2022 Texas Adjuster Study Guide 367 QUESTIONS ANSWERS ALL
CORRECT
1. PERILS: A CAUSE OF PROPERTY LOSSES UNDER AN INSURANCE CON- TRACT EX: WINDSTORM, HURRICANE, EXPLOSION, COLLAPSE OF
BUILD- ING, VANDALISM, ACCIDENTAL DISCHARGE, AND THEFT
2. LAW OF LARGE NUMBERS: A FUNDAMENTAL CONCEPT IN STATISTICS
AND PROBABILITY THAT DESCRIBES HOW THE AVERAGE OF A RANDOM-
LY SELECTED LARGE SAMPLE FROM A POPULATION. IT BASICALLY RE- LIES ON THE PRINCIPLE THAT THE LARGER THE POOL, THE MORE PRE-
DICTABLE THE AMOUNT OF LOSSES WILL BE IN A GIVEN PERIOD
3. PRINCIPLE OF INDEMNITY: IS AN INSURANCE PRINCIPLE STATING THAT AN INSURED MAY NOT BE COMPENSATED BY INSURANCE COMPANY
IN AN AMOUNT EXCEEDING THE INSURED'S ECONOMIC LOSS.
4. LIMITS OF LIABILITY: THE MAXIMUM AMOUNT THAT AN INSURANCE POL- ICY WILL PAY. IT IS SPECIFIED ON THE POLICY DECLARATION PAGE
5. PROPERTY INSURANCE: COVERAGE FOR REAL AND PERSONAL PROP- ERTY AGAINST LOSS OR DAMAGE FROM PERILS INSURED AGAINST.
6. LOSS SETTLEMENT: THE PROCESS USED TO DETERMINE THE AMOUNT OF THE LOSS
7. ACTUAL CASH VALUE: THE VALUE OF THE PROPERTY BASED ON THE CURRENT COST TO REPLACE IT MINUS DEPRECIATION.
8. AGREED VALUE: THE AMOUNT THAT THE INSURED AND INSURER AGREE UPON DURING THE TIME OF POLICY INCEPTION.
9. REPLACEMENT COST: THE COST ASSOCIATED WITH REPLACING PROP- ERTY AT CURRENT MARKET PRICES
10. MARKET VALUE: THE AMOUNT THAT THE PROPERTY IS WORTH IN A COMPETITIVE MARKET. THIS AMOUNT IS ACCEPTED BY THE BUYER AND
SELLER.
11. TORT: IS A WRONG THAT INVOLVES A BREACH OF CIVIL DUTY OWED TO SOMEONE ELSE. THIS BREACH DETERMINES IF THAT PERSON IS
NEG- LIGENCE.
12. ELEMENTS USED TO DETERMINE NEGLIGENCE: A DUTY OWED, A DUTY BREACHED, PROXIMATE CAUSE, AND DAMAGES
13. METHODS TO DETERMINE LOSS ARE:: ACV, MARKET VALUE, REPLACE- MENT COST, AGREED VALUE
14. CASUALTY INSURANCE: PROTECTS A PERSON FROM FINANCIAL LOSS
ARISING FROM BODILY INJURY OR PROPERTY DAMAGE TO OTHERS
15. HAZARD: IS A SITUATION THAT POSES A LEVEL OF THREAT TO LIFE, HEALTH, PROPERTY, OR ENVIRONMENT.
16. INDIRECT LOSS: TYPE OF LOSS THAT DOES NOT RESULT FROM DI- RECT DAMAGE OF A COVERED CAUSE OF LOSS OR PERIL BUT IS INSTEAD
A CONSEQUENCE OF THE DIRECT DAMAGE LOSS.
17. DIRECT LOSS: DIRECT PHYSICAL LOSS TO PROPERTY
18. INSURING AGREEMENT: THIS SECTION OF THE INSURANCE POLICY SPECIFIES WHAT THE INSURANCE WILL PROVIDE COVERAGE FOR IN EX
CHANGE FOR PREMIUM PAYMENTS BY THEIR CUSTOMER.
