TEXAS INSURANCE EXAM QUESTIONS
AND ANSWERS (VERIFIED AND
UPDATED)
Stock Insurers/Company - ANS - owned by stockholders
- dividends (excess profits _ are paid to stockholders
-divendends are taxable to stockholders
- iusse NONPARTICIPATING policies ONLY stockholders received dividends
Mutual Insurer/Company - ANS -owned by policy holders
-dividend is paid to policy holder
- dividend is not taxable
Texas Llyods - ANS regulated by the texas insurance code
- must consist of min 10 UWs
- managed by an attorney in fact
- Lloyds must be a member of TWIA where applicable
- Lloyds much be a member of the Tex Prop and Casualty Insurance Guartny Fund
Self Insurers - ANS business pays its own claims but must obtain cert of authorit from TDI
domestic vs foreign vs alien - ANS Dom - state where a company is incorporated
@2026/2027 ALLRIGHTS RESERVED.
,Foreign - Company is inc in another state of US territory
Alien- company is inc in another country
Certificate of Authority - ANS state license for an insurance company
- Authorized (admittted ) COA
- unauthorized (nonadmitted) no COA
Direct REsponse Carrier - ANS no agent/producer - mass advertisements
Law of Agency - ANS relationship between agent/principal
- ins agent acts on behalf of the principal (insurance company)
- insurance company is liable for agents actions and statements
responsibility of agent to applicants/insured - ANS -promptly send premium to insurer
-does not comingle funds
-fidciary = trust
- premiums = fiduciary funds
Elements of a Legal Contract - ANS CLOAC
Consideration - MUST BE EXCHANGE OF VALUE
Legal Purpose - cannot break low
Offer -
Acceptance
Competent Parties
Indemnity = - ANS restore
@2026/2027 ALLRIGHTS RESERVED.
,warranty - ANS written promise
statement that is guaranteed to be tree
- on the dec page
- MUST exist at the time of the loss
Representation - ANS believed to be true
Misrepresentation - ANS not true but would NOT affect the insurance company decision
Material Misrepresentation - ANS info given that is not true and DOES affect the insuers
decision
concealment - ANS failure to disclose information ---- if intentional than coverage will be
voided
fraud - ANS intentional misrepresentation of an existing, important fact
Insuring agreement - ANS summarizes the major promises of the insurer --- what perils are
covered
duties after loss - ANS - Prompt notice to insurer
- Protect from further damage
- Complete proof of loss - 91 days!!! From when the claim form is sent
- Make propert available for inspection
- Submit to examination under oath of required
- Coorperate with insurer
Salvage - ANS -when a total loss occurs, estimated repair costs are greater than the ACV
@2026/2027 ALLRIGHTS RESERVED.
, - INSURER has the right of salvage, not the insured , IF the insured agrees to surrender title for
claim settlement
how long is a binder good for? - ANS 30 days
manual rate class - ANS set rates for specific risk classes
experience rate class - ANS modification factor based on loss experience
- increases or decreases the premium
-3 year period
rate components - ANS - loss costs-expenses - profit
fair credit reporting act - ANS - all insured must comply
- Consumer investigation report - notice the applicant within three days after report was
requested
three people that must agree damages are done by terrorism - ANS -secretary of treasury
- secretary of homeland security
- us attorney general
Gramm-Leech-Bliley Act - ANS - Requires ins companies send out a form to customer advising
them how their confidential info is being used and gives them the opportunity to opt out
how often are tx insurance companies audited? - ANS every 5 years
penalties for fraudulent info given during audit - ANS - fine up to 50k and or 10 years in
prison
- 15 years if fraudulent info jeopardizes the insurer
@2026/2027 ALLRIGHTS RESERVED.
AND ANSWERS (VERIFIED AND
UPDATED)
Stock Insurers/Company - ANS - owned by stockholders
- dividends (excess profits _ are paid to stockholders
-divendends are taxable to stockholders
- iusse NONPARTICIPATING policies ONLY stockholders received dividends
Mutual Insurer/Company - ANS -owned by policy holders
-dividend is paid to policy holder
- dividend is not taxable
Texas Llyods - ANS regulated by the texas insurance code
- must consist of min 10 UWs
- managed by an attorney in fact
- Lloyds must be a member of TWIA where applicable
- Lloyds much be a member of the Tex Prop and Casualty Insurance Guartny Fund
Self Insurers - ANS business pays its own claims but must obtain cert of authorit from TDI
domestic vs foreign vs alien - ANS Dom - state where a company is incorporated
@2026/2027 ALLRIGHTS RESERVED.
,Foreign - Company is inc in another state of US territory
Alien- company is inc in another country
Certificate of Authority - ANS state license for an insurance company
- Authorized (admittted ) COA
- unauthorized (nonadmitted) no COA
Direct REsponse Carrier - ANS no agent/producer - mass advertisements
Law of Agency - ANS relationship between agent/principal
- ins agent acts on behalf of the principal (insurance company)
- insurance company is liable for agents actions and statements
responsibility of agent to applicants/insured - ANS -promptly send premium to insurer
-does not comingle funds
-fidciary = trust
- premiums = fiduciary funds
Elements of a Legal Contract - ANS CLOAC
Consideration - MUST BE EXCHANGE OF VALUE
Legal Purpose - cannot break low
Offer -
Acceptance
Competent Parties
Indemnity = - ANS restore
@2026/2027 ALLRIGHTS RESERVED.
,warranty - ANS written promise
statement that is guaranteed to be tree
- on the dec page
- MUST exist at the time of the loss
Representation - ANS believed to be true
Misrepresentation - ANS not true but would NOT affect the insurance company decision
Material Misrepresentation - ANS info given that is not true and DOES affect the insuers
decision
concealment - ANS failure to disclose information ---- if intentional than coverage will be
voided
fraud - ANS intentional misrepresentation of an existing, important fact
Insuring agreement - ANS summarizes the major promises of the insurer --- what perils are
covered
duties after loss - ANS - Prompt notice to insurer
- Protect from further damage
- Complete proof of loss - 91 days!!! From when the claim form is sent
- Make propert available for inspection
- Submit to examination under oath of required
- Coorperate with insurer
Salvage - ANS -when a total loss occurs, estimated repair costs are greater than the ACV
@2026/2027 ALLRIGHTS RESERVED.
, - INSURER has the right of salvage, not the insured , IF the insured agrees to surrender title for
claim settlement
how long is a binder good for? - ANS 30 days
manual rate class - ANS set rates for specific risk classes
experience rate class - ANS modification factor based on loss experience
- increases or decreases the premium
-3 year period
rate components - ANS - loss costs-expenses - profit
fair credit reporting act - ANS - all insured must comply
- Consumer investigation report - notice the applicant within three days after report was
requested
three people that must agree damages are done by terrorism - ANS -secretary of treasury
- secretary of homeland security
- us attorney general
Gramm-Leech-Bliley Act - ANS - Requires ins companies send out a form to customer advising
them how their confidential info is being used and gives them the opportunity to opt out
how often are tx insurance companies audited? - ANS every 5 years
penalties for fraudulent info given during audit - ANS - fine up to 50k and or 10 years in
prison
- 15 years if fraudulent info jeopardizes the insurer
@2026/2027 ALLRIGHTS RESERVED.
