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Insurance Terminology and Concepts, Exams of Insurance law

A wide range of insurance-related terminology and concepts, including the appraisal process, personal auto policy coverages, homeowner policy limits, commercial general liability policy coverages, claims handling processes, insurance law and regulations in texas, and various other insurance-related topics. Definitions, examples, and explanations for these insurance-related terms and concepts, which could be useful for students, professionals, or anyone interested in understanding the fundamentals of insurance. The level of detail and breadth of topics covered suggest this document could be used as a reference or study guide for insurance-related courses, exams, or professional development.

Typology: Exams

2024/2025

Available from 10/15/2024

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Texas Property & Casualty Adjusters

Study Questions

What is the formula for figuring Actual Cash Value(ACV)? - ANS Replacement cost minus depreciation Define the appraisal process. When would the appraisal process be appropriate? - ANS Used for value disputes. Each party selects an appraiser & umpire to make the decision. Which Personal Auto Policy coverage covers Loss of Income? - ANS P.I.P personal injury protection What is a hazard? - ANS Increases chances of a loss. Physical, Moral, Morale What percent of Coverage A is Coverage B on a HO 3? - ANS 10% of Coverage A What is insurable interest and when must it exist? - ANS Financial interest in an asset that must exist at the time of a loss. What is the maximum an insured can collect from their homeowner policy per tree for a covered loss? - ANS $ What coverages are included in a Standard Fire Policy? - ANS Fire, lightning, removal & extended coverage's can be added How many hours of ethics must you have to complete your continuing education requirements each license renewal? - ANS 2 What determines if an adjuster should "total" a vehicle? - ANS Repair costs are greater than the value of the vehicle.

What are the split limits of automobile liability in Texas? - ANS 30/60/ Or $ per person. $65000 per occurrence. $25000 property damage. What is the maximum number of days a property can be vacant before coverage ceases? - ANS 60 unless you have SFP is 30 Define mono line coverage. - ANS Single line coverage Does an insured have to admit blame for an adjuster to pay a claim? - ANS No What is a hangar-keepers coverage? - ANS Liability coverage for storing aircraft An insurance contract has how many parties? - ANS 2 A bond has how many parties to the contract? - ANS 3. Obligee. Obligor. Surety. In a bond, which party guarantees the actions of the principal? - ANS Surety Define barratry - ANS Illegal activities of a ships captain & crew. What is hull coverage for aviation and ocean marine insurance? - ANS Airplane or ship physical damage coverage

A commercial property policy provides how much coverage for an attached sign? - ANS $ What would an insured homeowner use Loss of Use? - ANS Covered peril makes home uninhabitable When would an owner of a commercial property policy use Extra Expense? - ANS After a covered loss when a business needs to open. Like an agent covering his clients. Give an example of Premises Liability claim - ANS Slip & fall Define tort - ANS Civil wrong other than breech of contract What is Article 21.21? - ANS Unfair Claims Practices Act Can an insured buy back his totaled vehicle from the insurance company? - ANS Yes List the time restraints for response and payment of claims in Texas. - ANS 15 Days to acknowledge. 15 Business days to review. 5 Days to issue payment. What is Section II of the Homeowners 3 Policy? What does it cover? - ANS Liability. Includes B.I., P.D., M.P. and Supplementary payments aka bailed What is the purpose of co-insurance? - ANS Encourages people to insurance 80% of the value of the property. What is the third party in a claim? - ANS Claimant

What regulates insurance law in Texas? - ANS T.D.I. & Commissioner Do adjusters have to investigate claims before denying? If so, what dictates this action? - ANS Yes. Article 21. What is arbitration? - ANS Dispute resolution process over coverages What is misrepresentation? - ANS Not telling the truth... Lying Define risk - ANS Possibility of a loss What is bad faith? - ANS Not fair dealings. What is a direct loss? - ANS destruction to tangible property What is the principle of indemnity? - ANS Returning to preloss condition What is the most common percentage of co-insurance? - ANS 80% Where can an adjuster find perils covered in an insurance policy? - ANS Insuring agreement What policy contains the policy territory? - ANS Conditions Define waiver. - ANS Voluntary relinquishment of a known right.

