Texas Property & Casualty Insurance
Exam With Actual Questions & Verified
Answers, Plus Explained
Rationales/Expert Verified For
Guaranteed 100% Pass 2026/Latest
Update/Instant Download Pdf
1. Which of the following is the primary purpose of property
insurance?
A. To provide medical payments
B. To protect against financial loss due to property damage or loss
C. To cover bodily injury to others
D. To pay legal fees
B. To protect against financial loss due to property damage or loss
Rationale: Property insurance is designed to indemnify the
policyholder against financial loss resulting from damage or
destruction of property.
2. In a homeowners policy, the section that lists covered perils is
called:
A. Declarations
B. Conditions
C. Insuring Agreement
D. Exclusions
,C. Insuring Agreement
Rationale: The insuring agreement specifies what perils are covered
under the policy.
3. Which of the following is considered a basic form of homeowners
insurance?
A. HO-1
B. HO-3
C. HO-5
D. HO-8
A. HO-1
Rationale: HO-1 is the basic form homeowners policy providing limited
coverage for specified perils.
4. In liability coverage, “bodily injury” refers to:
A. Damage to property
B. Injuries sustained by an insured
C. Injuries sustained by a third party
D. Medical payments to the insured
C. Injuries sustained by a third party
Rationale: Liability coverage protects the insured against claims for
bodily injury or property damage suffered by others.
5. Which of the following is NOT typically covered under a standard
homeowners policy?
A. Fire damage
B. Theft
C. Flood damage
D. Vandalism
,C. Flood damage
Rationale: Flood damage is generally excluded and requires a
separate flood insurance policy.
6. Which of the following best describes “actual cash value”?
A. Replacement cost minus depreciation
B. Full replacement cost
C. Market value of the property
D. Appraised value
A. Replacement cost minus depreciation
Rationale: Actual cash value (ACV) reimburses the policyholder based
on the replacement cost minus depreciation.
7. Which type of policy provides coverage for all risks except those
specifically excluded?
A. Named-peril policy
B. Open-peril policy
C. Liability policy
D. Endorsement policy
B. Open-peril policy
Rationale: Open-peril (or all-risk) policies cover all perils except those
specifically excluded in the policy.
8. In Texas, the Insurance Code requires property insurance claims
to be acknowledged within:
A. 5 business days
B. 15 days
C. 30 days
D. 45 days
, B. 15 days
Rationale: Texas law mandates insurers acknowledge property and
casualty claims within 15 days of receipt.
9. Which of the following is considered an insurable interest?
A. Ownership of property
B. Potential financial loss
C. Both A and B
D. Neither A nor B
C. Both A and B
Rationale: Insurable interest exists when the insured would suffer
financially from loss or damage to the property.
10. Under a standard homeowners policy, which of the
following is covered for personal liability?
A. Injury to the insured
B. Injury to a guest
C. Damage to the insured’s property
D. Damage caused intentionally by the insured
B. Injury to a guest
Rationale: Personal liability coverage protects the insured against
claims for bodily injury or property damage to others.
11. What is the purpose of a deductible in a property insurance
policy?
A. To increase premiums
B. To reduce the insurer’s exposure and prevent small claims
C. To guarantee full reimbursement
D. To cover excluded losses
Exam With Actual Questions & Verified
Answers, Plus Explained
Rationales/Expert Verified For
Guaranteed 100% Pass 2026/Latest
Update/Instant Download Pdf
1. Which of the following is the primary purpose of property
insurance?
A. To provide medical payments
B. To protect against financial loss due to property damage or loss
C. To cover bodily injury to others
D. To pay legal fees
B. To protect against financial loss due to property damage or loss
Rationale: Property insurance is designed to indemnify the
policyholder against financial loss resulting from damage or
destruction of property.
2. In a homeowners policy, the section that lists covered perils is
called:
A. Declarations
B. Conditions
C. Insuring Agreement
D. Exclusions
,C. Insuring Agreement
Rationale: The insuring agreement specifies what perils are covered
under the policy.
3. Which of the following is considered a basic form of homeowners
insurance?
A. HO-1
B. HO-3
C. HO-5
D. HO-8
A. HO-1
Rationale: HO-1 is the basic form homeowners policy providing limited
coverage for specified perils.
4. In liability coverage, “bodily injury” refers to:
A. Damage to property
B. Injuries sustained by an insured
C. Injuries sustained by a third party
D. Medical payments to the insured
C. Injuries sustained by a third party
Rationale: Liability coverage protects the insured against claims for
bodily injury or property damage suffered by others.
5. Which of the following is NOT typically covered under a standard
homeowners policy?
A. Fire damage
B. Theft
C. Flood damage
D. Vandalism
,C. Flood damage
Rationale: Flood damage is generally excluded and requires a
separate flood insurance policy.
6. Which of the following best describes “actual cash value”?
A. Replacement cost minus depreciation
B. Full replacement cost
C. Market value of the property
D. Appraised value
A. Replacement cost minus depreciation
Rationale: Actual cash value (ACV) reimburses the policyholder based
on the replacement cost minus depreciation.
7. Which type of policy provides coverage for all risks except those
specifically excluded?
A. Named-peril policy
B. Open-peril policy
C. Liability policy
D. Endorsement policy
B. Open-peril policy
Rationale: Open-peril (or all-risk) policies cover all perils except those
specifically excluded in the policy.
8. In Texas, the Insurance Code requires property insurance claims
to be acknowledged within:
A. 5 business days
B. 15 days
C. 30 days
D. 45 days
, B. 15 days
Rationale: Texas law mandates insurers acknowledge property and
casualty claims within 15 days of receipt.
9. Which of the following is considered an insurable interest?
A. Ownership of property
B. Potential financial loss
C. Both A and B
D. Neither A nor B
C. Both A and B
Rationale: Insurable interest exists when the insured would suffer
financially from loss or damage to the property.
10. Under a standard homeowners policy, which of the
following is covered for personal liability?
A. Injury to the insured
B. Injury to a guest
C. Damage to the insured’s property
D. Damage caused intentionally by the insured
B. Injury to a guest
Rationale: Personal liability coverage protects the insured against
claims for bodily injury or property damage to others.
11. What is the purpose of a deductible in a property insurance
policy?
A. To increase premiums
B. To reduce the insurer’s exposure and prevent small claims
C. To guarantee full reimbursement
D. To cover excluded losses
