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Texas Property & Casualty License Questions
and Correct Answers
Property vs Casualty: What is considered property? Ans: —
Structure & Personal Property
Property vs Casualty: What is considered casualty? Ans: — Non-
property losses. Legal liability to others. 3rd Party
Risk Ans: — uncertainty of financial loss
Pure Risk Ans: — Chance of Loss
Speculative Risk Ans: — Chance of Loss or Gain (Gamble)
Insurance (covers which type of risk?) Ans: — Pure Risk Only
How does the law of large numbers apply in insurance? Ans: —
Actuaries use the law of large numbers to estimate claims
What is the law of large numbers? Ans: — as the number of a
similar loss exposure increases, the more accurate claims can be
predicted from the group.
What is a peril? Ans: — cause of loss
What is a hazard? Ans: — things that increase the chance of a peril
happening
Three types of hazards Ans: — Physical: visible characteristic
(dead tree)
Moral: Dishonest tendencies
Morale: Attitude of carelessness
© 2025 All rights reserved
, 2 | Page
Proximate Cause Ans: — First cause in an unbroken chain of
events
Elements of a legal contract (CALC) Ans: — C - Competent parties
(18/Right frame of mind)
A - Agreement (Both parties agree)
L - Legal Purpose (The risk is LEGAL)
C - Consideration (It has to be fair)
What is representation? Ans: — Information believed to be true.
What is misrepresentation? Ans: — Information that is not true.
False information.
What is material misrepresentation? Ans: — Information that is
not true but would have caused the insurer not to issue the policy.
(4 prev spd tix)
What is fraud? Ans: — An all out effort by one party to deceive
and cheat the other.
What is warranty? Ans: — Guarantee that an insured will or will
not do something
What are the four major parts to an insurance policy structure?
(DICE) Ans: — D - Declarations Page (First Page)
I - Insuring Agreement (Insurers promise to pay)
C - Conditions (Rules)
E - Exclusions (Not covered)
What information is on the declarations page? (Remember 6 Ps)
Ans: — Policy Number
© 2025 All rights reserved
Texas Property & Casualty License Questions
and Correct Answers
Property vs Casualty: What is considered property? Ans: —
Structure & Personal Property
Property vs Casualty: What is considered casualty? Ans: — Non-
property losses. Legal liability to others. 3rd Party
Risk Ans: — uncertainty of financial loss
Pure Risk Ans: — Chance of Loss
Speculative Risk Ans: — Chance of Loss or Gain (Gamble)
Insurance (covers which type of risk?) Ans: — Pure Risk Only
How does the law of large numbers apply in insurance? Ans: —
Actuaries use the law of large numbers to estimate claims
What is the law of large numbers? Ans: — as the number of a
similar loss exposure increases, the more accurate claims can be
predicted from the group.
What is a peril? Ans: — cause of loss
What is a hazard? Ans: — things that increase the chance of a peril
happening
Three types of hazards Ans: — Physical: visible characteristic
(dead tree)
Moral: Dishonest tendencies
Morale: Attitude of carelessness
© 2025 All rights reserved
, 2 | Page
Proximate Cause Ans: — First cause in an unbroken chain of
events
Elements of a legal contract (CALC) Ans: — C - Competent parties
(18/Right frame of mind)
A - Agreement (Both parties agree)
L - Legal Purpose (The risk is LEGAL)
C - Consideration (It has to be fair)
What is representation? Ans: — Information believed to be true.
What is misrepresentation? Ans: — Information that is not true.
False information.
What is material misrepresentation? Ans: — Information that is
not true but would have caused the insurer not to issue the policy.
(4 prev spd tix)
What is fraud? Ans: — An all out effort by one party to deceive
and cheat the other.
What is warranty? Ans: — Guarantee that an insured will or will
not do something
What are the four major parts to an insurance policy structure?
(DICE) Ans: — D - Declarations Page (First Page)
I - Insuring Agreement (Insurers promise to pay)
C - Conditions (Rules)
E - Exclusions (Not covered)
What information is on the declarations page? (Remember 6 Ps)
Ans: — Policy Number
© 2025 All rights reserved
