State Exam Review Flashcards
What are the required amount of CE credit and in what timeframe?
30 hours and 2 years
What are the duties of the Commissioner?
Administer, enforce, carry out the insurance code
Determines TDI policy, adopts rules, hears appeals
Some examples:
Suspend or cancel license of any agent for cause
Examine the records of any insurance company at any time
Examine the records of ant licensed agent at any time
What is the grace period to renew your license?
90 days
Who does the agent represent?
Insurance company
Who does a broker represent?
Policyholder
What type of agent must be appointed by an insurance company?
PCA
What can only a PCA do?
Sign a policy
3 things the Property and Casualty Guaranty Fund wii pay
- Up to $25,000 of unearned premium
- $300,000 of any claim other than workers compensation
- 100% of workers compensation claims
What can be issued if a person participates in Unfair Trade Practices?
Cease and desist order
Deceptive Trade Practices Act, what is it unlawful for a consumer to do?
Drop charges filed against agent unless they have $5,000,000 in assets
What is twisting?
Making misleading comparisons
Incomplete comparisons
If an agent knowingly commits Unfair Trade Practices, the damages may be
Tripled
Define Fair Credit Reporting Act
Protects consumers right to privacy.
If insurance is denied, the reason why and the credit reporting agency contact information.
What is a peril?
The event that causes the loss
Domestic insurer
Operating in the state it is domiciled in
Foreign insurer
An insurer domiciled in another state
Alien insurer
An insurer domiciled in another country
What is the difference between admitted and non-admitted companies?
Admitted Overseen by TDI Regulated Has a COA Must maintain financial responsibility
Non-admitted
Not regulated
Overseen by stamping office
Surplus lines
Concealment
Failure to disclose a known truth
Omission
What type of insurance can only be purchased through a government insurance program?
Flood
What are the reasons to cancel midterm on a PAP?
Nonpayment of premium
Fraudulent claims
Suspension or revocation of drivers license
What are the reasons to cancel a Homeowners policy midterm?
Nonpayment of premium
Fraudulent claims
Increase in hazard
Explain PAP 10/10/30?
10 days notice for new business
10 days notice for nonpayment
30 days notice for non renewal
Explain 10/10/60 for BAP
10 days new business
10 days non payment
60 days for non-renewal
What percentage of the home’s value must be insured in order to receive replacement costs?
80%
If not, you will get ACV
What is coverage E on a Texas Dwelling policy?
Additional living expenses
What form is Coverage E on Texas Dwelling policy provided on and what is the amount?
Coverage E
20% of Coverage A
DP2 and DP3
What is always excluded for trees/shrubs/plants?
Wind
Can domestic servants file against HO liability?
Yes
Can domestic servants file a Workers Compensation claim?
No
What items are not covered for damage by wind or hail on a HO policy?
Antennas, greenhouses, cloth awnings, satellite dishes
What is vacancy and what is important around the timeframe?
Vacancy is no tenants or contents
After 60 days, voids or limits coverage
Is going to void those loses that could of been limited if not vacant such as sprinkler damage, vandalism, water damage, glass breakage, theft
Under Homeowners Policies what is not covered off premises?
Boats Trailers Campers Watercraft Building materials Property at secondary residence
What is necessary to qualify for a Homeowners policy?
You must own and occupy the structure to qualify
On homeowners policies, what is the maximum limit for Coverage B?
This is detached structures
10% of Coverage A
What is the standard deductible on HO2, HO3, HO5?
1% of Coverage A
What is this the basic limit of liability on Homeowners policies?
E - BI & PD $100,000 per occurrence
F - Med Pay $1,000 per person
What is the difference between HO2 valuation and HO3/HO5?
HO2 is ACV
HO3/HO5 is replacement
What is the statue of limitations for Medical Payments on homeowners policy?
3 years
Under PAP, what constitutes as a “your covered auto”?
Vehicle listed in declarations
Trailer owned by insured
Newly acquired additional vehicle (coverage ends after 30 days)
Newly acquired replacement vehicle (coverage drops to liability after 30 days)
Vehicle or trailer used as a temporary substitute due to breakdown, repair, servicing or loss of covered auto.
What must be true in order to file a UM claim?
You cannot be at fault
The other person doesn’t have insurance or enough insurance
Hit and run
Other insurance company is insolvent or doesn’t pay claim
How much notice must be given to a non-renewal on a PAP?
30 days for PAP nonrenew
How much notice must be given on a PAP for non-payment?
10 days for non-payment
What is TE and what are the max amount payable for expenses?
Transportation Expenses
Is a coverage extension for comprehensive (other than collision)
Gives $20 a day $600 a month for total theft of vehicle
Waiting period is 48 hours
Must notify police
Only for private passenger vehicles
What is the policy territory for PAP?
United States and its territories, Canada and Puerto Rico
What vehicles are ineligible for a PAP?
Less than 4 wheels
Vehicle used for business
Collision with an animal is covered by what coverage?
Either collision or comprehensive
Damage to a rental car is covered by what coverage?
Liability - Property Damage (you damaged someone’s property)
What coverage must be rejected in writing on a PAP?
PIP/Med
Uninsured/ under insured
What is the minimum PAP coverage?
30/60/25
What two forms are required to have a Commercial Property policy?
