TEXAS ADJUSTER 2026 TEST PAPER QUESTIONS AND
ANSWERS MARKED A+
✔✔adjustment - ✔✔the process of arriving at an amount of settlement for a claim. it
may consist of a series of computations to arrive at the amount of a loss, as in a
complicated fire loss. it may involve discussions of liability, quantum, and other such
matters as might be the case in a problem liability claim. it may contain both
✔✔administrator - ✔✔a person legally vested with the right of administration of an
estate
✔✔admiralty courts - ✔✔courts of law that deal with matters pertaining to the sea
✔✔admitted company - ✔✔an insurance company that is licensed (admittedly) to
conduct business within a given state
✔✔advance premium - ✔✔also called deposit premium, an advanced premium is a
down payment on what will be the final premium, in policies where the final premium is
subject to audit
✔✔adverse selection - ✔✔the tendency of poorer than average risks to buy and
maintain insurance. adverse selection occurs when insureds select only those
coverages that are most likely to have losses
is selection against the insurance company
✔✔advertising injury - ✔✔claim arising out of slander, libel, copyright infringement, or
misappropriation of advertising ideas. coverage is provided as part of coverage B of the
commercial general liability policy
✔✔agency contract - ✔✔the legal agreement between an insurance agency and the
insurer detailing the terms of representation
✔✔agent - ✔✔one who solicits, negotiates or effect contracts of insurance on behalf of
insurer. his right to exercise various functions, his authority, and his obligations and the
obligations of the insurer to the agent are subject to the terms of the agency contract
with the insurer, to statutory law, and to common law
✔✔agent's appointment - ✔✔the act by an insurer that grans an agent the authority to
act as an agent for the insurer. in most states, agents must be licensed and appointed
prior to being allowed to sell insurance
✔✔agent's authority - ✔✔the authority of an insurance agent to act on behalf of the
insurer he or she represents. there are several types including express authority
(authority to act on specific instructions only), implied authority (actions taken in
, accordance with prevailing custom), or apparent authority (actions based on
appearances created by the agent and acquiesced to by the principal)
✔✔agent errors and omissions insurance - ✔✔insurance obtained by the insurance
agent to guard against loss caused by an unintentional failure to properly insure (or
recommend insurance to) a client
✔✔agent license - ✔✔a certificate of authority from the state that permits the agent to
conduct business
✔✔aggregate limit - ✔✔the maximum amount an insurer will pay under a policy in any
one policy period
✔✔agreed amount clause - ✔✔an agreement between underwriter and insured
whereby, in exchange for the purchase of coverage in an amount specified by the
underwriter, the insured is protected from a coinsurance penalty. used when older
machinery is insured
✔✔agreed value clause - ✔✔though rare, some policies cover for a value agreed upon
at the time of writing; if the property is lost because of an insured peril, the amount
stated in the policy will be paid. fine arts insured under a personal article floater or
homeowner scheduled personal property endorsement are examples
✔✔agreement of guiding principles - ✔✔a guide for apportioning losses when
nonconcurring policy provisions apply to a single claim
✔✔aircraft coverages - ✔✔though aircraft have long been an important element in the
lives of most americans, insurance of aircraft exposures has remained outside the
mainstream of property and liability insurance markets. aircraft hull and liability
insurance is the counterpart of personal or commercial auto policies coverage. aircraft
products insurance is the counterpart of products liability cover. air cargo insurance is
mirrored in motor truck cargo. hangar keepers liability is akin to garage keepers
coverage. as with any specialty line of insurance, the absence of standardized forms
limits practice to specialist in the line
✔✔aleatory contract - ✔✔a contract in which the number of dollars to be given up by
each party is not equal. insurance contracts are of this type, as the policyholder pays a
premium and may collect nothing from the insurer or may collect a great deal more than
the amount of the premium if a loss occurs. no to be confused with contract of adhesion
✔✔allied lines - ✔✔lines of insurance that cover for perils other than fire, that are
usually sold with fire insurance, for example fire and allied lines
✔✔alien insurance company - ✔✔an insurance company formed under the laws of a
country other than the one it's doing business in
