Texas Property & Casualty Insurance | QUESTIONS AND
ANSWERS | 2025/2026
A condition or situation that presents a possibility of loss exposure
is a (an):
The purpose of insurance is to: transfer risk
Which hazard can be described as a careless attitude or morale
general indifference on the part of the insured toward the
occurrence of loss?
Which risk is insurable? pure
With regard to insurance, risk can be defined as: uncertainty regarding loss
Treating risk by purchasing insurance is an example of transfer
what type of risk management?
Robert and Carolyn live in a busy city and decide that not avoidance
owning a car is the solution to not experience having
a car stolen. What method describes this philosophy?
Dishonesty on the part of an insured is an example of a moral hazard
what?
What is an example of reduction as a method of handling Installing a burglar alarm
risk?
Driving too fast and not wearing a seat belt are examples morale hazard
of?
, The risk that involves the chance of both loss and gain is? speculative risk
Self-insurance is an example of what kind of risk Retention
treatment?
If John's father transfers ownership of a house to John, can Yes because he has an insurable interest.
John buy insurance?
Fire would be an example of a what? peril
What is the actual cause of a loss? peril
What kind of risk is the stock market? speculative risk
A____is a condition that increases the chance of loss. hazard
Faulty wiring causes a fire that destroys a building. The hazard
faulty wiring is considered to be a(n):
A chance, possibility, or uncertainty of loss is known as? risk
Examples of perils are____? fire, wind and lightning
Indemnity insurance will_____? restores insured to pre-loss condition
The types of hazards are___? moral, morale, and physical
______is when people with a greater than average Adverse selection
exposure to loss to purchase insurance.
Methods of handling risk are avoidance, Sharing (ARRTS)
reduction, retention, transfer and _.
Elements of insurable risk are calculable, affordable, Measurable (CANHAM)
non-catastrophic, homogenous, accidental and_____.
Myron, who is 16, signs a contract to lease a car. This He is not competent at 16.
would probably not be considered a valid contract
under the law because _.
Ben bought an automobile four years ago for $15,000. $6,000
Today it is worth $6,000. According to the principle of
indemnity, how much should Ben receive if the car is
totally demolished?
Harry Arne and his cousin each own 50% of a $160,000 $80,000
duplex. Suppose Harry purchases $160,000 of insurance
on the home. If it burns to the ground, how much would
Harry collect?
ANSWERS | 2025/2026
A condition or situation that presents a possibility of loss exposure
is a (an):
The purpose of insurance is to: transfer risk
Which hazard can be described as a careless attitude or morale
general indifference on the part of the insured toward the
occurrence of loss?
Which risk is insurable? pure
With regard to insurance, risk can be defined as: uncertainty regarding loss
Treating risk by purchasing insurance is an example of transfer
what type of risk management?
Robert and Carolyn live in a busy city and decide that not avoidance
owning a car is the solution to not experience having
a car stolen. What method describes this philosophy?
Dishonesty on the part of an insured is an example of a moral hazard
what?
What is an example of reduction as a method of handling Installing a burglar alarm
risk?
Driving too fast and not wearing a seat belt are examples morale hazard
of?
, The risk that involves the chance of both loss and gain is? speculative risk
Self-insurance is an example of what kind of risk Retention
treatment?
If John's father transfers ownership of a house to John, can Yes because he has an insurable interest.
John buy insurance?
Fire would be an example of a what? peril
What is the actual cause of a loss? peril
What kind of risk is the stock market? speculative risk
A____is a condition that increases the chance of loss. hazard
Faulty wiring causes a fire that destroys a building. The hazard
faulty wiring is considered to be a(n):
A chance, possibility, or uncertainty of loss is known as? risk
Examples of perils are____? fire, wind and lightning
Indemnity insurance will_____? restores insured to pre-loss condition
The types of hazards are___? moral, morale, and physical
______is when people with a greater than average Adverse selection
exposure to loss to purchase insurance.
Methods of handling risk are avoidance, Sharing (ARRTS)
reduction, retention, transfer and _.
Elements of insurable risk are calculable, affordable, Measurable (CANHAM)
non-catastrophic, homogenous, accidental and_____.
Myron, who is 16, signs a contract to lease a car. This He is not competent at 16.
would probably not be considered a valid contract
under the law because _.
Ben bought an automobile four years ago for $15,000. $6,000
Today it is worth $6,000. According to the principle of
indemnity, how much should Ben receive if the car is
totally demolished?
Harry Arne and his cousin each own 50% of a $160,000 $80,000
duplex. Suppose Harry purchases $160,000 of insurance
on the home. If it burns to the ground, how much would
Harry collect?
