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2026 MAIN EXAM TEXAS PROPERTY & CASUALTY LICENSE GRADED A
Property vs Casualty: What is considered property? - ANSWER-Structure & Personal Property Property vs Casualty: What is considered casualty? - ANSWER-Non-property losses. Legal liability to others. 3rd Party Risk - ANSWER-uncertainty of financial loss Pure Risk - ANSWER-Chance of Loss Speculative Risk - ANSWER-Chance of Loss or Gain (Gamble) Insurance (covers which type of risk?) - ANSWER-Pure Risk Only How does the law of large numbers apply in insurance? - ANSWER-Actuaries use the law of large numbers to estimate claims What is the law of large numbers? - ANSWER-as the number of a similar loss exposure increases, the more accurate claims can be predicted from the group. What is a peril? - ANSWER-cause of loss What is a hazard? - ANSWER-things that increase the chance of a peril happening Three types of hazards - ANSWER-Physical: visible characteristic (dead tree) Moral: Dishonest tendencies Morale: Attitude of carelessness
Proximate Cause - ANSWER-First cause in an unbroken chain of events Elements of a legal contract (CALC) - ANSWER-C - Competent parties (18/Right frame of mind) A - Agreement (Both parties agree) L - Legal Purpose (The risk is LEGAL) C - Consideration (It has to be fair) What is representation? - ANSWER-Information believed to be true. What is misrepresentation? - ANSWER-Information that is not true. False information. What is material misrepresentation? - ANSWER-Information that is not true but would have caused the insurer not to issue the policy. (4 prev spd tix) What is fraud? - ANSWER-An all out effort by one party to deceive and cheat the other. What is warranty? - ANSWER-Guarantee that an insured will or will not do something What are the four major parts to an insurance policy structure? (DICE) - ANSWER-D - Declarations Page (First Page) I - Insuring Agreement (Insurers promise to pay) C - Conditions (Rules) E - Exclusions (Not covered) What information is on the declarations page? (Remember 6 Ps) - ANSWER-Policy Number Parties Property Description/Location Policy Term
Arbitration - ANSWER-Deal with disagreements on coverage issues What is "Other Insurance"? - ANSWER-This provision applies when the insured has more than one policy covering the same loss Primary & Excess - ANSWER-Primary pays to limit Excess pays what is left Pro Rata - ANSWER-Primary pays their percentage of loss Other insurance pays their percentage of loss What does vacant mean? - ANSWER-Empty building. No people/No contents for 60 days. What does unoccupied mean? - ANSWER-No people present when loss occurs but contents still remain. Abandonment - ANSWER-insured cannot abandon partially damaged property and expect to be paid for its full value What is salvage value? - ANSWER-after paying the insured for a loss as if it was totally destroyed the insured must give the insured what's left. What is the most common casualty coverage? - ANSWER-Liability (3rd party) What is the definition of liability? - ANSWER-Individual or organizations maybe held responsible for action resulting in bodily injury or property damage to others. What are the two types of liability? - ANSWER-Criminal & Civil
What is a tort? - ANSWER-A civil wrong Direct Liability - ANSWER-Insured is the wrongdoer (Tortfeasor) Vicarious Liability - ANSWER-Insured is responsible for the actions of the wrongdoer Contractual Liability - ANSWER-Insured assumes another's liability under a written agreement Absolute Liability - ANSWER-Liability without fault (Child drowns in pool) Strict Liability - ANSWER-Product defect claims Negligence - ANSWER-Failure to do or not to do something that ordinarily should be or not be done that results in a loss Legal Duty - ANSWER-Owe an obligation to act or not act Breach of Duty - ANSWER-Failure to comply with a duty Actual Loss - ANSWER-Another suffers a loss Proximate Cause (Regarding Duties) - ANSWER-Breach of duty is the direct cause of loss Bodily Injury - ANSWER-Injuries including pain and suffering Property Damage - ANSWER-Damages including loss of use
