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InsTX-PersPC55 Personal Lines Property &
Casualty (English) Exam | 2 Sets | Latest Verified
Questions and Detailed Answers
OVERVIEW DESCRIPTION:
The InsTX-PersPC55 Personal Lines Property & Casualty (English) exam is the Texas
state-specific licensing test required for insurance agents who wish to sell non-
commercial coverage to individuals and families. The exam is structured to assess both
national insurance principles and Texas state regulations. It consists of 110 total
questions, but only 100 are scored; 10 are unscored "pretest" questions. The content is
split between national topics (like Homeowners and Auto policy forms, insurance terms,
and liability concepts) and Texas-specific laws (including TDI regulations, state-
mandated coverages like PIP, and Texas policy forms). Questions are roughly distributed
among terminology, numbers/days/limits, and real-world scenarios, requiring
candidates to not only memorize facts but also apply their knowledge to practical
situations.
InsTX-PersPC55 Set 1
QUESTION 1
An insurance agent explains a policy's benefits in a way that misleads a potential client
into believing the coverage is broader than it actually is. This unethical practice is known
as:
A) Rebating
B) Twisting
C) Misrepresentation
D) Defamation
CORRECT ANSWER: C
EXPERT RATIONALE: Misrepresentation is any false or misleading statement about a
policy's terms, benefits, or advantages, which is exactly what the agent is doing.
,2|Page
QUESTION 2
Under a Personal Auto Policy, which part provides coverage for bodily injury caused by a
hit-and-run driver to the insured and their family members?
A) Part A: Liability Coverage
B) Part B: Medical Payments Coverage
C) Part C: Uninsured/Underinsured Motorist Coverage
D) Part D: Coverage for Damage to Your Auto
CORRECT ANSWER: C
EXPERT RATIONALE: Uninsured Motorist coverage (Part C) specifically protects the
insured if they are injured by a driver with no insurance or in a hit-and-run accident.
QUESTION 3
What is the maximum number of days an insurer in Texas has to accept or reject a claim
after receiving all necessary documentation?
A) 10 business days
B) 15 calendar days
C) 30 calendar days
D) 45 business days
CORRECT ANSWER: B
EXPERT RATIONALE: According to the Texas Prompt Payment of Claims Act, insurers
have 15 calendar days to acknowledge receipt of a claim and begin the investigation,
and the same timeframe applies for accepting or rejecting a claim once all required
information is received.
QUESTION 4
An HO-3 policy covers the dwelling under what type of peril structure?
A) Named Perils
B) Open Perils
C) Broad Form Perils
D) Basic Form Perils
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CORRECT ANSWER: B
EXPERT RATIONALE: The HO-3 policy provides "open perils" coverage on the dwelling
and other structures, meaning all perils are covered except those specifically excluded in
the policy.
QUESTION 5
Which of the following is considered a valid offer and acceptance in an insurance
contract?
A) The agent accepts a premium payment from the applicant.
B) The applicant signs the application and pays the first premium.
C) The insurer's underwriting department approves the application.
D) The producer delivers the policy to the insured.
CORRECT ANSWER: C
EXPERT RATIONALE: In insurance, the offer is typically the completed application, and
acceptance occurs when the insurer's underwriter approves that application.
QUESTION 6
In Texas, Personal Injury Protection (PIP) coverage pays for reasonable medical expenses
and, up to the policy limit, what percentage of lost income?
A) 50%
B) 60%
C) 80%
D) 100%
CORRECT ANSWER: D
EXPERT RATIONALE: Texas PIP coverage is comprehensive; it pays for 100% of necessary
medical expenses and 100% of lost income (up to the policy's limit), as well as
replacement services.
QUESTION 7
What is the primary purpose of the coinsurance clause found in many commercial
property policies?
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A) To reduce the policy premium for the insured.
B) To ensure insureds carry coverage close to the full value of their property.
C) To allow the insurer to share profits with the policyholder.
D) To guarantee the insurer will pay 100% of any loss.
CORRECT ANSWER: B
EXPERT RATIONALE: The coinsurance clause penalizes insureds who underinsure their
property by reducing claim payments for partial losses, encouraging them to maintain
adequate coverage limits.
QUESTION 8
An agent offers to pay a portion of their commission to a client as an inducement to
purchase a policy. Under Texas law, this is strictly prohibited and known as:
A) Twisting
B) Rebating
C) Coercion
D) Indemnification
CORRECT ANSWER: B
EXPERT RATIONALE: Rebating is defined as giving the insured any valuable
consideration or inducement not specified in the policy, such as a portion of the
commission.
QUESTION 9
Which homeowners policy is specifically designed for a tenant renting an apartment?