Cause of loss
Coverage
What does the standard pollution policy specifically cover?
Is the only way to cover clean up
What are two exclusions to Employee Dishonesty?
Inventory losses
Employer not knowing about a previous dishonest act
Medical payments for CGL must be incurred within what timeframe?
1 year
How much coverage is Medical payments on CGL?
$5,000 per person
What is the coverage and timeframe for medical payments for TBOP?
1 year
$5,000
What is the coverage and timeframe for medical payments for Auto?
$500
3 years
What is the timeframe in order to have Boiler and Machinery paid out in replacement value?
18 months
What is open cargo form?
Provides continuous coverage until canceled
What is the basic deductible for Commercial Property?
$250
What is the basic deductible for TBOP?
$500
What are some examples of Supplemental Payments?
Defense costs
Premium bonds
Loss of earnings if required to be in court
These are in addition to other coverages
What Commercial Property Policy loss form covers theft?
Special
What TBOP loss form covers theft?
Broad & special
What 6 categories of businesses qualify for a TBOP?
Apartments Self-storage Trade contractors Offices Restaurants Mercantile
What is specifically excluded on a TBOP?
Money & Securities
What is the advantage of insuring property with a Special form?
Covers All Risks perils
For both Commercial Property Policies and TBOP, what is not covered after 60 days of vacancy?
Sprinkler leakage Vandalism Water damage Glass breakage Theft
What are the coverage extensions for Commercial Property policies?
Newly acquired building (30 days)
Newly acquired personal property on premises (30 days)
Personal property off premises (30 days)
Personal effects of employees and others
Valuable papers
Outdoor property including signs
$250 per plant, tree, shrub
Glass breakage $100 per pane, $500 per occurrence
What are the 3 reasons to deny a WC claim?
Employee created an occasion to be hurt by performing actions not part of job
Injury or death by willful intention
Intoxication on job causing harm to employee (employer did not know)
Is workers compensation in Texas elective or compulsory?
Workers compensation in Texas is elective
Who are beneficiaries of Texas Workers Compensation?
Spouse till death or remarriage
Children till 18 or 25 if in college
What happens to the money if someone doesn’t have children or spouse (beneficiaries)?
Death benefits are paid to the subsequent injury fund if there are no beneficiaries.
What is the minimum number of employees needed to qualify for Texas Workers Compensation?
1 employee
Who does the Jones Act protect?
Master and crew of vessels
Define extraterrestrial benefits/ clause
Texas benefits are available to Texas workers injured anywhere in the world.
What is flood?
Overflow of inland or tidal waters
Rapid accumulation of surface waters (inundation of normally dry area)
Mudslide
What covers physical damage to a boat?
Hull
When are you responsible for a SIR, self insurance retention?
If an underlying policy does not pay
What are the standard amounts for a SIR, self insurance retention?
$1,000 personal
$10,000 for commercial
Principle, obligee and surety
Principle - obligor - is the contractor
Obligee is the customer
Surety - protects the obligee to ensure the principle carries out contract.
Liquidated demand
100% of Homeowners policy of total loss by fire.
The premium for controlled business which a licensee is permitted to transact in any calendar year must be
25% from general public
A temporary emergency license is issued for an initial period of
3 months
90 days
Who holds a company appointment?
PCA
Property Casualty Agent
Licenses renew how often?
Every 2 years
Misrepresentation is:
Telling a lie
Who do agents represent?
Insurance company
When must a licensed agent report a change of address?
Immediately
Twisting is:
Giving a misleading comparison to the insured to induce them to buy.
What is a hazard?
The increase in the possibility that a loss might occur
The type of insurance company that the policyholder is considered an owner with the right to vote and share in profits
Mutual company
The principle that states that an insured should be restored to approximately the same financial condition after a loss as before the loss is known as
Indemnity
Staying at a hotel while home is being repaired after a fire is what type of loss?
Indirect
What is risk?
Uncertainty of loss
What kind of risk is insurable?
Pure risk
In a legal contract, agreement refers to
Offer and acceptance
Concealment is
Failure to disclose a known truth
A peril is
Cause of loss
What part of an insurance policy personalizes the policy as to who and what are insured
Declarations
What is ACV
Actual cash value
Replacement - depreciation
What type of policy insures against all risks off loss that is not specifically excluded by the policy
Open peril policy
The condition that provides a means to settle the amount of loss when the insured Bd the insurance company cannot agree
Appraisal
What does a binder do
Provides temporary protection for the insured between the time the application is made and the policy is issued or the binder expires
An additional loss that results from a direct loss to property
Consequential loss
In liability policies, supplementary payments are
Payable in addition to the policy limits
Homeowners policies proved liability coverage for
Property damage and bodily injury
What is the minimum amount of coverage that is available for Coverage E, liability, on the Homeowners policy?
$100,000
Section II of a homeowners policy covers
Bodily injury or property damage caused by the personal activities of an insured
An HO-2 form sets limits on
Money
Jewelry
Business contents
What is a representation?
A statement at time of application
Under which extension of coverage would a policy provide a rental car if your vehicle had been stolen and missing at least 48 hours?
