TEXAS PROPERTY AND CASUALTY EXAM AND PRACTICE QUESTIONS WITH VERIFIED CORRECT ANSWERS || GRADED A+ || LATEST UPDATE
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TEXAS PROPERTY AND CASUALTY
Institution
TEXAS PROPERTY AND CASUALTY
TEXAS PROPERTY AND CASUALTY
EXAM AND PRACTICE QUESTIONS
WITH VERIFIED CORRECT ANSWERS ||
GRADED A+ || LATEST UPDATE
Laws of Large Numbers - ANSWER The larger the group, the more
accurately losses can be predicted
Elements of Insurable Risk - ANSWER C-alculable
A-ffor...
TEXAS PROPERTY AND CASUALTY
EXAM AND PRACTICE QUESTIONS
WITH VERIFIED CORRECT ANSWERS ||
GRADED A+ || LATEST UPDATE
Laws of Large Numbers - ANSWER ✔ The larger the group, the more
accurately losses can be predicted
Elements of Insurable Risk - ANSWER ✔ C-alculable
A-ffordable
N-on-catastrophic
H-omogeneous
A-ccidental
M-easurable
Calculable - ANSWER ✔ Premiums must be calculable based upon
prior loss statistics for that particular risk in order to predict future losses
Affordable - ANSWER ✔ The premium for transferring the risk should
be affordable for the average consumer
Non-catastrophic - ANSWER ✔ The risk must be non-catastrophic for
the insurance company
Homogeneous - ANSWER ✔ The risk must be similar in nature so the
same factors affects the chance of loss
, Accidental - ANSWER ✔ The loss mus have caused due to
chance(accident). Intentional losses caused by the insured not covered
by insurance
Measurable - ANSWER ✔ A definite and measurable loss means the
proof of loss must be established with numbers and dollars amounts, not
just casual references
Reinsurance - ANSWER ✔ An insurance company's insurance
company. Helps insurers spread their risk.
Stock Insurers - ANSWER ✔ -Owned by stockholders
-Dividend is not guaranteed
-Dividend is paid to stockholder
-Dividend is taxable to stockholder
-Issue non-participating policies
Ex: Allstate
Mutual Insurer - ANSWER ✔ -Owned by policyholders
-Dividend is not guaranteed
-Dividend is paid to policyholder
-Dividend is not taxable; considered refund of premium
-Issue participating policies
Ex: Liberty Mutual
Fraternal Benefit Society - ANSWER ✔ -Provides insurance and other
benefits
-Must be a member to get the benefits
Ex: Herman and Sons
Reciprocal Insurer - ANSWER ✔ -Unincorporated
-Members are assessed if a loss occurs to any members of the group.
-Managed by an attorney-in-fact
Ex: USAA
Risk Retention Group - ANSWER ✔ -Liability insurance company
created for policyholders from the same industry
Ex: A car dealer's risk retention group in which only car dealers can be
policyholders
Risk Purchasing Group - ANSWER ✔ A group of businesses from the
same industry that joins together to buy liability insurance from an
insurance company.
Self Insurance - ANSWER ✔ A business that pays its own claims.
Reserves funds cover losses
Retain risk rather than transfers
Federal Government Provides Insurance - ANSWER ✔ -War Risk
Insurance
-Nuclear Energy Insurance
-Flood Insurance
-Federal Crop Insurance
-Unemployment Insurance (at state level)
-Workers' Compensation (at state level)
Insurance Company Location - ANSWER ✔ -Domestic
-Foreign
-Alien
Domestic - ANSWER ✔ The state where a company has its home office
, Foreign - ANSWER ✔ Home office is in another state
Alien - ANSWER ✔ Home Office is in another country
Certificate of Authority - ANSWER ✔ State license for an insurance
company
Authorized or Unauthorized
Alternative dispute methods (appraisal) - ANSWER ✔ disagreement of
the amount of the loss
- comp. and insured ea. pay their own appraiser
***- appraisers get an umpire if they can't agree (cost shared)****
- agreement of any 2/3 determines amount
Arbitration - ANSWER ✔ disagreement about other areas of the loss
Vacancy & Unoccupancy - ANSWER ✔ - Vacant = empty bldg,
insured (no ppl or contents) penalized after 60 days of vacancy
- Unoccupied: contents remain, but no ppl, no loss of coverage
No benefit to Bailee ( care custody ) - ANSWER ✔ a person or business
that has temporary control of the insured's property.
- BAILEE cannot benefit from the property owners policy.
Property vs. casualty ins - ANSWER ✔ - property covers personal
belongings & real property. ex: if house is burnt down, ins pays for
rebuilt.
- casualty pays the "other guy" ex: if my dog bites mailman, insurance
pays mail carrier
Third party losses - ANSWER ✔ the 3rd party is the "other guy"
- 1st : insured
- 2nd : insurance company
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