Texas Property and Casualty Exam

Texas Property and Casualty Exam and Practice Questions | Newest

– 200

Questions and Correct Detailed Answers | Already Graded A | Verified Solutions

Section 1: Introduction

This document features the actual / Texas Property and Casualty Licensing Exam and a full set of practice questions, including 200 verified and accurate answers with detailed explanations. It covers essential areas such as policy provisions, state regulations, claims processing, liability coverage, property risk, underwriting, and ethics. Graded A and compliant with the latest Texas Department of Insurance guidelines, this study tool is ideal for candidates seeking full licensure preparation in property and casualty insurance.

Section 2: Exam Questions and Answers

1 Question: What is the primary function of property insurance?

• To provide health benefits
• To safeguard against financial loss from property damage
• To offer investment opportunities
• To cover employee wages

Correct Answer: B. To safeguard against financial loss from property damage

Rationale: Property insurance is intended to protect policyholders from financial losses due to damage or loss of property, a key principle under Texas insurance law.

• Question: What is the minimum age requirement to apply for a Texas property and

casualty license?

• 17
• 18
• 19
• 21

Correct Answer: B. 18

Rationale: The Texas Department of Insurance mandates that applicants be at least 18 years old to ensure legal responsibility and maturity.

• Question: Which coverage is a standard feature of a homeowners insurance policy?
• Personal injury protection
• Personal property coverage
• Business income loss
• Long-term care 1 / 4

Correct Answer: B. Personal property coverage

Rationale: Personal property coverage protects the insured’s belongings inside the home, a fundamental component of Texas homeowners policies.

• Question: What does liability coverage in a business policy primarily address?
• Damage to the business’s own property
• Injuries or damage to third parties caused by the business
• Employee health benefits
• Natural disaster losses

Correct Answer: B. Injuries or damage to third parties caused by the business

Rationale: Liability coverage protects against claims from third parties for injuries or property damage resulting from business activities.

5 Question: Which entity regulates insurance practices in Texas?

• Texas Insurance Commission
• Texas Department of Insurance
• Federal Insurance Office
• Texas State Board of Insurance

Correct Answer: B. Texas Department of Insurance

Rationale: The Texas Department of Insurance is responsible for overseeing licensing, regulation, and consumer protection in the state.

• Question: What is the main role of underwriting in property and casualty insurance?
• To settle claims
• To evaluate and categorize risk
• To market insurance products
• To manage policy renewals

Correct Answer: B. To evaluate and categorize risk

Rationale: Underwriting assesses the risk level of applicants to determine insurability and set appropriate premiums.

• Question: Which peril is generally excluded from a basic homeowners policy in Texas?
• Windstorm
• Earthquake
• Fire
• Theft

Correct Answer: B. Earthquake

Rationale: Earthquake coverage is typically excluded and requires a separate endorsement or policy, per Texas insurance standards.

8 Question: What does a policy deductible represent?

• The total coverage limit
• The amount the insured pays before insurance coverage begins
• The annual premium cost
• The insurer’s profit margin

Correct Answer: B. The amount the insured pays before insurance coverage begins

Rationale: The deductible is the out-of-pocket amount the policyholder pays before the insurer covers additional losses. 2 / 4

9 Question: Which insurance type protects a business’s physical structures?

• Errors and omissions
• Commercial property
• General liability
• Workers’ compensation

Correct Answer: B. Commercial property

Rationale: Commercial property insurance covers damage to business-owned buildings and equipment from covered perils.10 Question: How long must insurance companies in Texas retain records of claims?

• 2 years
• 3 years
• 5 years
• 7 years

Correct Answer: C. 5 years

Rationale: Texas law requires a 5-year retention period for claim files to ensure regulatory compliance and audit readiness.

11 Question: What is the purpose of an insurance binder?

• To terminate a policy
• To offer temporary insurance coverage
• To finalize the policy terms
• To increase the coverage limit

Correct Answer: B. To offer temporary insurance coverage

Rationale: A binder provides immediate, temporary coverage until a formal policy is issued.

12 Question: Which factor is considered during the underwriting process?

• The insured’s favorite color
• The insured’s credit history
• The insured’s social media activity
• The insured’s hobbies

Correct Answer: B. The insured’s credit history

Rationale: Credit history is a valid underwriting factor as it may indicate risk level, per Texas guidelines.

13 Question: What is a common endorsement added to a homeowners policy?

• Flood coverage
• Auto collision
• Life insurance rider
• Health benefits

Correct Answer: A. Flood coverage

Rationale: Flood coverage is a common endorsement to address an excluded peril in standard policies.

14 Question: Which party is responsible for paying the deductible?

• The insurance company
• The policyholder
• The claims adjuster
• The underwriter 3 / 4

Correct Answer: B. The policyholder

Rationale: The policyholder pays the deductible as their initial contribution to a claim.

15 Question: What does a commercial general liability policy cover?

• Employee salaries
• Bodily injury and property damage to others
• Business equipment repairs
• Natural disaster losses

Correct Answer: B. Bodily injury and property damage to others

Rationale: This policy protects against third-party claims for injury or damage caused by business operations.16 Question: In Texas, what is required to renew a property and casualty license?

• Retake the exam
• Complete continuing education
• Pay a fine
• Change the license type

Correct Answer: B. Complete continuing education

Rationale: Texas requires 24 hours of continuing education biennially for license renewal.17 Question: Which type of loss is covered under a standard auto policy’s collision coverage?

• Theft of the vehicle
• Damage from hitting another object
• Medical payments
• Liability for others

Correct Answer: B. Damage from hitting another object

Rationale: Collision coverage applies to damage from the insured vehicle striking an object.

18 Question: What is a key ethical responsibility of an insurance agent?

• Maximizing personal commissions
• Acting in the best interest of the client
• Avoiding all client interactions
• Recommending unnecessary policies

Correct Answer: B. Acting in the best interest of the client

Rationale: Ethical standards require agents to prioritize client needs, per Texas insurance codes.

19 Question: Which peril is covered under a basic dwelling policy?

• Earthquake
• Flood
• Windstorm
• War

Correct Answer: C. Windstorm

Rationale: Windstorm is a covered peril in a basic dwelling policy, unless excluded by endorsement.

20 Question: What must an insurer provide after denying a claim?

• A new policy offer
• A written explanation of the denial
• / 4