TEXAS PROPERTY AND CASUALTY INSURANCE

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TEXAS PROPERTY AND CASUALTY INSURANCE

PRACTICE EXAM NEWEST ACTUAL EXAM 350

QUESTIONS AND CORRECT DETAILED ANSWERS

(VERIFIED ANSWERS) |ALREADY GRADED A+

Conditions that increase the chance of a loss are know as what? - ANSWER- Hazards

How is the actual cash value of a property calculated? - ANSWER- Current replacement cost minus depreciation

What are the three types of hazards? - ANSWER- Physical, Moral, Morale

A policy that covers all causes of loss except for those specifically excluded is known as what type of policy? - ANSWER- Open Peril (or special) form

What is negligence? - ANSWER- Failure to act as a reasonable, prudent person under given circumstances

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What is burglary? - ANSWER- A forced entry into another's premises with felonious intent

What type of limits of liability has the limits separately stated for different coverages? - ANSWER- Split limits

In property insurance, when must insurable interest exist? - ANSWER- At the time of loss

What is a risk? - ANSWER- Uncertainty of loss

Under absolute liability, does an injured party need to prove negligence? - ANSWER- No. Absolute liability exists when a condition or conduct is inherently dangerous, so proof of negligence is not required.

What determines an insurer's responsibility for payment, as stated in an insurance policy? - ANSWER- Limits of liability

(Insurance Carried/Insurance Required) x Loss Amount= - ANSWER- Loss payment

What is the term for the causes of loss insured against in an insurance policy? - ANSWER- Peril 2 / 4

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What do individuals use to transfer their risk of loss to a larger group? - ANSWER- Insurance

A tornado that destroys a property would be an example of what? - ANSWER- Peril

What sublimit in a liability policy puts a ceiling on the payment for all claims that arise from a single accident? - ANSWER- Per occurrence

Insurance is a contract that protects the insured from what? - ANSWER- Loss

A situation in which a person can experience only a loss and no gain presents what type of risk? - ANSWER- Pure risk

What is the difference between vacancy and unoccupancy? - ANSWER- Vacancy refers to an insured structure in which no people have been living or working and no property has been stored for the specified period of time. Unoccupancy refers to an insured structure in which no people have been living or working within the required period of time, but some property is stored. 3 / 4

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A person who does not lock the doors to his or her house shows an indifferent attitude. What type of hazard does this represents?

• ANSWER- Morale

Both robbery and burglary can be considered what? - ANSWER- Theft

What is a deductible in an insurance policy? - ANSWER- A specified dollar amount that the insured must pay before the insurer will pay the policy benefits

In property insurance, what is actual cash value? - ANSWER- Replacement cost at the time of loss, minus depreciation

Wagering on a sporting event is known as what type of risk? - ANSWER- Speculative

What term defines an exact, direct, and uninterrupted cause of loss? - ANSWER- Proximate cause

What is subrogation? - ANSWER- An insurer's legal right to seek damages from third parties after reimbursing insureds for a loss

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