Transportation expense
Under the claims-made CGL form, the first date that a loss may occur and still be covered under the policy is
Retroactive date
In the Boiler and Machinery policy, the items insured under the policy are defined in the
Object definition form
The Extra Expense coverage provides
Coverage that will permit the insured to continue in business without interruption following property damage loss
A person retained by the insured to have care, custody and control of property inside the premises and who has no other duties is
Watchperson
The crime coverage form that covers theft losses caused by employees has 2 important exclusions
Inventory losses
Prior dishonest acts of the employee
The premium charged for a standard Worker’s Compensation policy is primarily based on
Payrolls
Workers Compensation includes basic benefits
Medical Expenses
Loss of Income
Rehabilitation
The employer must be notified within how many days of injury when it comes to Workers Compensation
30 days
If there is no spouse or child and the worker dies, the benefits are paid to the
Subsequent Injury Fund
The party to the surety bond who promises to do or not to do a specific thing is the
Principle
What type of Ocean Marine insurance provides physical damage coverage for the ship
Hull
Something that increased the chance of a loss occurring due to a peril
Hazard
Actual cash value
Replacement cost less depreciation
All Risk insurance forms
Name the exclusions
What is considered an offer
The applicant submits an application to the company
What are two optional coverages obtained by endorsement to a BAP?
PIP
Uninsured
What coverage extension includes Transportation Expense?
Other than Collision
Comprehensive
Damage to an rental auto caused by the insured is covered under which section of PAP?
Liability
The failure to do what a reasonable prudent person would do under the circumstances
Negligence
Proximate causes requires that
An uninterrupted negligent series of events causes injury or damage
What is the acceptance of an offer
The insurance company issues the policy applied for
The principle of indemnity
Restores the insured to the same condition held prior to a loss
Occurrence is
A one time happening and or a continuous repeated exposure
After paying a claim, an insurance company may have the right to pursue legal action against the negligent party.
This right is called
Subrogation
As an inducement to buy insurance, promising to return a portion of the commission to the insurance buyer is known as
Rebating
Controlled business law
25% or more of policies must come from the general public
Publishing or circulating false and malicious statements about the financial conditions of an insurer with the intent to cause injury is
Defamation
In this state, a domestic insurance company is defined as a company that
Is incorporated in this state
Newly organized insurance companies operating in Texas are examined by TDI at least once each year during their initial
3 years of operations
Representation
Statement made by the insured that certain conditions exists at the time of application
The purpose of the Texas Property and Casualty Guaranty Association is to
Protect the public from the failure of impaired insurance companies
$25,000 unearned premium
$300,000 of any claim
100% for workers compensation
What is the insuring agent section of an auto policy?
Contains the insurance company promise to pay on behalf of the insured
What is insurance
Protection against certain losses by transferring risks from individuals to a group
Hazard
Any condition that increases the chance of loss or frequency or severity of loss
Subsequent injury fund
Pays for subsequent injuries that make someone lifetime disabled
Funded by unpaid death benefits
Impairment Income Benefits
Are paid when someone has a permanent partial disability
%of disability X 3 = additional # of weeks salary
Supplemental income benefits
Must be 15% or lore disabled and salary will be supplemented up to 80% of AWW
Lifetime income benefits
A worker is paid for the remainder of their life for loss of 2 of the same body parts or paralysis as long as the injuries occurred at the same employer
What is Part 1 of Texas Workers Compensation
The medical coverage
Extraterritorial clause
TX benefits are paid to TX workers while working anywhere in the world
Part 2 of Texas Workers Compensation
Employers liability
$100,000 coverage
Provides for subrogation
Suits from spouses and children
Employees suing for product liability
Part 3 Texas Workers Compensation
Other states insurance
Covers workers temporarily in a state not listed in part 1.
Can collect benefits from a different state if you are working there
Premiums on Texas Workers Compensation are
Based on payroll
Each $100
Texas Workers Compensation Fund
Takes good risks as well as bad
Must keep a 3:1 ratio
Financed by revenue bonds
What are the 3 forms available Texas Dwelling Policy
DP1 - Basic
DP2 - Broad
DP3 - Special
What are the coverages on TDP?
A - Dwelling (ACV for DP1 basic, replacement for DP2 broad and DP3 special)
B - Other Structures (ACV for DP1 basic, replacement for DP2 broad and DP3 special)
C - Personal Property (ACV for DP1, DP2, DP3)
D - Fair Rental Value (20% of Coverage A for DP1, DP2, DP3)
E - Additional Living Expenses (not covered on DP1, 20% of Coverage A for DP2, DP3)
What does Coverage A on TDP cover?
The dwelling itself
Appliances provided by landlord
Materials used to make repairs
Basic DP1 is ACV
Broad DP2 is Replacement
Special DP3 is replacement
What does Coverage B of TDP cover?
Detached structures
10% of Coverage A
Basic DP1 is ACV
Broad DP2 is replacement
Special DP3 is replacement
What does Coverage C of TDP cover?
Contents
Personal Property
10% of Coverage C if off premises or belongs to others
Is ACV for all forms
What does Coverage D of TDP cover?
Fair Rental Value
Loss of rents during repair
Max limit is 20% of Coverage A
What does Coverage E cover on TDP?
Additional living expenses
20% of Coverage A
Is excluded on Basic DP1
Only covered on Broad DP2 and Special DP3
What is the coverage for trees, shrubs and plants on TDP?