19. DEDUCTIBLE: THE AMOUNT THE INSURED MUST PAY IN A LOSS BE- FORE ANY PAYMENT IS DUE FROM THE INSURANCE COMPANY.
20. WHERE IS A HOMEOWNER PERCENTAGE DEDUCTIBLE ALWAYS TAKEN FROM?: COVERAGE A STRUCTURE POLICY LIMITS OF LIABILITY THAT
IS USED ON THE DECLARATION PAGE.
21. CANCELLATION: IS THE TERMINATION OF AN INSURANCE POLICY BY EITHER SIDE AND IT MUST BE DONE IN WRITING
22. LIABILITY: A PERSON IS LEGALLY LIABLE FOR AN ACCIDENT IF THAT PERSON IS FOUND RESPONSIBLE FOR BODILY INJURY OR PROPERTY
DAMAGE TO ANOTHER PARTY.
23. NEGLIGENCE: THE FAILURE TO EXERCISE THE CARE THAT A REASON- ABLY PRUDENT PERSON CAN BE CHARACTERIZED BY THE AVERAGE
PER- SON.
24. ADDITIONAL LIVING EXPENSES: CHARGES COVERED BY HOMEOWN- ERS POLICY OVER AND ABOVE POLICY HOLDERS CUSTOMARY LIVING
DUE TO DAMAGE BY A COVERED PERIL AND MAKES THE HOME TEMPO- RARY UNINHABITABLE.
, 2022 Texas Adjuster Study Guide 367 QUESTIONS ANSWERS ALL
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25. EXPOSURE: THE MEASURE OF THE POSSIBILITY OF THE LOSS
26. INSURED: THE PARTY TO AN INSURANCE ARRANGEMENT THAT HAS AN INSURABLE INTEREST IN THE PROPERTY THAT IS BEING INSURED.
27. INSURER: INSURANCE COMPANY
28. LOSS HISTORY: IS THE INSURED HISTORY OF LOSSES WITH OTHER COMPANIES. INSURANCE COMPANY VIEWS THIS AS INDICATION OF IN
SURED PROPENSITY FOR A CLAIM IN FUTURE.
29. NOTICE OF LOSS: NOTICE REQUIRED BY THE INSURANCE COMPANY
IMMEDIATELY AFTER AN INCIDENT. POLICY HOLDER RESPONSIBILITY AF- TER A LOSS
30. DEPRECIATION: ACT OF LOWERING AN ITEM DUE TO VALUE WEAR AND TEAR IT IS BASED ON AGE, CONDITION, AND LIFE EXPECTANCY.
31. PUNITIVE DAMAGE: THE AMOUNT AWARDED BY THE COURT WHICH IS
INTENDED TO REFORM OR DETER THE DEFENDANT FROM ENGAGING IN SIMILAR CONDUCT IN THE FUTURE
32. COMPARATIVE NEGLIGENCE: IS A PARTIAL LEGAL DEFENSE THAT RE- DUCES THE AMOUNT OF DAMAGES THAT A PERSON CAN RECOVER
BASED UPON THE AMOUNT THAT THIS PERSON'S OWN NEGLIGENCE CON- TRIBUTED TO THE LOSS
33. CONTRIBUTORY NEGLIGENCE: IS A LAW DEFENSE WHERE A PERSON NEGLIGENCE CONTRIBUTED TO THE HARM THAT HE OR SHE SUSTAINED
34. ASSUMPTION OF RISK: A doctrine under which a plaintiff may not recover for injuries or damage suffered from risks he or she knows of and has voluntaril
