Chapter 3/Terms - Texas All Lines
Exam Questions and Answers
Abandonment - ANS-The relinquishing ownership of damaged property to the insurence
company on a partial loss.
Actual Cash Value (ACV) - ANS-The replacement cost of like kind and quality at the
time of loss, less a reasonable amount of depreciation due to age and condition.
Additional Living Expense (ALE) - ANS-The necessary increase in living expense
resulting from a loss by a covered peril, and incurred by the insured, to continue the
normal standard of living of the named insured's household.
Adjuster - ANS-An individual who investigates or adjusts losses on behalf of either an
insurer or self-insured, or any person who supervises the handling of claims.
Agent - ANS-An individual who sells insurance, either an independent agent who
represents many insurance companies or an exclusive agent who only represents one
insurance company.
Amendment - ANS-An addition, deletion, or change to a legal document or policy. All
parties to the agreement must formally consent to an amendment by signing it.
Appeal Bonds - ANS-Required of the defendant in the lawsuit who elects to appeal a
verdict.
Appraisal - ANS-The process of involving a third party appraiser, or umpire, to govern a
dispute of a claim settlement amount.
Assumption of Liability - ANS-The act of taking responsibility through agreement for
something that person may not be legally liable.
Bail Bonds - ANS-Used to guarantee that an accused will appear at a date assigned by
the court.
Bailor - ANS-A person who voluntarily gives up possession of the property.
Barratry - ANS-Willful and illegal sinking of a ship at sea or its cargo.
Bid Bonds - ANS-Used as a promise to accept a bid if awarded to a company and to
guarantee that a performance bond will be obtained prior to commencement of a job.
, Business Interruption Insurance - ANS-A form of insurance for direct losses under
commercial property insurance policies that protect against loss of income as the result
of an insured peril.
Claim - ANS-Any request or demand for payment under the terms of the insurance
contract.
Class Action Lawsuit - ANS-A legal action filed by one or more persons on behalf of
themselves and others having an identical interest in the alleged wrongdoing.
Commissioner - ANS-A state officer who administers the state's insurance laws and
regulations.
Completion Bonds - ANS-Required by lenders to guarantee that outstanding loans
against a job are paid upon completion.
Contents - ANS-Personal property that is not part of the dwelling or structure.
Contract - ANS-A reciprocal agreement.
Coverage - ANS-Specific protection for an insured under an insurance policy.
Damages - ANS-The result of an insured's tort or wrongdoing. Consequences of a loss
or amount and type of losses suffered.
Declarations - ANS-The section of an insurance policy identifying the insured,
endorsements, coverages, limits, and premiums.
Dealer's Property - ANS-Merchandise on consignment.
Deductible - ANS-Amount of loss paid by the policyholder.
Direct Damage - ANS-A loss covered by a specific named peril.
Endorsement - ANS-A written agreement attached to the policy expanding or limiting
the benefits otherwise payable under the policy.
Estimates - ANS-An approximate calculation of amount, extent, quantity, magnitude,
position, degree or worth of something.
Estoppel - ANS-The result of a waiver, or of the conduct from which a waiver can be
implied.
Exclusions - ANS-A loss or risk that the policy does not cover.
Exam Questions and Answers
Abandonment - ANS-The relinquishing ownership of damaged property to the insurence
company on a partial loss.
Actual Cash Value (ACV) - ANS-The replacement cost of like kind and quality at the
time of loss, less a reasonable amount of depreciation due to age and condition.
Additional Living Expense (ALE) - ANS-The necessary increase in living expense
resulting from a loss by a covered peril, and incurred by the insured, to continue the
normal standard of living of the named insured's household.
Adjuster - ANS-An individual who investigates or adjusts losses on behalf of either an
insurer or self-insured, or any person who supervises the handling of claims.
Agent - ANS-An individual who sells insurance, either an independent agent who
represents many insurance companies or an exclusive agent who only represents one
insurance company.
Amendment - ANS-An addition, deletion, or change to a legal document or policy. All
parties to the agreement must formally consent to an amendment by signing it.
Appeal Bonds - ANS-Required of the defendant in the lawsuit who elects to appeal a
verdict.
Appraisal - ANS-The process of involving a third party appraiser, or umpire, to govern a
dispute of a claim settlement amount.
Assumption of Liability - ANS-The act of taking responsibility through agreement for
something that person may not be legally liable.
Bail Bonds - ANS-Used to guarantee that an accused will appear at a date assigned by
the court.
Bailor - ANS-A person who voluntarily gives up possession of the property.
Barratry - ANS-Willful and illegal sinking of a ship at sea or its cargo.
Bid Bonds - ANS-Used as a promise to accept a bid if awarded to a company and to
guarantee that a performance bond will be obtained prior to commencement of a job.
, Business Interruption Insurance - ANS-A form of insurance for direct losses under
commercial property insurance policies that protect against loss of income as the result
of an insured peril.
Claim - ANS-Any request or demand for payment under the terms of the insurance
contract.
Class Action Lawsuit - ANS-A legal action filed by one or more persons on behalf of
themselves and others having an identical interest in the alleged wrongdoing.
Commissioner - ANS-A state officer who administers the state's insurance laws and
regulations.
Completion Bonds - ANS-Required by lenders to guarantee that outstanding loans
against a job are paid upon completion.
Contents - ANS-Personal property that is not part of the dwelling or structure.
Contract - ANS-A reciprocal agreement.
Coverage - ANS-Specific protection for an insured under an insurance policy.
Damages - ANS-The result of an insured's tort or wrongdoing. Consequences of a loss
or amount and type of losses suffered.
Declarations - ANS-The section of an insurance policy identifying the insured,
endorsements, coverages, limits, and premiums.
Dealer's Property - ANS-Merchandise on consignment.
Deductible - ANS-Amount of loss paid by the policyholder.
Direct Damage - ANS-A loss covered by a specific named peril.
Endorsement - ANS-A written agreement attached to the policy expanding or limiting
the benefits otherwise payable under the policy.
Estimates - ANS-An approximate calculation of amount, extent, quantity, magnitude,
position, degree or worth of something.
Estoppel - ANS-The result of a waiver, or of the conduct from which a waiver can be
implied.
Exclusions - ANS-A loss or risk that the policy does not cover.