$500 each
Max is 5% of Coverage A
Wind is excluded
What are the coverages for Homeowners Insurance
A - Dwelling B - Other Structures (10% of Coverage A) C - Contents (Personal Property) D - Loss of Use (20% of Coverage A) E - BI & PD ($100,000 per occurrence) F - Med Pay ($1,000 per person)
What are the forms for Homeowners for houses
HO2, HO3, HO5
What form covers apartments
HO4
What form covers condos
HO6
What is the standard deductible for Homeowners
1% of Coverage A
What is the standard deductible on Renters and Condo?
1% of Coverage C
What forms have ACV for Coverage A - Dwelling?
HO8(Victorian homes)
HO2(Broad)
HO6(condos)
What forms have ACV for B - Other structures
HO2(broad)
HO8(Victorian homes)
HO6(condos)
What forms have replacement value for Coverage A - Dwelling?
HO3
HO5
What forms have replacement value for Coverage B - Other Structures?
HO3
HO5
What forms have ACV for Coverage C - contents
All forms have ACV for contents
What is the valuation for Coverage D - Loss of Use for all forms?
Loss of use is 20% of Coverage A
What form is all risk on Homeowners for all coverages?
HO5
HO3 is only all risks for Coverage A - Dwelling and Coverage B - Other Structures
What does Coverage E cover in homeowners?
BI & PD
$100,000 per occurrence
3 year time limit
What does Coverage- F cover in homeowners?
Med Pay
$1,000 per person
3 year time limit
Key word is first aid
What are the limits for Coverage B on homeowners?
Detached structures are covered up to 10% of Coverage A
What are some details on Coverage C on homeowners?
Automatically given 50% of Coverage A
Property located away from premises is 10% of Coverage C, but needs to at least be $1,000
What are the limits for Coverage D on homeowners?
20% of Coverage A for loss of use
What is the coverage for trees/plants/shrubs on homeowners
$500 each
5% of coverage A
Damage to property of others under homeowners?
Up to $1,000 replacement costs
Damaged caused by children under 13 are automatically covered
What are the coverages under PAP?
A - bodily injury (30,000/60,000)
B - property damage (25,000 per occurrence)
B1 - medical payments ($500 per person)
B2 - personal injury protection ($2,500 per person)
C - uninsured motorist bodily injury ($30,000/$60,000)
Uninsured property damage ($25,000 per occurrence with a $250 deductible)
D - comprehensive, collision, towing, rental
What is Part B on PAP?
B1 Medical Payments
3 years to report
$500 per person
B2 PIP
3 years to report
80% of actual income or essential services
What is Part C of PAP
Uninsured / underinsured motorist
Property damage has a $250 deductible
What does Section II of BAP cover?
Liability BI & PD
What does Part 3 of BAP cover?
Physical damage coverages
Collision
Comprehensive
Specified causes of loss
The CGL is composed of what 3 coverages?
A - bodily injury and property damage
B - personal and advertising injury
C - medical payments (1 year timeframe to report)
What is coverage A on CGL
Bodily injury and property damage
What is coverage b on CGL
Personal and advertising injury
What is coverage c on CGL
Medical payments
What is the deductible on Commercial property policy?
$250
What form covers theft in commercial?
Special
What forms cover theft in TBOP?
Broad and special
What are the coverages on TBOP?
A - building (replacement on all forms)
B - property (replacement on all forms)
C - business liability ($300,000 per occurrence)
D - medical payments ($5,000 per person)
What is the deductible on TBOP?
$500
What is the SIR
Self insured retention
$1,000 on personal
$10,000 on commercial
What are the 3 forms on TBOP?
Standard
Broad
Special
Who owns a mutual insurance company?
Policyholders
An admitted company is different from a non-admitted company because
Admitted companies are authorized to do business in the state
Non-admitted companies are exempt from most rate regulation
Admitted companies must meet certain minimum standards of financial strength
Who can place insurance directly with a county mutual?
PCA
Property & Casualty Agent
A PCA is the only one, no matter what type of insurance, who can sign a risk.
What are the insurance coverages that is purchased through a government insurance program?
Flood insurance
The general purpose of liability insurance is to cover
Unintentional torts
What is blanket coverage?
The term used to describe a policy that covers more than one item of property in a single amount of insurance
What is the standard mortgage clause
The bank always gets paid
If the insured is disqualified from receiving the benefits, the bank can still collect under the policy to the extent of its interest
What does unoccupied mean?
No tenants
Has contents
What is vacancy?
No tenants or contents
A poorly maintained building is an example of
A morale hazard in property insurance
The Texas Dwelling Form 3 does not cover damage to personal property in the dwelling caused by wind or hail unless
The wind or hail first causes an opening in a roof or wall
In order for a dwelling insured on a Texas Dwelling Policy to be covered on a replacement cost basis, the amount of insurance must be equal to at least what percentage of the replacement value of the property?
80%
What loss provides an example of how Texas Dwelling Special Form is broader than the Basic Form?
Additional Living Expenses are covered in Special
Additional Living Expenses is provided in Texas Dwelling Form in what amount
20% of Coverage A
What is the one exception to tree damage?
Wind or windstorm damage is excluded
A domestic servant can sue under which policy for damages received in the home?
Homeowners
A windstorm causes a tree to blow over, damaging an insured dwelling. Removal of the tree is paid for under what extension of coverage in the Homeowners Policy?
