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Texas Property and Casualty Exam Actual
Exam 2026/2027 – Complete Exam-Style
Questions with Detailed Rationales | 100%
Verified | Pass Guaranteed – A+ Graded
[SECTION 1: Property Insurance (Homeowners, Dwelling, Commercial Property) — Questions 1-30]
Q1: Which standard homeowners policy form provides coverage on a "named perils" basis for
the dwelling (Coverage A), meaning the dwelling is only covered for perils specifically listed in
the policy?
A. HO-3
B. HO-5
C. HO-2 [CORRECT]
D. HO-8
Correct Answer: C
Rationale: The HO-2 (Broad Form) provides named perils coverage for the dwelling, meaning it
only covers losses caused by perils explicitly listed in the policy (e.g., fire, lightning,
windstorm). The HO-3 (Special Form) provides "open perils" or "all risks" coverage for the
dwelling, covering everything except exclusions. The HO-5 is a comprehensive form that is open
perils for both dwelling and personal property. The HO-8 is a modified coverage form for older
homes.
Q2: A homeowner in Texas has an HO-3 policy. A pipe bursts, causing water to damage the
drywall and flooring. Which coverage section of the homeowners policy typically responds to
the cost of repairing the burst pipe itself?
A. Coverage A (Dwelling)
B. Coverage B (Other Structures)
C. Not covered (sudden and accidental discharge is excluded for the source) [CORRECT]
D. Coverage C (Personal Property)
,2
Correct Answer: C
Rationale: Standard homeowners policies typically cover the damage caused by the water (e.g.,
ruined drywall, carpet) under Coverage A or C, but they specifically exclude coverage for the
repair or replacement of the item that caused the loss, such as the burst pipe or leaking appliance.
The insured must pay to replace the pipe, while the insurer pays for the resulting water damage.
Coverage A covers the structure, and Coverage C covers personal property.
Q3: Under a standard homeowners policy, how much coverage is typically provided for
Coverage B (Other Structures) if a specific limit is not selected?
A. 10% of Coverage A
B. 10% of the Coverage A limit [CORRECT]
C. 20% of Coverage A
D. 50% of Coverage A
Correct Answer: B
Rationale: Under standard homeowners policies (HO-2, HO-3, HO-5), Coverage B for other
structures (such as detached garages, sheds, or fences) is typically set at 10% of the Coverage A
(Dwelling) limit unless a different percentage is explicitly stated by the insurer. For example, if
the home is insured for $200,000, Coverage B would be $20,000.
Q4: Which of the following losses would be covered under Coverage F (Medical Payments to
Others) of a homeowners policy?
A. The insured injures themselves while mowing the lawn.
B. The insured's dog bites a guest in the insured's home.
C. A neighbor slips on the insured's porch and breaks an arm. [CORRECT]
D. The insured accidentally damages a neighbor's property with a golf ball.
Correct Answer: C
,3
Rationale: Coverage F (Medical Payments to Others) pays for necessary medical expenses
incurred by a non-resident who is accidentally injured on the insured's premises, regardless of
legal liability. It is a "no-fault" coverage designed to settle small claims quickly. A dog bite to a
guest would fall under Coverage E (Liability) because it involves a specific liability
exclusion/trigger often handled differently, though sometimes covered; however, the slip and fall
is the classic example of medical payments usage. Injury to the insured is excluded. Damage to a
neighbor's property is liability, not medical payments.
Q5: A Texas homeowner wants to ensure they are covered for the cost of bringing their home up
to current building codes after a covered loss. Which endorsement is necessary to provide this
coverage?
A. Inflation Guard
B. Ordinance or Law Coverage
C. Ordinance or Law [CORRECT]
D. Replacement Cost Endorsement
Correct Answer: C
Rationale: The Ordinance or Law endorsement provides coverage for the loss in value of the
undamaged portion of the building, the cost of demolition of the undamaged portion if required
by law, and the increased cost of construction due to building code ordinances. Standard policies
typically exclude coverage for upgrading to meet current codes or laws. Inflation Guard simply
increases limits periodically.
