Texas Insurance License Exam Prep P&C / Study
Guide Q-Bank / Expert Verified Actual Questions &
Answers for Guaranteed Pass / Newest Update,
2025-2026.
Terms in this set (222)
What are 3 subjects an auto 1. Body
policy covers? 2. The vehicle
3. Assets
Personal Injury
Bodily Injury TypesMed Pay
Uninsured Motorist
No Fault Insurance 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 State Laws regulating that people are to carry a minimum
Laws coverage amount set by the state to protect themselves,
others, and property.
P.A.P Personal Automotive Policy
Negligence The failure to act as a prudent person would under similar
circumstances
Legal Liability Involves proven negligence or fault
Vicarious Liability Being responsible for the negligent acts of someone else. Ex.
Your children
, Stems from hazardous or dangerous activities that makes
Absolute or Strict Liability the owner liable WITHOUT the requirement of proof of
negligence.
Liability Being responsible for the damages or injury you or someone else
you're responsible for has done.
The 7 Characteristics of a 1. Personal Contract
Contract 2. Conditional Contract
3. Adhesion
4. Indemnity
5. Aleatory
6. Unilateral
7. Utmost Good Faith
Personal Contract Is stipulation of a contract that says the contract is for the
name person and cannot be transferred to another.
Conditional Contract Stipulates set by a contract. "You can do this, but...."
Adhesion 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.
Indemnity The contract agrees to indemnify, or make whole again the
customer. Makes them no better, nor worse, just whole.
Aleatory 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 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 Parties believe that both will deal with eachother honestly and
fairly, without misleading or withholding
A contract by which an Insurance company agrees to
Insurance compensate an insured for a covered loss in return for a
premium payment.
Underwriting Process of evaluating policyholders to determine eligibility for
coverage and pricing
Law of Large #'s Principle that the larger the examples of data, the more
accurate the information
Speculative Risk Risk of Gain OR Loss Ex. Gambling or Investment
Insurance
Pure Risk No chance of gain or benefit. The only kind that insurance deals
with.
Exposure An opportunity for risk or loss
Risk Possibility of financial loss
Peril The direct cause of a loss
Representation Statements on an insurance contract that the insured
BELIEVES to be true
4 Means of Managing Risk 1.Reduction
2.Retain
3.Avoid
4.Transfer
Reduction reduce the risk shared by the insured and insurer Ex.
Good maintenance
Retain 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 Avoiding risk all together. Ex. Not driving at all
Transfer Transferring risk. Ex. Getting insurance in the first place
transfers risk from the insured to the insurer
, Insurable Interest To have insurable interest in something it's loss or damage
would have to cause you to suffer financial or economic loss.
Must have ownership
Event increases likelyhood of loss. Ex. Texting while driving,
Hazards
weather.
Guide Q-Bank / Expert Verified Actual Questions &
Answers for Guaranteed Pass / Newest Update,
2025-2026.
Terms in this set (222)
What are 3 subjects an auto 1. Body
policy covers? 2. The vehicle
3. Assets
Personal Injury
Bodily Injury TypesMed Pay
Uninsured Motorist
No Fault Insurance 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 State Laws regulating that people are to carry a minimum
Laws coverage amount set by the state to protect themselves,
others, and property.
P.A.P Personal Automotive Policy
Negligence The failure to act as a prudent person would under similar
circumstances
Legal Liability Involves proven negligence or fault
Vicarious Liability Being responsible for the negligent acts of someone else. Ex.
Your children
, Stems from hazardous or dangerous activities that makes
Absolute or Strict Liability the owner liable WITHOUT the requirement of proof of
negligence.
Liability Being responsible for the damages or injury you or someone else
you're responsible for has done.
The 7 Characteristics of a 1. Personal Contract
Contract 2. Conditional Contract
3. Adhesion
4. Indemnity
5. Aleatory
6. Unilateral
7. Utmost Good Faith
Personal Contract Is stipulation of a contract that says the contract is for the
name person and cannot be transferred to another.
Conditional Contract Stipulates set by a contract. "You can do this, but...."
Adhesion 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.
Indemnity The contract agrees to indemnify, or make whole again the
customer. Makes them no better, nor worse, just whole.
Aleatory 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 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 Parties believe that both will deal with eachother honestly and
fairly, without misleading or withholding
A contract by which an Insurance company agrees to
Insurance compensate an insured for a covered loss in return for a
premium payment.
Underwriting Process of evaluating policyholders to determine eligibility for
coverage and pricing
Law of Large #'s Principle that the larger the examples of data, the more
accurate the information
Speculative Risk Risk of Gain OR Loss Ex. Gambling or Investment
Insurance
Pure Risk No chance of gain or benefit. The only kind that insurance deals
with.
Exposure An opportunity for risk or loss
Risk Possibility of financial loss
Peril The direct cause of a loss
Representation Statements on an insurance contract that the insured
BELIEVES to be true
4 Means of Managing Risk 1.Reduction
2.Retain
3.Avoid
4.Transfer
Reduction reduce the risk shared by the insured and insurer Ex.
Good maintenance
Retain 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 Avoiding risk all together. Ex. Not driving at all
Transfer Transferring risk. Ex. Getting insurance in the first place
transfers risk from the insured to the insurer
, Insurable Interest To have insurable interest in something it's loss or damage
would have to cause you to suffer financial or economic loss.
Must have ownership
Event increases likelyhood of loss. Ex. Texting while driving,
Hazards
weather.