ANSWERS MARKED A+
✔✔adjustment - ✔✔the process of arriving at an amount of settlement for a claim. it
may consist of a series of computations to arrive at the amount of a loss, as in a
complicated fire loss. it may involve discussions of liability, quantum, and other such
matters as might be the case in a problem liability claim. it may contain both
✔✔administrator - ✔✔a person legally vested with the right of administration of an
estate
✔✔admiralty courts - ✔✔courts of law that deal with matters pertaining to the sea
✔✔admitted company - ✔✔an insurance company that is licensed (admittedly) to
conduct business within a given state
✔✔advance premium - ✔✔also called deposit premium, an advanced premium is a
down payment on what will be the final premium, in policies where the final premium is
subject to audit
✔✔adverse selection - ✔✔the tendency of poorer than average risks to buy and
maintain insurance. adverse selection occurs when insureds select only those
coverages that are most likely to have losses
is selection against the insurance company
✔✔advertising injury - ✔✔claim arising out of slander, libel, copyright infringement, or
misappropriation of advertising ideas. coverage is provided as part of coverage B of the
commercial general liability policy
✔✔agency contract - ✔✔the legal agreement between an insurance agency and the
insurer detailing the terms of representation
✔✔agent - ✔✔one who solicits, negotiates or effect contracts of insurance on behalf of
insurer. his right to exercise various functions, his authority, and his obligations and the
obligations of the insurer to the agent are subject to the terms of the agency contract
with the insurer, to statutory law, and to common law
✔✔agent's appointment - ✔✔the act by an insurer that grans an agent the authority to
act as an agent for the insurer. in most states, agents must be licensed and appointed
prior to being allowed to sell insurance
✔✔agent's authority - ✔✔the authority of an insurance agent to act on behalf of the
insurer he or she represents. there are several types including express authority
(authority to act on specific instructions only), implied authority (actions taken in
, accordance with prevailing custom), or apparent authority (actions based on
appearances created by the agent and acquiesced to by the principal)
✔✔agent errors and omissions insurance - ✔✔insurance obtained by the insurance
agent to guard against loss caused by an unintentional failure to properly insure (or
recommend insurance to) a client
✔✔agent license - ✔✔a certificate of authority from the state that permits the agent to
conduct business
✔✔aggregate limit - ✔✔the maximum amount an insurer will pay under a policy in any
one policy period
✔✔agreed amount clause - ✔✔an agreement between underwriter and insured
whereby, in exchange for the purchase of coverage in an amount specified by the
underwriter, the insured is protected from a coinsurance penalty. used when older
machinery is insured
✔✔agreed value clause - ✔✔though rare, some policies cover for a value agreed upon
at the time of writing; if the property is lost because of an insured peril, the amount
stated in the policy will be paid. fine arts insured under a personal article floater or
homeowner scheduled personal property endorsement are examples
✔✔agreement of guiding principles - ✔✔a guide for apportioning losses when
nonconcurring policy provisions apply to a single claim
✔✔aircraft coverages - ✔✔though aircraft have long been an important element in the
lives of most americans, insurance of aircraft exposures has remained outside the
mainstream of property and liability insurance markets. aircraft hull and liability
insurance is the counterpart of personal or commercial auto policies coverage. aircraft
products insurance is the counterpart of products liability cover. air cargo insurance is
mirrored in motor truck cargo. hangar keepers liability is akin to garage keepers
coverage. as with any specialty line of insurance, the absence of standardized forms
limits practice to specialist in the line
✔✔aleatory contract - ✔✔a contract in which the number of dollars to be given up by
each party is not equal. insurance contracts are of this type, as the policyholder pays a
premium and may collect nothing from the insurer or may collect a great deal more than
the amount of the premium if a loss occurs. no to be confused with contract of adhesion
✔✔allied lines - ✔✔lines of insurance that cover for perils other than fire, that are
usually sold with fire insurance, for example fire and allied lines
✔✔alien insurance company - ✔✔an insurance company formed under the laws of a
country other than the one it's doing business in
