Free Texas Property & Casualty Practice Exam 2026

Texas property and casualty insurance exam sample questions and answers

6 of the 130 practice questions, one from each topic, with the answer explained.

1. 1. Which reason lets a Texas insurer cancel a personal auto policy that has been in force more than 60 days?

   • A.The insured had a not-at-fault claim
   • B.A household driver's license was revoked
   • C.The insured moved to another county
   • D.The insured reached age 70

   Answer: B. After 60 days a personal auto policy may be canceled only for nonpayment, a fraudulent claim, TDI finding that continuing it would violate the law, or suspension or revocation of the license or registration of the named insured or a household or regular driver, unless the insured agrees to exclude that driver. Cancellation takes effect 10 days after notice is mailed. Age alone is not a reason to nonrenew.

2. 2. Which commercial crime insuring agreement covers loss caused by an employee's dishonest acts?

   • A.Forgery or Alteration
   • B.Computer Fraud
   • C.Inside the Premises - Robbery or Safe Burglary
   • D.Employee Theft

   Answer: D. Employee theft, formerly employee dishonesty, covers theft of money, securities and other property by employees. The other agreements respond to outsiders.

3. 3. Under the Texas Insurance Code, a Lloyd's plan must have at least how many underwriters?

   • A.10
   • B.25
   • C.50
   • D.5

   Answer: A. Texas requires a Lloyd's plan to have at least 10 underwriters, who act through an attorney in fact.

4. 4. Under Texas law, when real property insured by a fire policy is totally destroyed by fire, the policy is treated as:

   • A.A claim paid at market value
   • B.A claim paid at actual cash value
   • C.A liquidated demand for its face
   • D.Subject to a coinsurance penalty

   Answer: C. Texas's valued policy law makes a fire policy a liquidated demand for its full face amount on a total fire loss of real property, and insurers must print that rule in the policy. It does not apply to personal property.

5. 5. A Texas employer without workers' compensation coverage is sued by an injured employee. The employer may not defend on the ground that:

   • A.The employee meant to cause the injury
   • B.The employer was not negligent
   • C.The employee was also negligent
   • D.The employee was intoxicated

   Answer: C. A nonsubscribing employer loses the defenses of contributory negligence, assumption of risk and fellow-employee negligence, though the employee must still prove the employer's negligence. Intoxication and an intentional injury remain defenses.

6. 6. The Texas Property and Casualty Insurance Guaranty Association pays covered claims when a member insurer:

   • A.Is ordered liquidated as insolvent
   • B.Stops writing in the Texas market
   • C.Denies a claim in bad faith
   • D.Raises its rates sharply

   Answer: A. Covered claims arise when a member insurer is an impaired insurer, meaning it is under a final liquidation order with a finding of insolvency. Claimants must first use any other applicable coverage, and surplus lines insurers are not members.