What is pro-rata liability? How are the claims paid under this concept? - ANS Shared coverage between insurers. Claims are paid proportionately. What is a warranty and why is it so important to an insured and insurance company? - ANS Guarantee of an action. That if not fulfilled will void the policy. Where would an adjuster find the named insured in an insurance contract? - ANS Declarations page What is subrogation? - ANS Insurers right to collect from a responsible party. Who has the right to salvage? - ANS Insurer What is the minimum limit for combined single limit automobile liability insurance? - ANS $85, What is coverage A, B and C under a Commercial General Liability policy? - ANS A- BI and PD B- Personal and Advertising Agency C- Medical pay Which homeowner policy has replacement cost on personal property? - ANS None. Endorsement only. Which homeowner policy has coverage for theft? - ANS All Is the dirt under the dwelling covered on a dwelling policy? - ANS No Explain the occurrence version of the Commercial General Liability policy. - ANS It pays when a loss occurs during the policy period.

Explain the claims-made version of the Commercial General liability policy. - ANS It pays when a claim is made during the policy period. Does the Commercial Liability policy cover fraud? - ANS No Give an example of a Completed Operations claim. - ANS Electrician installs a ceiling fan. two weeks later it falls and injures the owner. Strict liability applies to_____ - ANS Product defects What type of policy contains supplementary payments? - ANS Liability What is coverage A in a Dwelling and Homeowner policy? - ANS Dwelling What type of bond would a contractor want for a project? - ANS Contract Bond includes performance, bid, completion, and payment bonds What coverage in the Personal Auto Policy would pay for losses for a which insured is legally liable? - ANS liability coverage - Section A Does a garage policy cover workers compensation? - ANS No What is the name of the coverage in the garage policy that is the bailee coverage? - ANS Garage keep simple 30 What is the special limit on theft of firearms in a homeowners policy? - ANS $

What homeowner policy has theft coverage? - ANS All Define the pair and set clause - ANS Payment is value before loss minus value after loss What is the inchmaree clause? - ANS Covers loss in errors of navigation. What is the jettison? - ANS Throwing cargo overboard to save the vessel & crew. List some of the types of businesses that can be covered by a Business Owners Policy. - ANS Small or medium sized business. Floral shop or agents office Which coverage would best provide coverage for an expensive ring - ANS Personal articles floater Is an umbrella policy an excess or primary policy? - ANS Excess How old does a prospective adjuster have to be get a license? - ANS 18 Give an example of a Product claim. - ANS Recall of defective tires. A refinery would best be covered by what type of policy for coverage following an explosion? - ANS C.P.P. Commercial package policy How much additional coverage does a Commercial Property policy provide for debris removal if the policy limit has been exhausted? - ANS 25, What conviction can get an adjuster license revoked? - ANS Felony

A pubic adjuster represents whom? - ANS Insured What is a liquidated demand on a homeowners policy? - ANS Total loss by fire entitles a policy holder to full amount of the policy for real property only. What is estoppel? - ANS Involuntary relinquishment of known right How often does the adjusters license renew? - ANS 2 years What is removal coverage on a property policy? - ANS Remove property up to 30 days to protect it from further damage. Storage How long does an insured have to return a signed, sworn, proof of loss statement back to the insurer? - ANS 91 Days If an adjuster license has lapsed for less than 90 days, what should the adjuster do to get it renewed? - ANS Complete continuing education and pay 50% penalty Define Bodily Injury B.I. - ANS Accident, sickness, including death Define Property Damage P.D. - ANS Destruction of tangible property. Including loss of use. Define Personal Injury P.I. - ANS Libel slander Define Advertising Injury A.I. - ANS False statement about a competitor in advertisement

A product liability claim must be filled in which countries to covered by the policy? - ANS US & Canada What is the warranty contained in the valuable papers and records policy? - ANS Keep papers in fire proof receptacles when not in use or business is closed. Define custodian. - ANS Person has insured property on premises or person. Salesman wearing the product How often must an insurance company be audited by T.D.I. and who pays for the Audit? - ANS 5 years. The insurance company. What is concealment? - ANS Don't disclose known information What is the minimum for funeral benefit provided under the Personal Injury Protection? - ANS $ Define replacement cost. - ANS Property replace LIKE KIND & QUALITY Where would an adjuster find the amount of insurance provided on a dwelling in the insurance contract? - ANS Declarations Page What is Section I of the Homeowners policy? - ANS Property/ Dwelling Define a domestic Insurer. - ANS Headquarters are in Texas. Define a Foreign insurer - ANS Headquarters in the US. Not in Texas. Define an Alien insurer. - ANS Headquarters in another country.

