Property and Casualty Texas Exam

____ is uncertainty of loss

risk

____ is a transfer of risk from the insured to the insurer

insurance

____ risk means there is no chance of gain. It is insurable.

pure

____ risk means there is a chance of a loss or a gain. It is not insurable.

speculative

a ____ is something that increases the risk.

hazard

the principle of _____ governs property and casualty policies. It states that the purpose of the policy is to restore the insured financially to where they were prior to the loss

indemnity

_____ _____ must exist on a casualty policy at time of loss in order for the policy to provide coverage.

insurable interest

the law of _____ _____ is used to predict the likelihood of loss

large numbers

____ ____ ____ is replacement cost minus depreciation.

actual cash value

________ is a tort, or civil wrong; it is grounds for a lawsuit.

Negligence

_______ is the failure to act as a reasonable person would in the same set of circumstances

negligence

an _____ happens over a period of time

Occurrence

a _____ may be oral or written

binder

a _____ provides coverage until the policy is issued. it includes all coverages provided by the policy.

binder

a ____ is a literal truth

warranty

a _______ is a substantial truth. in insurance, statements of the applicant/policyowner are _______ - true to the best of their knowledge

representation

______ is an omission of a material fact.

concealment

the insurer has the right to sue a negligent third party for damages paid to an insured under the concept of ______

subrogation

four parts of a policy

DICE (declarations, insuring agreement, conditions, and exclusions)

the ______ list the named insured, policy limits, and premium and policy period

declarations

the ____ __ ____ are found on the declaration page of the policy

limits of liability

the _______ _______ describes the coverages provided

insuring agreement

the _______ list the obligations of both parties, the insurer and the insured

conditions

the ______ list the perils that are not covered

exclusions

If the Insurer and the Insured disagree that the liability policy does or does not provide coverage, the claim will go to _____

arbitration

in _____ each party pays for one and a half persons involved

arbitration

in arbitration there are _____ arbitrators

three

the cancellation provisions are found in the ________ section of the policy

conditions

the insured must promptly tell the insurer about a ______

claim

the other insurance clause is also known as the - _____ _______

pro-rata liability clause

_- does not mean equal, it is proportionate

pro-rata

the _____ _____ _____ act protects consumers against the circulation of inaccurate or obsolete personal or financial information.

fair credit reporting act

the --____ act requires that a customer be given out a privacy notice at the time the customer relationship is initially established and thereafter annually.

gramm-leach-bliley act

the ____ ____ insurance act applies to commercial policies only

terrorism risk insurance act (TRIA)

the main difference between the various _____ _____ forms is the property perils insured against

dwelling policy (DP)

DP policies do not cover personal liability, although it can be added by adding an endorsement known as a _____ ______ ______ for an additional premium charge

personal liability supplement

DP policies contain general exclusions for damage due to war, nuclear hazard, and flood but not _____

wind

on a dwelling policy, other structures coverage will apply to a structure rented out as a _____ _____

private garage

DP policies do not cover _______ of ______ after 60 days of vacancy

breakage of glass

DP policies do not cover _____ of _____ unless the heat was left on

freezing of plumbing

the _____ on which the insured dwelling sits on is not insurable

land

_____ _____, also known as the automatic increase endorsement, must be added to a DP policy by endorsement

inflation guard

a loss from rain or dust would only be covered if an opening in the dwelling ____ or ____ was first created by wind or another covered cause of loss

roof or walls

when a dwelling is covered by more than one policy, losses are shared - under the other insurance clause. this may also be referred to ad the _- liability clause

pro-rata

the basic dwelling form _- is a named or specified peril policy

DP-1

the _- _____ ____ does not provide additional living expense under coverage D; only fair rental value is provided

DP-1 basic form

The Extended Coverage Endorsement is added to the Standard Fire Policy to create the _-

DP-1

a _- _____ _____ policy is named perils on both the dwelling and the contents

DP-2 broad form

on the dwelling broad form DP-2 building structures (Coverages A and B) are written with an ____% coinsurance requirement

80%

on a _- ____ _____, Coverage B (other structures) is in addition to other coverage limits

DP-2 broad form

the _- policy will provide the same coverage as the DP-2 (contents broad) for personal property coverage, should coverage for contents be declared.

