Texas Property & Casualty Insurance License Exam With Accurate Answers 2023

Texas Property & Casualty Insurance License Exam with Accurate Answers 2023 In order to be considered legally binding, an insurance contract must include all of the following - Offer and acceptance. Competent parties. Consideration (The four essential elements of all legal contracts are offer and acceptance, consideration, legal purpose, and competent parties.) With respect to a bonded contractor who defaults on a construction performance contract, which of the following statements is true? - The obligee may engage another contractor and then seek reimbursement from the surety. (The bonding company would have to make sure that the job was completed and then seek recovery for its expenses from the principal (bonded contractor). When a direct chain of events caused by a negligent act causes damage or injury, that act is considered to be - The proximate cause. (The proximate cause is an event or act that is the actual or immediate cause of a loss.) Basic dwelling policies automatically provide protection against fire, lightning, and - Internal explosion. (The other three perils are included in the extended coverages that can be added to the basic form for an additional premium.) The risk of loss can be categorized as - Pure risk and speculative risk. (Pure risks involve the possibility or probability of a loss with no chance for gain. Pure risks are typically insurable. Speculative risks involve uncertainty as to whether the final outcome will be a loss or a gain. Speculative risks are typically uninsurable.) A policy condition that stipulates how the amount of lost or damaged property will be determined if the principal and the insured do not agree on the value of a property loss is known as - Appraisal If there is a disagreement between the insurer and the insured on the value of any property loss, either party can make a written demand for an appraisal. A plasterer has completed a job. What kind of liability coverage would protect them if the plaster falls and hurts someone because they did not perform the job correctly? - Completed operations (The plasterer's completed operations pays because their negligence caused the loss. It does not pay to redo the job.) A professional who wants to cover all of their liability exposures should buy what form of liability insurance? - Commercial general and professional (Commercial general liability does not cover professional liability, and professional liability does not cover premises liability.) Robbery is defined as - Taking of property by use of violence, force, or fear. Most insurance policies exclude losses caused by - Mysterious disappearance. (Losses resulting from mysterious disappearance are excluded by most insurance policies.) Which of the following special liability coverages offers protection to a manager of a corporation for claims arising from a wrongful act perpetrated by the manager while serving in an official capacity? - Directors and officers liability (Under the law, a directors and officers liability policy will pay damages that the corporation or nonprofit entity would be required to reimburse the individual director or officer for judgments resulting from actions alleging wrongful acts.) Under an HO-8 form, theft coverage is restricted - The actual cash value of what was stolen, with limits for certain classes of property. (The modified form HO-8 provides coverage on an actual cash value basis. There is also a $1,000 basic limit that applies to theft losses, and no coverage for theft of personal property off of the premises.) Under Coverage D (Loss of Use), the amount an insurance provider will pay depends on - The amount of coverage on the dwelling. (Loss of use is generally limited to a percentage of the overall dwelling or personal property coverage (when dealing with forms HO-4 and HO-6).) An applicant for insurance willingly fails to communicate information that would assist an underwriter to make a sound decision regarding coverage. This is an example of - Concealment (With respect to insurance, concealment is the withholding of information that will result in an inaccurate underwriting decision.) Whether named or not, individuals covered under an insurance policy are known as the - (Insureds) The insureds are individuals covered under a policy, whether they are named or not. Crunchy Cracker Company shipped some of its product in defective containers that resulted in spoilage. This caused some consumers to become ill. If the company is sued for this occurrence, it would be an example of - Product liability claim. (The Claims-made form is used for special situations such as professional liability, product liability, environmental liability and employment related liability.) In a businessowners policy, the inspections and surveys condition - Allows the insurance producer the right to inspect the insured's premises. (The inspections and surveys condition affords the insurer the right to inspect the insured's operations and premises at any reasonable time during the policy period. Inspections and surveys are not mandatory. This condition does not make safety inspections, nor does it guarantee that the conditions are healthful, safe, or meet safety regulations.) Workers compensation benefits are provided for an employee injury or death that occurs from the normal course of employment in all of the following situations - An employee who delivers packages is injured while willingly running the "package race" at the mandatory company gathering. An employee sustains an injury while working at a jobsite. An employee working as a truck driver is injured while loading freight at a vendor's dock. (Workers compensation insurance provides coverage for injuries that happen in the course of normal employment, activities that add to the employer's interests and goodwill, and activities that an employee typically would engage in during the course of employment. The employer is liable for compensation for injuries that happen during employer-sponsored off-duty events.) Malicious mischief and vandalism would be covered if the policyholder's premises have been vacant for no more than how many days? - 60 (Malicious mischief and vandalism will not be covered if the insured's premises have been vacant for more than 60 days immediately preceding the loss.) Which principle of insurance states that if a policy allows for greater compensation than the financial loss sustained, the policyowner may only receive benefits for the amount lost? - Indemnity The indemnity principle stipulates that the insured can only collect for the amount of the loss even if the policy is written with greater benefit limits. What is the definition of a material misrepresentation? - Upon discovery, a statement by the applicant that would affect the underwriting decision of the insurance company (If discovered, a material misrepresentation is a statement that would alter the underwriting decision of the insurance carrier.)