Debris removal
Under a Texas Homeowners Policy, all coverage on a dwelling is suspended if the dwelling has been vacant more than
60 days
What is the standard deductible on a Homeowners Form 3
1% of Coverage A
The basic limit of liability for Section II of a Homeowners policy is
$100,000
What coverage is not provided by Homeowners Form 2?
Replacement cost
HO2 only provides ACV
In order for medical expenses to be covered by Section II of the Homeowners Policy, the expenses must be incurred within:
3 years of the accident
What is the maximum amount available for daily transportation expenses on a PAP?
$20 a day
What vehicles are eligible for transportation expenses?
Private passenger vehicles only
Garage Liability Policy
Provides protection for premises and operations, products and completed, and auto liability.
Includes BI and PD when the insured is legally liable and Supplemental payments when applicable.
Garage Keepers
Adds physical damage to property you don’t own but have care, custody or control of.
Garage Policy - Liability-Premises & Operations
Protects the insured against liability as a result of them assuming responsibility for what occurs on the premises or for actions and that are part of the regular garage operations
Garage Liability - products and completed operations
Protects against the insured against liabilities arising out of products or services that are supplied as a result of garage business
What coverages can pay out for injuries to passengers in an individual’s auto insured on a PAP?
PIP
UM
Medical Payments
What coverage in PAP could pay for damage to an insured car caused by collision with an animal
Collision or comprehensive
On PAP, what coverages must be rejected in writing?
PIP
UM
If you damage a rental car on vacation, what part of PAP covers the damages
Liability- Property Damage
What is a major requirement of UM
The other driver must be at fault and not have insurance or not have enough insurance
What is the maximum limit of PIP coverage available from the Texas Auto Insurance Plan?
$2,500
On a Commercial Property Policy what two forms are required to secure a policy?
Cause of Loss form and Coverage form
The taking of property by means of forcible entry into or exit from the premises, leaving visible marks of force at the point of entry or exit.
Burglary
The difference between standard and limited pollution coverage forms in the CGL program is the coverage afforded for
Cleanup costs
What Is not covered by Employee Dishonesty Insurance?
Loss of merchandise discovered while taking inventory
Previous dishonest act not disclosed previously
Expenses payable under the Medical Payments (Coverage C) of the CGL must be incurred and reported to the insurance company by the claimant within
1 year
Property insured on the Boiler & Machinery Policy is valued at replacement cost of damaged property is repaired or replaced within
18 months
What is the deductible for Commercial Property Policy?
$250
Which form provides automatic coverage for any shipment of property in which the shipper has an interest?
Open Cargo Policy
Defense costs are provided under what section of the general liability policy?
Supplementary Payments
In Commercial Property Policy, which Cause of Loss form includes coverage for theft of personal property?
Special form
What is the greatest advantage of insuring property with the Business Owners Special Form instead of Broad Form
Special Coverage is “all risk” on business personal property
In order for property insured on a Texas Business Owners Policy to be covered on a replacement cost basis, the amount of insurance must be at least what percentage of the replacement value of the property?
80%
The Money and Securities Coverage in Texas Business Owners Policy provides coverage for loss of money and securities except for
Employee theft
What is the per person medical payments limit provided by the Texas Business Owners Policy?
$5,000
What is the minimum occurrence limit of the Employer’s Liability protection in the Workers Compensation and Employer’s Liability Policy
$100,000
Who is protected by the Jones Act?
Crew of sea vessels
A person who is blind in one eye is hired by an employer. If the employee suffers an injury on the job that results in a total loss of sight, what will pay the benefits due to this employee?
Subsequent Injury Fund
An employer must notify the Texas Workers Compensation Commission of a claim within
8 days
If a worker is killed on the job, the surviving spouse can collect compensation benefits
Fir life or until they remarry
By law, the Texas Workers Compensation Insurance Fund must maintain a premium to surplus ratio of not more than
Three to one
3:1
What is the minimum number of employees required before an employer is eligible to purchase Workers Compensation Insurance
1 employee
The Workers Compensation policy will pay Texas benefits to an eligible employee injured anywhere in the world. This provision is known as
Extraterrestrial Benefits
What covers physical damage to a boat or vessel owned by the insured?
Hull insurance
What is the SIR, self-insured retention for personal and commercial?
Personal- $1,000
Commercial - $10,000
If the principle of a surety bond does not perform the bonded work, which pays the bond
The surety
If you own a parking garage and want coverage for damages to vehicles left in your care, custody and control, you need
Garage Keepers
Newly acquired additional vehicle
Has same coverage for 30 days then you lose all coverages.
Newly acquired replacement vehicle
Physical damage (comprehensive and collision) drops after 30 days
Liability is automatic for remaining policy period.
PAP exclusions for physical damage
- while the vehicle is used to carry people or property for a fee
- wear & tear, freezing, mechanical breakdown or road wear to tires
- sound reproduction equipment, unless permanently installed ($1,500)
- tapes, CDs
- camper or trailer not listed in the declarations
- Temporary substitute (rental car) this is covered under liability- property damage
- TV antennas, awnings, etc
- CB radio, radar detector, phone, unless permanently installed
- Custom furnishings, unless charged a premium (custom vans, pickups)
- while racing
- government destruction or confiscation
What is included on a HO policy that is never included on a dwelling policy?
