Texas Insurance Code Overview

Questions and Answers

Which regulatory body handles violations of each related insurance issue only?

TIC - Texas Insurance Code

What license carries the minimum requirements to handle homeowners claims?

Property, Casualty and Surety

Most workers' comp policies have what type of policy limit?

None

Which one of the following penalties or remedies is not valid under the DTPA?

Locked in the same room as an adjuster Signup and view all the answers

Which one of the following is not a qualification to become an adjuster?

Have an MBA in insurance Signup and view all the answers

In the mid 1900's insurers shifted focus on claims handling from field adjusting to in-office adjusting. This change in claims handling was known as ________?

Claim Centralization Signup and view all the answers

When the dealers negotiated an agreement on purchasing drugs, they were of age and there was a monetary exchange. Which of the following nullifies this transaction as a 'contract'?

Legal offer and acceptance Signup and view all the answers

Which of the following is not allowed to handle property or auto claims for an insurance carrier?

Public adjuster Signup and view all the answers

In workers' comp, what is utilized to monitor the frequency of medical visits?

Utilization review Signup and view all the answers

Which of the following is a workers' comp regulatory entity?

Texas Workers' Comp Commission Signup and view all the answers

Which of the following is allowed to handle property claims for an insurance carrier?

An individual who is an employee of an insurance company supervising the handling of claims Signup and view all the answers

What does IME stand for?

Independent Medical Examination Signup and view all the answers

Which of the following is not a source of legal liability?

Peril Signup and view all the answers

What is TIC?

Texas Insurance Code Signup and view all the answers

An individual who investigates or adjusts losses or supervises the handling of claims is known as an?

Adjuster Signup and view all the answers

Which of the following is a compensatory damage?

Money to punish the wrong-doer Signup and view all the answers

Under the TIC remedies, what is the cap for punitive damages?

2 times the actual damages Signup and view all the answers

Which of the following methods to control medical costs would not be included in a workers' comp policy?

Deny physical therapy treatments Signup and view all the answers

The courts have interpreted that an insured or third-party beneficiary to an insurance policy can be recognized as a __________ under the TIC.

Claimant Signup and view all the answers

This position is the insurer's direct representative with the insured, claimant, attorney, etc.

Adjuster Signup and view all the answers

What is the best description of a 'competent party'?

Of sound mind and at least 18 Signup and view all the answers

The Texas Workers' Comp Act limits a covered employer's liability to a schedule of benefits. Which benefit is not included?

Life insurance on dependents Signup and view all the answers

An emergency licensed adjuster can work for _____________ days before submitting the actual license application.

5 days Signup and view all the answers

Workers' comp has how many regulatory entities in Texas?

2 Signup and view all the answers

Which of the following will not likely be involved or included in a workers' comp investigation?

Inspection of tax records Signup and view all the answers

What regulatory body or statute handles consumer protection violations of most business-related issues in Texas?

DTPA Signup and view all the answers

Pursuant to Texas Insurance Code (TIC), which of the following is not exempt from the requirement of an adjuster's license examination?

Those earning an MBA in insurance operations Signup and view all the answers

Which of the following is an 'exemplary damage'?

Punitive Signup and view all the answers

The insurance company function that is responsible for handling payment of claims is?

Claims adjusting Signup and view all the answers

What is TDI?

Texas Department of Insurance Signup and view all the answers

An insured is also considered a ________ under the DTPA.

Consumer Signup and view all the answers

The body of law can be divided into 2 categories. Which of the following is a category?

Private Law Signup and view all the answers

Which of the following could be a violation of the Unfair Claims Settlement Practices Act?

The adjuster refuses to return the contract from attempts of the insured for over 6 months Signup and view all the answers

The claims adjusting process consists of 3 major elements. Which of the following is NOT one of the elements?

The insured must be over 21 years Signup and view all the answers

A person, entity, or organization known as the 2nd party is referred to as the?

Insurer Signup and view all the answers

What is DTPA?

Deceptive Trade Practices Act Signup and view all the answers

In a bond transaction, the entity that makes the commitment and is sometimes referred to as the 'obligator' is the?

Principal Signup and view all the answers

Courts that have jurisdiction over matters pertaining to the sea are known as ______________ courts.

Admiralty Signup and view all the answers

Most insurance policies are considered two-party contracts, whereas bond transactions usually involve ___________ party(ies).

3 Signup and view all the answers

Which of the following is not a party to a bond?