State Ex. Texas Auto Insurance Plan Assoc (TAIPA), Texas Windstorm Insurance Assoc (TWIA), Joint Underwriting Assoc (JUA), and Fair Access to Insurance Requirements (FAIR) Three Federal Regulation Sources - ANSWER-Fair Credit Reporting Act Terrorism Risk Insurance Act Gramm Leach Bliley Act Fair Credit Reporting Act - ANSWER-to protect consumers when adverse action (increase in rates) resulting from review of credit Terrorism Risk Insurance Act - ANSWER-has to be certified by sec of state, sec of treasury, and attorney general as an eligible act not the president. Will not pay more than 100 billion in aggregate. What does the commissioner do? - ANSWER-Runs the Texas Department of Insurance (TDI) A new commissioner is appointed by the governor for 2 yr term, ending Feb 1st of each odd numbered year. Investigations and Examinations by the Commissioner - ANSWER-At least once every five years or more often if deemed necessary What is the Texas Property and Casualty Insurance Guaranty Association - ANSWER-Protects claimants and policy holders in the event of insurer insolvency (cannot pay claims). Governed by a board of directors - 5 members from insurers and 4 members from the public Private Companies not TDI that publish the financial strength ratings include: - ANSWER-A.M. Best (A++ to F) Moody's Standard and Poor's
Definition of agent - ANSWER-Anyone who solicits insurance or aids in placing risk, delivering policies, or collecting policies on behalf of an insurance company. Temporary Agents License - ANSWER-Issued for period of 90 days; No renewal Only 1 every 6 months Cannot be paid any commission for sales Must have a company or agent sponsor Must complete 40hrs of study within 14days of applying for the license No test required License Renewals - ANSWER-Most renew every 2 years on anniversary date If license lapse:
- May renew within 90 days, subject to $50 late fee penalty
- If license expires after 90 days, may apply for new license without having to retest, up to 1 yr following the expiration
- After one year, if still expired, must reapply and retest Continuing Education - ANSWER-30 hrs required during license cycle 50% Classroom setting/ Classroom equivalent 2 hrs of Ethics Keep records for at least 4 yrs in case of audit No grace period given for completing continuing education Termination of Appointment - ANSWER-If an agency contract has been in place for two years or longer agent is entitled to a 6 months advanced notice. Reason for termination must be provided Examples of License Revocation or Renewal Refused - ANSWER--Violation of insurance laws
- Misappropriation of funds or defraud a policyholder(cannot reapply for five years)
Part B two (personal auto policy) - ANSWER-Texas Personal Injury Protection Part C (personal auto policy) - ANSWER-Uninsured and Underinsured Motorist Part D (personal auto policy) - ANSWER-Damage to your auto Bodily Injury (personal auto policy) - ANSWER-Bodily harm, sickness or disease including death Bodily Injury covers injuries caused by the insured including what? - ANSWER-Medical Expenses, Lost Wages, Pain & Suffering Property Damage (personal auto policy) - ANSWER-Includes physical injury to, destruction of, or loss of use of tangible property Property damage covers damages caused by insured including what? - ANSWER-Damage to another vehicle, damage to a building, damage to a wall or fence Minimum Limits of Liability in Texas - ANSWER-30/60/ 30,000 bodily injury per person 60,000 bodily injury per accident 25,000 for damage per accident Types of Supplementary Payments (personal auto policy) - ANSWER-Bonds - premiums for appeal and bail bonds (up to $250) Loss of Earnings - up to $200 per day, if insured misses work due to trial Liability Exclusions - ANSWER-Use of vehicle without permission Use of vehicle used as a public or taxi transporter
Use of vehicle in prearranged racing or speed contest Loss caused intentionally by the insured Damage to property owned or being transported by the insured Motorized vehicles with fewer than four wheels Other Insurance Clause - ANSWER-Any insurance the company provides for a vehicle that is not owned by the insured will be considered excess to other insurance Medical Payments - ANSWER-Pays for: Insured occupying an auto or as a pedestrian Pays regardless of fault up to three years Minimum limit is $500 per person Texas Personal Injury Protection (PIP) - ANSWER-Pays for: Insured occupying an auto or as a pedestrian Insures the guest passenger Pays regardless of fault up to three years Medical and funeral expenses 80% of lost wages OR essential services A person cannot collect both lost wages and essential services Minimum limit is $2500 per person (must be included with all minimum limits of liability policies issued in Texas unless rejected in writing) Uninsured Motorist Coverage - ANSWER-Provides coverage when at-fault third party does not carry liability insurance Includes hit and run Physical contact with another vehicle must occur
If you have no comp/coll = only covered for 4 days with broadest coverage on policy. (Must notify within 4 days) Auto Policy - Insurer Cancellation - ANSWER-Insurer can only cancel within 60 days with underwriting reason or non-payment and 10 day notice to insured. After 60 days - Insurer can only cancel with 10 day notice for non-payment, DL suspended/revoked, fraudulent claim, or veh registration suspended/revoked.
