USAA Licensing Detailed Exam
Questions with 100% Accurate
Answers
1. Insurance - ANSWER Transfer of risk from one person or organization to
an insurance company
2. What is Indemnity? - ANSWER The principle to restore the insured to the
pre-loss economic or financial condition.
3. Law of Large numbers - ANSWER Mathematical principle used by insurers
to predict losses to charge the appropriate premiums
4. Insurable Interest - ANSWER Proof that someone stands to lose financially
if a loss occurs; must exist at the time of the loss in property and casualty
insurance
5. Binder - ANSWER Temporary insurance contract; commits the company to
act as if a policy has been issued
6. Peril - ANSWER Cause of loss
7. Direct Loss - ANSWER Immediate actual physical damage to tangible
property
8. Indirect loss - ANSWER Inability to use property as a result of a direct loss
,9. Risk - ANSWER Chance of loss; uncertainty of loss
10.Speculative Risk - ANSWER Involves the simultaneous chance of gain or
loss: is not insurable
11.How many parties does an insurance contact have? - ANSWER 2 parties in
an insurance contract
Property damage - coverage for damage you do to someone else's property
(house, car, personal property of 3rd party)
Personal injury - coverage for injury to a person's reputation (libel, slander,
defamation, false arrest, false imprisonment, invasion of privacy)
12.What is the purpose of casualty/liability coverage? - ANSWER The
insurance company will pay a 3rd party on your behalf for any injuries you
cause to others and damage to their stuff.
13.Deductibles (1st party coverage) - ANSWER The portion of the claim the
policyholder must pay.
14.What is designed to minimize small nuisance claims, reduce morale hazards,
and property has deductibles? - ANSWER Deductibles
15.What happens when you have a higher deductible? - ANSWER Your
premium is lower. You retain more risk.
16.What does a lower deductible do? - ANSWER Increases the premium.
,17.The Lower of the Loss or the Limit - ANSWER The insurance company
will pay up to the policy limits but will never pay more than the actual loss
(you can never win in insurance)
Ex. - Loss $58,000, Limit $100,000, Company pays $58,000.
The insurance company always pays the lower amount!!!!
18.Proximate cause - ANSWER 1st peril in an UNBROKEN chain of events
(caused damage)
If the proximate cause is listed, everything in the chain is covered.
If the proximate cause is not listed, the entire claim is not covered.
19.Named peril policies - ANSWER Only covers losses when the proximate
cause is specifically listed.
Ex - The wind blew the tree over onto the house damaging the roof. It would be
covered as long as wind is listed in the insuring agreement as a peril.
20.Where will you find the named peril policies? - ANSWER In the insuring
agreement.
21.Special peril policies - ANSWER Special
Open
, All
Risk
COVERS EVERYTHING EXCEPT EXCLUSIONS
Typically has more exclusions
22.Loss valuation - ANSWER Designates which method the insurance
company will use to indemnify the insured in the event of a covered loss.
DETERMINED AT THE TIME OF APPLICATION.
23.Loss settlement and basis of recovery - ANSWER The method the insurer
uses to put a dollar value on your claimed property.
24.Stated value policy - ANSWER The amount you state your property is
worth. If the insurance company can repair for less, the insurance company
will settle for less.
25.Agreed value policy - ANSWER The amount the insurance company agrees
the property is worth and will pay in the event of a loss.
The contract is written for a specific high value item like
jewelry/artwork/antiques.
26.REQUIRES AN APPRAISAL.
Questions with 100% Accurate
Answers
1. Insurance - ANSWER Transfer of risk from one person or organization to
an insurance company
2. What is Indemnity? - ANSWER The principle to restore the insured to the
pre-loss economic or financial condition.
3. Law of Large numbers - ANSWER Mathematical principle used by insurers
to predict losses to charge the appropriate premiums
4. Insurable Interest - ANSWER Proof that someone stands to lose financially
if a loss occurs; must exist at the time of the loss in property and casualty
insurance
5. Binder - ANSWER Temporary insurance contract; commits the company to
act as if a policy has been issued
6. Peril - ANSWER Cause of loss
7. Direct Loss - ANSWER Immediate actual physical damage to tangible
property
8. Indirect loss - ANSWER Inability to use property as a result of a direct loss
,9. Risk - ANSWER Chance of loss; uncertainty of loss
10.Speculative Risk - ANSWER Involves the simultaneous chance of gain or
loss: is not insurable
11.How many parties does an insurance contact have? - ANSWER 2 parties in
an insurance contract
Property damage - coverage for damage you do to someone else's property
(house, car, personal property of 3rd party)
Personal injury - coverage for injury to a person's reputation (libel, slander,
defamation, false arrest, false imprisonment, invasion of privacy)
12.What is the purpose of casualty/liability coverage? - ANSWER The
insurance company will pay a 3rd party on your behalf for any injuries you
cause to others and damage to their stuff.
13.Deductibles (1st party coverage) - ANSWER The portion of the claim the
policyholder must pay.
14.What is designed to minimize small nuisance claims, reduce morale hazards,
and property has deductibles? - ANSWER Deductibles
15.What happens when you have a higher deductible? - ANSWER Your
premium is lower. You retain more risk.
16.What does a lower deductible do? - ANSWER Increases the premium.
,17.The Lower of the Loss or the Limit - ANSWER The insurance company
will pay up to the policy limits but will never pay more than the actual loss
(you can never win in insurance)
Ex. - Loss $58,000, Limit $100,000, Company pays $58,000.
The insurance company always pays the lower amount!!!!
18.Proximate cause - ANSWER 1st peril in an UNBROKEN chain of events
(caused damage)
If the proximate cause is listed, everything in the chain is covered.
If the proximate cause is not listed, the entire claim is not covered.
19.Named peril policies - ANSWER Only covers losses when the proximate
cause is specifically listed.
Ex - The wind blew the tree over onto the house damaging the roof. It would be
covered as long as wind is listed in the insuring agreement as a peril.
20.Where will you find the named peril policies? - ANSWER In the insuring
agreement.
21.Special peril policies - ANSWER Special
Open
, All
Risk
COVERS EVERYTHING EXCEPT EXCLUSIONS
Typically has more exclusions
22.Loss valuation - ANSWER Designates which method the insurance
company will use to indemnify the insured in the event of a covered loss.
DETERMINED AT THE TIME OF APPLICATION.
23.Loss settlement and basis of recovery - ANSWER The method the insurer
uses to put a dollar value on your claimed property.
24.Stated value policy - ANSWER The amount you state your property is
worth. If the insurance company can repair for less, the insurance company
will settle for less.
25.Agreed value policy - ANSWER The amount the insurance company agrees
the property is worth and will pay in the event of a loss.
The contract is written for a specific high value item like
jewelry/artwork/antiques.
26.REQUIRES AN APPRAISAL.