Does an adjuster ever render a legal determination? - ANS No. Just opinions. What warrants that punitive damages be awarded? - ANS Did not try to correct a situation. Gross negligence. What is the Law of Large Numbers? - ANS Determined premium by possibility of loss How many companies can an independent adjuster represent? - ANS One or more What are four essential elements of a contract? - ANS C.A.L.C. Competent. Agreement. Legal purpose. Consideration. Should an adjuster ever complete a proof of loss for a claimant? - ANS No What is the co-insurance formula? - ANS Did. divided by Should. times loss. minus deductible. Is collapse covered on a basic or broad named peril policy? - ANS Broad How soon does an adjuster have to report an address change to the T.D.I.? - ANS 30 Days or promptly Is every claim paid just because the insured has purchased an insurance policy? - ANS No

Is an attorney who adjust claims automatically considered to be an adjuster? - ANS No, but they do have rights to do it for work Are criminal actions ever covered by an insurance policy? - ANS Yes What is a MORALE hazard - ANS Carelessness easy going ... Example: Left keys in the car What is SPECULATIVE risk? - ANS Chance of loss or gain Example: gambling Define Vacant. - ANS No People. No property. Define Unoccupied. - ANS No people. Furnished. People plan on returning. Is breakage covered by a Personal Articles Floater? - ANS Yes What is the minimum amount an adjuster can accept for a kickback? - ANS Zero There must be evidence of what for the theft to be considered to be a burglary? - ANS Forced entry or exit Is there coverage offered to provide coverage for employee theft? - ANS Yes A first named insured can be found on what type of policy? - ANS Commercial The first named insured has what duties on a policy? - ANS To maintain the policy. Pays the premium and makes changes

A retroactive date applies to what type of policy? - ANS C.G.O. Policy Claims made Are losses in Mexico covered under Personal Auto Policy? - ANS N Can a snowmobile be insured on a Personal Auto Policy? - ANS No How much coverage applies to permanently attached sound reproduction equipment on a Personal Auto Policy? - ANS $ Does an insured have to report a hit and run accident to the police in order for it to be covered on a Personal Auto Policy? - ANS Yes Does a Basic Named Peril Policy cover water damage? - ANS No Which Dwelling Property form requires that the dwelling be owner occupied? - ANS DP- Who is the first party in an insurance contract? - ANS Insured Define business day in Texas. - ANS Any day but SATURDAY, SUNDAY OR A HOLIDAY. What is utmost good faith? - ANS Honesty, cooperation and full disclosure Can an insured assign the entire policy or just the benefits? - ANS Benefits Does co-insurance apply to total losses or partial losses? - ANS Partial

Can an insured abandon property to collect for a total loss? - ANS No What is proximate cause? - ANS First peril of loss in an unbroken chain of events. What is vicarious liability? - ANS Insured responsible for actions of wrong doers. Example...Employer responsible for employee or a bar responsible for drunk patrons. Define negligence. - ANS Failure to act in reasonable prudent manner. What is absolute liability? - ANS Liability without fault....having a pool, dog or demolition How long does coverage extend from a Personal Auto Policy to a newly acquired vehicle? - ANS 14 days/ 4 days/ 500 deductible How long does coverage extend from a Farm policy to a newly acquired livestock? - ANS 30 days How many insurers must reject an applicant before they can apply to the Texas Auto Insurance Plan Association? - ANS 2 How many wheels must a vehicle have to be insured? - ANS 4 An insured can endorse liability on a dwelling under what circumstances? - ANS Owner occupied What property policy has coverage for debris removal? - ANS All Can an insured obtain coverage for cemetery plots? If so, where? - ANS Yes. Homeowners policy.

