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72 Cards in this Set
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Texas Code For Licensing |
21.07-4 |
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3 Types of Tx Adjuster License |
1) All Lines 2) Property & Casualty 3) Workers Comp |
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5 Types of All Lines |
1) Property 2) Casualty 3) Surety 4) Workers Comp 5) Employer liability |
Please Call Susan When Empty |
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Property & Casualty Types |
Property Casualty Surety |
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Workers Comp License Includes: |
Workers comp and employer liability |
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Law of Large Numbers |
Helps insurers to predict the number of losses they will pay in any given time period so they can determine what premium is required to pay those losses. |
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Insurable Interest |
Exists when the party would suffer a financial loss as a result of damage to or loss of the insured item; prevents people from profiting from a loss; losses only covered to the extent of this |
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Consideration (in a contract) |
Each party to a contract must give something of value to the other; money, an act, a promise, or giving up a legal right |
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Aleatory Contract |
Means that performance depends on the occurrence of an uncertain event; insurance policies are aleatory contracts |
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Contract of Adhesion |
Terms are drawn up by the insurer, and the insured simply adheres. Any ambiguity must be interpreted in favor of the insured because the insured has little or no control over policy content. |
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Indemnity Basis |
The intent being to make something "whole" again by paying actual losses while preventing any gain |
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Concealment |
Failure to disclose known facts |
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Fraud |
A deliberate misrepresentation that causes harm |
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4 Elements of Fraud |
1) Someone deliberately lies 2) The intent of the lie is for someone else 3) Another person relies on that lie 4) The other person suffers harm as a result of that lie |
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What is the difference between fraud and misrepresentation? |
Misrepresentation may be intentional OR unintentional. Fraud is always intentional and involves an effort by one party to deceive and cheat the other. |
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Waiver |
Intentional relinquishment of a known right |
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Estoppel |
The insurance company is prevented from denying a fact. |
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Stock Companies |
Stockholders own and share profits & losses; 70% of all property & liability premiums and 50% of life insurance premiums |
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Mutual Companies |
No stockholders; owned by policy holders; voting rights and share profits via policy dividends; 30% of property & liability and 50% of life |
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County Mutual |
Organized for the purpose of insurance on the mutual or cooperative plan against loss or damage by fire, lightning, gas explosion, theft, windstorm & hail, and for all or either |
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Principal |
The insurance company |
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Express Authority |
An agent has been expressly told he may act on behalf of principal |
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Implied Authority |
The Authority an agent has by virtue of being reasonably necessary to carry out his express authority |
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Apparent Authority |
The principal's words or conduct would lead a reasonable person to believe that the agent was authorized to act, even if it had never been discussed |
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Insurable Interest |
Insured must have a chance of financial loss or have a financial interest in the property |
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Loss Ratio |
Incurred Losses/Earned Premium
Determines insurance company's success |
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Judgment Rating |
Considers the individual risk; oldest form |
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Manual Rating |
Company's rates for a particular state or area are obtained by consulting a manual |
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Merit Rating |
Starts with class or manual rates, which are then modified to reflect the unique characteristics of the risks that are not reflected in the manual rate |
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Experience Rating |
Form of merit Rating that modifies the manual premium based on the insured's loss experience over some period of time |
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Retrospective Rating |
Bases the insured's premium on losses incurred during the policy period |
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Scheduled Rating |
Applies a system of debits or credits to reflect characteristics of a particular insured |
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Hazards |
Anything that increases the seriousness of a loss or the likelihood that a loss will occur due to a peril |
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Risk |
Uncertain potential for loss; things that cause losses |
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Difference Between Hazard and Peril |
Hazards are catalysts that trigger or advance perils |
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Difference Between Hazard and Peril |
Hazards are catalysts that trigger or advance perils |
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Physical Hazard |
Arise from material, structural, or operational features of a risk situation; example: seriously worn automobile tires |
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Moral Hazard |
