Texas Insurance License Exam Prep P&C Questions and Answers Already Passed

Texas Insurance License Exam Prep P&C Questions and Answers Already Passed What are 3 subjects an auto policy covers? 1. Body 2. The vehicle 3. Assets Bodily Injury Types Personal Injury Med 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 Laws 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 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 Absolute or Strict Liability Stems from hazardous or dangerous activities that makes 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 Contract 1. Personal 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 Insurance A contract by which an Insurance company agrees to 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 Hazards Event increases likelyhood of loss. Ex. Texting while driving, weather. Insurance Agreement Agreement by insurance to provide coverage in exchange for a premium Conditions in an Insurance Contract Assigns: Duties after a loss Defines Policy Terms Outlines how