DP-3

although the DP-1 Basic Form does not provide coverage for _____, _____, _____, and _____, both the DP-2 and DP-3 do

trees, shrubs, plants, lawns

all __ policies are package policies combining property and liability coverages

HO

the most a policy will pay under the liability section is known as the ____ of _____

limit of liability

the definition of an ______ includes residents of a household who are relatives, or any other person under the age of 21 who is in the insured's care

insured

all HO policies exclude coverage for ______, ______, or ________

flood, landslides, mudslides

the homeowners policy does not cover theft of _______

animals

______ _______ ______ for false arrest, libel, slander, defamation, and invasion of privacy is not automatically covered on an HO, but it can be added by endorsement for an additional premium

personal injury liability

the _____ on which a house sits is not insurable on HO policies

land

section II (liability) provides coverage for damage to the property of others up to $______ per occurrence

$1,000

a HO policy will not cover the property of a /, but will cover the property of a guest or residence employee

boarder/renter

an HO policy will provide coverage for contents ______ __ __ ____, including theft.

anywhere in the world

an HO policy written on a dwelling under the course of construction will not cover _____

theft

_______ ______ will cover charges for medical, surgical, x-ray, dental, ambulance, hospital, nursing, prosthetic devices and funeral services

medical coverage

medical payments never apply to ______ members of the household

regular

the ______ of an insured does not relieve the insurer of their obligations under the policy

bankruptcy

claims resulting from the enforcement of an _______ or ______ are not covered by most property policies, although limited coverage is provided as an additional charge

ordinance or law

the insurer's duty to defend a lawsuit is stated in the _____ _____

insuring agreement

______ ______ (such as for trees, shrubs and plants) are in addition to limits

additional coverages

HO liability covers ____ ____ to a third party

bodily injury

if the insurer cancels an HO policy, they must send advance written notice to both the ______ _____ and the named insured

mortgage company

an HO policy will not pay the cost of defense on an _______ claim

excluded

an HO policy covers contents in full while moving, for up to __ days

30

HO Coverage __ will not cover property of a roomer, boarder or other tenant unless related to the insured

C

damage due to ____ is not covered on a property policy unless the roof or wall was first damages by wind or hail, allowing the rain to enter

rain

property policies do not cover damage to _____ _____, other than those used to maintain the premises (for ex riding lawn mowers)

motorized vehicles

_____ _____ and medical coverage cover the insured's activities both on and off the premises

personal liability

_____ ___ _____ covers only additional living expenses

loss of use

the insurer's duty to defend a lawsuit ends when the amount paid out for damages equals the ______ __ _____

limit of liability

a person who is hired to maintain a premises is referred to as a ______ _____

residence employee

at the insured's option, ______ ______ will be returned to the insured or retained by the insurer. If returned, the loss payment must be adjusted.

recovered property

after a loss, if the cost of reconstructing a home exceeds its market value, the insurer will consider it to be a _____ _____ _____

constructive total loss

_- is named peril on both the dwelling and contents

HO-2

_- is all-risk on a dwelling, but named peril on its contents

HO-3

in the _- _____ _____ policy, theft of personal property of a resident employee is covered

HO-3 special form

_- are property policies issued to tenants to cover contents extended coverage to losses caused by a covered peril to improvements, alterations and additions made to the described location at the tenant's expense

HO-4

on _- policy, contents coverage is named perils

HO-6

_- (unit-owners form) does not cover common area buildings

HO-6

_- was created specifically for older homes

HO-8

the _____ _____ section of a CPP (commercial package policy) permits either the insured or the insurer to cancel the policy

common conditions

CPPs are subject to premium audit for ___ years after policy expiration

3

business income insurance is a type of - coverage

time-element

on ______ ______, replacement cost coverage, ordinance or law coverage and value reporting forms are all optional endorsements. However, valuation is a loss condition in the policy.

commercial property

on commercial property insurance, signs that are not attached to the building are covered as ____ _____ _____

business personal property

the commercial property _____ _____ ______ form protects an insured for the value of his lease in the event it is canceled as a result of physical loss or damage to the property by a covered cause of loss

leasehold interest coverage

the commercial property causes of loss forms are _____, _____, and _______

basic, broad and special

the coverage territory on a commercial property policy is the __, _____ _____, and ______

US, puerto rico and canada

the ____ _____ _____ on a commercial property policy states that the insured has a maximum of 2 years to file a lawsuit against the insurer

legal actions clause

commercial fire policies only cover trees, shrubs, and plants up to $_____ each

$500

a ______ ______ covers bodily injury (BI), property damage (PD), and personal injury liability, but not employers liability

businessowners policy (BOP)