Texas Property and Casualty Insurance Exam -
Module 1 Questions With Correct Answers
Insurance is a transfer of risk of ___ from an individual or a business entity to an
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insurance company - CORRECT ANSWER✔✔-loss
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Law of Large Numbers - CORRECT ANSWER✔✔-the larger the number of people
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with a similar exposure to loss, the more predictable actual losses will be
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Depreciation - CORRECT ANSWER✔✔-reduction in value, particularly due to wear
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and tear
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Exposure - CORRECT ANSWER✔✔-susceptibility to risk
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Implied warranty - CORRECT ANSWER✔✔-a legal term meaning that a product is
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suitable for its intended purpose and that it fits an ordinary buyer's expectations
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Insurance policy - CORRECT ANSWER✔✔-a contract between a policyowner
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(and/or insured) and an insurance company which agrees to pay the insured or
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the beneficiary for loss caused by specific events
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Insurer (principal) - CORRECT ANSWER✔✔-the company who issues an insurance
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policy
, Obsolescence - CORRECT ANSWER✔✔-depreciation in the value of a property
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due to becoming outdated
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Premium - CORRECT ANSWER✔✔-the money paid to the insurance company for
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the insurance policy
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Tort - CORRECT ANSWER✔✔-a wrongful act or the violation of someone's rights
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that leads to legal liability
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3 Elements of Insurable Risk - CORRECT ANSWER✔✔-- Financial (money)
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- Blood (relative)
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- Business (a business partner)
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Insurable Interest must exist at the __ ___ __ ___ - CORRECT ANSWER✔✔-time
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of the loss
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Risk - CORRECT ANSWER✔✔-The uncertainty or chance of a loss occurring.
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Pure Risk - CORRECT ANSWER✔✔-situations that can only result in a loss or no
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change
Speculative Risk - CORRECT ANSWER✔✔-the opportunity for either loss or gain.
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- ex: gambling
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- not insurable
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Module 1 Questions With Correct Answers
Insurance is a transfer of risk of ___ from an individual or a business entity to an
| | | | | | | | | | | | | | | | |
insurance company - CORRECT ANSWER✔✔-loss
| | | |
Law of Large Numbers - CORRECT ANSWER✔✔-the larger the number of people
| | | | | | | | | | | |
with a similar exposure to loss, the more predictable actual losses will be
| | | | | | | | | | | |
Depreciation - CORRECT ANSWER✔✔-reduction in value, particularly due to wear
| | | | | | | | |
and tear
| |
Exposure - CORRECT ANSWER✔✔-susceptibility to risk
| | | | |
Implied warranty - CORRECT ANSWER✔✔-a legal term meaning that a product is
| | | | | | | | | | | |
suitable for its intended purpose and that it fits an ordinary buyer's expectations
| | | | | | | | | | | |
Insurance policy - CORRECT ANSWER✔✔-a contract between a policyowner
| | | | | | | | |
(and/or insured) and an insurance company which agrees to pay the insured or
| | | | | | | | | | | | |
the beneficiary for loss caused by specific events
| | | | | | |
Insurer (principal) - CORRECT ANSWER✔✔-the company who issues an insurance
| | | | | | | | | |
policy
, Obsolescence - CORRECT ANSWER✔✔-depreciation in the value of a property
| | | | | | | | | |
due to becoming outdated
| | |
Premium - CORRECT ANSWER✔✔-the money paid to the insurance company for
| | | | | | | | | | |
the insurance policy
| |
Tort - CORRECT ANSWER✔✔-a wrongful act or the violation of someone's rights
| | | | | | | | | | | |
that leads to legal liability
| | | |
3 Elements of Insurable Risk - CORRECT ANSWER✔✔-- Financial (money)
| | | | | | | | |
- Blood (relative)
| |
- Business (a business partner)
| | | |
Insurable Interest must exist at the __ ___ __ ___ - CORRECT ANSWER✔✔-time
| | | | | | | | | | | | |
of the loss
| |
Risk - CORRECT ANSWER✔✔-The uncertainty or chance of a loss occurring.
| | | | | | | | | |
Pure Risk - CORRECT ANSWER✔✔-situations that can only result in a loss or no
| | | | | | | | | | | | | |
change
Speculative Risk - CORRECT ANSWER✔✔-the opportunity for either loss or gain.
| | | | | | | | | | |
- ex: gambling
| |
- not insurable
| |
