Texas Insurance License Exam
2023/2024 with 100% correct answers
What are 3 subjects an auto policy covers? - correct answer 1. Body
2. The vehicle
3. Assets
Bodily Injury Types - correct answer Personal Injury
Med Pay
Uninsured Motorist
No Fault Insurance - correct answer State stipulates that parties cannot file a claim to the other persons
insurance policy unless required in excess. Instead, each party is required to file a primary claim against
their own insurance regardless who is at fault. EX. Florida
Financial Responsibility Laws - correct answer State Laws regulating that people are to carry a
minimum coverage amount set by the state to protect themselves, others, and property.
P.A.P - correct answer Personal Automotive Policy
Negligence - correct answer The failure to act as a prudent person would under similar circumstances
Legal Liability - correct answer Involves proven negligence or fault
Vicarious Liability - correct answer Being responsible for the negligent acts of someone else. Ex. Your
children
Absolute or Strict Liability - correct answer Stems from hazardous or dangerous activities that makes
the owner liable WITHOUT the requirement of proof of negligence.
,Liability - correct answer Being responsible for the damages or injury you or someone else you're
responsible for has done.
The 7 Characteristics of a Contract - correct answer 1. Personal Contract
2. Conditional Contract
3. Adhesion
4. Indemnity
5. Aleatory
6. Unilateral
7. Utmost Good Faith
Personal Contract - correct answer Is stipulation of a contract that says the contract is for the name
person and cannot be transferred to another.
Conditional Contract - correct answer Stipulates set by a contract. "You can do this, but...."
Adhesion - correct answer A stipulation that the contract and it's language is binding, or "sticks" and
the parties agreeing cannot back out so long as the conditions are met.
Indemnity - correct answer The contract agrees to indemnify, or make whole again the customer.
Makes them no better, nor worse, just whole.
Aleatory - correct answer The stipulation that the contract must include and unequal transfer of
money. Ex. The insured signed a contract a month ago and has paid a single payment of $300. The
company has only received $300, but it on the hook to pay out $30,000 in the event of a loss.
Unilateral - correct answer Stipulation that the contract is one-sided. Ex. The customer doesn't HAVE to
pay the insurance company, but IF they do, then the insurance company HAS to pay out.
Utmost Good Faith - correct answer Parties believe that both will deal with eachother honestly and
fairly, without misleading or withholding
,Insurance - correct answer A contract by which an Insurance company agrees to compensate an
insured for a covered loss in return for a premium payment.
Underwriting - correct answer Process of evaluating policyholders to determine eligibility for coverage
and pricing
Law of Large #'s - correct answer Principle that the larger the examples of data, the more accurate the
information
Speculative Risk - correct answer Risk of Gain OR Loss Ex. Gambling or Investment Insurance
Pure Risk - correct answer No chance of gain or benefit. The only kind that insurance deals with.
Exposure - correct answer An opportunity for risk or loss
Risk - correct answer Possibility of financial loss
Peril - correct answer The direct cause of a loss
Representation - correct answer Statements on an insurance contract that the insured BELIEVES to be
true
4 Means of Managing Risk - correct answer 1.Reduction
2.Retain
3.Avoid
4.Transfer
Reduction - correct answer reduce the risk shared by the insured and insurer Ex. Good maintenance
, Retain - correct answer Taking risks by retaining the risk to ones self. Ex. Not reporting an accident to
the insurance company, or not getting insurance at all.
Avoid - correct answer Avoiding risk all together. Ex. Not driving at all
Transfer - correct answer Transferring risk. Ex. Getting insurance in the first place transfers risk from
the insured to the insurer
Insurable Interest - correct answer To have insurable interest in something it's loss or damage would
have to cause you to suffer financial or economic loss. Must have ownership
Hazards - correct answer Event increases likelyhood of loss. Ex. Texting while driving, weather.
Insurance Agreement - correct answer Agreement by insurance to provide coverage in exchange for a
premium
Conditions in an Insurance Contract - correct answer Assigns:
Duties after a loss
Defines Policy Terms
Outlines how to cancel
Stipulates on multiple contracts (primary & secondary)
Insurance Exclusions - correct answer Things not covered. Ex. Intentional Acts
Coverage - correct answer Defines what is covered and what is insured against within an insurance
contract
Premium - correct answer Monetary amount charged by insurer in exchange for coverage
Casualty Insurance - correct answer A broad term for insurance that covers PROPERTY and LIABILITY
losses.