Theft is not covered on a dwelling policy
Dwelling also doesn’t include liability coverage
Boiler and Machinery, where are the items insured defined?
Object Definition Form
ACV formula
Replacement value - depreciation
What does Homeowners Coverage A provide protection for?
Dwelling
House and all attached structures
List all of the possible premises covered under your HO policy
Vacant land Rented premises such as a party room or wedding venue Cemetery lot Storage unit Does not include farmland Temporary residence such as a hotel room
Examples of Personal Injury
Libel, slander, false arrest, detention, malicious prosecution, wrongful eviction, wrongful entry, and publication violating privacy
Examples of Advertising Injury
Damages arising from oral or written publication caused by libel, slander, publication violating privacy, misappropriation of ideas, and copyright or trademark infringement.
What can the insured and insurer go into if they do not agree on the amount for property?
Appraisal
What can the insured and insurer go into if they do. It agree on liability?
Arbitration
What is the coverage for trees/shrubs/plants on s HO policy?
$500 each or 5% of Coverage A
What is coverage for trees/shrubs/plants for Commercial Policy?
$250
Define liability and give an example of what it covers.
Any type of injury caused by the actions of the insured.
The insured damaged a third party.
Do you pay a deductible for liability?
No
Do you pay a deductible for property claims?
Yes
Define “running down clause “ that is part of hull insurance
Pays for the damage the owner is liable to another vessel when it runs over another boat
Will fix your boat and the other boat
How are supplementary payments made in relation to the policy limits?
Supplementary payments are paid in addition to the policy limits
Mobile Equipment
Bulldozers, farm machinery, forklifts, vehicles on crawler treads, or vehicles principally used off public roads
What is listed on the declarations page of a Commercial Policy?
Describes the covered property
Designates primary and optimal coverages
Indicates limits, perils, mortgagee and deductible information
Also used to activate any optional coverage forms or cause of loss forms
Burglary
The taking of property by means of forcible entry or exit from the premises, leaving visible marks of force and violence at the place of entry or exit
Robbery
The taking of property by violence, fear, or threat of violence from any person in custody of the property
Mysterious Disappearance
Any unexplained absence of covered property, even though it might not have been because of a criminal act
What are the different perils between the Broad & Basic form of a Commercial Property Policy?
Broad includes: Falling Objects Weight of snow, ice, sleet Collapse Glass breakage Water damage
For Commercial Inland Marine Floater policies, what are the exclusions for the Jewelers Block?
Showroom windows
Employee Theft
Explain what an Errors and Omissions Policy is and an example of who would need one
When the product an agent sales is his/her knowledge, skills, and advice
Professional liability insurance
Is necessary for insurance agents
What is the part of an insurance contract that includes the promise to pay in the event of a loss?
Insuring agreement
What part of the insurance contract includes dispute resolution?
Conditions
What part of an insurance contract spells out the perils that are not covered?
Exclusions
What part of an insurance contract has amendments added to change the original contract terms?
Endorsements
What is considered flood?
Overflow of inland or tidal waters
Rapid accumulation of surface waters
Inundation of normally dry areas
Mudslides
What is discovery period?
The amount of time the insured has to determine the amount of losses that occurred during the policy period
1 year for employee dishonesty
What is another name for Employee Dishonesty?
Fidelity Bond
What are the 3 types of employee dishonesty forms
Name Schedule - covers specific employees
Position Schedule - covers employees in specific positions
Blanket Schedule - covers all employees
Who does the surety indemnify?
Obligee
Who does the surety then subrogate?
Principle
What is an accident?
Single event, normally sudden and unexpected in nature
Occurrence
Single event that can occur over a period of time
An occurrence can be an accident
An accident cannot be an occurrence
What are some examples of an occurrence?
Workers compensation
Carpel tunnels
Black lung
Damage from smoke stacks
Negligence
Failure to exercise the standard of care required by law to protect others from harm
Failure to act prudently
Failure to act responsible
Binder
Temporary written evidence of coverage issued at time of sale
Representation
Statements made by the applicant to insurance company during the process of obtaining a policy
Proximate Cause
Unbroken connection between the peril and the loss without the intervention of a new and independent cause
The purpose of insurance is to restore an insured to their previous financial condition
Indemnity
An insurance policy must be canceled
In writing
Insured duties after a loss
Proof of loss must be submitted within 90 days
If loss is a theft, the insured must notify police
Inform the insurer of the details of the loss, all interest in the property, and the existence of any other insurance
Complete a signed and sworn statement to the insurer
Protect property from further damage after a loss (mitigate damages)
If an insured is found to have misrepresented or concealed facts around obtaining a policy, coverage may be
Voided
What are the elements of a contract?
Consideration
Legal purpose
Agreement
Competent parties
If any of these are missing, it is not a valid contract
Depreciation
Decline in value
3 different types of hazards
Physical - things you can touch, feel, see, etc tangible things
Moral - previous actions, history
Morale - attitude
What is an example of a liability loss?
