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Texas Code For Licensing

21.07-4

3 Types of Tx Adjuster License

1) All Lines


2) Property & Casualty


3) Workers Comp

5 Types of All Lines

1) Property


2) Casualty


3) Surety


4) Workers Comp


5) Employer liability

Please Call Susan When Empty

Property & Casualty Types

Property


Casualty


Surety

Workers Comp License Includes:

Workers comp and employer liability

Law of Large Numbers

Helps insurers to predict the number of losses they will pay in any given time period so they can determine what premium is required to pay those losses.

Insurable Interest

Exists when the party would suffer a financial loss as a result of damage to or loss of the insured item; prevents people from profiting from a loss; losses only covered to the extent of this

Consideration (in a contract)

Each party to a contract must give something of value to the other; money, an act, a promise, or giving up a legal right

Aleatory Contract

Means that performance depends on the occurrence of an uncertain event; insurance policies are aleatory contracts

Contract of Adhesion

Terms are drawn up by the insurer, and the insured simply adheres. Any ambiguity must be interpreted in favor of the insured because the insured has little or no control over policy content.

Indemnity Basis

The intent being to make something "whole" again by paying actual losses while preventing any gain

Concealment

Failure to disclose known facts

Fraud

A deliberate misrepresentation that causes harm

4 Elements of Fraud

1) Someone deliberately lies


2) The intent of the lie is for someone else


3) Another person relies on that lie


4) The other person suffers harm as a result of that lie

What is the difference between fraud and misrepresentation?

Misrepresentation may be intentional OR unintentional. Fraud is always intentional and involves an effort by one party to deceive and cheat the other.

Waiver

Intentional relinquishment of a known right

Estoppel

The insurance company is prevented from denying a fact.

Stock Companies

Stockholders own and share profits & losses; 70% of all property & liability premiums and 50% of life insurance premiums

Mutual Companies

No stockholders; owned by policy holders; voting rights and share profits via policy dividends; 30% of property & liability and 50% of life

County Mutual

Organized for the purpose of insurance on the mutual or cooperative plan against loss or damage by fire, lightning, gas explosion, theft, windstorm & hail, and for all or either

Principal

The insurance company

Express Authority

An agent has been expressly told he may act on behalf of principal

Implied Authority

The Authority an agent has by virtue of being reasonably necessary to carry out his express authority

Apparent Authority

The principal's words or conduct would lead a reasonable person to believe that the agent was authorized to act, even if it had never been discussed

Insurable Interest

Insured must have a chance of financial loss or have a financial interest in the property

Loss Ratio

Incurred Losses/Earned Premium



Determines insurance company's success

Judgment Rating

Considers the individual risk; oldest form

Manual Rating

Company's rates for a particular state or area are obtained by consulting a manual

Merit Rating

Starts with class or manual rates, which are then modified to reflect the unique characteristics of the risks that are not reflected in the manual rate

Experience Rating

Form of merit Rating that modifies the manual premium based on the insured's loss experience over some period of time

Retrospective Rating

Bases the insured's premium on losses incurred during the policy period

Scheduled Rating

Applies a system of debits or credits to reflect characteristics of a particular insured

Hazards

Anything that increases the seriousness of a loss or the likelihood that a loss will occur due to a peril

Risk

Uncertain potential for loss; things that cause losses

Difference Between Hazard and Peril

Hazards are catalysts that trigger or advance perils

Difference Between Hazard and Peril

Hazards are catalysts that trigger or advance perils

Physical Hazard

Arise from material, structural, or operational features of a risk situation; example: seriously worn automobile tires

Moral Hazard

Arise from a person's habits which increase the possibility of a loss

Negligence

Failure to do what a reasonable and prudent person would do under given circumstances; one of the most commonly insured perils

4 Elements of Negligence

1- Legal Duty


2- Standard of Care


3- Proximate Cause


4- Actual loss or damage

Assumption of Risk

If someone understands a danger and voluntarily assumes the risk, a court may disallow recovery against a negligent party

Contributory Negligence

Denies recovery to an injured party who contributed to the loss by failing to meet standards required for self protection

Comparative Negligence

Less harsh version of contributory Negligence; reduces injury and damage awards proportionally when the plaintiff and defendant were both negligent

Compensatory Damages

Reimburse the injured party only for losses that were actually sustained

Punitive Damages

Intended to punish the defendant and make an example to discourage others from behaving the same way

Absolute Liability

Imposed by law on those participating in certain activities that are considered especially hazardous

Strict Liability

Product claims; claimant proves that a product was defective and that the defect caused the injury; the manufacturer can be held strictly liable

Vicarious Liability

When a person is held responsible for the negligent act of another person

Peril

Cause of loss

Direct Loss

Actual physical damage, destruction, or loss of property. Fire damage and stolen merchandise are examples.

Consequential/Indirect Loss

Those that result from direct losses and occur as a consequence of direct loss

Consequential/Indirect Loss

Those that result from direct losses and occur as a consequence of direct loss

Types of Loss Valuation

1- ACV


2- RCV


3- Functional Replacement Cost


4- Market Value


5- Valued Policy

ACV

(Replacement Cost) -


(Depreciation) = ACV

RCV

Replacement Cost Value


Replacement Cost for covered losses, with no allowance for depreciation

Functional Replacement Cost

Damaged property is repaired or replaced with less expensive, but functionally equivalent materials. Used most frequently with antiques, ornate, or custom construction

Market Value

Property is insured for market value or what it could be sold for at the time of the loss.

Valued Policy

For hard-to-Value items, the insurance company will issue a valued or agreed amount contract

What does the Declarations include?

Identity and address of insured, policy term or period, amount of insurance or limits of liability, policy premium, any deductible, property description, or a schedule of coverage parts and a list of any endorsements

Insuring Agreement or Clause

Describes the covered perils, or risks assumed, or nature of coverage, or makes some reference to the contractual agreement between insurer and insured

Deductible

Amount of a loss which the insured must absorb before the insurer begins to pay the additional loss

Deductible

Amount of a loss which the insured must absorb before the insurer begins to pay the additional loss

Limits of Liability

Each policy or coverage part will have a declarations section for listing the limits of liability

Vacancy VS Un-occupancy

Vacant means absence of both people and property; Unoccupied means absence of people only

Abandonment

The insured cannot abandon damaged property to the insurer and demand to be reimbursed for its full value

Liberalization

If a law is passed that broadens coverage under a policy form or endorsement without requiring an additional premium, then all existing similar policy endorsements will be construed to contain broadened coverage

Liberalization

If a law is passed that broadens coverage under a policy form or endorsement without requiring an additional premium, then all existing similar policy endorsements will be construed to contain broadened coverage

Subrogation

The transfer to the insurance company of the insured's right to collect damages from another party

Salvage

Damaged property that can be retrieved and reconditioned then sold to reduce an insured loss

Tort

Wrongful act or omission, other than a breach of contract, which causes harm and might lead to a civil lawsuit for damages

Contractual Liability

Arises when someone's rights are violated under the terms of a contract

Contractual Assumptions of Liability

As a condition of a business contract, a party often agrees to assume financial responsibility for liabilities imposed by law or another party