTUAL
UPDATED Exam Questions and CORRECT
Answers
Insurance - CORRECT ANSWER - Risk transfer mechanism
Risk - CORRECT ANSWER - Uncertainty of loss
Speculative Risk - CORRECT ANSWER - Uninsurable risk like gambling
Pure Risk - CORRECT ANSWER - Insurable risk, accidental
Peril - CORRECT ANSWER - Cause of loss
Direct Loss - CORRECT ANSWER - Physical damage occurrence
Indirect Loss - CORRECT ANSWER - Consequential loss due to direct loss
Hazard - CORRECT ANSWER - Increases chance of loss
Physical Hazard - CORRECT ANSWER - Visible risk factor
Moral Hazard - CORRECT ANSWER - Dishonesty increasing risk
Morale Hazard - CORRECT ANSWER - Carelessness affecting risk
,Methods of Handling Risk - CORRECT ANSWER - Sharing, transfer, avoidance,
retention, reduction
Parties to the Contract - CORRECT ANSWER - Insured and insurer in agreement
Law of Large Numbers - CORRECT ANSWER - Predicting loss accurately with larger
groups
Elements of an Insurable Risk - CORRECT ANSWER - Non-catastrophic, homogenous,
accidental
Adverse Selection - CORRECT ANSWER - High-risk individuals insurers avoid
Reinsurance - CORRECT ANSWER - Insurer's risk-sharing mechanism
Stock Insurer - CORRECT ANSWER - For-profit insurance company
Mutual Insurer - CORRECT ANSWER - Owned by policyholders
Reciprocal Insurer - CORRECT ANSWER - Unincorporated group of members
Lloyd's Association - CORRECT ANSWER - Individual underwriters providing insurance
Self-Insurer - CORRECT ANSWER - Business paying own claims
Private vs Government Market - CORRECT ANSWER - Difference in insurance
providers
, Domestic Insurer - CORRECT ANSWER - Incorporated in the US state
Foreign Insurer - CORRECT ANSWER - Incorporated in another US state/territory
Alien Insurer - CORRECT ANSWER - Incorporated in another country
Authorized vs Unauthorized - CORRECT ANSWER - State license status for insurers
Surplus Lines Insurers - CORRECT ANSWER - Insurance for high-risk from unlicensed
insurers
Financial Ratings of Insurers - CORRECT ANSWER - Determining insurer's financial
stability
Test Taking Tips - CORRECT ANSWER - Strategies for insurance exams
Agency Systems - CORRECT ANSWER - Types of insurance agents and their roles
Law of Agency - CORRECT ANSWER - Agent acts on behalf of insurance company
Agent/Producer Authority - CORRECT ANSWER - Different types of agent authority
Responsibility to Applicants/Insured - CORRECT ANSWER - Fiduciary duties of
insurance agents
Elements of Legal Contract - CORRECT ANSWER - Key components of a valid
insurance contract
UPDATED Exam Questions and CORRECT
Answers
Insurance - CORRECT ANSWER - Risk transfer mechanism
Risk - CORRECT ANSWER - Uncertainty of loss
Speculative Risk - CORRECT ANSWER - Uninsurable risk like gambling
Pure Risk - CORRECT ANSWER - Insurable risk, accidental
Peril - CORRECT ANSWER - Cause of loss
Direct Loss - CORRECT ANSWER - Physical damage occurrence
Indirect Loss - CORRECT ANSWER - Consequential loss due to direct loss
Hazard - CORRECT ANSWER - Increases chance of loss
Physical Hazard - CORRECT ANSWER - Visible risk factor
Moral Hazard - CORRECT ANSWER - Dishonesty increasing risk
Morale Hazard - CORRECT ANSWER - Carelessness affecting risk
,Methods of Handling Risk - CORRECT ANSWER - Sharing, transfer, avoidance,
retention, reduction
Parties to the Contract - CORRECT ANSWER - Insured and insurer in agreement
Law of Large Numbers - CORRECT ANSWER - Predicting loss accurately with larger
groups
Elements of an Insurable Risk - CORRECT ANSWER - Non-catastrophic, homogenous,
accidental
Adverse Selection - CORRECT ANSWER - High-risk individuals insurers avoid
Reinsurance - CORRECT ANSWER - Insurer's risk-sharing mechanism
Stock Insurer - CORRECT ANSWER - For-profit insurance company
Mutual Insurer - CORRECT ANSWER - Owned by policyholders
Reciprocal Insurer - CORRECT ANSWER - Unincorporated group of members
Lloyd's Association - CORRECT ANSWER - Individual underwriters providing insurance
Self-Insurer - CORRECT ANSWER - Business paying own claims
Private vs Government Market - CORRECT ANSWER - Difference in insurance
providers
, Domestic Insurer - CORRECT ANSWER - Incorporated in the US state
Foreign Insurer - CORRECT ANSWER - Incorporated in another US state/territory
Alien Insurer - CORRECT ANSWER - Incorporated in another country
Authorized vs Unauthorized - CORRECT ANSWER - State license status for insurers
Surplus Lines Insurers - CORRECT ANSWER - Insurance for high-risk from unlicensed
insurers
Financial Ratings of Insurers - CORRECT ANSWER - Determining insurer's financial
stability
Test Taking Tips - CORRECT ANSWER - Strategies for insurance exams
Agency Systems - CORRECT ANSWER - Types of insurance agents and their roles
Law of Agency - CORRECT ANSWER - Agent acts on behalf of insurance company
Agent/Producer Authority - CORRECT ANSWER - Different types of agent authority
Responsibility to Applicants/Insured - CORRECT ANSWER - Fiduciary duties of
insurance agents
Elements of Legal Contract - CORRECT ANSWER - Key components of a valid
insurance contract