Your negligence causing damage to someone else
Formula for Coinsurance
Amount carried/amount required X loss
Did/should X loss
Insurance companies will go into a pro-rata distribution if
Duplicate policies exists
Hazard
Something that increases the chance of a loss
Defamation
Statement or literature that is false or malicious and derogatory used to damage another insurer
Rebating
Offer to pay or promise anything of value not specified through the insurance contract to encourage a customer to purchase insurance
Unfair Discrimination
You cannot discriminate against rate
It is illegal to permit unfair discrimination between individuals of the same class
Examples of Unfair Trade Practices
Misrepresentation False advertising Defamation Boycott, coercion, intimidation Unfair discrimination Rebating and unlawful inducements Unfair competition False use of statistics Disparaging remarks
How many days does an adjuster have to acknowledge the claim?
15 days
How many days does an adjuster have to settle a claim if no fraud present?
30 days
How many days does an adjuster have to settle a case of fraud is thought to be present?
45 days
Who are not considered witnesses?
Minors
Where is an adjuster’s place of business considered?
Your current location
What do you do in the event that your claimant advises that they have hired an attorney?
Stop all communications
Workers Compensation premiums are based on
Payroll
Who pays workers compensation premiums?
The employer
What part of the Workers Compensation policy is responsible for paying out on the event that a 3rd party is liable for the injuries?
Part 2
Basic limit is $100,000
Abandonment
On partial losses or property that can be repaired, the insurance company will not accept the damaged property in return for full insured value
Deductible
What you pay for each loss before insurance company pays
Betterments
Improvements that enhance the value of property more than replacement value
TX Fire
ACV only
Standard Mortgage Clause
Exclusions- Money
Vacancy rules - 60 days coverage is suspended
What are the first 3 things an adjuster must do after they get claim
- The policy is active (in force) at time of claim
- Is vehicle on policy
- Is driver on policy
If you own a parking garage and want coverage for damages to vehicles left in your care, custody and control, you need
Garage Keepers
Newly acquired additional vehicle
Has same coverage for 30 days then you lose all coverages.
Newly acquired replacement vehicle
Physical damage (comprehensive and collision) drops after 30 days
Liability is automatic for remaining policy period.
PAP exclusions for physical damage
- while the vehicle is used to carry people or property for a fee
- wear & tear, freezing, mechanical breakdown or road wear to tires
- sound reproduction equipment, unless permanently installed ($1,500)
- tapes, CDs
- camper or trailer not listed in the declarations
- Temporary substitute (rental car) this is covered under liability- property damage
- TV antennas, awnings, etc
- CB radio, radar detector, phone, unless permanently installed
- Custom furnishings, unless charged a premium (custom vans, pickups)
- while racing
- government destruction or confiscation
What is included on a HO policy that is never included on a dwelling policy?
Theft is not covered on a dwelling policy
Dwelling also doesn’t include liability coverage
Boiler and Machinery, where are the items insured defined?
Object Definition Form
ACV formula
Replacement value - depreciation
What does Homeowners Coverage A provide protection for?
Dwelling
House and all attached structures
List all of the possible premises covered under your HO policy
Vacant land Rented premises such as a party room or wedding venue Cemetery lot Storage unit Does not include farmland Temporary residence such as a hotel room
Examples of Personal Injury
Libel, slander, false arrest, detention, malicious prosecution, wrongful eviction, wrongful entry, and publication violating privacy
Examples of Advertising Injury
Damages arising from oral or written publication caused by libel, slander, publication violating privacy, misappropriation of ideas, and copyright or trademark infringement.
What can the insured and insurer go into if they do not agree on the amount for property?
Appraisal
What can the insured and insurer go into if they do. It agree on liability?
Arbitration
What is the coverage for trees/shrubs/plants on s HO policy?
$500 each or 5% of Coverage A
What is coverage for trees/shrubs/plants for Commercial Policy?
$250
Define liability and give an example of what it covers.
Any type of injury caused by the actions of the insured.
The insured damaged a third party.
Do you pay a deductible for liability?
No
Do you pay a deductible for property claims?
Yes
Define “running down clause “ that is part of hull insurance
Pays for the damage the owner is liable to another vessel when it runs over another boat
Will fix your boat and the other boat
How are supplementary payments made in relation to the policy limits?
Supplementary payments are paid in addition to the policy limits
Mobile Equipment
Bulldozers, farm machinery, forklifts, vehicles on crawler treads, or vehicles principally used off public roads
What is listed on the declarations page of a Commercial Policy?
Describes the covered property
Designates primary and optimal coverages
Indicates limits, perils, mortgagee and deductible information
Also used to activate any optional coverage forms or cause of loss forms
What are the different perils between the Broad & Basic form of a Commercial Property Policy?
Broad includes: Falling Objects Weight of snow, ice, sleet Collapse Glass breakage Water damage
For Commercial Inland Marine Floater policies, what are the exclusions for the Jewelers Block?
Showroom windows
Employee Theft
Explain what an Errors and Omissions Policy is and an example of who would need one
When the product an agent sales is his/her knowledge, skills, and advice
Professional liability insurance
Is necessary for insurance agents
What is the part of an insurance contract that includes the promise to pay in the event of a loss?
Insuring agreement
What part of the insurance contract includes dispute resolution?
Conditions
What part of an insurance contract spells out the perils that are not covered?
Exclusions
What part of an insurance contract has amendments added to change the original contract terms?
Endorsements
What is considered flood?
Overflow of inland or tidal waters
Rapid accumulation of surface waters
Inundation of normally dry areas
Mudslides
What is discovery period?
