Texas Property and Casualty Insurance
Licensing Exam 2026/2027 with
Detailed Rationales | Complete
Exam-Style Questions | Pass
Guaranteed – A+ Graded
Q1: Under the Texas Insurance Code, the Texas Department of Insurance is subject to sunset
review by the Texas Legislature at what interval?
A. Every 6 years
B. Every 8 years
C. Every 12 years [CORRECT]
D. Every 10 years
Correct Answer: C
Rationale: Correct because the Texas Department of Insurance undergoes sunset review every 12
years as established by the Texas Sunset Act to evaluate its continued necessity and performance.
Q2: An applicant for a Texas resident property and casualty insurance license must complete how
many hours of pre-licensing education for the casualty line?
A. 20 hours
B. 30 hours
C. 40 hours [CORRECT]
D. 50 hours
Correct Answer: C
Rationale: Correct because Texas requires 40 hours of pre-licensing education for the casualty line
and 40 hours for the property line before sitting for the licensing examination.
,Q3: A Texas homeowner with a dwelling built in 2005 suffers a covered fire loss. The insurer is
required to offer which settlement basis for the dwelling?
A. Actual cash value only
B. Market value
C. Replacement cost value [CORRECT]
D. Agreed value
Correct Answer: C
Rationale: Correct because Texas law mandates that insurers offer replacement cost value
settlement for dwellings that are more than 15 years old, with a required explanation of
depreciation.
Q4: Under the Texas Workers' Compensation Act, what is the effect of an employer electing to
subscribe to workers' compensation insurance?
A. The employer retains full tort liability for all employee injuries
B. The employee may sue the employer for punitive damages only
C. The employer's liability is limited to the exclusive remedy provision [CORRECT]
D. The employee may collect double benefits from both the employer and the insurer
Correct Answer: C
Rationale: Correct because subscription to the Texas workers' compensation system provides
employers with the exclusive remedy defense, limiting an injured worker's recovery to statutory
benefits.
Q5: The Texas Surplus Lines Stamping Office requires surplus lines brokers to file premium tax
reports on what schedule?
A. Monthly within 15 days after month end
B. Semiannually within 60 days after period end
C. Quarterly within 45 days after quarter end [CORRECT]
D. Annually within 90 days after year end
Correct Answer: C
Rationale: Correct because surplus lines brokers in Texas must file quarterly reports and premium
taxes with the Surplus Lines Stamping Office within 45 days after the end of each quarter.
Q6: In Texas, an insurer that uses credit scoring in underwriting or rating must provide what notice
if an adverse action is taken based on credit information?
A. A general privacy notice only
B. No notice is required for commercial policies
C. An adverse action notice with an explanation [CORRECT]
D. A verbal explanation from the agent within 5 days
Correct Answer: C
,Rationale: Correct because Texas law permits credit scoring but requires insurers to provide an
adverse action notice and explanation when credit information results in an adverse underwriting or
rating decision.
Q7: A non-subscribing Texas employer must provide notice to the Texas Department of Insurance
and post notice for employees within what timeframe after electing non-subscription?
A. 10 days
B. 30 days
C. 60 days [CORRECT]
D. 90 days
Correct Answer: C
Rationale: Correct because Texas law requires non-subscribing employers to file notice with TDI
and post notice for employees within 60 days of electing not to subscribe to workers'
compensation.
Q8: Under the Texas Personal Auto Policy, uninsured/underinsured motorist coverage must be:
A. Automatically included without additional premium
B. Included only if the insured pays triple the standard premium
C. Offered to the named insured and may be rejected by signed written rejection [CORRECT]
D. Excluded from all policies issued in coastal counties
Correct Answer: C
Rationale: Correct because Texas law mandates that insurers offer UM/UIM coverage, and the
named insured may reject it only by providing a signed written rejection.