Arise from a person's habits which increase the possibility of a loss |
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Negligence |
Failure to do what a reasonable and prudent person would do under given circumstances; one of the most commonly insured perils |
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4 Elements of Negligence |
1- Legal Duty 2- Standard of Care 3- Proximate Cause 4- Actual loss or damage |
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Assumption of Risk |
If someone understands a danger and voluntarily assumes the risk, a court may disallow recovery against a negligent party |
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Contributory Negligence |
Denies recovery to an injured party who contributed to the loss by failing to meet standards required for self protection |
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Comparative Negligence |
Less harsh version of contributory Negligence; reduces injury and damage awards proportionally when the plaintiff and defendant were both negligent |
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Compensatory Damages |
Reimburse the injured party only for losses that were actually sustained |
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Punitive Damages |
Intended to punish the defendant and make an example to discourage others from behaving the same way |
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Absolute Liability |
Imposed by law on those participating in certain activities that are considered especially hazardous |
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Strict Liability |
Product claims; claimant proves that a product was defective and that the defect caused the injury; the manufacturer can be held strictly liable |
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Vicarious Liability |
When a person is held responsible for the negligent act of another person |
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Peril |
Cause of loss |
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Direct Loss |
Actual physical damage, destruction, or loss of property. Fire damage and stolen merchandise are examples. |
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Consequential/Indirect Loss |
Those that result from direct losses and occur as a consequence of direct loss |
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Consequential/Indirect Loss |
Those that result from direct losses and occur as a consequence of direct loss |
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Types of Loss Valuation |
1- ACV 2- RCV 3- Functional Replacement Cost 4- Market Value 5- Valued Policy |
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ACV |
(Replacement Cost) - (Depreciation) = ACV |
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RCV |
Replacement Cost Value Replacement Cost for covered losses, with no allowance for depreciation |
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Functional Replacement Cost |
Damaged property is repaired or replaced with less expensive, but functionally equivalent materials. Used most frequently with antiques, ornate, or custom construction |
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Market Value |
Property is insured for market value or what it could be sold for at the time of the loss. |
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Valued Policy |
For hard-to-Value items, the insurance company will issue a valued or agreed amount contract |
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What does the Declarations include? |
Identity and address of insured, policy term or period, amount of insurance or limits of liability, policy premium, any deductible, property description, or a schedule of coverage parts and a list of any endorsements |
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Insuring Agreement or Clause |
Describes the covered perils, or risks assumed, or nature of coverage, or makes some reference to the contractual agreement between insurer and insured |
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Deductible |
Amount of a loss which the insured must absorb before the insurer begins to pay the additional loss |
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Deductible |
Amount of a loss which the insured must absorb before the insurer begins to pay the additional loss |
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Limits of Liability |
Each policy or coverage part will have a declarations section for listing the limits of liability |
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Vacancy VS Un-occupancy |
Vacant means absence of both people and property; Unoccupied means absence of people only |
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Abandonment |
The insured cannot abandon damaged property to the insurer and demand to be reimbursed for its full value |
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Liberalization |
If a law is passed that broadens coverage under a policy form or endorsement without requiring an additional premium, then all existing similar policy endorsements will be construed to contain broadened coverage |
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Liberalization |
If a law is passed that broadens coverage under a policy form or endorsement without requiring an additional premium, then all existing similar policy endorsements will be construed to contain broadened coverage |
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Subrogation |
The transfer to the insurance company of the insured's right to collect damages from another party |
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Salvage |
Damaged property that can be retrieved and reconditioned then sold to reduce an insured loss |
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Tort |
Wrongful act or omission, other than a breach of contract, which causes harm and might lead to a civil lawsuit for damages |
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Contractual Liability |
Arises when someone's rights are violated under the terms of a contract |
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Contractual Assumptions of Liability |
As a condition of a business contract, a party often agrees to assume financial responsibility for liabilities imposed by law or another party |
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