assumed
35. ADVERSE SELECTION: THE TENDENCY OF INSURED'S WHO PRESENT
A HIGHER PROBABILITY OF LOSS TO PURCHASE OR RENEW INSURANCE MORE OFTEN THAN THOSE WHO PRESENT A LOWER PROBABILITY
36. ATTRACTIVE NUISANCE: A dangerous place, condition, or object that is particularly attractive to children.
37. ACCIDENT: UNFORESEEN, UNINTENDED EVENT, SOMETHING UNEX- PECTED
38. OCCURRENCE: AN EVENT THAT RESULTS IN AN INSURED LOSS WHICH RESULTS IN BODILY INJURY OR DAMAGES
39. BETTERMENT: IMPROVEMENT OF PROPERTY THAT PUTS IT IN A BET- TER CONDITION THAN IT WAS BEFORE THE OCCUPANCY OR LOSS
40. ALL RISK INSURANCE: "open perils" insurance - protecting the insured from loss arising from any peril other than those perils specifically excluded by name
41. APPRAISAL: IS A FORM OF DISPUTE RESOLUTION THAT OCCURS
WHEN THERE IS A DISPUTE BETWEEN THE INSURED AND THE INSURANCE
COMPANY REGARDING THE AMOUNT OF THE CLAIM OR LOSS. BOTH PAR- TIES HIRE AN APPRAISAL AND IF CANT DECIDE THEN THEY WILL HIRE AN
UMPIRE
42. BREACH OF CONTRACT: THE FAILURE TO COMPLY WITH TERMS OR CONDITIONS OF AN INSURANCE POLICY THAT MAY RESULT IN RESTRICT
ED COVERAGE OR VOID THE POLICY.
43. BODILY INJURY: Physical pain, illness or any impairment of physical condition
44. CONCEALMENT: The withholding of known facts which, if material, can void a contract or not pay out on claims related to that material information
45. DAMAGES: THE AMOUNT CLAIMED BY OR AWARDED TO AN INJURED
PARTY AS COMPENSATION FOR LIABILITY OWING TO BODILY INJURY OR PROPERTY DAMAGE
46. FRAUD: INTENTIONAL LYING OR MISREPRESENTATION BY POLICY
HOLDER OR CLAIM ADJUSTERS OF A MATERIAL FACT IN ORDER TO IN-
FLATE A CLAIM PAYMENT OR RECEIVE A CLAIM PAYMENT THAT WOULD OTHERWISE NOT BE PAID OR VOID THE CONTRACT
47. INCURRED EXPENSES: EXPENSES THAT HAVE ALREADY BEEN SUS- TAINED AND HAVE NOT BEEN PAID EX: AN ADDITIONAL LIVING EXPENSE
CLAIM IS A REIMBURSEMENT OF INCURRED EXPENSES.
48. LOSS PAYEE: the person designated on an insurance policy as the one to be paid in case the property is damaged/destroyed
, 2022 Texas Adjuster Study Guide 367 QUESTIONS ANSWERS ALL
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49. CLAIMANT: IS A PARTY WHO MAKES A CLAIM
50. CO INSURANCE CLAUSE: A clause in an insurance policy under which the insured agrees to maintain insurance equal to some specified percentage of th
property value or otherwise to assume a portion of any loss
51. COLLISION: COVERAGE THAT PAYS FOR DAMAGES TO YOUR CAR WITH- OUT REGARDS TO WHO CAUSED THE ACCIDENT. Covers a collision
with another object, car, or from a rollover.
52. COMMERCIAL GENERAL LIABILITY: Insurance that covers many of the common commercial general liability loss exposures faced by an organization
including its premises, operations, and products. An employee working in a cus- tomer's home trips and injures the customer causing property damage the
employ- ee and business would be covered under
53. CATASTROPHE: A SEVERE DISASTER THAT INVOLVES A LARGE POPU- LATION AND GENERATES LARGE AMOUNT OF PROPERTY DAMAGE
54. COMPREHENSIVE COVERAGE: Insurance that pays for damage to your car caused by something other than a collision, such as damage from storms, FIRE
HAIL, FALLING OBJECTS, vandalism, and theft. IT ALSO PAYS FOR A RENTAL IF YOUR CAR IS STOLEN
55. CONCURRENT CAUSATION: A situation where there are 2 causes resulting in a loss and 1 of the causes is excluded while the other cause is not excluded
Unless the policy specifies otherwise, the loss is covered. Example: a policy that excludes earth movement will still pay a loss due to for or explosion tha
ensues directly from the earth movement.
