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TEXAS PROPERTY AND CASUALTY EXAM AND PRACTICE QUESTIONS NEWEST
2025/2026 ACTUAL EXAM 500 QUESTIONS AND CORRECT DETAILED ANSWERS
|ALREADY GRADED A+
____ is uncertainty of loss - ANSWER - risk
____ is a transfer of risk from the insured to the insurer - ANSWER - insurance
____ risk means there is no chance of gain. It is insurable. - ANSWER - pure
____ risk means there is a chance of a loss or a gain. It is not insurable. - ANSWER -
speculative
a ____ is something that increases the risk. - ANSWER - hazard
the principle of _____ governs property and casualty policies. It states that the purpose of
the policy is to restore the insured financially to where they were prior to the loss -
ANSWER - indemnity
_____ _____ must exist on a casualty policy at time of loss in order for the policy to provide
coverage. - ANSWER - insurable interest
The law of _____ _____ is used to predict the likelihood of loss - ANSWER - large numbers
____ ____ ____ is replacement cost minus depreciation. - ANSWER - actual cash value
________ is a tort, or civil wrong; it is grounds for a lawsuit. - ANSWER - Negligence
_______ is the failure to act as a reasonable person would in the same set of circumstances
- ANSWER - negligence
an _____ happens over a period of time - ANSWER - Occurrence
a _____ may be oral or written - ANSWER - binder
a _____ provides coverage until the policy is issued. it includes all coverages provided by
the policy. - ANSWER - binder
a ____ is a literal truth - ANSWER - warranty
a _______ is a substantial truth. in insurance, statements of the applicant/policyowner are
_______ - true to the best of their knowledge - ANSWER - representation
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______ is an omission of a material fact. - ANSWER - concealment
the insurer has the right to sue a negligent third party for damages paid to an insured under
the concept of ______ - ANSWER - subrogation
four parts of a policy - ANSWER - DICE (declarations, insuring agreement, conditions, and
exclusions)
the ______ list the named insured, policy limits, and premium and policy period - ANSWER -
declarations
the ____ __ ____ are found on the declaration page of the policy - ANSWER - limits of liability
the _______ _______ describes the coverages provided - ANSWER - insuring agreement
the _______ list the obligations of both parties, the insurer and the insured - ANSWER -
conditions
the ______ list the perils that are not covered - ANSWER - exclusions
If the Insurer and the Insured disagree that the liability policy does or does not provide
coverage, the claim will go to _____ - ANSWER - arbitration
in _____ each party pays for one and a half persons involved - ANSWER - arbitration
in arbitration there are _____ arbitrators - ANSWER - three
the cancellation provisions are found in the ________ section of the policy - ANSWER -
conditions
the insured must promptly tell the insurer about a ______ - ANSWER - claim
the other insurance clause is also known as the - _____ _______ - ANSWER - pro-rata
liability clause
_- does not mean equal, it is proportionate - ANSWER - pro-rata
the _____ _____ _____ act protects consumers against the circulation of inaccurate or
obsolete personal or financial information. - ANSWER - fair credit reporting act
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the --____ act requires that a customer be given out a privacy notice at the time the
customer relationship is initially established and thereafter annually. - ANSWER - gram-
leach-Bliley act
the ____ ____ insurance act applies to commercial policies only - ANSWER - terrorism risk
insurance act (TRIA)
the main difference between the various _____ _____ forms is the property perils insured
against - ANSWER - dwelling policy (DP)
DP policies do not cover personal liability, although it can be added by adding an
endorsement known as a _____ ______ ______ for an additional premium charge - ANSWER -
personal liability supplement
DP policies contain general exclusions for damage due to war, nuclear hazard, and flood
but not _____ - ANSWER - wind
on a dwelling policy, other structures coverage will apply to a structure rented out as a
_____ _____ - ANSWER - private garage
DP policies do not cover _______ of ______ after 60 days of vacancy - ANSWER - breakage of
glass
DP policies do not cover _____ of _____ unless the heat was left on - ANSWER - freezing of
plumbing
the _____ on which the insured dwelling sits on is not insurable - ANSWER - land
_____ _____, also known as the automatic increase endorsement, must be added to a DP
policy by endorsement - ANSWER - inflation guard