Bailee Signup and view all the answers

In a typical homeowners policy, the expense incurred BEYOND the normal daily expense of maintaining a household subsequent to a covered loss would be ___________.

ALE - Additional Living Expense Signup and view all the answers

The standard fire policy was truly standardized in what year?

1943 Signup and view all the answers

In a typical homeowners insurance policy, the price of a 'unit' of insurance determines the exposure to a risk. This is referred to as ____________.

Rate Signup and view all the answers

Inland marine insurance can be classified by all the following except:

Water transportation Signup and view all the answers

Which of the following statements is most true regarding bonds?

There is no penalty for failure to appear with a bail bond Signup and view all the answers

Even though most perils are covered in an 'All-Risk' homeowners policy, what would not be covered?

Earth movement Signup and view all the answers

What is the amount payable under a homeowners insurance policy with the following facts: 1) 1% deductible, 2) $10,000 loss, 3) $150,000 Coverage A limit?

$8,500 Signup and view all the answers

According to most homeowners insurance policies, which of the following is the definition of 'RISK'?

The uncertainty of loss Signup and view all the answers

The TSFP is considered a ____________ policy.

Excess Signup and view all the answers

Homeowner policies are considered ______ policies since they provide both property and liability.

Package Signup and view all the answers

How many sections does the HO-2 policy have?

2 Signup and view all the answers

In a typical homeowners insurance policy, an 'All Risk' (special) policy is usually responsible for _____________.

All perils unless specifically excluded Signup and view all the answers

An adjuster for marine losses is known as?

Average adjuster Signup and view all the answers

What peril does the standard fire policy cover?

Fire Signup and view all the answers

What type of bond would be required for a contractor to guarantee that a performance bond would be obtained prior to commencement of a job?

Bid Signup and view all the answers

Bailees are one of the most common purchasers of inland marine insurance. What is a bailee?

A person or organization voluntarily receiving the property Signup and view all the answers

The initial fire policy was considered a ___________ policy.

Named peril Signup and view all the answers

Inland marine insurance covers all the following except:

Watercraft Signup and view all the answers

The loss payment provision in an inland marine policy states that the carrier must take action within __________ days of receipt of the proof of loss.

30 days Signup and view all the answers

What is covered under Coverage A in the homeowners insurance policy?

Dwelling Signup and view all the answers

A mathematical concept that the more times an event is repeated, the more predictable the outcome is known as __________.

The law of large numbers Signup and view all the answers

A bond that guarantees that a contractual obligation will be met, such as a debt, duty, and/or commitment is known as a?

Surety bond Signup and view all the answers

Heidi is a defendant in a lawsuit and has elected to appeal her verdict. She will need to purchase what bond?

Appeal bond Signup and view all the answers

What is covered under homeowners policy Coverage B?

Fence Signup and view all the answers

The insured has an ACV policy on her residence. The replacement cost of the loss is $10,000 and the depreciation is 25%. What is the amount payable?

$7,500 Signup and view all the answers

What was the year that the first independent policy combined personal liability coverage with packaged property coverages?

1950 Signup and view all the answers

The Texas Standard Fire Policy is used exclusively for __________.

Property Signup and view all the answers

According to the typical homeowners policy, what is the payable if the tree is blown onto the dwelling by a covered peril?

Damages to the roof, cutting the tree off the roof, and debris removal Signup and view all the answers

Under the ISO homeowners policy, what would be covered under Coverage C?

Patio furniture on the attached deck Signup and view all the answers

What of the following is not part of most insurance policies and contracts?

Glossary Signup and view all the answers

What coverage pays for lost wages in the Texas PAP?

PIP Signup and view all the answers

What coverage pays for household or replacement services if needed due to an injury in an auto accident?

PIP Signup and view all the answers

What coverage is mandatory to offer to prospective insureds?

PIP Signup and view all the answers

When crossing state lines, the auto limit of liability coverage will __________.

Increase to the minimum limit of liability of the state occupied Signup and view all the answers

Which of the following is not a penalty for violating financial responsibility laws in Texas?

Repo owners vehicle Signup and view all the answers

According to the TPAP, Coverage D is __________.

Both comp and collision Signup and view all the answers

Regarding liability, Texas is considered a ______ state.

Comparative negligence state Signup and view all the answers

Hail damage to an insured vehicle would be paid under what coverage?

D1 - Other than collision Signup and view all the answers

ISO stands for?

