TEXAS PROPERTY AND CASUALTY
INSURANCE ACTUAL EXAM 2026 WITH
420 PREP QUESTIONS AND 100%
ACCURATE ANSWERS | ALREADY
GRADED A+ | GUARANTEED PASS |
TEXAS PROPERTY & CASUALTY
INSURANCE LATEST EXAM 2026
Methods of handling risk are avoidance, reduction, retention, transfer and _____. -
ANSWER-Sharing (ARRTS)
Elements of insurable risk are calculable, affordable, non-catastrophic,
homogenous, accidental and _____. - ANSWER-Measurable (CANHAM)
Myron, who is 16, signs a contract to lease a car. This would probably not be
considered a valid contract under the law because _____. - ANSWER-He is not
competent at 16.
Ben bought an automobile four years ago for $15,000. Today it is worth $6,000.
According to the principle of indemnity, how much should Ben receive if the car is
totally demolished? - ANSWER-$6,000
,Harry Arne and his cousin each own 50% of a $160,000 duplex. Suppose Harry
purchases $160,000 of insurance on the home. If it burns to the ground, how much
would Harry collect? - ANSWER-$80,000
Under a unilateral contract, which parties are legally bound to perform under the
contract? - ANSWER-Insurer only
Which part of an insurance policy describes the responsibilities and obligations of
both the insurance company and the insured under the policy? - ANSWER-
Conditions
The insuring agreement section of a policy describes the ____ you are insured
against. - ANSWER-perils
The elements of a valid contract are legal purpose, consideration, competent
parties, and _____. - ANSWER-Offer and acceptance
Both parties rely on statements made to each other when writing a contract. This is
known as? - ANSWER-Utmost good faith
The limits of liability are found in which of the following sections of a casualty
policy? - ANSWER-Declarations
An insurance company issued a homeowners policy that included ambiguous
language regarding how a loss was settled. The insured sued the insurance
company and won. The judge stated that due to the ambiguous language in the
contract the decision must be made in favor of the insured. The judge was basing
this decision on which of the following types of insurance contract? - ANSWER-
Contract of adhesion
,A policy may be amended only with a(n): - ANSWER-endorsement
The procedure for resolving a disagreement between an insured and an insurance
company about a loss is described in which of the following parts of an insurance
policy? - ANSWER-Conditions
Who does a personal contract protect? - ANSWER-The individual who owns the
property.
Which one of the following terms indicates that an insurance contract contains the
enforceable promises of only one party? - ANSWER-Unilateral
The principle that restores someone to the condition he enjoyed before a loss
is_____? - ANSWER-indemnity
A condition or situation that presents a possibility of loss is a (an): - ANSWER-
exposure
The purpose of insurance is to: - ANSWER-transfer risk
Which hazard can be described as a careless attitude or general indifference on the
part of the insured toward the occurrence of loss? - ANSWER-morale
Which risk is insurable? - ANSWER-pure
With regard to insurance, risk can be defined as: - ANSWER-uncertainty regarding
loss
, Treating risk by purchasing insurance is an example of what type of risk
management? - ANSWER-transfer
Robert and Carolyn live in a busy city and decide that not owning a car is the
solution to not experience having a car stolen. What method describes this
philosophy? - ANSWER-avoidance
Dishonesty on the part of an insured is an example of what? - ANSWER-a moral
hazard
What is an example of reduction as a method of handling risk? - ANSWER-
Installing a burglar alarm
Driving too fast and not wearing a seat belt are examples of? - ANSWER-morale
hazard
The risk that involves the chance of both loss and gain is? - ANSWER-speculative
risk
Self-insurance is an example of what kind of risk treatment? - ANSWER-Retention
If John's father transfers ownership of a house to John, can John buy insurance? -
ANSWER-Yes because he has an insurable interest.