a loss from rain or dust would only be covered if an opening in the dwelling ____ or ____ was
first created by wind or another covered cause of loss - ANSWER - roof or walls
when a dwelling is covered by more than one policy, losses are shared - under the other
insurance clause. this may also be referred to as the _- liability clause - ANSWER - pro-rata
the basic dwelling form _- is a named or specified peril policy - ANSWER - DP-1
the _- _____ ____ does not provide additional living expense under coverage D; only fair
rental value is provided - ANSWER - DP-1 basic form
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The Extended Coverage Endorsement is added to the Standard Fire Policy to create the _- -
ANSWER - DP-1
a _- _____ _____ policy is named perils on both the dwelling and the contents - ANSWER -
DP-2 broad form
on the dwelling broad form DP-2 building structures (Coverages A and B) are written with
an ____% coinsurance requirement - ANSWER - 80%
on a _- ____ _____, Coverage B (other structures) is in addition to other coverage limits -
ANSWER - DP-2 broad form
the _- policy will provide the same coverage as the DP-2 (contents broad) for personal
property coverage, should coverage for contents be declared. - ANSWER - DP-3
although the DP-1 Basic Form does not provide coverage for _____, _____, _____, and _____,
both the DP-2 and DP-3 do - ANSWER - trees, shrubs, plants, lawns
all __ policies are package policies combining property and liability coverages - ANSWER -
HO
the most a policy will pay under the liability section is known as the ____ of _____ - ANSWER
- limit of liability
the definition of an ______ includes residents of a household who are relatives, or any other
person under the age of 21 who is in the insured's care - ANSWER - insured
all HO policies exclude coverage for ______, ______, or ________ - ANSWER - flood,
landslides, mudslides
the homeowner's policy does not cover theft of _______ - ANSWER - animals
______ _______ ______ for false arrest, libel, slander, defamation, and invasion of privacy is
not automatically covered on an HO, but it can be added by endorsement for an additional
premium - ANSWER - personal injury liability
the _____ on which a house sits is not insurable on HO policies - ANSWER - land
section II (liability) provides coverage for damage to the property of others up to $______
per occurrence - ANSWER - $1,000
TEXAS PROPERTY AND CASUALTY EXAM AND PRACTICE QUESTIONS NEWEST
2025/2026 ACTUAL EXAM 500 QUESTIONS AND CORRECT DETAILED ANSWERS
|ALREADY GRADED A+
____ is uncertainty of loss - ANSWER - risk
____ is a transfer of risk from the insured to the insurer - ANSWER - insurance
____ risk means there is no chance of gain. It is insurable. - ANSWER - pure
____ risk means there is a chance of a loss or a gain. It is not insurable. - ANSWER -
speculative
a ____ is something that increases the risk. - ANSWER - hazard
the principle of _____ governs property and casualty policies. It states that the purpose of
the policy is to restore the insured financially to where they were prior to the loss -
ANSWER - indemnity
_____ _____ must exist on a casualty policy at time of loss in order for the policy to provide
coverage. - ANSWER - insurable interest
The law of _____ _____ is used to predict the likelihood of loss - ANSWER - large numbers
____ ____ ____ is replacement cost minus depreciation. - ANSWER - actual cash value
________ is a tort, or civil wrong; it is grounds for a lawsuit. - ANSWER - Negligence
_______ is the failure to act as a reasonable person would in the same set of circumstances
- ANSWER - negligence
an _____ happens over a period of time - ANSWER - Occurrence
a _____ may be oral or written - ANSWER - binder
a _____ provides coverage until the policy is issued. it includes all coverages provided by
the policy. - ANSWER - binder
a ____ is a literal truth - ANSWER - warranty
a _______ is a substantial truth. in insurance, statements of the applicant/policyowner are
_______ - true to the best of their knowledge - ANSWER - representation
,2 of 101
______ is an omission of a material fact. - ANSWER - concealment
the insurer has the right to sue a negligent third party for damages paid to an insured under
the concept of ______ - ANSWER - subrogation
four parts of a policy - ANSWER - DICE (declarations, insuring agreement, conditions, and
exclusions)
the ______ list the named insured, policy limits, and premium and policy period - ANSWER -
declarations
the ____ __ ____ are found on the declaration page of the policy - ANSWER - limits of liability
the _______ _______ describes the coverages provided - ANSWER - insuring agreement
