USAA LICENSING EXAM QUESTIONS & ANSWERS
Law of Large numbers - Answer -Mathematical principle used by insurers to predict
losses to charge the appropriate premiums
Insurable Interest - Answer -Proof that someone stands to lose financially if a loss
occurs; must exist at the time of the loss in property and casualty insurance
Risk - Answer -Chance of loss; uncertainty of loss
Speculative Risk - Answer -Involves the simultaneous chance of gain or loss: is not
insurable
Pure Risk - Answer -a risk that presents the chance of loss but no opportunity for gain
(insurable)
What are two examples of speculative risk? - Answer -Gambling
Investing
Consideration - Answer -An exchange of value between parties to a contract
What is Estopple? - Answer -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?
Material Misrepresentation - Answer -Insured or prospect giving incorrect material
information to the insurer, this voids coverage
Warranty - Answer -A written condition in the policy that must be true at the time of the
loss
Unfair Claim Settlement - Answer -An adjuster intentionally lowballs the claim
settlement by offering less than the amount owed to the insured
Unfair Claim Settlement Practices Act - Answer -An Agent collects a premium for a
policy, but does not send it to the company and allows a policy to be canceled
Unfair Claims Settlement Practices Act - Answer -The insurance company fails to adopt
reasonable standards for processing claims
Unfair Claim Settlement - Answer -If an adjuster were to deny a claim without
conducting a reasonable investigation. This would be an example of what type of claim
settlement violation?
, Supplemental Coverages - Answer -The insurance company defends the insured for a
suit arising out of a covered claim
An unfair claims settlement practice. - Answer -If an adjuster were to deny a claim
without providing the policyholder with a reasonable explanation for the denial, this
would be an example of what type of claims settlement practice?
An unfair claims settlement practice - Answer -If the adjuster tells the insured that he
has no coverage under a policy when the coverage really exists, this would be an
example of what type of claims settlement practice?
What hazards does Standard Fire Protection cover? - Answer -(FLI)Fire, Lightning,
Internal Explosions
What hazards does Name Peril "Basic" Cover? - Answer -(FLI)+
W-Wind
C- Civil Commotion
S- Smoke
H- Hail
A- Aircraft
V- Vehicle not owned by the insured
V- Volcano activity
E- Explosion
R- Riot
M- Malicious Mischief
What hazards are covered under "Named Peril Broad" coverage? - Answer -
(FLI+WCSHAVVERM) &
B- Burglary Damage
I- Ice/Sleet/Snow
G- Glass Coverage
A- Accidental Discharge/Overflow
F- Falling Objects
F- Freezing Pluming
E- Electric Current
C- Collapse Coverage
T- Tearing Appart
What hazards or perils are listed in the "Special Exclusions" policy? - Answer -Building
Ordinances
Mechanical Breakdown
War & Nuclear
Power Surge - Offcite
International Acts
Earthquake
Flood
Law of Large numbers - Answer -Mathematical principle used by insurers to predict
losses to charge the appropriate premiums
Insurable Interest - Answer -Proof that someone stands to lose financially if a loss
occurs; must exist at the time of the loss in property and casualty insurance
Risk - Answer -Chance of loss; uncertainty of loss
Speculative Risk - Answer -Involves the simultaneous chance of gain or loss: is not
insurable
Pure Risk - Answer -a risk that presents the chance of loss but no opportunity for gain
(insurable)
What are two examples of speculative risk? - Answer -Gambling
Investing
Consideration - Answer -An exchange of value between parties to a contract
What is Estopple? - Answer -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?
Material Misrepresentation - Answer -Insured or prospect giving incorrect material
information to the insurer, this voids coverage
Warranty - Answer -A written condition in the policy that must be true at the time of the
loss
Unfair Claim Settlement - Answer -An adjuster intentionally lowballs the claim
settlement by offering less than the amount owed to the insured
Unfair Claim Settlement Practices Act - Answer -An Agent collects a premium for a
policy, but does not send it to the company and allows a policy to be canceled
Unfair Claims Settlement Practices Act - Answer -The insurance company fails to adopt
reasonable standards for processing claims
Unfair Claim Settlement - Answer -If an adjuster were to deny a claim without
conducting a reasonable investigation. This would be an example of what type of claim
settlement violation?
, Supplemental Coverages - Answer -The insurance company defends the insured for a
suit arising out of a covered claim
An unfair claims settlement practice. - Answer -If an adjuster were to deny a claim
without providing the policyholder with a reasonable explanation for the denial, this
would be an example of what type of claims settlement practice?
An unfair claims settlement practice - Answer -If the adjuster tells the insured that he
has no coverage under a policy when the coverage really exists, this would be an
example of what type of claims settlement practice?
What hazards does Standard Fire Protection cover? - Answer -(FLI)Fire, Lightning,
Internal Explosions
What hazards does Name Peril "Basic" Cover? - Answer -(FLI)+
W-Wind
C- Civil Commotion
S- Smoke
H- Hail
A- Aircraft
V- Vehicle not owned by the insured
V- Volcano activity
E- Explosion
R- Riot
M- Malicious Mischief
What hazards are covered under "Named Peril Broad" coverage? - Answer -
(FLI+WCSHAVVERM) &
B- Burglary Damage
I- Ice/Sleet/Snow
G- Glass Coverage
A- Accidental Discharge/Overflow
F- Falling Objects
F- Freezing Pluming
E- Electric Current
C- Collapse Coverage
T- Tearing Appart
What hazards or perils are listed in the "Special Exclusions" policy? - Answer -Building
Ordinances
Mechanical Breakdown
War & Nuclear
Power Surge - Offcite
International Acts
Earthquake
Flood
