TEXAS PROPERTY & CASUALTY INSURANCE EXAM | NEW ACTUAL EXAM WITH 100% VERIFIED QUESTIONS AND CORRECT SOLUTIONS | LATEST UPDATE 2026/2027 | GUARANTEED VALUE PACK | GRADED A+.

TEXAS PROPERTY & CASUALTY INSURANCE EXAM | NEW ACTUAL EXAM WITH 100% VERIFIED QUESTIONS AND CORRECT SOLUTIONS | LATEST UPDATE 2026/2027 | GUARANTEED VALUE PACK | GRADED A+. A condition or situation that presents a possibility of loss is a (an): - correct answer - exposure 2. The purpose of insurance is to: - correct answer - transfer risk 3. Which risk is insurable? - correct answer - pure 4. Which hazard can be described as a careless attitude or general indifference on the part of the insured toward the occurrence of loss? - correct answer - morale 5. What is an example of reduction as a method of handling risk? - correct answer - Installing a burglar alarm P a g e | 2 6. Driving too fast and not wearing a seat belt are examples of? - correct answer - morale hazard 7. The risk that involves the chance of both loss and gain is? - correct answer - speculative risk 8. Self-insurance is an example of what kind of risk treatment? - correct answer - Retention 9. If John's father transfers ownership of a house to John, can John buy insurance? - correct answer - Yes because he has an insurable interest. 10. With regard to insurance, risk can be defined as: - correct answer - uncertainty regarding loss 11. Treating risk by purchasing insurance is an example of what type of risk management? - correct answer - transfer P a g e | 3 12. 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? - correct answer - avoidance 13. Dishonesty on the part of an insured is an example of what? - correct answer - a moral hazard 14. What kind of risk is the stock market? - correct answer - speculative risk 15. A ____ is a condition that increases the chance of loss. - correct answer - hazard 16. Faulty wiring causes a fire that destroys a building. The faulty wiring is considered to be a(n): - correct answer - hazard 17. ________ is when people with a greater than average exposure to loss to purchase insurance. - correct answer - Adverse selection P a g e | 4 18. Methods of handling risk are avoidance, reduction, retention, transfer and _____. - correct answer - Sharing (ARRTS) 19. Elements of insurable risk are calculable, affordable, noncatastrophic, homogenous, accidental and _____. - correct answer - Measurable (CANHAM) 20. Myron, who is 16, signs a contract to lease a car. This would probably not be considered a valid contract under the law because _____. - correct answer - He is not competent at 16. 21. Under a unilateral contract, which parties are legally bound to perform under the contract? - correct answer - Insurer only 22. Which part of an insurance policy describes the responsibilities and obligations of both the insurance company and the insured under the policy? - correct answer - Conditions 23. The insuring agreement section of a policy describes the ____ you are insured against. - correct answer - perils P a g e | 5 24. The elements of a valid contract are legal purpose, consideration, competent parties, and _____. - correct answer - Offer and acceptance 25. Both parties rely on statements made to each other when writing a contract. This is known as? - correct answer - Utmost good faith 26. A chance, possibility, or uncertainty of loss is known as? - correct answer - risk 27. Examples of perils are_____? - correct answer - fire, wind and lightning 28. Indemnity insurance will _____? - correct answer - restores insured to preloss condition 29. The types of hazards are_____? - correct answer - moral, morale, and physical 30. Fire would be an example of a what? - correct answer - peril