Texas Department of Insurance (TDI) Property and
Casualty Insurance Producer Licensing Exam
(Practice Test) Newest 2025 – 2026 Questions
From Actual Exams Complete Questions And
Correct Detailed Answers (Verified Answers)
|Already Graded A+||Brand New!!
Content covered (most tested areas): General Insurance Concepts,
Policy Structure, Property Insurance, Casualty Insurance, Texas Laws
and Regulations, Personal Lines, Commercial Lines, Liability, Auto
Insurance
1. What is the purpose of insurance?
A. To eliminate risk
B. To transfer risk
C. To increase risk
D. To avoid contracts
Answer: B. To transfer risk
Insurance shifts financial risk from an individual to an insurer in exchange
for a premium.
2. Which principle states that insureds should be restored to the same
financial position after a loss?
A. Indemnity
B. Subrogation
C. Contribution
D. Estoppel
, Answer: A. Indemnity
Indemnity prevents the insured from profiting from a loss.
3. What is an insurable interest?
A. Financial gain from loss
B. Legal right in property
C. Emotional attachment
D. Speculative interest
Answer: B. Legal right in property
The insured must suffer a financial loss if damage occurs.
4. Which contract is unilateral?
A. Lease
B. Insurance policy
C. Sales agreement
D. Mortgage
Answer: B. Insurance policy
Only the insurer makes a legally enforceable promise.
5. What is a deductible?
A. Premium amount
B. Loss paid by insurer
C. Amount paid by insured before coverage
D. Policy limit
Answer: C. Amount paid by insured before coverage
The insured shares in the loss before insurance applies.
6. What does peril mean?
A. Cause of loss
B. Type of policy
C. Policy limit
D. Deductible
Answer: A. Cause of loss
Examples include fire, theft, and windstorm.
, 7. Which peril is covered under a standard HO-3 policy?
A. Flood
B. Earthquake
C. Fire
D. War
Answer: C. Fire
Fire is a named or open peril typically covered.
8. What is actual cash value?
A. Replacement cost
B. Market value
C. Replacement minus depreciation
D. Original price
Answer: C. Replacement minus depreciation
Depreciation accounts for wear and age.
9. Replacement cost coverage pays for:
A. Used value
B. Original cost
C. New item without depreciation
D. Market value
Answer: C. New item without depreciation
No deduction for depreciation is applied.
10.What is liability insurance?
A. Covers property loss
B. Covers legal responsibility
C. Covers health costs
D. Covers investment loss
Answer: B. Covers legal responsibility
Protects against claims from others for injury or damage.
11.What does subrogation allow?
A. Insured to sue insurer
B. Insurer to recover from third party
Casualty Insurance Producer Licensing Exam
(Practice Test) Newest 2025 – 2026 Questions
From Actual Exams Complete Questions And
Correct Detailed Answers (Verified Answers)
|Already Graded A+||Brand New!!
Content covered (most tested areas): General Insurance Concepts,
Policy Structure, Property Insurance, Casualty Insurance, Texas Laws
and Regulations, Personal Lines, Commercial Lines, Liability, Auto
Insurance
1. What is the purpose of insurance?
A. To eliminate risk
B. To transfer risk
C. To increase risk
D. To avoid contracts
Answer: B. To transfer risk
Insurance shifts financial risk from an individual to an insurer in exchange
for a premium.
2. Which principle states that insureds should be restored to the same
financial position after a loss?
A. Indemnity
B. Subrogation
C. Contribution
D. Estoppel
, Answer: A. Indemnity
Indemnity prevents the insured from profiting from a loss.
3. What is an insurable interest?
A. Financial gain from loss
B. Legal right in property
C. Emotional attachment
D. Speculative interest
Answer: B. Legal right in property
The insured must suffer a financial loss if damage occurs.
4. Which contract is unilateral?
A. Lease
B. Insurance policy
C. Sales agreement
D. Mortgage
Answer: B. Insurance policy
Only the insurer makes a legally enforceable promise.
5. What is a deductible?
A. Premium amount
B. Loss paid by insurer
C. Amount paid by insured before coverage
D. Policy limit
Answer: C. Amount paid by insured before coverage
The insured shares in the loss before insurance applies.
6. What does peril mean?
A. Cause of loss
B. Type of policy
C. Policy limit
D. Deductible
Answer: A. Cause of loss
Examples include fire, theft, and windstorm.
, 7. Which peril is covered under a standard HO-3 policy?
A. Flood
B. Earthquake
C. Fire
D. War
Answer: C. Fire
Fire is a named or open peril typically covered.
8. What is actual cash value?
A. Replacement cost
B. Market value
C. Replacement minus depreciation
D. Original price
Answer: C. Replacement minus depreciation
Depreciation accounts for wear and age.
9. Replacement cost coverage pays for:
A. Used value
B. Original cost
C. New item without depreciation
D. Market value
Answer: C. New item without depreciation
No deduction for depreciation is applied.
10.What is liability insurance?
A. Covers property loss
B. Covers legal responsibility
C. Covers health costs
D. Covers investment loss
Answer: B. Covers legal responsibility
Protects against claims from others for injury or damage.
11.What does subrogation allow?
A. Insured to sue insurer
B. Insurer to recover from third party
