TEXAS ADJUSTER STUDY GUIDE 2016 ACTUAL EXAM QUESTIONS AND ANSWERS

TEXAS ADJUSTER STUDY GUIDE
2016 ACTUAL EXAM QUESTIONS
AND ANSWERS
PERILS - ANS ✔✔✔A CAUSE OF PROPERTY LOSSES
UNDER AN INSURANCE CONTRACT EX: WINDSTORM,
HURRICANE, EXPLOSION, COLLAPSE OF BUILDING,
VANDALISM, ACCIDENTAL DISCHARGE, AND THEFT
LAW OF LARGE NUMBERS - ANS ✔✔✔A
FUNDAMENTAL CONCEPT IN STATISTICS AND
PROBABILITY THAT DESCRIBES HOW THE AVERAGE
OF A RANDOMLY SELECTED LARGE SAMPLE FROM
A POPULATION. IT BASICALLY RELIES ON THE
PRINCIPLE THAT THE LARGER THE POOL, THE
MORE PREDICTABLE THE AMOUNT OF LOSSES WILL
BE IN A GIVEN PERIOD
PRINCIPLE OF INDEMNITY - ANS ✔✔✔IS AN
INSURANCE PRINCIPLE STATING THAT AN INSURED
MAY NOT BE COMPENSATED BY INSURANCE
COMPANY IN AN AMOUNT EXCEEDING THE
INSURED'S ECONOMIC LOSS.
LIMITS OF LIABILITY - ANS ✔✔✔THE MAXIMUM
AMOUNT THAT AN INSURANCE POLICY WILL PAY. IT
IS SPECIFIED ON THE POLICY DECLARATION PAGE.
PROPERTY INSURANCE - ANS ✔✔✔COVERAGE FOR
REAL AND PERSONAL PROPERTY AGAINST LOSS OR
DAMAGE FROM PERILS INSURED AGAINST.
LOSS SETTLEMENT - ANS ✔✔✔THE PROCESS USED
TO DETERMINE THE AMOUNT OF THE LOSS
ACTUAL CASH VALUE - ANS ✔✔✔THE VALUE OF THE
PROPERTY BASED ON THE CURRENT COST TO
REPLACE IT MINUS DEPRECIATION.
AGREED VALUE - ANS ✔✔✔THE AMOUNT THAT THE
INSURED AND INSURER AGREE UPON DURING THE
TIME OF POLICY INCEPTION.
REPLACEMENT COST - ANS ✔✔✔THE COST
ASSOCIATED WITH REPLACING PROPERTY AT
CURRENT MARKET PRICES
MARKET VALUE - ANS ✔✔✔THE AMOUNT THAT THE
PROPERTY IS WORTH IN A COMPETITIVE MARKET.
THIS AMOUNT IS ACCEPTED BY THE BUYER AND
SELLER.
TORT - ANS ✔✔✔IS A WRONG THAT INVOLVES A
BREACH OF CIVIL DUTY OWED TO SOMEONE ELSE.
THIS BREACH DETERMINES IF THAT PERSON IS
NEGLIGENCE.
ELEMENTS USED TO DETERMINE NEGLIGENCE -
ANS ✔✔✔A DUTY OWED, A DUTY BREACHED,
PROXIMATE CAUSE, AND DAMAGES
METHODS TO DETERMINE LOSS ARE: - ANS
✔✔✔ACV, MARKET VALUE, REPLACEMENT COST,
AGREED VALUE
CASUALTY INSURANCE - ANS ✔✔✔PROTECTS A
PERSON FROM FINANCIAL LOSS ARISING FROM
BODILY INJURY OR PROPERTY DAMAGE TO OTHERS
HAZARD - ANS ✔✔✔IS A SITUATION THAT POSES A
LEVEL OF THREAT TO LIFE, HEALTH, PROPERTY, OR
ENVIRONMENT.
INDIRECT LOSS - ANS ✔✔✔TYPE OF LOSS THAT
DOES NOT RESULT FROM DIRECT DAMAGE OF A
COVERED CAUSE OF LOSS OR PERIL BUT IS
INSTEAD A CONSEQUENCE OF THE DIRECT DAMAGE
LOSS.
DIRECT LOSS - ANS ✔✔✔DIRECT PHYSICAL LOSS TO
PROPERTY
INSURING AGREEMENT - ANS ✔✔✔THIS SECTION OF
THE INSURANCE POLICY SPECIFIES WHAT THE
INSURANCE WILL PROVIDE COVERAGE FOR IN
EXCHANGE FOR PREMIUM PAYMENTS BY THEIR
CUSTOMER.
DEDUCTIBLE - ANS ✔✔✔THE AMOUNT THE INSURED
MUST PAY IN A LOSS BEFORE ANY PAYMENT IS DUE
FROM THE INSURANCE COMPANY.
WHERE IS A HOMEOWNER PERCENTAGE
DEDUCTIBLE ALWAYS TAKEN FROM? - ANS
✔✔✔COVERAGE A STRUCTURE POLICY LIMITS OF
LIABILITY THAT IS USED ON THE DECLARATION
PAGE.
CANCELLATION - ANS ✔✔✔IS THE TERMINATION OF
AN INSURANCE POLICY BY EITHER SIDE AND IT
MUST BE DONE IN WRITING
LIABILITY - ANS ✔✔✔A PERSON IS LEGALLY LIABLE
FOR AN ACCIDENT IF THAT PERSON IS FOUND
RESPONSIBLE FOR BODILY INJURY OR PROPERTY
DAMAGE TO ANOTHER PARTY.
NEGLIGENCE - ANS ✔✔✔THE FAILURE TO EXERCISE
THE CARE THAT A REASONABLY PRUDENT PERSON
CAN BE CHARACTERIZED BY THE AVERAGE
PERSON.
ADDITIONAL LIVING EXPENSES - ANS ✔✔✔CHARGES
COVERED BY HOMEOWNERS POLICY OVER AND
ABOVE POLICY HOLDERS CUSTOMARY LIVING DUE
TO DAMAGE BY A COVERED PERIL AND MAKES THE
HOME TEMPORARY UNINHABITABLE