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