the _______ list the obligations of both parties, the insurer and the insured - ANSWER -
conditions
the ______ list the perils that are not covered - ANSWER - exclusions
If the Insurer and the Insured disagree that the liability policy does or does not provide
coverage, the claim will go to _____ - ANSWER - arbitration
in _____ each party pays for one and a half persons involved - ANSWER - arbitration
in arbitration there are _____ arbitrators - ANSWER - three
the cancellation provisions are found in the ________ section of the policy - ANSWER -
conditions
the insured must promptly tell the insurer about a ______ - ANSWER - claim
the other insurance clause is also known as the - _____ _______ - ANSWER - pro-rata
liability clause
_- does not mean equal, it is proportionate - ANSWER - pro-rata
the _____ _____ _____ act protects consumers against the circulation of inaccurate or
obsolete personal or financial information. - ANSWER - fair credit reporting act
,3 of 101
the --____ act requires that a customer be given out a privacy notice at the time the
customer relationship is initially established and thereafter annually. - ANSWER - gram-
leach-Bliley act
the ____ ____ insurance act applies to commercial policies only - ANSWER - terrorism risk
insurance act (TRIA)
the main difference between the various _____ _____ forms is the property perils insured
against - ANSWER - dwelling policy (DP)
DP policies do not cover personal liability, although it can be added by adding an
endorsement known as a _____ ______ ______ for an additional premium charge - ANSWER -
personal liability supplement
DP policies contain general exclusions for damage due to war, nuclear hazard, and flood
but not _____ - ANSWER - wind
on a dwelling policy, other structures coverage will apply to a structure rented out as a
_____ _____ - ANSWER - private garage
DP policies do not cover _______ of ______ after 60 days of vacancy - ANSWER - breakage of
glass
DP policies do not cover _____ of _____ unless the heat was left on - ANSWER - freezing of
plumbing
the _____ on which the insured dwelling sits on is not insurable - ANSWER - land
_____ _____, also known as the automatic increase endorsement, must be added to a DP
policy by endorsement - ANSWER - inflation guard
a loss from rain or dust would only be covered if an opening in the dwelling ____ or ____ was
first created by wind or another covered cause of loss - ANSWER - roof or walls
when a dwelling is covered by more than one policy, losses are shared - under the other
insurance clause. this may also be referred to as the _- liability clause - ANSWER - pro-rata
the basic dwelling form _- is a named or specified peril policy - ANSWER - DP-1
the _- _____ ____ does not provide additional living expense under coverage D; only fair
rental value is provided - ANSWER - DP-1 basic form
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The Extended Coverage Endorsement is added to the Standard Fire Policy to create the _- -
ANSWER - DP-1
a _- _____ _____ policy is named perils on both the dwelling and the contents - ANSWER -
DP-2 broad form
on the dwelling broad form DP-2 building structures (Coverages A and B) are written with
an ____% coinsurance requirement - ANSWER - 80%
on a _- ____ _____, Coverage B (other structures) is in addition to other coverage limits -
ANSWER - DP-2 broad form
the _- policy will provide the same coverage as the DP-2 (contents broad) for personal
property coverage, should coverage for contents be declared. - ANSWER - DP-3
although the DP-1 Basic Form does not provide coverage for _____, _____, _____, and _____,
both the DP-2 and DP-3 do - ANSWER - trees, shrubs, plants, lawns
all __ policies are package policies combining property and liability coverages - ANSWER -
HO
the most a policy will pay under the liability section is known as the ____ of _____ - ANSWER
- limit of liability
the definition of an ______ includes residents of a household who are relatives, or any other
person under the age of 21 who is in the insured's care - ANSWER - insured
all HO policies exclude coverage for ______, ______, or ________ - ANSWER - flood,
landslides, mudslides
the homeowner's policy does not cover theft of _______ - ANSWER - animals
______ _______ ______ for false arrest, libel, slander, defamation, and invasion of privacy is
not automatically covered on an HO, but it can be added by endorsement for an additional
premium - ANSWER - personal injury liability
the _____ on which a house sits is not insurable on HO policies - ANSWER - land
section II (liability) provides coverage for damage to the property of others up to $______
per occurrence - ANSWER - $1,000