Q6: What is the waiting period for a flood insurance policy to become effective under the
National Flood Insurance Program (NFIP)?
A. 7 days
B. 14 days
C. 30 days [CORRECT]
D. 60 days
Correct Answer: C
, 4
Rationale: There is typically a 30-day waiting period from the date of application and payment of
premium for a new flood insurance policy to become effective. This prevents individuals from
waiting until a storm is imminent (e.g., a hurricane approaching) to purchase coverage. There are
a few exceptions, such as when flood insurance is required by a lender for a new home purchase.
Q7: Which FEMA-designated flood zone is considered a Special Flood Hazard Area (SFHA)
with a 1% annual chance of flooding and is the zone where flood insurance is mandatory for
federally backed mortgages?
A. Zone B
C. Zone A [CORRECT]
D. Zone X
Correct Answer: C
Rationale: Zones A and AE (as well as V and VE) are Special Flood Hazard Areas (SFHAs) with
a 1% annual chance of flooding, often referred to as the "100-year floodplain." Mortgages from
federally regulated or insured lenders in these zones require flood insurance. Zone X is usually a
moderate-to-low risk area, and Zone B (older designation) or Zone X (shaded) indicates reduced
risk but not mandatory insurance requirements.
Q8: The Texas Windstorm Insurance Association (TWIA) provides coverage for which of the
following perils in designated coastal areas?
A. Fire and Theft
C. Windstorm and Hail [CORRECT]
D. Flood
Correct Answer: C
Rationale: TWIA provides windstorm and hail insurance in the 14 coastal counties and parts of
Harris County (designated catastrophe areas) where private insurers may limit coverage or
charge high premiums. It acts as the insurer of last resort for these specific wind/hail risks. Fire
and theft are covered by standard policies, and flood is covered by the NFIP.
Texas Property and Casualty Exam Actual
Exam 2026/2027 – Complete Exam-Style
Questions with Detailed Rationales | 100%
Verified | Pass Guaranteed – A+ Graded
[SECTION 1: Property Insurance (Homeowners, Dwelling, Commercial Property) — Questions 1-30]
Q1: Which standard homeowners policy form provides coverage on a "named perils" basis for
the dwelling (Coverage A), meaning the dwelling is only covered for perils specifically listed in
the policy?
A. HO-3
B. HO-5
C. HO-2 [CORRECT]
D. HO-8
Correct Answer: C
Rationale: The HO-2 (Broad Form) provides named perils coverage for the dwelling, meaning it
only covers losses caused by perils explicitly listed in the policy (e.g., fire, lightning,
windstorm). The HO-3 (Special Form) provides "open perils" or "all risks" coverage for the
dwelling, covering everything except exclusions. The HO-5 is a comprehensive form that is open
perils for both dwelling and personal property. The HO-8 is a modified coverage form for older
homes.
Q2: A homeowner in Texas has an HO-3 policy. A pipe bursts, causing water to damage the
drywall and flooring. Which coverage section of the homeowners policy typically responds to
the cost of repairing the burst pipe itself?
A. Coverage A (Dwelling)
B. Coverage B (Other Structures)
C. Not covered (sudden and accidental discharge is excluded for the source) [CORRECT]
D. Coverage C (Personal Property)
,2
Correct Answer: C
Rationale: Standard homeowners policies typically cover the damage caused by the water (e.g.,
ruined drywall, carpet) under Coverage A or C, but they specifically exclude coverage for the
repair or replacement of the item that caused the loss, such as the burst pipe or leaking appliance.
The insured must pay to replace the pipe, while the insurer pays for the resulting water damage.
Coverage A covers the structure, and Coverage C covers personal property.
Q3: Under a standard homeowners policy, how much coverage is typically provided for
Coverage B (Other Structures) if a specific limit is not selected?