What deductible applies to liability policies? - ANS Zero The insurer must give the insured how much notice for non renewal? - ANS 30 Days How many acres must a property have before it qualifies for a farm policy? - ANS 10 In Texas, a policy must have what two coverage parts before it can be packaged? - ANS Property and Liability. What part of an insurance policy personalized the policy as to whom and what are insured? - ANS Declarations An insurance policy is prepared by the insurance company with little or no input from the insured. This policy is? - ANS Adhesion contract BAILED(supplementary payment) - ANS Bonds. Aid. Interest. Loss of earnings. Expenses. Defense and investigation. Liberalization clause - ANS Broaden coverage with no additional cost. Additional coverage. Conditions - ANS Rules

Insuring agreement - ANS Promise Moral hazard - ANS Legally dishonest Morale hazard - ANS Easy going/ careless Binder - ANS Commits to act as if a policy had been issued. Agent telling you something is covered buts it's not in your policy. Warranties - ANS Promise to do or not to do Contract adhesion - ANS One way. No negotiation. Adhere to the contract as a whole. Aleatory contract - ANS Values exchanged are Not equal. Unilateral contract - ANS One party makes an enforceable promise. Insurance - ANS Transfer of risk. C.A.L.C. contract - ANS Competent. Agreement. Legal. Consideration. Coverage A - ANS Real property or dwelling

Coverage B - ANS Other structures such as garage, fence, etc. Coverage C - ANS Your stuff Standard homeowners deductible - ANS $ Compensatory damages - ANS Money paid to make an injured person whole again. Special damages - ANS Actual monetary expenses, such as medical. General damages - ANS Non economic loses, such as pain & suffering & malice. Aggregate limit - ANS 100/300 maximum amount of coverage available during a policy period Occurrence - ANS Loss caused by continued & repeated exposure Liability 3rd party coverage - ANS Insurance. Insured. Unknown 3rd party beneficiary. Absolute liability - ANS Liability without fault. Pool, dog loaded gun Strict liability - ANS Product defect Defective tires, toys, legal drugs

Bodily injury - ANS Caused by bodily injury, sickness, disease, loss of service resulting in death Coverage D (HO) - ANS Loss of use Coverage E(HO) - ANS Personal liability coverage. Coverage F(HO) - ANS Medical payments Loss of use per day coverage - ANS $ SR-22 Form - ANS Proof of financial responsibility Cancellation Or Non renewal of a auto policy - ANS 10 day advance written notice of cancellation. 30 days advance written for nonrenewal. Trucks & Vans must be less to be covered for personal auto - ANS Less than 25,000 lbs Med pays for how long? - ANS 3 years of accident date Med pay funeral benefit? - ANS $ Med pays what percentage of income? - ANS 80%

Other than collision O.T.C. - ANS Comprehensive OTC rental benefit - ANS $20 day. 600 max amount Towing - ANS $120 per claim You sell a car and buy another right away. Must you take any action for liability on the new car? - ANS No, coverage for the replacement car is automatic. The physical damage section of the personal auto excludes? - ANS Mechanical breakdown Dwelling Basic covers? - ANS Fire. Lightning. Internal explosion. Removal. Dwelling Basic extended covers? - ANS WCSHAVVER Wind. Civil commotion. Smoke. Hail. Aircraft. Vehicles. Volcanic. Explosion.

Riot. According to Nationwide Definition, imports and exports are eligible for - ANS Inland marine insurance The primary purpose of the business income insurance forms is to reimburse the insured for - ANS Loss of income resulting from property damage at the insureds property. Property off-premises - ANS Coverage extension that is available in the building and personal property form. If the insurance is canceling a commercial policy for nonpayment the insured mutt be given how many days notice? - ANS 10 days Commercial extra expense coverage form provides? - ANS Coverage that will permit the insured to continue in business without interruption. Building and personal property coverage form would cover? - ANS Fixtures Builders risk reporting - ANS Policy limits gradually increasing as the value of the building under construction increases. Well house - ANS Not a farm building Which commercial property coverage form covers damage to the property of others in the insureds care, custody, or control? - ANS It's always excluded The Causes of a Loss- Special Form of the commercial property coverage part insured against? - ANS All risk of direct physical loss unless specifically excluded.

Electronics disturbance is excluded in the electronic data processing from how many feet? - ANS 500 feet