Q9: The Texas Automobile Insurance Plan Association (TAIPA) provides coverage for:
A. High-value luxury vehicles only
B. Commercial fleet operators
C. Drivers unable to obtain auto insurance in the voluntary market [CORRECT]
D. Government-owned vehicles only
Correct Answer: C
Rationale: Correct because TAIPA serves as Texas's assigned risk plan, providing personal
automobile liability and physical damage coverage to eligible risks unable to secure insurance
through the standard market.
Q10: A Texas commercial property policy includes Ordinance or Law coverage with the default
limits specified in the standard form. What are those default limits?
A. 10/20/5
B. 50/100/25
, C. 25/50/10 [CORRECT]
D. 100/200/50
Correct Answer: C
Rationale: Correct because the standard ISO Ordinance or Law coverage form provides default
limits of 25/50/10, representing percentages of the building limit for demolition, increased cost of
construction, and debris removal respectively.
Q11: Under Texas Penal Code Section 35.02, insurance fraud is classified as:
A. A Class A misdemeanor
B. A second degree felony
C. A third degree felony [CORRECT]
D. A capital felony
Correct Answer: C
Rationale: Correct because Texas Penal Code Section 35.02 classifies insurance fraud as a third
degree felony, with enhanced penalties for larger amounts.
Q12: A Texas insurer cancels a personal auto policy for nonpayment of premium. How many days'
advance notice must the insurer provide to the named insured?
A. 10 days
B. 15 days
C. 30 days [CORRECT]
D. 60 days
Correct Answer: C
Rationale: Correct because Texas law requires insurers to provide 30 days' advance written notice
for cancellation of personal auto policies, including cancellation for nonpayment of premium.
Q13: The Texas Windstorm Insurance Association (TWIA) provides windstorm and hail coverage in
how many designated coastal counties?
A. 10 counties
B. 12 counties
C. 14 counties [CORRECT]
D. 20 counties
Correct Answer: C
Rationale: Correct because TWIA provides windstorm and hail insurance in 14 designated coastal
counties of Texas where coverage may be excluded or limited in the standard market.
Q14: In a general liability policy, a claims-made coverage trigger requires that:
Licensing Exam 2026/2027 with
Detailed Rationales | Complete
Exam-Style Questions | Pass
Guaranteed – A+ Graded
Q1: Under the Texas Insurance Code, the Texas Department of Insurance is subject to sunset
review by the Texas Legislature at what interval?
A. Every 6 years
B. Every 8 years
C. Every 12 years [CORRECT]
D. Every 10 years
Correct Answer: C
Rationale: Correct because the Texas Department of Insurance undergoes sunset review every 12
years as established by the Texas Sunset Act to evaluate its continued necessity and performance.
Q2: An applicant for a Texas resident property and casualty insurance license must complete how
many hours of pre-licensing education for the casualty line?
A. 20 hours
B. 30 hours
C. 40 hours [CORRECT]
D. 50 hours
Correct Answer: C
Rationale: Correct because Texas requires 40 hours of pre-licensing education for the casualty line
and 40 hours for the property line before sitting for the licensing examination.
,Q3: A Texas homeowner with a dwelling built in 2005 suffers a covered fire loss. The insurer is
required to offer which settlement basis for the dwelling?
A. Actual cash value only
B. Market value
C. Replacement cost value [CORRECT]
D. Agreed value
Correct Answer: C
Rationale: Correct because Texas law mandates that insurers offer replacement cost value
settlement for dwellings that are more than 15 years old, with a required explanation of
depreciation.
Q4: Under the Texas Workers' Compensation Act, what is the effect of an employer electing to
subscribe to workers' compensation insurance?
A. The employer retains full tort liability for all employee injuries
B. The employee may sue the employer for punitive damages only
C. The employer's liability is limited to the exclusive remedy provision [CORRECT]
D. The employee may collect double benefits from both the employer and the insurer
Correct Answer: C
Rationale: Correct because subscription to the Texas workers' compensation system provides
employers with the exclusive remedy defense, limiting an injured worker's recovery to statutory
benefits.