Insurance Services Office Signup and view all the answers

Which of the following perils is not covered under the 'comp coverage'?

Collision with a human Signup and view all the answers

Coverage C under the TPAP is?

UM / Uninsured Motorist coverage Signup and view all the answers

AAIS stands for?

American Association of Insurance Services Signup and view all the answers

___________ contracts and policies are drafted to meet the specific needs of a state, company, and/or policyholder.

Manuscript Signup and view all the answers

TPAP stands for?

Texas Personal Auto Policy Signup and view all the answers

According to the TPAP, it will provide liability coverage for any insured __________.

While driving a described vehicle Signup and view all the answers

The TPAP is based on what type of driver?

Drivers who cannot obtain basic liability coverage Signup and view all the answers

What contracts or policies are consistent from state to state?

Standard contracts and policies Signup and view all the answers

A legal term applying to third-party claims meaning to pay back or make whole is?

Indemnification Signup and view all the answers

What is not listed on the declarations page of a commercial property policy?

Coverage Territory Signup and view all the answers

What of the following is not a person identified as a 'premises liability' claimant?

Insured Signup and view all the answers

AIC stands for?

Associate in Claims Signup and view all the answers

What form of the commercial property policy is an 'open peril' 'all risk' policy?

Special Signup and view all the answers

What CGL policy is commonly utilized?

Occurrence-based Signup and view all the answers

Which of the following is not an element of tort and negligence?

Negligence per se Signup and view all the answers

Which of the following is not a type of 'absolute liability'?

Punitive damages Signup and view all the answers

The commercial property insurance policy utilizes the ______________ coverage.

Building and personal property coverage Signup and view all the answers

Which CGL coverage addresses personal injury and advertising injury?

Coverage B Signup and view all the answers

The necessary increase in living expense resulting from a loss by a covered peril incurred by the insured is?

ALE - Additional Living Expense Signup and view all the answers

What is the statute of limitations for a liability claim in Texas?

2 years Signup and view all the answers

Derived from statutory and case law of England and the American colonies, this is known as?

Common law Signup and view all the answers

Study Notes

Texas Insurance Code and Regulatory Entities

TIC refers to the Texas Insurance Code, which addresses violations related to insurance issues.
The Texas Workers' Compensation Commission is a key regulatory entity for workers' compensation matters in Texas.
The Texas Department of Insurance (TDI) oversees insurance companies, agents, and adjusters.

Licensing and Adjuster Qualifications

The minimum license required to handle homeowners' claims is Property, Casualty, and Surety.
Adjusters do not need an MBA in insurance to qualify.
An emergency licensed adjuster can operate for up to five days before submitting a full license application.

Claims Handling Practices

Claim centralization marked the transition from field adjusting to in-office claims management in the mid-1900s.
There are two regulatory entities governing workers' compensation in Texas.

Compensation and Damages

Compensatory damages are designed to punish wrongdoers, often through punitive measures.
Under TIC, punitive damages are capped at twice the actual damages.
The term "consumer" under the DTPA designates an insured individual.

Insurance Policy Features

Homeowners' policies typically cover living expenses incurred beyond normal costs due to loss, known as Additional Living Expense (ALE).
The standard fire policy was standardized in 1943 and only covers fire as a peril.
Homeowners' policies are classified as 'package' policies since they provide both property and liability coverage.

Coverage Specifics

Coverage A in homeowners policies addresses dwelling, while Coverage B pertains to additional structures like fences.
The Texas Personal Auto Policy (TPAP) includes mandatory Personal Injury Protection (PIP) coverage.
Coverage C under TPAP refers to Uninsured Motorist (UM) coverage.

Claims Investigation and Practices

Utilization review is employed in workers' compensation to monitor medical visit frequencies.
Adjusters are expected to manage claims, including supervising the handling of property and auto claims.

Legal Principles and Liability

Indemnification refers to the legal principle of making a party whole in third-party claims.
Texas operates under comparative negligence laws concerning liability claims.

Miscellaneous Facts

The law of large numbers states that the predictability of outcomes increases with repeated events.
Common law originates from both statutory and case law established in England and American colonies.
The statute of limitations for liability claims in Texas is set at two years.

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Description

This quiz covers key aspects of the Texas Insurance Code and its regulatory entities, including licensing and qualifications for adjusters. It also addresses claims handling practices and the purpose of compensatory damages. Test your knowledge on Texas insurance regulations and practices.