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TEXAS PROPERTY AND CASUALTY ACTUAL EXAM
2026/2027 | 200 Practice Questions | Correct Detailed
Answers | Already Graded A | Pass Guaranteed
[Domain 1: Texas Insurance Regulation & Department of Insurance (Q1-25)]
Q1. Under the Texas Insurance Code, the Commissioner of Insurance is appointed by
which authority and serves at whose pleasure?
A. The Texas Legislature; serves at the Legislature's pleasure
B. The Governor; serves at the Governor's pleasure
C. The Texas Department of Insurance Board; serves at the Board's pleasure
D. Elected by Texas voters; serves a fixed 4-year term
Correct Answer: B
Rationale: The Texas Insurance Commissioner is appointed by the Governor with
Senate confirmation and serves at the Governor's pleasure. This is established under
Texas Insurance Code Chapter 301. The Commissioner is not elected, nor does the
TDI Board appoint the position.
Q2. A licensed Texas property and casualty agent fails to remit premiums collected
from insureds to the insurer within the required timeframe. Under Texas Insurance
Code provisions regarding fiduciary duties, this agent's failure constitutes:
A. A minor administrative violation subject only to a written warning
B. Misappropriation of fiduciary funds, subject to license suspension or revocation
C. A civil matter between the agent and insurer only, with no TDI jurisdiction
D. An automatic felony charge without hearing
Correct Answer: B
Rationale: Texas Insurance Code §4001.151 requires agents to hold premiums in a
fiduciary capacity. Failure to remit premiums is misappropriation of fiduciary funds
and subjects the licensee to disciplinary action including suspension or revocation
under TDI enforcement powers.
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Q3. The Texas Department of Insurance may impose an administrative penalty of up
to what amount per violation for engaging in unfair claims settlement practices?
A. $5,000
B. $10,000
C. $25,000
D. $50,000
Correct Answer: C
Rationale: Under Texas Insurance Code Chapter 541 (Unfair Methods of Competition
and Unfair or Deceptive Acts or Practices) and TDI enforcement authority, the
Department may assess administrative penalties up to $25,000 per violation. This
applies to unfair claims settlement practices and other prohibited conduct.
Q4. Under the Texas Unfair Claims Settlement Practices Act, which of the following is
NOT one of the 15 specific prohibited acts?
A. Failing to acknowledge and act promptly upon communications with respect to
claims
B. Refusing to pay claims without conducting a reasonable investigation
C. Requiring an insured to provide three estimates for auto repairs
D. Failing to affirm or deny coverage of claims within a reasonable time after proof of
loss
Correct Answer: C
Rationale: The Texas Unfair Claims Settlement Practices Act (Insurance Code
§541.060) lists 15 prohibited acts including failure to acknowledge communications,
refusal to pay without investigation, and failure to affirm/deny coverage. Requiring
repair estimates is a common insurer practice and is not prohibited by statute.
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Q5. A Texas premium finance company charges an insured an APR that exceeds the
maximum rate permitted under the Texas Premium Finance Companies Act. What is
the consequence of this violation?
A. The excess charge is automatically forfeited to the state
B. The premium finance agreement is voidable at the option of the insured
C. The insurer must refund the entire premium
D. No consequence unless the insured files a civil lawsuit
Correct Answer: B
Rationale: Under Texas Insurance Code Chapter 651 (Premium Finance Companies
Act), charging interest in excess of the statutory maximum renders the agreement
usurious and voidable at the insured's option. The insured may recover the excess
plus penalties.
Q6. The Texas Windstorm Insurance Association (TWIA) provides windstorm and hail
coverage for coastal residents. What is the maximum dwelling coverage limit
available under TWIA for a residential structure?
A. $100,000
B. $250,000
C. $500,000
D. $1,000,000
Correct Answer: B
Rationale: TWIA provides residential dwelling coverage up to a maximum of
$250,000 for the structure (similar to NFIP dwelling limits but for wind/hail only in
designated catastrophe areas). Contents coverage is available up to $100,000
separately. These limits are set by statute and TWIA plan of operation.
Q7. To obtain TWIA coverage, a residential property must meet which of the
following requirements?
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A. The property must be located in any Texas county touching the Gulf of Mexico
B. The property must pass a TWIA inspection certifying it meets applicable building
codes for windstorm resistance
C. The property owner must have been denied coverage by only one private insurer
D. The property must be built after 2008 regardless of location
Correct Answer: B
Rationale: Under Texas Insurance Code Chapter 2210 and TWIA rules, properties
must pass a windstorm inspection (WPI-8 or equivalent) certifying compliance with
applicable building codes for windstorm resistance before TWIA coverage can be
bound or renewed. Location in designated catastrophe areas is required, but the
inspection is the critical eligibility gate.
Q8. Under 2026 TDI cybersecurity requirements for licensees, which of the following
is now mandated?
A. All licensees must obtain a separate cybersecurity insurance policy with minimum
$1 million limits
B. Licensees must implement multi-factor authentication for all systems containing
nonpublic personal information and report data breaches to TDI within 72 hours
C. Licensees are prohibited from using cloud storage for any insurance records
D. Cybersecurity requirements apply only to insurers with more than 500 employees
Correct Answer: B
Rationale: 2026 TDI amendments to 28 TAC §7.82 and related cybersecurity rules
require licensees to implement reasonable safeguards including multi-factor
authentication for systems containing nonpublic personal information and to report
data breaches to TDI within 72 hours. The rules apply broadly, not just to large
insurers.
