Texas Property Exam With Correct Answers

Texas Property & Casualty Insurance
Exam With Correct Answers




A condition or situation that presents a possibility of loss is a (an):CORRECT ANSWERS✔✔exposure
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The purpose of insurance is to:CORRECT ANSWERS✔✔transfer risk
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Which hazard can be described as a careless attitude or general indifference on the part of the insured toward
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the occurrence of loss?CORRECT ANSWERS✔✔morale
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Which risk is insurable?CORRECT ANSWERS✔✔pure
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With regard to insurance, risk can be defined as:CORRECT ANSWERS✔✔uncertainty regarding loss
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Treating risk by purchasing insurance is an example of what type of risk management?CORRECT ANSWERS✔
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✔transfer

,Robert and Carolyn live in a busy city and decide that not owning a car is the solution to not experience having a
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car stolen. What method describes this philosophy?CORRECT ANSWERS✔✔avoidance
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Dishonesty on the part of an insured is an example of what?CORRECT ANSWERS✔✔a moral hazard
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What is an example of reduction as a method of handling risk?CORRECT ANSWERS✔✔Installing a burglar
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alarm
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Driving too fast and not wearing a seat belt are examples of?CORRECT ANSWERS✔✔morale hazard
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The risk that involves the chance of both loss and gain is?CORRECT ANSWERS✔✔speculative risk
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Self-insurance is an example of what kind of risk treatment?CORRECT ANSWERS✔✔Retention j j j j j j j j j j




If John's father transfers ownership of a house to John, can John buy insurance?CORRECT ANSWERS✔✔Yes
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because he has an insurable interest.
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Fire would be an example of a what?CORRECT ANSWERS✔✔peril
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What is the actual cause of a loss?CORRECT ANSWERS✔✔peril
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What kind of risk is the stock market?CORRECT ANSWERS✔✔speculative risk
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A ____ is a condition that increases the chance of loss.CORRECT ANSWERS✔✔hazard
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Faulty wiring causes a fire that destroys a building. The faulty wiring is considered to be a(n):CORRECT
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ANSWERS✔✔hazard
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,A chance, possibility, or uncertainty of loss is known as?CORRECT ANSWERS✔✔risk
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Examples of perils are_____?CORRECT ANSWERS✔✔fire, wind and lightning
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Indemnity insurance will _____?CORRECT ANSWERS✔✔restores insured to pre-loss condition
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The types of hazards are_____?CORRECT ANSWERS✔✔moral, morale, and physical
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________ is when people with a greater than average exposure to loss to purchase insurance.CORRECT
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ANSWERS✔✔Adverse selection
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Methods of handling risk are avoidance, reduction, retention, transfer and _____.CORRECT ANSWERS✔✔
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Sharing (ARRTS) j




Elements of insurable risk are calculable, affordable, non-catastrophic, homogenous, accidental and
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_____.CORRECT ANSWERS✔✔Measurable (CANHAM)
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Myron, who is 16, signs a contract to lease a car. This would probably not be considered a valid contract under
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the law because _____.CORRECT ANSWERS✔✔He is not competent at 16.
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Ben bought an automobile four years ago for $15,000. Today it is worth $6,000. According to the principle of
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indemnity, how much should Ben receive if the car is totally demolished?CORRECT ANSWERS✔✔$6,000
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Harry Arne and his cousin each own 50% of a $160,000 duplex. Suppose Harry purchases $160,000 of
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insurance on the home. If it burns to the ground, how much would Harry collect?CORRECT ANSWERS✔✔
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$80,000

, Under a unilateral contract, which parties are legally bound to perform under the contract?CORRECT
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ANSWERS✔✔Insurer only
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Which part of an insurance policy describes the responsibilities and obligations of both the insurance
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company and the insured under the policy?CORRECT ANSWERS✔✔Conditions
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The insuring agreement section of a policy describes the ____ you are insured against.CORRECT ANSWERS✔
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✔perils



The elements of a valid contract are legal purpose, consideration, competent parties, and _____.CORRECT
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ANSWERS✔✔Offer and acceptance
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Both parties rely on statements made to each other when writing a contract. This is known as?CORRECT
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ANSWERS✔✔Utmost good faith
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The limits of liability are found in which of the following sections of a casualty policy?CORRECT ANSWERS✔✔
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Declarations



An insurance company issued a homeowners policy that included ambiguous language regarding how a loss
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was settled. The insured sued the insurance company and won. The judge stated that due to the ambiguous
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language in the contract the decision must be made in favor of the insured. The judge was basing this decision
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on which of the following types of insurance contract?CORRECT ANSWERS✔✔Contract of adhesion
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A policy may be amended only with a(n):CORRECT ANSWERS✔✔endorsement
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The procedure for resolving a disagreement between an insured and an insurance company about a loss is
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described in which of the following parts of an insurance policy?CORRECT ANSWERS✔✔Conditions
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Who does a personal contract protect?CORRECT ANSWERS✔✔The individual who owns the property.
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