TEXAS PROPERTY AND CASUALTY EXAM
STUDY GUIDE 2026/2027 COMPLETE
QUESTIONS WITH VERIFIED CORRECT
ANSWERS || ALREADY GRADED A+
<LATEST VERSION>
Property vs Casualty: What is considered property? - ANSWER✔Structure &
Personal Property
Property vs Casualty: What is considered casualty? - ANSWER✔Non-property
losses. Legal liability to others. 3rd Party
Risk - ANSWER✔uncertainty of financial loss
Pure Risk - ANSWER✔Chance of Loss
Speculative Risk - ANSWER✔Chance of Loss or Gain (Gamble)
Insurance (covers which type of risk?) - ANSWER✔Pure Risk Only
How does the law of large numbers apply in insurance? - ANSWER✔Actuaries
use the law of large numbers to estimate claims
, What is the law of large numbers? - ANSWER✔as the number of a similar loss
exposure increases, the more accurate claims can be predicted from the group.
What is a peril? - ANSWER✔cause of loss
What is a hazard? - ANSWER✔things that increase the chance of a peril
happening
Three types of hazards - ANSWER✔Physical: visible characteristic (dead tree)
Moral: Dishonest tendencies
Morale: Attitude of carelessness
Proximate Cause - ANSWER✔First cause in an unbroken chain of events
A condition or situation that presents a possibility of loss is a (an): -
ANSWER✔exposure
The purpose of insurance is to: - ANSWER✔transfer risk
Which hazard can be described as a careless attitude or general indifference on the
part of the insured toward the occurrence of loss? - ANSWER✔morale
Which risk is insurable? - ANSWER✔pure
With regard to insurance, risk can be defined as: - ANSWER✔uncertainty
regarding loss
,Treating risk by purchasing insurance is an example of what type of risk
management? - ANSWER✔transfer
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? - ANSWER✔avoidance
Dishonesty on the part of an insured is an example of what? - ANSWER✔a moral
hazard
What is an example of reduction as a method of handling risk? -
ANSWER✔Installing a burglar alarm
Driving too fast and not wearing a seat belt are examples of? - ANSWER✔morale
hazard
The risk that involves the chance of both loss and gain is? -
ANSWER✔speculative risk
Self-insurance is an example of what kind of risk treatment? -
ANSWER✔Retention
If John's father transfers ownership of a house to John, can John buy insurance? -
ANSWER✔Yes because he has an insurable interest.
Fire would be an example of a what? - ANSWER✔peril
, What is the actual cause of a loss? - ANSWER✔peril
What kind of risk is the stock market? - ANSWER✔speculative risk
A ____ is a condition that increases the chance of loss. - ANSWER✔hazard
Faulty wiring causes a fire that destroys a building. The faulty wiring is
considered to be a(n): - ANSWER✔hazard
A chance, possibility, or uncertainty of loss is known as? - ANSWER✔risk
Examples of perils are_____? - ANSWER✔fire, wind and lightning
Indemnity insurance will _____? - ANSWER✔restores insured to pre-loss
condition
The types of hazards are_____? - ANSWER✔moral, morale, and physical
________ is when people with a greater than average exposure to loss to purchase
insurance. - ANSWER✔Adverse selection
Methods of handling risk are avoidance, reduction, retention, transfer and _____. -
ANSWER✔Sharing (ARRTS)
Elements of insurable risk are calculable, affordable, non-catastrophic,
homogenous, accidental and _____. - ANSWER✔Measurable (CANHAM)
STUDY GUIDE 2026/2027 COMPLETE
QUESTIONS WITH VERIFIED CORRECT
ANSWERS || ALREADY GRADED A+
<LATEST VERSION>
Property vs Casualty: What is considered property? - ANSWER✔Structure &
Personal Property
Property vs Casualty: What is considered casualty? - ANSWER✔Non-property
losses. Legal liability to others. 3rd Party
Risk - ANSWER✔uncertainty of financial loss
Pure Risk - ANSWER✔Chance of Loss
Speculative Risk - ANSWER✔Chance of Loss or Gain (Gamble)
Insurance (covers which type of risk?) - ANSWER✔Pure Risk Only
How does the law of large numbers apply in insurance? - ANSWER✔Actuaries
use the law of large numbers to estimate claims
, What is the law of large numbers? - ANSWER✔as the number of a similar loss
exposure increases, the more accurate claims can be predicted from the group.
What is a peril? - ANSWER✔cause of loss
What is a hazard? - ANSWER✔things that increase the chance of a peril
happening
Three types of hazards - ANSWER✔Physical: visible characteristic (dead tree)
Moral: Dishonest tendencies
Morale: Attitude of carelessness
Proximate Cause - ANSWER✔First cause in an unbroken chain of events
A condition or situation that presents a possibility of loss is a (an): -
ANSWER✔exposure
The purpose of insurance is to: - ANSWER✔transfer risk
Which hazard can be described as a careless attitude or general indifference on the
part of the insured toward the occurrence of loss? - ANSWER✔morale
Which risk is insurable? - ANSWER✔pure
With regard to insurance, risk can be defined as: - ANSWER✔uncertainty
regarding loss
,Treating risk by purchasing insurance is an example of what type of risk
management? - ANSWER✔transfer
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? - ANSWER✔avoidance
Dishonesty on the part of an insured is an example of what? - ANSWER✔a moral
hazard
What is an example of reduction as a method of handling risk? -
ANSWER✔Installing a burglar alarm
Driving too fast and not wearing a seat belt are examples of? - ANSWER✔morale
hazard
The risk that involves the chance of both loss and gain is? -
ANSWER✔speculative risk
Self-insurance is an example of what kind of risk treatment? -
ANSWER✔Retention
If John's father transfers ownership of a house to John, can John buy insurance? -
ANSWER✔Yes because he has an insurable interest.
Fire would be an example of a what? - ANSWER✔peril
, What is the actual cause of a loss? - ANSWER✔peril
What kind of risk is the stock market? - ANSWER✔speculative risk
A ____ is a condition that increases the chance of loss. - ANSWER✔hazard
Faulty wiring causes a fire that destroys a building. The faulty wiring is
considered to be a(n): - ANSWER✔hazard
A chance, possibility, or uncertainty of loss is known as? - ANSWER✔risk
Examples of perils are_____? - ANSWER✔fire, wind and lightning
Indemnity insurance will _____? - ANSWER✔restores insured to pre-loss
condition
The types of hazards are_____? - ANSWER✔moral, morale, and physical
________ is when people with a greater than average exposure to loss to purchase
insurance. - ANSWER✔Adverse selection
Methods of handling risk are avoidance, reduction, retention, transfer and _____. -
ANSWER✔Sharing (ARRTS)
Elements of insurable risk are calculable, affordable, non-catastrophic,
homogenous, accidental and _____. - ANSWER✔Measurable (CANHAM)