Q9. A Texas insurance agent offers a $100 gift card to any prospect who purchases a
homeowners policy through the agent. Under Texas Insurance Code Chapter 541,
this practice constitutes:
TEXAS PROPERTY AND CASUALTY ACTUAL EXAM
2026/2027 | 200 Practice Questions | Correct Detailed
Answers | Already Graded A | Pass Guaranteed
[Domain 1: Texas Insurance Regulation & Department of Insurance (Q1-25)]
Q1. Under the Texas Insurance Code, the Commissioner of Insurance is appointed by
which authority and serves at whose pleasure?
A. The Texas Legislature; serves at the Legislature's pleasure
B. The Governor; serves at the Governor's pleasure
C. The Texas Department of Insurance Board; serves at the Board's pleasure
D. Elected by Texas voters; serves a fixed 4-year term
Correct Answer: B
Rationale: The Texas Insurance Commissioner is appointed by the Governor with
Senate confirmation and serves at the Governor's pleasure. This is established under
Texas Insurance Code Chapter 301. The Commissioner is not elected, nor does the
TDI Board appoint the position.
Q2. A licensed Texas property and casualty agent fails to remit premiums collected
from insureds to the insurer within the required timeframe. Under Texas Insurance
Code provisions regarding fiduciary duties, this agent's failure constitutes:
A. A minor administrative violation subject only to a written warning
B. Misappropriation of fiduciary funds, subject to license suspension or revocation
C. A civil matter between the agent and insurer only, with no TDI jurisdiction
D. An automatic felony charge without hearing
Correct Answer: B
Rationale: Texas Insurance Code §4001.151 requires agents to hold premiums in a
fiduciary capacity. Failure to remit premiums is misappropriation of fiduciary funds
and subjects the licensee to disciplinary action including suspension or revocation
under TDI enforcement powers.
,2
Q3. The Texas Department of Insurance may impose an administrative penalty of up
to what amount per violation for engaging in unfair claims settlement practices?
A. $5,000
B. $10,000
C. $25,000
D. $50,000
Correct Answer: C
Rationale: Under Texas Insurance Code Chapter 541 (Unfair Methods of Competition
and Unfair or Deceptive Acts or Practices) and TDI enforcement authority, the
Department may assess administrative penalties up to $25,000 per violation. This
applies to unfair claims settlement practices and other prohibited conduct.
Q4. Under the Texas Unfair Claims Settlement Practices Act, which of the following is
NOT one of the 15 specific prohibited acts?
A. Failing to acknowledge and act promptly upon communications with respect to
claims
B. Refusing to pay claims without conducting a reasonable investigation
C. Requiring an insured to provide three estimates for auto repairs
D. Failing to affirm or deny coverage of claims within a reasonable time after proof of
loss
Correct Answer: C
Rationale: The Texas Unfair Claims Settlement Practices Act (Insurance Code
§541.060) lists 15 prohibited acts including failure to acknowledge communications,
refusal to pay without investigation, and failure to affirm/deny coverage. Requiring
repair estimates is a common insurer practice and is not prohibited by statute.
,3
Q5. A Texas premium finance company charges an insured an APR that exceeds the
maximum rate permitted under the Texas Premium Finance Companies Act. What is
the consequence of this violation?
A. The excess charge is automatically forfeited to the state
B. The premium finance agreement is voidable at the option of the insured
C. The insurer must refund the entire premium
D. No consequence unless the insured files a civil lawsuit
Correct Answer: B
Rationale: Under Texas Insurance Code Chapter 651 (Premium Finance Companies
Act), charging interest in excess of the statutory maximum renders the agreement
usurious and voidable at the insured's option. The insured may recover the excess
plus penalties.
Q6. The Texas Windstorm Insurance Association (TWIA) provides windstorm and hail
coverage for coastal residents. What is the maximum dwelling coverage limit
available under TWIA for a residential structure?
A. $100,000
B. $250,000
C. $500,000
D. $1,000,000
Correct Answer: B
Rationale: TWIA provides residential dwelling coverage up to a maximum of
$250,000 for the structure (similar to NFIP dwelling limits but for wind/hail only in
designated catastrophe areas). Contents coverage is available up to $100,000
separately. These limits are set by statute and TWIA plan of operation.
Q7. To obtain TWIA coverage, a residential property must meet which of the
following requirements?
, 4
A. The property must be located in any Texas county touching the Gulf of Mexico
B. The property must pass a TWIA inspection certifying it meets applicable building
codes for windstorm resistance
C. The property owner must have been denied coverage by only one private insurer
D. The property must be built after 2008 regardless of location
Correct Answer: B
Rationale: Under Texas Insurance Code Chapter 2210 and TWIA rules, properties
must pass a windstorm inspection (WPI-8 or equivalent) certifying compliance with
applicable building codes for windstorm resistance before TWIA coverage can be
bound or renewed. Location in designated catastrophe areas is required, but the
inspection is the critical eligibility gate.
Q8. Under 2026 TDI cybersecurity requirements for licensees, which of the following
is now mandated?
A. All licensees must obtain a separate cybersecurity insurance policy with minimum
$1 million limits
B. Licensees must implement multi-factor authentication for all systems containing
nonpublic personal information and report data breaches to TDI within 72 hours
C. Licensees are prohibited from using cloud storage for any insurance records
D. Cybersecurity requirements apply only to insurers with more than 500 employees
Correct Answer: B
Rationale: 2026 TDI amendments to 28 TAC §7.82 and related cybersecurity rules
require licensees to implement reasonable safeguards including multi-factor
authentication for systems containing nonpublic personal information and to report
data breaches to TDI within 72 hours. The rules apply broadly, not just to large
insurers.
Q9. A Texas insurance agent offers a $100 gift card to any prospect who purchases a
homeowners policy through the agent. Under Texas Insurance Code Chapter 541,
this practice constitutes:
