Insurance Exam

Front 1

Causes of a loss

Back 1

Peril

Front 2

Sometimes referred to as reimbursement, It's purpose is to reimburse but not make an insured a profit from loss

Back 2

Indemnity

Front 3

Insurer's legal right to seek damages from 3rd parties after loss was already paid

Back 3

Subrogation

Front 4

Failure to use the care that a reasonable person would have taken under same circumstance

Back 4

Negligence

Front 5

Crime of forced entry with visible signs of forced entry/exit from premises

Back 5

Burglary

Front 6

Taking of property from the care/custody of a person by threat of bodily harm

Back 6

Robbery

Front 7

List of perils covered which excludes unlisted

Back 7

Named Perils

Front 8

Any risk that is not specifically excluded is covered (also referred to as all risk)

Back 8

Open Perils

Front 9

Disappearance of property without knowledge as to the location, time or how it was lost.

(usually excluded from most policies)

Back 9

Mysterious Disappearance

Front 10

Considered a result of a direct loss

(like extra living expenses)

Back 10

Indirect Loss

Front 11

Insured structure with no people living or working in it. Also does not have any property for a period of time.

Back 11

Vacancy

Front 12

Structure that has stored property but no one lives or works there.

Back 12

Unoccupancy

Front 13

Insurance that covers multiple classes of property at 1 location or multiple

Back 13

Blanket Insurance

Front 14

Insurance that covers only certain kind of unit of property for a certain amount

Back 14

Specific Insurance

Front 15

recognizes reduction of value of property as it ages, calculated as:

(Current Replacement Cost- Depreciation)

Back 15

ACV

Front 16

Cost to replace damaged property with like kind and quality at today's price

Back 16

Replacement Cost

Front 17

Valuing a loss based upon the amount a buyer is willing to pay (can consider value of land, not just to rebuild structure)

Back 17

Market Value

Front 18

Scheduled value for items hard to value

(commonly used for stamp or other collections)

Back 18

Stated Value

Front 19

Estimated value an asset will realize upon it's sale at the end of it's useful life

Back 19

Salvage Value

Front 20

A pool is considered this liability

Back 20

Absolute Liability

Front 21

Liability commonly used on products for manufacturers (does not cover hazardous activities)

Back 21

Strict Liability

Front 22

When someone else is responsible for your liability.

(such as parents for child / Employers for Employees)

Back 22

Vicarios Liability

Front 23

When policy has a Max limit of coverage available during a policy year.

Back 23

Aggregate Limit

Front 24

Separately stated limits (ex: 25/50/25)

Back 24

Split Limits

Front 25

Single limit of liability for total loss

Back 25

Combined Single Limits

Front 26

Act/event considered a natural and reasonably foreseeable cause of damage

(caused chain reaction)

Back 26

Proximate Cause

Front 27

What the insured must pay on a claim before the insurance company provides coverage

Back 27

Deductible

Front 28

set up to encourage insurance value and provides consideration of reduced rate.

works with %'s

Back 28

CoInsurance

Front 29

An estimated premium paid in advance at time the policy is issued

Back 29

Deposit Premium

Front 30

Allows insurer to audit the insured's books and records at the end of the policy term to make sure adequate premium was collected

Back 30

Deposit Premium Audit

Front 31

Insurance companies must have these 4 things to be legally binding

Back 31

Agreement (offer and acceptance)

Consideration (what is given to each other)

Competent parties (18+, mentally competent)

Legal purpose (lawful reasons, not against public policy)

Front 32

Statements believed to be true, but not guaranteed

Back 32

Representations

Front 33

Untrue statements (they can void contract)

Back 33

Misrepresentations

Front 34

an absolutely true statement upon which the validity of the insurance policy depends

(may breach contract)

Back 34

Warranty

Front 35

withholding of information of a material fact that is crucial in making a decision (could void policy)

Back 35

Concealment

Front 36

A agreement issued by an agent providing temporary coverage until policy is issued

Back 36

Binder

Front 37

Located in the policy structure: this contains basic UW info such as insured's name, address, coverage limits, premiums and description.

Back 37

Declarations Page

Front 38

Clarifies terms as used in policy and usually includes bold, italics and quotations.

