Midterm Review

Question 0

What is a hazard?

Answer 0

Any condition that increases the chance of loss or frequency or severity of a loss

Question 1

What is insurance?

Answer 1

Protection against certain losses by transferring risks from individuals to a group

Question 2

What is the formula for Actual Cash Value (ACV)

Answer 2

Replacement value - depreciation

Question 3

What is an Open/All Policy?

Answer 3

Covers all perils except those excluded

Question 4

What is named/specific policy?

Answer 4

Only covers perils listed in policy

Question 5

Where would one find the term insured?

Answer 5

Definitions section of policy

Question 6

Where would you find the “who” and “what” that are insured?

Answer 6

Decelerations section of policy

Question 7

Where would you find the promise to pay?

Answer 7

The insuring agreement section of policy

Question 8

Where would you find the limitations to coverage?

Answer 8

Exclusions section of policy

Question 9

What is an insurable interest?

Answer 9

A financial interest or ownership at the time of loss

Question 10

What are the four parts of a contract?

Answer 10

Consideration
Legal purpose
Agreement
Competent parties

Question 11

In the insurance contract, what does agreement represent?

Answer 11

Offer is when the person submits the application

Acceptance is when the insurance company offers a policy

Question 12

What coverages are only available as an endorsement to BAP?

Answer 12

PIP and Uninsured

Question 13

Where would you find the coverage extension Transportation Expenses?

Answer 13

Comprehensive

Question 14

What is he difference between Medical Payments and PIP?

Answer 14

Medical pays $500, does not cover lost income
PIP pays $2,500 80% of actual income lost or reimbursement of essential services

Both are per person and 3 year time limit to report

Question 15

What is the difference between newly acquired replacement vehicle and newly acquired additional vehicle?

Answer 15

Newly acquired replacement vehicle - the most broadest coverage transfers for 30 days then drops to liability

New acquired additional vehicle, no coverage after 30 days

Question 16

What is the only coverage that can be rejected with an option form?

Answer 16

PIP/Medical

Uninsured

Question 17

What is a garage keepers policy?

Answer 17

Physical damage to property you don’t own but that you have care, custody or control of is covered under this type of policy.

Question 18

What is the deductible for Uninsured Motorist?

Answer 18

$250

Question 19

Define negligence

Answer 19

Failure to exercise the standard of care required by law to protect others from harm

Question 20

What is subrogation?

Answer 20

Insurance company’s right to go after the truly negligent party after a claim is paid

Prevents someone from being paid by the insurance company and the negligent party.

Question 21

What is the difference between accident and occurrence?

Answer 21

An accident is a single event, normally sudden and unexpected
An occurrence is a single event that can occur over a period of time

Question 22

What is the controlled business law?

Answer 22

25% or more has to come from general public

75% can come from whoever you want

Question 23

What are the CE requirements for a PCA?

Answer 23

30 CE hours every 2 years

Question 24

What is a domestic insurer?

Answer 24

An insurer who is in the same state that they are incorporate and formed in

Question 25

Who is a foreign insurer?

Answer 25

An insurer in a different state than the one they are incorporated in

Question 26

Who is an alien insurer?

Answer 26

An insurer from a different country

Question 27

What is the Texas Property & Casualty Guaranty Association?

Answer 27

Provides for: 25K in unpaid premiums 300K in unpaid claims Covers workers compensation at 100%

Question 28

Under a PAP, if I hit a tree or other object, what physical damage coverage would pay?

Answer 28

Collision

Question 29

If I hit an animal, what physical damage coverage pays?

Answer 29

You can chose between comprehensive or collision

Question 30

What physical damage coverage pays in the case of a hurricane?

Answer 30

Comprehensive

Question 31

What is defamation?

Answer 31

Publishing false information in order to hurt someone

Question 32

What is rebating?

Answer 32

Inducing someone to buy a policy by offering something of value

Question 33

What is representation?

Answer 33

Statement

Question 34

What is a hazard?

Answer 34

Something that increases the chance of a loss

Question 35

What is risk?

Answer 35

Chance of loss

Question 36

What is peril?

Answer 36

An event that causes a loss

Question 37

A temporary emergency license is issued for his long?

Answer 37

3 months / 90 days

Question 38

Licenses renew every

Answer 38

2 years

Question 39

Misrepresentation is

Answer 39

Telling a lie

Question 40

Who holds a company appointment?

Answer 40

Property casualty agent (PCA)

Question 41

How soon must a claim to the Texas Property and Casualty Guaranty Association must be made?

Answer 41

30 days

Question 42

Who does an agent represent?

Answer 42

Insurance company

Question 43

Who does the broker represent?

Answer 43

The policyholder

Question 44

When must a licensed agent report of change of address?

Answer 44

Immediately

Question 45

What is twisting?

Answer 45

Giving a misleading comparison to the insured to induce them to buy

Question 46

What type of insurance company is the policyholder considered an owner with the right to vote and share in profits?

Answer 46

Mutual company

Question 47

What is indemnity?

Answer 47

The principle that an insured should be restored to approximately the same financial condition after a loss as before the loss

Question 48

What is an indirect loss?

Answer 48

Loss and result of a direct loss Example is the hotel costs after a house fire

Question 49

What is the only Insurable risk?

Answer 49

Pure risk

Question 50

Concealment

Answer 50

Failure to disclose a known truth

Question 51

Appraisal

Answer 51

Provides a means to settle the amount of loss when the insured and insurance company can't agree

Question 52

What does a binder do?

Answer 52

Provides temporary protection for the insured between the time the application is made and the policy is issued or the binder expires

Question 53

What is a deductible?

Answer 53

Insured must pay a certain amount for each loss incurred under the policy

Question 54

Consequential loss

Answer 54

An additional loss that results from a direct loss

Question 55

What are supplementary payments?

Answer 55

Payable in addition to policy limits Covers defense costs Work cost if required to be in court Bail