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TEXAS PROPERTY & CASUALTY INSURANCE EXAM | NEW ACTUAL
EXAM WITH 100% VERIFIED QUESTIONS AND CORRECT SOLUTIONS |
LATEST UPDATE 2026/2027 | GUARANTEED VALUE PACK | GRADED A+.
1. A condition or situation that presents a possibility of loss is a (an): - correct
answer - exposure
2. The purpose of insurance is to: - correct answer - transfer risk
3. Which risk is insurable? - correct answer - pure
4. Which hazard can be described as a careless attitude or general indifference
on the part of the insured toward the occurrence of loss? - correct answer -
morale
5. What is an example of reduction as a method of handling risk? - correct
answer - Installing a burglar alarm
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6. Driving too fast and not wearing a seat belt are examples of? - correct
answer - morale hazard
7. The risk that involves the chance of both loss and gain is? - correct answer -
speculative risk
8. Self-insurance is an example of what kind of risk treatment? - correct
answer - Retention
9. If John's father transfers ownership of a house to John, can John buy
insurance? - correct answer - Yes because he has an insurable interest.
10. With regard to insurance, risk can be defined as: - correct answer -
uncertainty regarding loss
11. Treating risk by purchasing insurance is an example of what type of risk
management? - correct answer - transfer
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12. Robert and Carolyn live in a busy city and decide that not owning a car is
the solution to not experience having a car stolen. What method describes
this philosophy? - correct answer - avoidance
13. Dishonesty on the part of an insured is an example of what? - correct
answer - a moral hazard
14. What kind of risk is the stock market? - correct answer - speculative risk
15. A ____ is a condition that increases the chance of loss. - correct answer -
hazard
16. Faulty wiring causes a fire that destroys a building. The faulty wiring is
considered to be a(n): - correct answer - hazard
17. ________ is when people with a greater than average exposure to loss to
purchase insurance. - correct answer - Adverse selection
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18. Methods of handling risk are avoidance, reduction, retention, transfer and
_____. - correct answer - Sharing (ARRTS)
19. Elements of insurable risk are calculable, affordable, noncatastrophic,
homogenous, accidental and _____. - correct answer - Measurable
(CANHAM)
20. Myron, who is 16, signs a contract to lease a car. This would probably not be
considered a valid contract under the law because _____. - correct answer -
He is not competent at 16.
21. Under a unilateral contract, which parties are legally bound to perform
under the contract? - correct answer - Insurer only
22. Which part of an insurance policy describes the responsibilities and
obligations of both the insurance company and the insured under the
policy? - correct answer - Conditions
23. The insuring agreement section of a policy describes the ____ you are
insured against. - correct answer - perils
TEXAS PROPERTY & CASUALTY INSURANCE EXAM | NEW ACTUAL
EXAM WITH 100% VERIFIED QUESTIONS AND CORRECT SOLUTIONS |
LATEST UPDATE 2026/2027 | GUARANTEED VALUE PACK | GRADED A+.
1. A condition or situation that presents a possibility of loss is a (an): - correct
answer - exposure
2. The purpose of insurance is to: - correct answer - transfer risk
3. Which risk is insurable? - correct answer - pure
4. Which hazard can be described as a careless attitude or general indifference
on the part of the insured toward the occurrence of loss? - correct answer -
morale
5. What is an example of reduction as a method of handling risk? - correct
answer - Installing a burglar alarm
, Page|2
6. Driving too fast and not wearing a seat belt are examples of? - correct
answer - morale hazard
7. The risk that involves the chance of both loss and gain is? - correct answer -
speculative risk
8. Self-insurance is an example of what kind of risk treatment? - correct
answer - Retention
9. If John's father transfers ownership of a house to John, can John buy
insurance? - correct answer - Yes because he has an insurable interest.
10. With regard to insurance, risk can be defined as: - correct answer -
uncertainty regarding loss
11. Treating risk by purchasing insurance is an example of what type of risk
management? - correct answer - transfer
, Page|3
12. Robert and Carolyn live in a busy city and decide that not owning a car is
the solution to not experience having a car stolen. What method describes
this philosophy? - correct answer - avoidance
13. Dishonesty on the part of an insured is an example of what? - correct
answer - a moral hazard
14. What kind of risk is the stock market? - correct answer - speculative risk
15. A ____ is a condition that increases the chance of loss. - correct answer -
hazard
16. Faulty wiring causes a fire that destroys a building. The faulty wiring is
considered to be a(n): - correct answer - hazard
17. ________ is when people with a greater than average exposure to loss to
purchase insurance. - correct answer - Adverse selection
, Page|4
18. Methods of handling risk are avoidance, reduction, retention, transfer and
_____. - correct answer - Sharing (ARRTS)
19. Elements of insurable risk are calculable, affordable, noncatastrophic,
homogenous, accidental and _____. - correct answer - Measurable
(CANHAM)
20. Myron, who is 16, signs a contract to lease a car. This would probably not be
considered a valid contract under the law because _____. - correct answer -
He is not competent at 16.
21. Under a unilateral contract, which parties are legally bound to perform
under the contract? - correct answer - Insurer only
22. Which part of an insurance policy describes the responsibilities and
obligations of both the insurance company and the insured under the
policy? - correct answer - Conditions
23. The insuring agreement section of a policy describes the ____ you are
insured against. - correct answer - perils