A. 10% of Coverage A
B. 10% of the Coverage A limit [CORRECT]
C. 20% of Coverage A
D. 50% of Coverage A
Correct Answer: B
Rationale: Under standard homeowners policies (HO-2, HO-3, HO-5), Coverage B for other
structures (such as detached garages, sheds, or fences) is typically set at 10% of the Coverage A
(Dwelling) limit unless a different percentage is explicitly stated by the insurer. For example, if
the home is insured for $200,000, Coverage B would be $20,000.
Q4: Which of the following losses would be covered under Coverage F (Medical Payments to
Others) of a homeowners policy?
A. The insured injures themselves while mowing the lawn.
B. The insured's dog bites a guest in the insured's home.
C. A neighbor slips on the insured's porch and breaks an arm. [CORRECT]
D. The insured accidentally damages a neighbor's property with a golf ball.
Correct Answer: C
,3
Rationale: Coverage F (Medical Payments to Others) pays for necessary medical expenses
incurred by a non-resident who is accidentally injured on the insured's premises, regardless of
legal liability. It is a "no-fault" coverage designed to settle small claims quickly. A dog bite to a
guest would fall under Coverage E (Liability) because it involves a specific liability
exclusion/trigger often handled differently, though sometimes covered; however, the slip and fall
is the classic example of medical payments usage. Injury to the insured is excluded. Damage to a
neighbor's property is liability, not medical payments.
Q5: A Texas homeowner wants to ensure they are covered for the cost of bringing their home up
to current building codes after a covered loss. Which endorsement is necessary to provide this
coverage?
A. Inflation Guard
B. Ordinance or Law Coverage
C. Ordinance or Law [CORRECT]
D. Replacement Cost Endorsement
Correct Answer: C
Rationale: The Ordinance or Law endorsement provides coverage for the loss in value of the
undamaged portion of the building, the cost of demolition of the undamaged portion if required
by law, and the increased cost of construction due to building code ordinances. Standard policies
typically exclude coverage for upgrading to meet current codes or laws. Inflation Guard simply
increases limits periodically.
Q6: What is the waiting period for a flood insurance policy to become effective under the
National Flood Insurance Program (NFIP)?
A. 7 days
B. 14 days
C. 30 days [CORRECT]
D. 60 days
Correct Answer: C
, 4
Rationale: There is typically a 30-day waiting period from the date of application and payment of
premium for a new flood insurance policy to become effective. This prevents individuals from
waiting until a storm is imminent (e.g., a hurricane approaching) to purchase coverage. There are
a few exceptions, such as when flood insurance is required by a lender for a new home purchase.
Q7: Which FEMA-designated flood zone is considered a Special Flood Hazard Area (SFHA)
with a 1% annual chance of flooding and is the zone where flood insurance is mandatory for
federally backed mortgages?
A. Zone B
C. Zone A [CORRECT]
D. Zone X
Correct Answer: C
Rationale: Zones A and AE (as well as V and VE) are Special Flood Hazard Areas (SFHAs) with
a 1% annual chance of flooding, often referred to as the "100-year floodplain." Mortgages from
federally regulated or insured lenders in these zones require flood insurance. Zone X is usually a
moderate-to-low risk area, and Zone B (older designation) or Zone X (shaded) indicates reduced
risk but not mandatory insurance requirements.
Q8: The Texas Windstorm Insurance Association (TWIA) provides coverage for which of the
following perils in designated coastal areas?
A. Fire and Theft
C. Windstorm and Hail [CORRECT]
D. Flood
Correct Answer: C
Rationale: TWIA provides windstorm and hail insurance in the 14 coastal counties and parts of
Harris County (designated catastrophe areas) where private insurers may limit coverage or
charge high premiums. It acts as the insurer of last resort for these specific wind/hail risks. Fire
and theft are covered by standard policies, and flood is covered by the NFIP.