56. CONDITIONS: THE PART OF THE INSURANCE POLICY THAT DETAIL THE
RIGHTS AND DUTIES OF THE INSURED AND THE INSURANCE COMPANY IN THE POLICY
57. ENDORSEMENTS: IS A SPECIFIC ADDITION TO A POLICY THAT ALTERS
THE COVERAGE AND THEREFORE THE PRICE OF THAT POLICY YOU CAN EITHER ADD OR REMOVE SPECIFIC TYPES OF COVERAGE
58. DECLARATION PAGE: PART OF THE WRITTEN INSURANCE POLICY THAT
STATES ALL THE POLICY'S SPECIFICS LIKE NAME, PROPERTY INSURED, PREMIUMS, AND THE LIMITS FOR THE COVERAGE
59. EXCLUSIONS: specific hazards listed in an insurance policy for which the
insurance company will not pay EX WEAR AND TEAR, RUST, ROT, CONTAMI- NATION, AND MECHANICAL BREAKDOWN
60. MATERIAL MISREPRESENTATION: A SIGNIFICANT MISSTATEMENT IN AN APPLICATION FORM. IF A COMPANY HAD ACCESS TO THE CORRECT
INFO AT THE TIME OF THE APPLICATION PROCESS THE COMPANY MIGHT HAVE NOT AGREED TO ACCEPT THE APPLICATION
61. OCCURRENCE: IS AND EVENT THAT RESULTS IN AN INSURED LOSS WHICH RESULTS IN BODILY INJURY OR DAMAGES
62. SALVAGE: LEFT OVER VALUE OF A CLAIM WHEN AN INSURANCE COM-
PANY RECOVERS AND SELLS PROPERTY TO REDUCE ITS FINANCIAL LOSS
63. PERSONAL LINE: Insurance for individuals and families, such as private-pas- senger auto and homeowners insurance.
64. RESERVES: IS A COMPANY BEST ESTIMATE OF WHAT IT WILL PAY FOR
CLAIMS. THE AMOUNT REPRESENTING ACTUAL OR POTENTIAL LIABILI- TIES KEPT BY AN INSURER TO COVER DEBTS TO POLICY HOLDERS
65. SUBROGATION: The legal process by which an insurance company seeks recovery of the amount paid to the insured from a third party who may have cause
the loss
66. UMBRELLA INSURANCE: REFERS TO LIABILITY INSURANCE COVER- AGE ABOVE THE LIMS OF YOUR HOMEOWNERS, AUTO, AND BOAT POLI
CIES, IT MAY PROVIDE COVERAGE CLAIMS THAT MAY BE EXCLUDED BY
OTHER LIABILITY POLICIES LIKE FALSE ARREST, LIBEL AND SLANDER, INVASION OF PRIVACY
67. POLICY TERRITORY: IDENTIFIES THE PLACE WHEN COVERAGE UNDER A POLICY APPLIES
68. THIRD PARTY PROVISIONS: THE STANDARD MORTGAGEE OR LOSS
PAYABLE CLAUSE SPECIFIES THE RIGHTS AND DUTIES OF THE MORT- GAGEE OR LOSS PAYEE UNDER THE POLICY EX. THE MORTGAGEE MAY
BE EXPECTED TO PAY THE POLICY IF THE INSURED FAILS TO DO SO
69. ADDITIONAL COVERAGES: COVERAGES APPLY ONLY IN CERTAIN CIR- CUMSTANCES HAVE REDUCED OR SEPARATE LIMITS OF LIABILITY OR
REQUIRE THE INSURED TO MEET CERTAIN REQUIREMENTS
