Texas General Lines Property & Casualty Agent Licensing Exam
120 Advanced Practice Questions & Answers 2025/2026 | latest
Update | Instant Download!!
1. In Texas, what is the maximum allowable return premium when a policy is canceled mid-term by
the insurer?
a. Short-rate refund
b. Fixed prorated refund
c. Pro rata refund (correct answer)
d. Variable schedule refund
Rationale: When the insurer cancels, Texas requires pro rata unearned premium refund to protect
consumers.
2. Which Texas regulation restricts unfair discrimination in P&C ratemaking?
a. McCarran–Ferguson Act
b. Gramm-Leach-Bliley Act
c. Texas Insurance Code (TIC) §544 (correct answer)
d. TRIPRA
Rationale: TIC §544 prohibits discrimination not based on actuarial justification.
3. A commercial property has a replacement cost of $500,000. The insured carries $300,000 insurance
and suffers a $100,000 loss. The policy has an 80% coinsurance clause. What is the insurer’s
payment?
a. $60,000
b. $75,000 (correct answer)
c. $80,000
d. $100,000
Rationale: Required = 80% × 500K = 400K → 300K/400K = 0.75 × 100K = 75K.
4. What is the waiting period for Business Income coverage to begin after a direct physical loss?
a. 24 hours
,b. 72 hours (correct answer)
c. 7 days
d. 14 days
Rationale: Standard ISO form uses 72-hour waiting period.
5. Which homeowners policy form provides the broadest open-peril coverage for buildings and
personal property?
a. HO-2
b. HO-3
c. HO-5 (correct answer)
d. HO-8
Rationale: HO-5 offers open-peril on both dwelling and contents.
6. In Texas auto insurance, what does PIP cover that MedPay does not?
a. Funeral expenses
b. Lost wages (correct answer)
c. Medical and surgical care
d. Passenger injuries
Rationale: MedPay does not include wage reimbursement; PIP does.
7. A landlord’s policy covers $250,000 with 1% windstorm deductible. A hail loss totals $15,000. What
does the insured pay?
a. $1,250
b. $2,500
c. $2,500 (correct answer)
d. $3,000
Rationale: Deductible: 1% × 250K = $2,500 → insurer pays remaining $12,500.
8. What action must a Texas insurer take when denying a claim based on arson suspicion?
a. Delay indefinitely
b. Require criminal conviction
c. Provide written explanation referencing evidence (correct answer)
,d. Notify the agent only
Rationale: Texas law requires transparent claim-handling disclosure.
9. Under the BOP, which additional coverage is automatically included?
a. Earthquake
b. Employee dishonesty
c. Business income and extra expense (correct answer)
d. Machinery breakdown
Rationale: Business income auto-included in standard BOP form.
10. Which liability policy covers defective products that cause damage after delivery?
a. Premises liability
b. Products–Completed Operations (correct answer)
c. Personal and advertising injury
d. Garagekeeper liability
Rationale: Applies to work/products no longer in insured’s possession.
11. Which Texas agency regulates workers’ compensation compliance?
a. TDI
b. Texas Department of Insurance – Division of Workers’ Compensation (DWC) (correct answer)
c. NAIC
d. OSHA
Rationale: DWC enforces employer obligations and claim administration.
12. A policy has $1M occurrence / $2M aggregate limits. The insured has three claims of $600K each.
What is total insurer payout?
a. $1,200,000
b. $1,600,000
c. $1,600,000 (correct answer)
d. $2,000,000
Rationale: Each claim capped at 1M, but aggregate stops payment after $2M total → only first two full,
third partially (0).
, 13. Texas Windstorm Insurance Association (TWIA) covers:
a. All properties statewide
b. Flood-prone zones only
c. Coastal properties unable to get wind/hail insurance in the voluntary market (correct answer)
d. Commercial inland buildings only
Rationale: Last-resort market for coastal counties.
14. What endorsement modifies auto liability so the insured can drive non-owned vehicles for business
use?
a. Drive Other Car coverage
b. Named Non-Owner endorsement (correct answer)
c. Garage liability endorsement
d. Trailer interchange agreement
Rationale: Extends liability to non-owned autos.
15. Which coverage applies to tenant improvements in a leased commercial space?
a. Ordinance & Law
b. Business Income only
c. Business personal property (correct answer)
d. Premises liability
Rationale: Tenant improvements permanently attached count as BPP.
16. Which is a compulsory auto insurance requirement in Texas?
a. UIM
b. 30/60/25 liability minimum (correct answer)
c. Collision
d. GAP
Rationale: $30K per person / $60K per accident / $25K property mandatory.
