Texas Insurance License Exam Prep P&C
Questions and Answers
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 to cancel
Stipulates on multiple contracts (primary & secondary)
- Insurance Exclusions - -Things not covered. Ex. Intentional Acts
- Coverage - -Defines what is covered and what is insured against within an
insurance contract
- Premium - -Monetary amount charged by insurer in exchange for coverage
- Casualty Insurance - -A broad term for insurance that covers PROPERTY
and LIABILITY losses.
Questions and Answers
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 to cancel
Stipulates on multiple contracts (primary & secondary)
- Insurance Exclusions - -Things not covered. Ex. Intentional Acts
- Coverage - -Defines what is covered and what is insured against within an
insurance contract
- Premium - -Monetary amount charged by insurer in exchange for coverage
- Casualty Insurance - -A broad term for insurance that covers PROPERTY
and LIABILITY losses.