Back 38

Definitions

Front 39

Contains insured's promise to pay, includes effective date, renewal and description of perils

Back 39

Insuring Agreement

Front 40

General rules and procedures agreed to be followed by both parties

Back 40

Conditions

Front 41

Change to a policy

Back 41

Endorsement

Front 42

Details perils not insured against and what persons are excluded (except spouse)

Back 42

Exclusions

Front 43

Max amount an insured may collect

Back 43

Policy Limit

Front 44

When insurer and insured cannot agree on a claim settlement,

Back 44

Arbitration

Front 45

If any disagreement exists each party selects an appraiser and then an umpire

Back 45

Appraisal

Front 46

Defines how policy will respond if there is another valid insurance policy written on the same risk

Back 46

Other Insurance

Front 47

Sharing of loss with other insurance company that may have a policy written on the same risk

Back 47

Pro Rata

Front 48

Termination by insured or insurer before policy end date

Back 48

Cancellation

Front 49

When a policy will not renew

Back 49

Non Renewal

Front 50

Property insurance written as DP form that allows ACV

Back 50

DP-1

Front 51

3 policies written on replacement cost of 80%+

Back 51

HO-2, HO-3 AND HO-5

Front 52

NFIP STANDS FOR

Back 52

NATIONAL FLOOD INSURANCE PROGRAM

Front 53

If premises is vacant for 60 days what is excluded?

Back 53

malicious mischief/vandalism

Front 54

Coverage for Bodily harm, sickness or disease (including death)

Back 54

Bodily Injury (BI)

Front 55

Physical injury, destruction, loss to property

Back 55

Property Damage (PD)

Front 56

The upset or impact of a covered vehicle or non-owned auto with another vehicle or object

Back 56

Collision

Front 57

If you hit a deer, this coverage would pay

Back 57

Comprehensive (Other than collision)

Front 58

If customer wants rental reimbursement they must have this coverage

Back 58

Comprehensive (Other than collision)

Front 59

This coverage pays for funeral expenses cause by an accident sustained by insured

Back 59

Medical Payments

Front 60

Why do commercial auto policies not automatically include medical payments coverage?

Back 60

Most businesses have Worker's Comp

Front 61

Provides coverage for BI if the other driver does not have insurance and they are at fault

Back 61

Uninsured Motorist (UM)

Front 62

Provides coverage for BI if the at fault driver does not have enough insurance

Back 62

Underinsured Motorist (UIM)

Front 63

Provides coverage for damage to your auto

(includes both collision and comprehensive)

Back 63

Physical Damage

Front 64

What is "No benefit to bailee"

Back 64

Insurance company will not directly or indirectly pay any carried or bailee.

Front 65

What is DOC

Back 65

Drive other car: Includes non-owned vehicles the insured person operates

[non-owned vehicle coverage]

Front 66

This is used when insured is required or chooses to purchase higher liability limits than what is offered on primary policy

Back 66

Umbrella/Excess Liability

Front 67

Limits of insurance for liability coverage of the policies used 1st during a loss.

Back 67

Underlying Policy

Front 68

The minimum limit for this coverage is $1,000,000

Back 68

Umbrella Policy

Front 69

who appoints the commissioner? And how long is their term?

Back 69

The Governer for a 2 yr term

Front 70

This person cannot draft insurance laws

Back 70

The Commissioner

Front 71

The commissioner must examine all authorized insurers at least once every

Back 71

5 years

Front 72

When a cease and desist order is issued the person it was issued to has ______ days to request a hearing.

Back 72

30 days

Front 73

Once person requested a hearing for a cease and desist order, a hearing will be scheduled within ______ days unless other timeframe is agreed upon by both parties

Back 73

10 days

Front 74

Administrative penalties may not exceed $______ for violations

Back 74

$25,000

Front 75

If licensee violates a law/code the department of insurance has _____ days to notify the licensee in writing

Back 75

14 Days

Front 76

someone licensed in state (home office)

Back 76

Domestic Insurer

Front 77

Someone licensed in another state

Back 77

Foreign Insurer

Front 78

Someone licensed outside the U.S.

Back 78

Alien Insurer

Front 79

These companies are owned by policy owners and issue participating policies

Back 79

Mutual Companies

Front 80

These companies are owned by stockholders who provide capital to establish and operate the insurance company

Back 80

Stock Companies

Front 81

This insurance policy will pay dividends to the owner of the policy based upon actual mortality rates cost , interest earned cost

Back 81

Participating Policy

Front 82

What fee has to be paid in TX to act as a life insurance agent

Back 82

$50

Front 83

An agent's license must be renewed every _____ ,on the licensees birthday.

Back 83

2 years

Front 84

If a license expired LESS than 90 days ago you must...

Back 84

File a renewal application, Pay the renewal fee + an additional 1/2 of renewal fee

Front 85

If a license expired MORE than 90 days ago but LESS than 1 year you must...

Back 85

File a new application, Pay the renewal fee + an additional 1/2 of renewal fee [no exam required]

Front 86

If a license expired MORE than 1 year ago you must...