17. What triggers coverage under an OCCURRENCE-form liability policy?
a. When claims are reported
120 Advanced Practice Questions & Answers 2025/2026 | latest
Update | Instant Download!!
1. In Texas, what is the maximum allowable return premium when a policy is canceled mid-term by
the insurer?
a. Short-rate refund
b. Fixed prorated refund
c. Pro rata refund (correct answer)
d. Variable schedule refund
Rationale: When the insurer cancels, Texas requires pro rata unearned premium refund to protect
consumers.
2. Which Texas regulation restricts unfair discrimination in P&C ratemaking?
a. McCarran–Ferguson Act
b. Gramm-Leach-Bliley Act
c. Texas Insurance Code (TIC) §544 (correct answer)
d. TRIPRA
Rationale: TIC §544 prohibits discrimination not based on actuarial justification.
3. A commercial property has a replacement cost of $500,000. The insured carries $300,000 insurance
and suffers a $100,000 loss. The policy has an 80% coinsurance clause. What is the insurer’s
payment?
a. $60,000
b. $75,000 (correct answer)
c. $80,000
d. $100,000
Rationale: Required = 80% × 500K = 400K → 300K/400K = 0.75 × 100K = 75K.
4. What is the waiting period for Business Income coverage to begin after a direct physical loss?
a. 24 hours
,b. 72 hours (correct answer)
c. 7 days
d. 14 days
Rationale: Standard ISO form uses 72-hour waiting period.
5. Which homeowners policy form provides the broadest open-peril coverage for buildings and
personal property?
a. HO-2
b. HO-3
c. HO-5 (correct answer)
d. HO-8
Rationale: HO-5 offers open-peril on both dwelling and contents.
6. In Texas auto insurance, what does PIP cover that MedPay does not?
a. Funeral expenses
b. Lost wages (correct answer)
c. Medical and surgical care
d. Passenger injuries
Rationale: MedPay does not include wage reimbursement; PIP does.
7. A landlord’s policy covers $250,000 with 1% windstorm deductible. A hail loss totals $15,000. What
does the insured pay?
a. $1,250
b. $2,500
c. $2,500 (correct answer)
d. $3,000
Rationale: Deductible: 1% × 250K = $2,500 → insurer pays remaining $12,500.
8. What action must a Texas insurer take when denying a claim based on arson suspicion?
a. Delay indefinitely
b. Require criminal conviction
c. Provide written explanation referencing evidence (correct answer)
,d. Notify the agent only
Rationale: Texas law requires transparent claim-handling disclosure.
9. Under the BOP, which additional coverage is automatically included?
a. Earthquake
b. Employee dishonesty
c. Business income and extra expense (correct answer)
d. Machinery breakdown
Rationale: Business income auto-included in standard BOP form.
10. Which liability policy covers defective products that cause damage after delivery?
a. Premises liability
b. Products–Completed Operations (correct answer)
c. Personal and advertising injury
d. Garagekeeper liability
Rationale: Applies to work/products no longer in insured’s possession.
11. Which Texas agency regulates workers’ compensation compliance?
a. TDI
b. Texas Department of Insurance – Division of Workers’ Compensation (DWC) (correct answer)
c. NAIC
d. OSHA
Rationale: DWC enforces employer obligations and claim administration.
12. A policy has $1M occurrence / $2M aggregate limits. The insured has three claims of $600K each.
What is total insurer payout?
a. $1,200,000
b. $1,600,000
c. $1,600,000 (correct answer)
d. $2,000,000
Rationale: Each claim capped at 1M, but aggregate stops payment after $2M total → only first two full,
third partially (0).
, 13. Texas Windstorm Insurance Association (TWIA) covers:
a. All properties statewide
b. Flood-prone zones only
c. Coastal properties unable to get wind/hail insurance in the voluntary market (correct answer)
d. Commercial inland buildings only
Rationale: Last-resort market for coastal counties.
14. What endorsement modifies auto liability so the insured can drive non-owned vehicles for business
use?
a. Drive Other Car coverage
b. Named Non-Owner endorsement (correct answer)
c. Garage liability endorsement
d. Trailer interchange agreement
Rationale: Extends liability to non-owned autos.
15. Which coverage applies to tenant improvements in a leased commercial space?
a. Ordinance & Law
b. Business Income only
c. Business personal property (correct answer)
d. Premises liability
Rationale: Tenant improvements permanently attached count as BPP.
16. Which is a compulsory auto insurance requirement in Texas?
a. UIM
b. 30/60/25 liability minimum (correct answer)
c. Collision
d. GAP
Rationale: $30K per person / $60K per accident / $25K property mandatory.
17. What triggers coverage under an OCCURRENCE-form liability policy?
a. When claims are reported
