Chapters 1-3

Front 1

Texas Code For Licensing

Back 1

21.07-4

Front 2

3 Types of Tx Adjuster License

Back 2

1) All Lines

2) Property & Casualty

3) Workers Comp

Front 3

5 Types of All Lines

Back 3

1) Property

2) Casualty

3) Surety

4) Workers Comp

5) Employer liability

Hint 3

Please Call Susan When Empty

Front 4

Property & Casualty Types

Back 4

Property

Casualty

Surety

Front 5

Workers Comp License Includes:

Back 5

Workers comp and employer liability

Front 6

Law of Large Numbers

Back 6

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.

Front 7

Insurable Interest

Back 7

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

Front 8

Consideration (in a contract)

Back 8

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

Front 9

Aleatory Contract

Back 9

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

Front 10

Contract of Adhesion

Back 10

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.

Front 11

Indemnity Basis

Back 11

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

Front 12

Concealment

Back 12

Failure to disclose known facts

Front 13

Fraud

Back 13

A deliberate misrepresentation that causes harm

Front 14

4 Elements of Fraud

Back 14

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

Front 15

What is the difference between fraud and misrepresentation?

Back 15

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

Front 16

Waiver

Back 16

Intentional relinquishment of a known right

Front 17

Estoppel

Back 17

The insurance company is prevented from denying a fact.

Front 18

Stock Companies

Back 18

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

Front 19

Mutual Companies

Back 19

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

Front 20

County Mutual

Back 20

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

Front 21

Principal

Back 21

The insurance company

Front 22

Express Authority

Back 22

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

Front 23

Implied Authority

Back 23

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

Front 24

Apparent Authority

Back 24

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

Front 25

Insurable Interest

Back 25

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

Front 26

Loss Ratio

Back 26

Incurred Losses/Earned Premium

Determines insurance company's success

Front 27

Judgment Rating

Back 27

Considers the individual risk; oldest form

Front 28

Manual Rating

Back 28

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

Front 29

Merit Rating

Back 29

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

Front 30

Experience Rating

Back 30

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

Front 31

Retrospective Rating

Back 31

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

Front 32

Scheduled Rating

Back 32

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

Front 33

Hazards

Back 33

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

Front 34

Risk

Back 34

Uncertain potential for loss; things that cause losses

Front 35

Difference Between Hazard and Peril

Back 35

Hazards are catalysts that trigger or advance perils

Front 36

Difference Between Hazard and Peril

Back 36

Hazards are catalysts that trigger or advance perils

Front 37

Physical Hazard

Back 37

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

Front 38

Moral Hazard

Back 38

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

Front 39

Negligence

Back 39

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

Front 40

4 Elements of Negligence

Back 40

1- Legal Duty

2- Standard of Care

3- Proximate Cause

4- Actual loss or damage

Front 41

Assumption of Risk

Back 41

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

Front 42

Contributory Negligence

Back 42

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

Front 43

Comparative Negligence

Back 43

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

Front 44

Compensatory Damages

Back 44

Reimburse the injured party only for losses that were actually sustained

Front 45

Punitive Damages

Back 45

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

Front 46

Absolute Liability

Back 46

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

Front 47

Strict Liability

Back 47

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

Front 48

Vicarious Liability

Back 48

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

Front 49

Peril

Back 49

Cause of loss

Front 50

Direct Loss

Back 50

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

Front 51

Consequential/Indirect Loss

Back 51

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

Front 52

Consequential/Indirect Loss

Back 52

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

Front 53

Types of Loss Valuation

Back 53

1- ACV

2- RCV

3- Functional Replacement Cost

4- Market Value

5- Valued Policy

Front 54

ACV

Back 54

(Replacement Cost) -

(Depreciation) = ACV

Front 55

RCV

Back 55

Replacement Cost Value

Replacement Cost for covered losses, with no allowance for depreciation

Front 56

Functional Replacement Cost

Back 56

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

Front 57

Market Value

Back 57

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

Front 58

Valued Policy

Back 58

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

Front 59

What does the Declarations include?

Back 59

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

Front 60

Insuring Agreement or Clause

Back 60

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

Front 61

Deductible

Back 61

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

Front 62

Deductible

Back 62

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

Front 63

Limits of Liability

Back 63

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

Front 64

Vacancy VS Un-occupancy

Back 64

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

Front 65

Abandonment

Back 65

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

Front 66

Liberalization

Back 66

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

Front 67

Liberalization

Back 67

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

Front 68

Subrogation

Back 68

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

Front 69

Salvage

Back 69

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

Front 70

Tort

Back 70

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

Front 71

Contractual Liability

Back 71

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

Front 72

Contractual Assumptions of Liability

Back 72

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