The amount of time the insured has to determine the amount of losses that occurred during the policy period
1 year for employee dishonesty
What is another name for Employee Dishonesty?
Fidelity Bond
What are the 3 types of employee dishonesty forms
Name Schedule - covers specific employees
Position Schedule - covers employees in specific positions
Blanket Schedule - covers all employees
Who does the surety indemnify?
Obligee
Who does the surety then subrogate?
Principle
What is an accident?
Single event, normally sudden and unexpected in nature
Occurrence
Single event that can occur over a period of time
An occurrence can be an accident
An accident cannot be an occurrence
What are some examples of an occurrence?
Workers compensation
Carpel tunnels
Black lung
Damage from smoke stacks
Negligence
Failure to exercise the standard of care required by law to protect others from harm
Failure to act prudently
Failure to act responsible
Binder
Temporary written evidence of coverage issued at time of sale
Representation
Statements made by the applicant to insurance company during the process of obtaining a policy
Proximate Cause
Unbroken connection between the peril and the loss without the intervention of a new and independent cause
The purpose of insurance is to restore an insured to their previous financial condition
Indemnity
An insurance policy must be canceled
In writing
If an insured is found to have misrepresented or concealed facts around obtaining a policy, coverage may be
Voided
What are the elements of a contract?
Consideration
Legal purpose
Agreement
Competent parties
If any of these are missing, it is not a valid contract
Depreciation
Decline in value
3 different types of hazards
Physical - things you can touch, feel, see, etc tangible things
Moral - previous actions, history
Morale - attitude
What is an example of a liability loss?
Your negligence causing damage to someone else
Formula for Coinsurance
Amount carried/amount required X loss
Did/should X loss
Insurance companies will go into a pro-rata distribution if
Duplicate policies exists
Hazard
Something that increases the chance of a loss
Defamation
Statement or literature that is false or malicious and derogatory used to damage another insurer
Rebating
Offer to pay or promise anything of value not specified through the insurance contract to encourage a customer to purchase insurance
Unfair Discrimination
You cannot discriminate against rate
It is illegal to permit unfair discrimination between individuals of the same class
Examples of Unfair Trade Practices
Misrepresentation False advertising Defamation Boycott, coercion, intimidation Unfair discrimination Rebating and unlawful inducements Unfair competition False use of statistics Disparaging remarks
How many days does an adjuster have to acknowledge the claim?
15 days
How many days does an adjuster have to settle a claim if no fraud present?
30 days
How many days does an adjuster have to settle a case of fraud is thought to be present?
45 days
Who are not considered witnesses?
Minors
Where is an adjuster’s place of business considered?
Your current location
What do you do in the event that your claimant advises that they have hired an attorney?
Stop all communications
Workers Compensation premiums are based on
Payroll
Who pays workers compensation premiums?
The employer
What part of the Workers Compensation policy is responsible for paying out on the event that a 3rd party is liable for the injuries?
Part 2
Basic limit is $100,000
Abandonment
On partial losses or property that can be repaired, the insurance company will not accept the damaged property in return for full insured value
Deductible
What you pay for each loss before insurance company pays
Betterments
Improvements that enhance the value of property more than replacement value
TX Fire
ACV only
Standard Mortgage Clause
Exclusions- Money
Vacancy rules - 60 days coverage is suspended
What are the first 3 things an adjuster must do after they get claim
- The policy is active (in force) at time of claim
- Is vehicle on policy
- Is driver on policy
What does an agent do?
Solicits insurance
Takes or transmits an application for insurance
Receives or delivers a policy
Examines or inspects a risk
Collects or transmits any premium for insurance
Adjusts a claim on behalf of an insurance company
PCA
Must be appointed by company
Only one who can sign a policy
Appoints ISRs
Can only work for 1 company at a time
ISR
Appointed by a PCA
No outside solicitation
Can only represent 1 company at a time
Is paid a salary with an option for commission or bonus
MGA
Supervisory responsibility
Cannot deal with the insuring public
May not sign or execute policies
Survivors Temporary License
Issued to surviving spouse and children
May not write new business
Emergency PCA
90 days
May conduct business of the agency
Surplus Lines Agent
Must be a PCA or MGA or both
Is appointed
Risk Manager
Evaluates risks Advises on how to reduce losses and exposure to risk Is not an agent Cannot collect commissions Can collect a fee for services
Unfair Claim Settlements
The rights for claimants in Texas are protected
Texas Certified Self-Insurer
Every self-insurer must be a member
Protects impaired insurers
Risk
Chance of loss
Hazard
Any condition that increases the chance of a loss
Peril
The event that causes a loss
Loss
Reduction in the value of an asset
Which type of company does Law of Large Numbers benefit
Admitted
The greater the numbers, the more accurate statistics will be that permit an insurer to predict the frequency and severity of losses and calculate a premium to spread the cost of risk among all policyholders
Domestic Insurer
Located in the state they are incorporated or domiciled
Foreign Insurer
Located in a different state
Alien Insurer
Located in a different county
Elements of a contract
Consideration - Both parties assume some type of responsibility
Legal Purpose
Agreement - offer and acceptance
Competent Parties
Offer and Acceptance
Offer - applicant submitting application
acceptance - insurance of policy