Q5: The Texas Surplus Lines Stamping Office requires surplus lines brokers to file premium tax
reports on what schedule?
A. Monthly within 15 days after month end
B. Semiannually within 60 days after period end
C. Quarterly within 45 days after quarter end [CORRECT]
D. Annually within 90 days after year end
Correct Answer: C
Rationale: Correct because surplus lines brokers in Texas must file quarterly reports and premium
taxes with the Surplus Lines Stamping Office within 45 days after the end of each quarter.
Q6: In Texas, an insurer that uses credit scoring in underwriting or rating must provide what notice
if an adverse action is taken based on credit information?
A. A general privacy notice only
B. No notice is required for commercial policies
C. An adverse action notice with an explanation [CORRECT]
D. A verbal explanation from the agent within 5 days
Correct Answer: C
,Rationale: Correct because Texas law permits credit scoring but requires insurers to provide an
adverse action notice and explanation when credit information results in an adverse underwriting or
rating decision.
Q7: A non-subscribing Texas employer must provide notice to the Texas Department of Insurance
and post notice for employees within what timeframe after electing non-subscription?
A. 10 days
B. 30 days
C. 60 days [CORRECT]
D. 90 days
Correct Answer: C
Rationale: Correct because Texas law requires non-subscribing employers to file notice with TDI
and post notice for employees within 60 days of electing not to subscribe to workers'
compensation.
Q8: Under the Texas Personal Auto Policy, uninsured/underinsured motorist coverage must be:
A. Automatically included without additional premium
B. Included only if the insured pays triple the standard premium
C. Offered to the named insured and may be rejected by signed written rejection [CORRECT]
D. Excluded from all policies issued in coastal counties
Correct Answer: C
Rationale: Correct because Texas law mandates that insurers offer UM/UIM coverage, and the
named insured may reject it only by providing a signed written rejection.
Q9: The Texas Automobile Insurance Plan Association (TAIPA) provides coverage for:
A. High-value luxury vehicles only
B. Commercial fleet operators
C. Drivers unable to obtain auto insurance in the voluntary market [CORRECT]
D. Government-owned vehicles only
Correct Answer: C
Rationale: Correct because TAIPA serves as Texas's assigned risk plan, providing personal
automobile liability and physical damage coverage to eligible risks unable to secure insurance
through the standard market.
Q10: A Texas commercial property policy includes Ordinance or Law coverage with the default
limits specified in the standard form. What are those default limits?
A. 10/20/5
B. 50/100/25
, C. 25/50/10 [CORRECT]
D. 100/200/50
Correct Answer: C
Rationale: Correct because the standard ISO Ordinance or Law coverage form provides default
limits of 25/50/10, representing percentages of the building limit for demolition, increased cost of
construction, and debris removal respectively.
Q11: Under Texas Penal Code Section 35.02, insurance fraud is classified as:
A. A Class A misdemeanor
B. A second degree felony
C. A third degree felony [CORRECT]
D. A capital felony
Correct Answer: C
Rationale: Correct because Texas Penal Code Section 35.02 classifies insurance fraud as a third
degree felony, with enhanced penalties for larger amounts.
Q12: A Texas insurer cancels a personal auto policy for nonpayment of premium. How many days'
advance notice must the insurer provide to the named insured?
A. 10 days
B. 15 days
C. 30 days [CORRECT]
D. 60 days
Correct Answer: C
Rationale: Correct because Texas law requires insurers to provide 30 days' advance written notice
for cancellation of personal auto policies, including cancellation for nonpayment of premium.
Q13: The Texas Windstorm Insurance Association (TWIA) provides windstorm and hail coverage in
how many designated coastal counties?
A. 10 counties
B. 12 counties
C. 14 counties [CORRECT]
D. 20 counties
Correct Answer: C
Rationale: Correct because TWIA provides windstorm and hail insurance in 14 designated coastal
counties of Texas where coverage may be excluded or limited in the standard market.
Q14: In a general liability policy, a claims-made coverage trigger requires that:
