Texas Property Casualty Insurance
questions with appropriate answers
A condition or situation that presents a possibility of loss is a (an): - answersexposure
The purpose of insurance is to: - answerstransfer risk
Which hazard can be described as a careless attitude or general indifference on the
part of the insured toward the occurrence of loss? - answersmorale
Which risk is insurable? - answerspure
With regard to insurance, risk can be defined as: - answersuncertainty regarding loss
Treating risk by purchasing insurance is an example of what type of risk management? -
answerstransfer
Robert and Carolyn live in a busy city and decide that not owning a car is the solution to
not experience having a car stolen. What method describes this philosophy? -
answersavoidance
Dishonesty on the part of an insured is an example of what? - answersa moral hazard
What is an example of reduction as a method of handling risk? - answersInstalling a
burglar alarm
Driving too fast and not wearing a seat belt are examples of? - answersmorale hazard
The risk that involves the chance of both loss and gain is? - answersspeculative risk
Self-insurance is an example of what kind of risk treatment? - answersRetention
If John's father transfers ownership of a house to John, can John buy insurance? -
answersYes because he has an insurable interest.
Fire would be an example of a what? - answersperil
What is the actual cause of a loss? - answersperil
What kind of risk is the stock market? - answersspeculative risk
A ____ is a condition that increases the chance of loss. - answershazard
,Faulty wiring causes a fire that destroys a building. The faulty wiring is considered to be
a(n): - answershazard
A chance, possibility, or uncertainty of loss is known as? - answersrisk
Examples of perils are_____? - answersfire, wind and lightning
Indemnity insurance will _____? - answersrestores insured to pre-loss condition
The types of hazards are_____? - answersmoral, morale, and physical
________ is when people with a greater than average exposure to loss to purchase
insurance. - answersAdverse selection
Methods of handling risk are avoidance, reduction, retention, transfer and _____. -
answersSharing (ARRTS)
Elements of insurable risk are calculable, affordable, non-catastrophic, homogenous,
accidental and _____. - answersMeasurable (CANHAM)
Myron, who is 16, signs a contract to lease a car. This would probably not be
considered a valid contract under the law because _____. - answersHe is not
competent at 16.
Ben bought an automobile four years ago for $15,000. Today it is worth $6,000.
According to the principle of indemnity, how much should Ben receive if the car is totally
demolished? - answers$6,000
Harry Arne and his cousin each own 50% of a $160,000 duplex. Suppose Harry
purchases $160,000 of insurance on the home. If it burns to the ground, how much
would Harry collect? - answers$80,000
Under a unilateral contract, which parties are legally bound to perform under the
contract? - answersInsurer only
Which part of an insurance policy describes the responsibilities and obligations of both
the insurance company and the insured under the policy? - answersConditions
The insuring agreement section of a policy describes the ____ you are insured against.
- answersperils
The elements of a valid contract are legal purpose, consideration, competent parties,
and _____. - answersOffer and acceptance
, Both parties rely on statements made to each other when writing a contract. This is
known as? - answersUtmost good faith
The limits of liability are found in which of the following sections of a casualty policy? -
answersDeclarations
An insurance company issued a homeowners policy that included ambiguous language
regarding how a loss was settled. The insured sued the insurance company and won.
The judge stated that due to the ambiguous language in the contract the decision must
be made in favor of the insured. The judge was basing this decision on which of the
following types of insurance contract? - answersContract of adhesion
A policy may be amended only with a(n): - answersendorsement
The procedure for resolving a disagreement between an insured and an insurance
company about a loss is described in which of the following parts of an insurance
policy? - answersConditions
Who does a personal contract protect? - answersThe individual who owns the property.
Which one of the following terms indicates that an insurance contract contains the
enforceable promises of only one party? - answersUnilateral
The principle that restores someone to the condition he enjoyed before a loss is_____?