Fire would be an example of a what? - ANSWER-peril
What is the actual cause of a loss? - ANSWER-peril
INSURANCE ACTUAL EXAM 2026 WITH
420 PREP QUESTIONS AND 100%
ACCURATE ANSWERS | ALREADY
GRADED A+ | GUARANTEED PASS |
TEXAS PROPERTY & CASUALTY
INSURANCE LATEST EXAM 2026
Methods of handling risk are avoidance, reduction, retention, transfer and _____. -
ANSWER-Sharing (ARRTS)
Elements of insurable risk are calculable, affordable, non-catastrophic,
homogenous, accidental and _____. - ANSWER-Measurable (CANHAM)
Myron, who is 16, signs a contract to lease a car. This would probably not be
considered a valid contract under the law because _____. - ANSWER-He is not
competent at 16.
Ben bought an automobile four years ago for $15,000. Today it is worth $6,000.
According to the principle of indemnity, how much should Ben receive if the car is
totally demolished? - ANSWER-$6,000
,Harry Arne and his cousin each own 50% of a $160,000 duplex. Suppose Harry
purchases $160,000 of insurance on the home. If it burns to the ground, how much
would Harry collect? - ANSWER-$80,000
Under a unilateral contract, which parties are legally bound to perform under the
contract? - ANSWER-Insurer only
Which part of an insurance policy describes the responsibilities and obligations of
both the insurance company and the insured under the policy? - ANSWER-
Conditions
The insuring agreement section of a policy describes the ____ you are insured
against. - ANSWER-perils
The elements of a valid contract are legal purpose, consideration, competent
parties, and _____. - ANSWER-Offer and acceptance
Both parties rely on statements made to each other when writing a contract. This is
known as? - ANSWER-Utmost good faith
The limits of liability are found in which of the following sections of a casualty
policy? - ANSWER-Declarations
An insurance company issued a homeowners policy that included ambiguous
language regarding how a loss was settled. The insured sued the insurance
company and won. The judge stated that due to the ambiguous language in the
contract the decision must be made in favor of the insured. The judge was basing
this decision on which of the following types of insurance contract? - ANSWER-
Contract of adhesion
,A policy may be amended only with a(n): - ANSWER-endorsement
The procedure for resolving a disagreement between an insured and an insurance
company about a loss is described in which of the following parts of an insurance
policy? - ANSWER-Conditions
Who does a personal contract protect? - ANSWER-The individual who owns the
property.
Which one of the following terms indicates that an insurance contract contains the
enforceable promises of only one party? - ANSWER-Unilateral
The principle that restores someone to the condition he enjoyed before a loss
is_____? - ANSWER-indemnity
A condition or situation that presents a possibility of loss is a (an): - ANSWER-
exposure
The purpose of insurance is to: - ANSWER-transfer risk
Which hazard can be described as a careless attitude or general indifference on the
part of the insured toward the occurrence of loss? - ANSWER-morale
Which risk is insurable? - ANSWER-pure
With regard to insurance, risk can be defined as: - ANSWER-uncertainty regarding
loss
, Treating risk by purchasing insurance is an example of what type of risk
management? - ANSWER-transfer
Robert and Carolyn live in a busy city and decide that not owning a car is the
solution to not experience having a car stolen. What method describes this
philosophy? - ANSWER-avoidance
Dishonesty on the part of an insured is an example of what? - ANSWER-a moral
hazard
What is an example of reduction as a method of handling risk? - ANSWER-
Installing a burglar alarm
Driving too fast and not wearing a seat belt are examples of? - ANSWER-morale
hazard
The risk that involves the chance of both loss and gain is? - ANSWER-speculative
risk
Self-insurance is an example of what kind of risk treatment? - ANSWER-Retention
If John's father transfers ownership of a house to John, can John buy insurance? -
ANSWER-Yes because he has an insurable interest.
Fire would be an example of a what? - ANSWER-peril
What is the actual cause of a loss? - ANSWER-peril
