Texas All Lines
Adjuster Test Study
Guide & Terms
Accumulated Depreciation
- The total decrease in an item’s value over a period of time. Formula: (Annual
Depreciation x Number of years used)
Acreage Reporting Date - The deadline for providing the insurer with an acreage report, which is used
to determine the amount of coverage needed and the premium charged for a
particular crop.
Actual Cash Value (ACV) - A valuation method used by insurers to reflect an item’s current market value
right before being damaged or destroyed. Formula: (Replacement cost –
Accumulated Depreciation)
Actual Production History - A history of a farmer’s crop yields over a multi-year period, which is used to
determine the normal production level of a farm.
Adhesion - Characteristic of an insurance contract. Means that one party (the insurer)
sets the terms, and the other (the policyholder) can “take it or leave it.”
Adjusted Gross Revenue (Crop Insurance) - Narrowest (and least expensive) form of Crop Revenue Insurance. Insures
farm revenue as a whole instead of individual crops. Guarantees a percentage
of the insured farm’s average revenue.
Adjuster - An agent who, for compensation, processes insurance claims. Can represent
either the insured or the insurer.
Adjuster – Emergency - Adjusters who are temporarily licensed by the insurance commissioner to
handle claims during catastrophes or emergencies that produce an
overwhelming number of claims in a short period of time.
Adjuster – Independent - Self-employed adjusters who contract with multiple insurers at the same
time. Paid on a commission or fee-plus-expenses basis for each claim. Also
called: Fee Adjuster, Bureau Adjuster
Adjuster – Public - An adjuster who is hired to represent the claimant and help determine a fair
indemnification. Usually specializes in appraisals and negotiation. Paid
commission, usually a percentage of final settlement.
Adjuster – Staff
- Salaried employee of one insurance company who can work locally, regionally,
or nationally. Also called: Company Adjuster
Advance Payment Settlement - A settlement option that lets the insurer offer some financial relief to the
claimant before the claim has been fully settled. The insurer makes advance
payments to the claimant, which are then subtracted from the final settlement
amount. Often used when a claimant suffers bodily injury and is unable to
work.
Agency Authority - The Agent’s authority to act on behalf of someone else, usually an insurer.
This authority is derived from the agent’s contract with the insurer.
Agency Authority – express - Authority that is expressly given to the agent in writing. Allows agent to act
on behalf of the principal.
Agency Authority – implied - Authority that an agent possesses by implication of her behavior, regardless
of whether this authority is granted in writing.
Agency Authority – apparent - Authority that an agent possesses based on the appearance of representing
the insurer.
Agent - Someone who has received authority from an insurer to sell or service
insurance policies.
Aggregate Limit - A type of policy limit found in some health, liability, and property damage
policies. It represents the total amount the insurer will pay for all losses (as
opposed to an occurrence limit, which denotes the total amount the insurer
will pay per occurrence).
Agreement - One of the four requirements of a legally binding contract. All parties involved
must agree to the terms of the contract. Can also refer to a binder, which is the
preliminary substance of a contract.
Agricultural Producer - A business that grows, harvests, and sells crops for profit.
Aleatory - A characteristic of an insurance contract. Means “depending on an unknown
future event.” An insurance contract will only pay IF and WHEN covered
damages occur. Neither party knows how much the contract will end up paying
when they enter into the contract.