Back 86

Go through the complete license process

Front 87

What is CE?

Back 87

Continued Education

Front 88

Producers must maintain records of continuing education for how long after completion?

Back 88

4 years

Front 89

Licensees must complete at least _____ hrs of CE every renewal before expire date

Back 89

24

Front 90

At least how many hours of the CE should be for ETHICS?

Back 90

2

Front 91

You must pay $_____ per deficient hour in order to complete them before a 90 day timeframe

Back 91

$50

Front 92

Agents licensed for ___ yrs or over that have no gaps of more than 90 days can be exempt from CE.

Back 92

20

Front 93

At least ____% of all required CE must be completed in a classroom or classroom equivalent setting approved by the Department

Back 93

50

Front 94

In Texas if a license is revoked you cannot apply for another one for ____ years

Back 94

5

Front 95

What is TDI?

Back 95

Texas Department of Insurance

Front 96

An unfair trade practice in which an insured used physical or mental force to persuade an applicant to buy insurance

Back 96

Coercion

Front 97

When a company criticizes the financial situation of another company with the intention of injuring the company it has committed and illegal trade called ____

Back 97

Defamation

Front 98

It is illegal for an agent to pay or offer to pay for referrals unless the customer is or was formerly a ______

Back 98

licensed agent

Front 99

Each filing of rates and forms must be made no later than _____ days before the date of delivery or use

Back 99

60

Front 100

Cancellation cannot take effect until after ____ days that the insurer mails notice of cancellation to insured if policy in effect is LESS than 60 days old

Back 100

10

Front 101

If a policy is over 60 days old it must remain in effect until the ___day after notice is delivered

Back 101

61

Front 102

A premium surcharge can be assessed at time policy is renewed if the insured has filed ___ or more claims in the preceding year

Back 102

2

Front 103

Insurer may decline renewal if insured has filed ___ or more claims under the policy in any 3 year period

Back 103

3

Front 104

Insurance markets or facilities designed to assume risks that are generally declined

[is a residual market]

Back 104

Texas Fair Plan Association

Front 105

Was established to provide an adequate market for windstorm, hail and fire insurance in designated areas

Back 105

Texas Windstorm Insurance Association

(TWIA)

Front 106

Requires insured in Texas state to have min liability limits of 30/60/25

Back 106

Texas Motor Vehicle Safety Responsibility Act

Front 107

A person convicted a 2nd time for not having min liability coverage limits will have to establish and maintain proof of _________ for __ years

Back 107

Financial responsibility

for 2 yrs

Front 108

PIP must be included in a Texas policy with a min of $2,500 unless...

Back 108

a signed rejection form is received

Front 109

Is Joint Underwriting Association a residual market?

Back 109

yes

Front 110

Is a mechanism for assisting the policy holders of bankrupt insurers and is not a residual market

Back 110

Texas Property and Casualty Insurance Guaranty Association

Front 111

What is the max pay from the Texas Property and Casualty Insurance Guaranty Association

Back 111

$300,000

Front 112

Cancellation to take effect on the 12th month anniversary of the policy requires the insurer to give prior written notice of at least _____ days

Back 112

30

Front 113

Insurance uses this law to more accurately predict losses from numbers

Back 113

Law of Large Numbers

Front 114

Any condition or exposure that increases the possibility of a loss is a

Back 114

Hazard

Front 115

A tornado is considered this because it was the cause of a loss

Back 115

A Peril

Front 116

A _____ is the basis for a claim against an insurance policy (claims result from this)

Back 116

Loss

Front 117

A loss caused by conditions or repeated exposure resulting in injury even if not intended or expected is considered an _____

Back 117

Occurrence

Front 118

Pain and suffering, disfigurement would be paid as

Back 118

General compensatory damages

Front 119

Conditions are part of the policy ______

Back 119

structure

Front 120

when an UW approves an application and issues a policy it is _______

Back 120

acceptance

Front 121

When a covered loss occurs the insurer requests a signed _____________ from the insured

Back 121

Sworn proof of loss

Front 122

The insurers report financial difficulty to the _______

Back 122

state

Front 123

the max # of roomers or boarders for property insured under dwelling policy is ____

Back 123

5

Front 124

removal coverage which is included in the broad form dwelling policy will cover property temporarily removed from premises to protect it got up to _____ days

Back 124

30

Front 125

volcanic eruptions will be considered 1 occurrence if they occur within a _____ hour period

Back 125

72

Front 126

After insurer receives proof of loss from insured, they have ____ days to pay for loss

Back 126

60

Front 127

A loss from sudden collapse of earth arising from underground limestone created by the action of water on rock formation is a _____

Back 127

Sinkhole Collapse