TEXAS PROPERTY AND CASUALTY
EXAM 2026 STUDY GUIDE TEST
PAPER QUESTIONS AND SOLUTIONS
GRADED A+
◉ Peril. Answer: Cause of loss
◉ Hazard. Answer: Anything that increases the chance of a peril
happening
◉ Loss. Answer: The damage itself
◉ Risk. Answer: The uncertainty of a loss happening
◉ Physical Hazard. Answer: Tangible things (frayed wires, oily floor)
◉ Moral Hazard. Answer: Dishonesty/Intentional loss (I'll burn it down
to get that insurance money)
◉ Morale Hazard. Answer: Carelessness ("I don't lock my car cause it's
insured")
◉ Depreciation. Answer: How much something has worn out or aged
since it was new
, ◉ Tangible. Answer: Able to be touched/felt. Such as a physical object
◉ Intangible. Answer: Unable to be touched/felt. Not a physical object
◉ If a house is insured for $80,000 and it should be $100,000 but there
is a $10,000 loss....how much would the insurer pay?. Answer: $8,000
◉ Commercial Auto Policies. Answer: Covers vehicles owned, leased,
hired, or used by a business.
◉ Commercial General Liability Policies. Answer: Covers the general
operations of a business, not vehicle use.
◉ Coverage A. Answer: Dwelling- covers the main part of the dwelling,
the home itself. (Structure, attached garages, built-in-appliances)
◉ Coverage B. Answer: Other Structures- structures that aren't attached
to the main dwelling. ( Detached garages, fences, sheds) (10% of Cov A
by default)
◉ Coverage C. Answer: Personal Property - Furniture, clothes,
electronics, no matter where in the world you are
◉ Coverage D. Answer: Loss of Use - Pays for additional living
expenses if your home is uninhabitable after a covered loss
EXAM 2026 STUDY GUIDE TEST
PAPER QUESTIONS AND SOLUTIONS
GRADED A+
◉ Peril. Answer: Cause of loss
◉ Hazard. Answer: Anything that increases the chance of a peril
happening
◉ Loss. Answer: The damage itself
◉ Risk. Answer: The uncertainty of a loss happening
◉ Physical Hazard. Answer: Tangible things (frayed wires, oily floor)
◉ Moral Hazard. Answer: Dishonesty/Intentional loss (I'll burn it down
to get that insurance money)
◉ Morale Hazard. Answer: Carelessness ("I don't lock my car cause it's
insured")
◉ Depreciation. Answer: How much something has worn out or aged
since it was new
, ◉ Tangible. Answer: Able to be touched/felt. Such as a physical object
◉ Intangible. Answer: Unable to be touched/felt. Not a physical object
◉ If a house is insured for $80,000 and it should be $100,000 but there
is a $10,000 loss....how much would the insurer pay?. Answer: $8,000
◉ Commercial Auto Policies. Answer: Covers vehicles owned, leased,
hired, or used by a business.
◉ Commercial General Liability Policies. Answer: Covers the general
operations of a business, not vehicle use.
◉ Coverage A. Answer: Dwelling- covers the main part of the dwelling,
the home itself. (Structure, attached garages, built-in-appliances)
◉ Coverage B. Answer: Other Structures- structures that aren't attached
to the main dwelling. ( Detached garages, fences, sheds) (10% of Cov A
by default)
◉ Coverage C. Answer: Personal Property - Furniture, clothes,
electronics, no matter where in the world you are
◉ Coverage D. Answer: Loss of Use - Pays for additional living
expenses if your home is uninhabitable after a covered loss
