Texas All-Lines Adjuster Pre-Licensing
Chapter 1 -
insurance - financial took that protects individual and organizations from unforeseen and extraordinary
financial losses by transferring risk to another party
insured - individual or organization that pays premiums in exchange for protection
insurer - company, group, or government agency offering financial protection
how does insurance work? - insured pays premium
insurer promises to pay for specific losses if they occur
insurer's promise gives peace of mind to insured
principle of indemnity - when a loss occurs, an individual should be restored to the approximate financial
condition he was in before the loss, no more and no less
Q1: How can insurance companies afford to pay for an individual's catastrophic loss? -
Q1: The purpose of the principle of indemnity: - prevents an insured from profiting from a loss
Q1: Which of the following best defines premium? - the fee paid by the insured in exchange for the
insurance policy
Q1: What best describes insurance? - an economic device used to protect against the risk of unforeseen
and extraordinary financial loss
,Q1: Mark incurred $8000 damage to his car in an accident. He received $8000 from his insurance
company and $4000 from the other driver. By receiving profit from his loss, Mark could be in violation of:
- the principle of indemnity
he should be in the same financial condition. no better, no worse
indemnification may include payment for: - repairs to property
reimbursement for additional living expenses
rental cars, hotels
costs directly associated with a loss, as allowed under the policy
legal contract/insurance policy is: - contract to provide financial protection for a fee
legally binding because it meets the 4 requirements of a legal contract
What are the 4 requirements of a legal contract? - agreement (offer and acceptance)
consideration
competent parties
legal purpose
agreement - mutual consent between offeror and offeree
acceptance criteria - offeree communicates to the offeror his intent to enter into contract
,must be unconditional - the offeree accepts the terms proposed by the offeror
original offeree is the only person who can legally accept the offer
An offer may be terminated by: - revocation by offeror
rejection by offeree
time lapse
termination by operation of law
-either party dies or becomes disabled
-performance of contract becomes illegal after the offer
-subject matter is destroyed
offer rejection - explicit rejection
proposal of new offer
counteroffer
consideration - all parties bring something of value
competent parties - 18 years old, sober, and sane
legal purpose - no contracts for money laundering
, Q2: An offeree may legally reject a contract offer by any of the following means EXCEPT: - asking for
clarification or additional information
Q2: If covered by an insurance policy, an insured may be indemnified for all of the following except: -
home remodels
Q2: Which of the following is NOT a requirement for a legally binding contract? - it must be a notarized
document
Q2: Which of the following refers to being restored to the financial condition you were in before a loss? -
indemnification
Q2: A legally binding contract is where the risk of financial loss is transferred in exchange for premiums is
called: - an insurance policy
1-A: The purpose of the principle of indemnity is: - to prevent and insured from making a profit on a loss
1-A: Which of the following best defines premium? - the fee paid by the insured in exchange for an
insurance policy
1-A: What is a reserve, in insurance terms? - a pool of collected premiums that the insurer sets aside to
pay claims
1-A: Which of the following refers to being restored to the financial condition you were in before a loss? -
indemnification
six special characteristics of insurance contracts - personal
adhesion
utmost good faith
Chapter 1 -
insurance - financial took that protects individual and organizations from unforeseen and extraordinary
financial losses by transferring risk to another party
insured - individual or organization that pays premiums in exchange for protection
insurer - company, group, or government agency offering financial protection
how does insurance work? - insured pays premium
insurer promises to pay for specific losses if they occur
insurer's promise gives peace of mind to insured
principle of indemnity - when a loss occurs, an individual should be restored to the approximate financial
condition he was in before the loss, no more and no less
Q1: How can insurance companies afford to pay for an individual's catastrophic loss? -
Q1: The purpose of the principle of indemnity: - prevents an insured from profiting from a loss
Q1: Which of the following best defines premium? - the fee paid by the insured in exchange for the
insurance policy
Q1: What best describes insurance? - an economic device used to protect against the risk of unforeseen
and extraordinary financial loss
,Q1: Mark incurred $8000 damage to his car in an accident. He received $8000 from his insurance
company and $4000 from the other driver. By receiving profit from his loss, Mark could be in violation of:
- the principle of indemnity
he should be in the same financial condition. no better, no worse
indemnification may include payment for: - repairs to property
reimbursement for additional living expenses
rental cars, hotels
costs directly associated with a loss, as allowed under the policy
legal contract/insurance policy is: - contract to provide financial protection for a fee
legally binding because it meets the 4 requirements of a legal contract
What are the 4 requirements of a legal contract? - agreement (offer and acceptance)
consideration
competent parties
legal purpose
agreement - mutual consent between offeror and offeree
acceptance criteria - offeree communicates to the offeror his intent to enter into contract
,must be unconditional - the offeree accepts the terms proposed by the offeror
original offeree is the only person who can legally accept the offer
An offer may be terminated by: - revocation by offeror
rejection by offeree
time lapse
termination by operation of law
-either party dies or becomes disabled
-performance of contract becomes illegal after the offer
-subject matter is destroyed
offer rejection - explicit rejection
proposal of new offer
counteroffer
consideration - all parties bring something of value
competent parties - 18 years old, sober, and sane
legal purpose - no contracts for money laundering
, Q2: An offeree may legally reject a contract offer by any of the following means EXCEPT: - asking for
clarification or additional information
Q2: If covered by an insurance policy, an insured may be indemnified for all of the following except: -
home remodels
Q2: Which of the following is NOT a requirement for a legally binding contract? - it must be a notarized
document
Q2: Which of the following refers to being restored to the financial condition you were in before a loss? -
indemnification
Q2: A legally binding contract is where the risk of financial loss is transferred in exchange for premiums is
called: - an insurance policy
1-A: The purpose of the principle of indemnity is: - to prevent and insured from making a profit on a loss
1-A: Which of the following best defines premium? - the fee paid by the insured in exchange for an
insurance policy
1-A: What is a reserve, in insurance terms? - a pool of collected premiums that the insurer sets aside to
pay claims
1-A: Which of the following refers to being restored to the financial condition you were in before a loss? -
indemnification
six special characteristics of insurance contracts - personal
adhesion
utmost good faith