A) HO-2
B) HO-3
C) HO-4
D) HO-6
CORRECT ANSWER: C
EXPERT RATIONALE: An HO-4, also known as "Tenants" or "Renters" insurance, provides
InsTX-PersPC55 Personal Lines Property &
Casualty (English) Exam | 2 Sets | Latest Verified
Questions and Detailed Answers
OVERVIEW DESCRIPTION:
The InsTX-PersPC55 Personal Lines Property & Casualty (English) exam is the Texas
state-specific licensing test required for insurance agents who wish to sell non-
commercial coverage to individuals and families. The exam is structured to assess both
national insurance principles and Texas state regulations. It consists of 110 total
questions, but only 100 are scored; 10 are unscored "pretest" questions. The content is
split between national topics (like Homeowners and Auto policy forms, insurance terms,
and liability concepts) and Texas-specific laws (including TDI regulations, state-
mandated coverages like PIP, and Texas policy forms). Questions are roughly distributed
among terminology, numbers/days/limits, and real-world scenarios, requiring
candidates to not only memorize facts but also apply their knowledge to practical
situations.
InsTX-PersPC55 Set 1
QUESTION 1
An insurance agent explains a policy's benefits in a way that misleads a potential client
into believing the coverage is broader than it actually is. This unethical practice is known
as:
A) Rebating
B) Twisting
C) Misrepresentation
D) Defamation
CORRECT ANSWER: C
EXPERT RATIONALE: Misrepresentation is any false or misleading statement about a
policy's terms, benefits, or advantages, which is exactly what the agent is doing.
,2|Page
QUESTION 2
Under a Personal Auto Policy, which part provides coverage for bodily injury caused by a
hit-and-run driver to the insured and their family members?
A) Part A: Liability Coverage
B) Part B: Medical Payments Coverage
C) Part C: Uninsured/Underinsured Motorist Coverage
D) Part D: Coverage for Damage to Your Auto
CORRECT ANSWER: C
EXPERT RATIONALE: Uninsured Motorist coverage (Part C) specifically protects the
insured if they are injured by a driver with no insurance or in a hit-and-run accident.
QUESTION 3
What is the maximum number of days an insurer in Texas has to accept or reject a claim
after receiving all necessary documentation?
A) 10 business days
B) 15 calendar days
C) 30 calendar days
D) 45 business days
CORRECT ANSWER: B
EXPERT RATIONALE: According to the Texas Prompt Payment of Claims Act, insurers
have 15 calendar days to acknowledge receipt of a claim and begin the investigation,
and the same timeframe applies for accepting or rejecting a claim once all required
information is received.
QUESTION 4
An HO-3 policy covers the dwelling under what type of peril structure?
A) Named Perils
B) Open Perils
C) Broad Form Perils
D) Basic Form Perils
,3|Page
CORRECT ANSWER: B
EXPERT RATIONALE: The HO-3 policy provides "open perils" coverage on the dwelling
and other structures, meaning all perils are covered except those specifically excluded in
the policy.
QUESTION 5
Which of the following is considered a valid offer and acceptance in an insurance
contract?
A) The agent accepts a premium payment from the applicant.
B) The applicant signs the application and pays the first premium.
C) The insurer's underwriting department approves the application.
D) The producer delivers the policy to the insured.
CORRECT ANSWER: C
EXPERT RATIONALE: In insurance, the offer is typically the completed application, and
acceptance occurs when the insurer's underwriter approves that application.
QUESTION 6
In Texas, Personal Injury Protection (PIP) coverage pays for reasonable medical expenses
and, up to the policy limit, what percentage of lost income?
A) 50%
B) 60%
C) 80%
D) 100%
CORRECT ANSWER: D
EXPERT RATIONALE: Texas PIP coverage is comprehensive; it pays for 100% of necessary
medical expenses and 100% of lost income (up to the policy's limit), as well as
replacement services.
QUESTION 7
What is the primary purpose of the coinsurance clause found in many commercial
property policies?
, 4|Page
A) To reduce the policy premium for the insured.
B) To ensure insureds carry coverage close to the full value of their property.
C) To allow the insurer to share profits with the policyholder.
D) To guarantee the insurer will pay 100% of any loss.
CORRECT ANSWER: B
EXPERT RATIONALE: The coinsurance clause penalizes insureds who underinsure their
property by reducing claim payments for partial losses, encouraging them to maintain
adequate coverage limits.
QUESTION 8
An agent offers to pay a portion of their commission to a client as an inducement to
purchase a policy. Under Texas law, this is strictly prohibited and known as:
A) Twisting
B) Rebating
C) Coercion
D) Indemnification
CORRECT ANSWER: B
EXPERT RATIONALE: Rebating is defined as giving the insured any valuable
consideration or inducement not specified in the policy, such as a portion of the
commission.
QUESTION 9
Which homeowners policy is specifically designed for a tenant renting an apartment?
A) HO-2
B) HO-3
C) HO-4
D) HO-6
CORRECT ANSWER: C
EXPERT RATIONALE: An HO-4, also known as "Tenants" or "Renters" insurance, provides