2023/2024 with 100% correct answers
What are 3 subjects an auto policy covers? - correct answer 1. Body
2. The vehicle
3. Assets
Bodily Injury Types - correct answer Personal Injury
Med Pay
Uninsured Motorist
No Fault Insurance - correct answer State stipulates that parties cannot file a claim to the other persons
insurance policy unless required in excess. Instead, each party is required to file a primary claim against
their own insurance regardless who is at fault. EX. Florida
Financial Responsibility Laws - correct answer State Laws regulating that people are to carry a
minimum coverage amount set by the state to protect themselves, others, and property.
P.A.P - correct answer Personal Automotive Policy
Negligence - correct answer The failure to act as a prudent person would under similar circumstances
Legal Liability - correct answer Involves proven negligence or fault
Vicarious Liability - correct answer Being responsible for the negligent acts of someone else. Ex. Your
children
Absolute or Strict Liability - correct answer Stems from hazardous or dangerous activities that makes
the owner liable WITHOUT the requirement of proof of negligence.
,Liability - correct answer Being responsible for the damages or injury you or someone else you're
responsible for has done.
The 7 Characteristics of a Contract - correct answer 1. Personal Contract
2. Conditional Contract
3. Adhesion
4. Indemnity
5. Aleatory
6. Unilateral
7. Utmost Good Faith
Personal Contract - correct answer Is stipulation of a contract that says the contract is for the name
person and cannot be transferred to another.
Conditional Contract - correct answer Stipulates set by a contract. "You can do this, but...."
Adhesion - correct answer A stipulation that the contract and it's language is binding, or "sticks" and
the parties agreeing cannot back out so long as the conditions are met.
Indemnity - correct answer The contract agrees to indemnify, or make whole again the customer.
Makes them no better, nor worse, just whole.
Aleatory - correct answer The stipulation that the contract must include and unequal transfer of
money. Ex. The insured signed a contract a month ago and has paid a single payment of $300. The
company has only received $300, but it on the hook to pay out $30,000 in the event of a loss.
Unilateral - correct answer Stipulation that the contract is one-sided. Ex. The customer doesn't HAVE to
pay the insurance company, but IF they do, then the insurance company HAS to pay out.
Utmost Good Faith - correct answer Parties believe that both will deal with eachother honestly and
fairly, without misleading or withholding
,Insurance - correct answer A contract by which an Insurance company agrees to compensate an
insured for a covered loss in return for a premium payment.
Underwriting - correct answer Process of evaluating policyholders to determine eligibility for coverage
and pricing
Law of Large #'s - correct answer Principle that the larger the examples of data, the more accurate the
information
Speculative Risk - correct answer Risk of Gain OR Loss Ex. Gambling or Investment Insurance
Pure Risk - correct answer No chance of gain or benefit. The only kind that insurance deals with.
Exposure - correct answer An opportunity for risk or loss
Risk - correct answer Possibility of financial loss
Peril - correct answer The direct cause of a loss
Representation - correct answer Statements on an insurance contract that the insured BELIEVES to be
true
4 Means of Managing Risk - correct answer 1.Reduction
2.Retain
3.Avoid
4.Transfer
Reduction - correct answer reduce the risk shared by the insured and insurer Ex. Good maintenance
, Retain - correct answer Taking risks by retaining the risk to ones self. Ex. Not reporting an accident to
the insurance company, or not getting insurance at all.
Avoid - correct answer Avoiding risk all together. Ex. Not driving at all
Transfer - correct answer Transferring risk. Ex. Getting insurance in the first place transfers risk from
the insured to the insurer
Insurable Interest - correct answer To have insurable interest in something it's loss or damage would
have to cause you to suffer financial or economic loss. Must have ownership
Hazards - correct answer Event increases likelyhood of loss. Ex. Texting while driving, weather.
Insurance Agreement - correct answer Agreement by insurance to provide coverage in exchange for a
premium
Conditions in an Insurance Contract - correct answer Assigns:
Duties after a loss
Defines Policy Terms
Outlines how to cancel
Stipulates on multiple contracts (primary & secondary)
Insurance Exclusions - correct answer Things not covered. Ex. Intentional Acts
Coverage - correct answer Defines what is covered and what is insured against within an insurance
contract
Premium - correct answer Monetary amount charged by insurer in exchange for coverage
Casualty Insurance - correct answer A broad term for insurance that covers PROPERTY and LIABILITY
losses.
