Exam (elaborations)
Texas Property & Casualty Insurance License Prep
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Texas Property & Casualty Insurance License Prep
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Texas Property & Casualty InsuranceLicense Prep
An insurance provider has to be fair in their underwriting and must pay all covered
losses of any insured. For the faithful execution of these duties, an insurance provider
has the right to: - ANS-Accept the payment of premiums for every policy currently in
force. (An insurance provider has the right to accept a premium for a policy that has
been fairly underwritten and for which covered losses are paid.)
A potential insured intentionally did not disclose a material fact on their application for
insurance. This would be considered - ANS-Concealment (Concealment is the legal
term for intentionally withholding information of a material fact that is critical in making a
decision. With respect to insurance, concealment is the withholding of information that
will result in an inaccurate underwriting decision.)
If an insurance provider affirms that the value of a loss is $5,000, but the policyholder is
certain that the amount of the loss is substantially different, which of the following would
likely be used to settle the disagreement? - ANS-Arbitration (When an insurer and
insured are unable to agree on how to settle a claim, arbitration is often used. The
settlement is submitted to an arbitrator whose decision may or may not be binding on
both parties depending on state law.)
Which of the following best describes the law of large numbers? - ANS-The larger the
pool of risks, the more accurate the predictions will be. (Actuaries make use of the law
of large numbers to set premium rates. It is more likely for similar results to occur if a
larger group is studied.)
What part of the insurance contract explains the covered perils and the nature of
coverage of the contractual agreement between the insured and the insurance
company? - ANS-Insuring Agreement - (The insuring agreement is the part of the policy
structure that describes the method of indemnification and the insured perils.)
Under a homeowners policy, which of the following exposures is NOT covered? -
ANS-Medical payments to an insured (Section II of the HO policy provides medical
payments to others but does not include coverage for the payment of medical expenses
of an insured.)
, The Fair Credit Reporting Act is intended to - ANS-Protect consumers against the
circulation of obsolete or inaccurate financial or personal information. (The Fair Credit
Reporting Act is administered by the Federal Trade Commission. The law was designed
to protect consumers against the circulation of obsolete or inaccurate information and to
make sure that consumer reporting agencies are fair and equitable in the way they treat
consumers.)
What information is contained within the conditions section of an insurance policy? -
ANS-The description of the duties and obligations of the policyowner. (Conditions is the
part of an insurance policy that states the general rules or procedures that the insurance
provider and insured agree to follow under the terms of the policy.)
The two types of utility services endorsements are - ANS-Direct damage and time
element (The 2 types of utility services endorsements are direct damage and time
element.)
Under Coverage C, and at the request of a policyholder, personal property of a
residence employee or guest is covered - ANS-While it is located in any residence
premises occupied by a policyholder. Personal property usually located at a residence,
or located on the described location for the policy-owner and resident family members,
as well as the property of guests or servants can be covered at the discretion of the
policy-owner.
Which of the following statements does accurately describe the term "endorsements"? -
ANS-Endorsements have to be signed by an executive officer. Endorsements can be
added during the policy term. Endorsements are printed addenda added to a policy.
Endorsements can be used to correct items, add coverage or remove coverage from an
existing policy.
All of the following are TRUE with respect to a policy's cancellation condition. - ANS-The
policy-owner can cancel the policy at any time by mailing a written notice of cancellation
to the insurance company.
The insurance company can cancel the policy by mailing a written notice to the first
named insured only.
The insurance company is required to provide advance notice of its cancellation to the
policy-owner.
(The insurance company only has to prove that the notice was mailed to the address on
file, not that the insured received the notice.)
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