- answersindemnity
Bryce owns a $50,000 lake cabin that he has insured for $40,000. He sustains a $5,000
covered loss. According to the principle of indemnity, how much will his insurer pay? -
answers$5000
The _____ page in an insurance contract contains information about the risk, the
effective date of coverage, deductible, premium amounts, coinsurance percentage, and
location of the insured property. - answersDeclarations
The attempt to restore an insured to his pre-loss condition is known as _____. -
answersindemnification
The insured is looking for the amount of coverage in a property and casualty policy. This
information would be found in the ______. - answersdeclarations
Jennifer and David signed a homeowners insurance application for coverage on their
home. They did not divulge that last year their garage burned down after their 16-year-
old son left a cigarette burning. The agent sent in the application and a policy was
issued. When another fire occurred 2 months after the policy was issued, the company
voided the policy because the agent would not have sent in the application if he had
questions with appropriate answers
A condition or situation that presents a possibility of loss is a (an): - answersexposure
The purpose of insurance is to: - answerstransfer risk
Which hazard can be described as a careless attitude or general indifference on the
part of the insured toward the occurrence of loss? - answersmorale
Which risk is insurable? - answerspure
With regard to insurance, risk can be defined as: - answersuncertainty regarding loss
Treating risk by purchasing insurance is an example of what type of risk management? -
answerstransfer
Robert and Carolyn live in a busy city and decide that not owning a car is the solution to
not experience having a car stolen. What method describes this philosophy? -
answersavoidance
Dishonesty on the part of an insured is an example of what? - answersa moral hazard
What is an example of reduction as a method of handling risk? - answersInstalling a
burglar alarm
Driving too fast and not wearing a seat belt are examples of? - answersmorale hazard
The risk that involves the chance of both loss and gain is? - answersspeculative risk
Self-insurance is an example of what kind of risk treatment? - answersRetention
If John's father transfers ownership of a house to John, can John buy insurance? -
answersYes because he has an insurable interest.
Fire would be an example of a what? - answersperil
What is the actual cause of a loss? - answersperil
What kind of risk is the stock market? - answersspeculative risk
A ____ is a condition that increases the chance of loss. - answershazard
,Faulty wiring causes a fire that destroys a building. The faulty wiring is considered to be
a(n): - answershazard
A chance, possibility, or uncertainty of loss is known as? - answersrisk
Examples of perils are_____? - answersfire, wind and lightning
Indemnity insurance will _____? - answersrestores insured to pre-loss condition
The types of hazards are_____? - answersmoral, morale, and physical
________ is when people with a greater than average exposure to loss to purchase
insurance. - answersAdverse selection
Methods of handling risk are avoidance, reduction, retention, transfer and _____. -
answersSharing (ARRTS)
Elements of insurable risk are calculable, affordable, non-catastrophic, homogenous,
accidental and _____. - answersMeasurable (CANHAM)
Myron, who is 16, signs a contract to lease a car. This would probably not be
considered a valid contract under the law because _____. - answersHe is not
competent at 16.
Ben bought an automobile four years ago for $15,000. Today it is worth $6,000.
According to the principle of indemnity, how much should Ben receive if the car is totally
demolished? - answers$6,000
Harry Arne and his cousin each own 50% of a $160,000 duplex. Suppose Harry
purchases $160,000 of insurance on the home. If it burns to the ground, how much
would Harry collect? - answers$80,000
Under a unilateral contract, which parties are legally bound to perform under the
contract? - answersInsurer only
Which part of an insurance policy describes the responsibilities and obligations of both
the insurance company and the insured under the policy? - answersConditions
The insuring agreement section of a policy describes the ____ you are insured against.
- answersperils
The elements of a valid contract are legal purpose, consideration, competent parties,
and _____. - answersOffer and acceptance
, Both parties rely on statements made to each other when writing a contract. This is
known as? - answersUtmost good faith
The limits of liability are found in which of the following sections of a casualty policy? -
answersDeclarations
An insurance company issued a homeowners policy that included ambiguous language
regarding how a loss was settled. The insured sued the insurance company and won.
The judge stated that due to the ambiguous language in the contract the decision must
be made in favor of the insured. The judge was basing this decision on which of the
following types of insurance contract? - answersContract of adhesion
A policy may be amended only with a(n): - answersendorsement
The procedure for resolving a disagreement between an insured and an insurance
company about a loss is described in which of the following parts of an insurance
policy? - answersConditions
Who does a personal contract protect? - answersThe individual who owns the property.
Which one of the following terms indicates that an insurance contract contains the
enforceable promises of only one party? - answersUnilateral
The principle that restores someone to the condition he enjoyed before a loss is_____?
- answersindemnity
Bryce owns a $50,000 lake cabin that he has insured for $40,000. He sustains a $5,000
covered loss. According to the principle of indemnity, how much will his insurer pay? -
answers$5000
The _____ page in an insurance contract contains information about the risk, the
effective date of coverage, deductible, premium amounts, coinsurance percentage, and
location of the insured property. - answersDeclarations
The attempt to restore an insured to his pre-loss condition is known as _____. -
answersindemnification
The insured is looking for the amount of coverage in a property and casualty policy. This
information would be found in the ______. - answersdeclarations
Jennifer and David signed a homeowners insurance application for coverage on their
home. They did not divulge that last year their garage burned down after their 16-year-
old son left a cigarette burning. The agent sent in the application and a policy was
issued. When another fire occurred 2 months after the policy was issued, the company
voided the policy because the agent would not have sent in the application if he had
