Texas Property & Casualty Insurance

The principle of indemnity in property and casualty insurance is best described as:

• ARestoring the insured to the same financial position they were in before the loss, with n…
• BPaying the insured more than the actual loss to discourage future claims
• CReimbursing the insured for replacement cost regardless of depreciation
• DProviding coverage only for losses caused intentionally by the insured

Insurable interest in a property insurance policy must exist:

• AOnly at the time the policy is purchased
• BAt the time of loss
• COnly after a claim is filed
• DAt no particular time as long as premiums are paid

Which legal doctrine allows an insurer that has paid a claim to recover the amount paid from a negligent third party who caused the loss?

• ASubrogation
• BCoinsurance
• CEstoppel
• DAbandonment

An insured intentionally over-insures a building hoping to profit from a fire. This is most directly prevented by which insurance principle?

• AIndemnity
• BUtmost good faith
• CAdhesion
• DSubrogation

An insurance policy is described as a contract of adhesion. This means:

• AThe contract is drafted by the insurer and offered to the insured on a take-it-or-leave-i…
• BBoth parties negotiate every term equally
• CThe insured drafts the policy language
• DThe contract requires both parties to contribute equally to losses

Which of the following is an example of the insurance principle of utmost good faith (uberrimae fidei)?

• AThe applicant must honestly disclose all material facts on the application
• BThe insurer must pay all claims regardless of the policy terms
• CThe insured may cancel the policy at any time without notice
• DThe agent guarantees that premiums will never increase

An insurance contract is considered 'aleatory.' What does this mean?

• AThe dollar amounts exchanged by the parties may be unequal depending on whether a loss oc…
• BBoth parties must exchange equal consideration
• COnly the insurer is bound by the contract terms
• DThe contract must be in writing to be enforceable

A representation on an insurance application differs from a warranty in that a representation:

• AIs a statement believed to be true to the best of the applicant's knowledge
• BIs guaranteed to be absolutely and literally true
• CIs part of the printed policy form
• DCannot affect the validity of the policy

The intentional concealment of a material fact by an applicant can allow the insurer to:

• AVoid the policy
• BIncrease the policy limit automatically
• CWaive the deductible
• DExtend the policy term

An insurer accepts a late premium payment without reservation, then later tries to deny a claim on the basis that the policy had lapsed. The insurer is most likely prevented from doing so by:

• AEstoppel
• BSubrogation
• CCoinsurance
• DAbandonment

The part of an insurance policy that states the names of the insured, the property covered, the policy period, and the limits of coverage is the:

• ADeclarations
• BInsuring agreement
• CConditions
• DExclusions

In the DICE structure of a policy, the section that describes the perils insured against and the insurer's basic promise to pay is the:

• AInsuring agreement
• BDeclarations
• CConditions
• DExclusions

Which policy section sets out the rules and duties both parties must follow, such as the duties after a loss and how losses will be valued?

• AConditions
• BDeclarations
• CInsuring agreement
• DExclusions