Texas General Lines Property & Casualty
Insurance Examination Questions And
Correct Answers (Verified Answers) Plus
Rationales 2026 Q&A | Instant Download
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1. Which of the following best describes the principle of indemnity?
A) The insured is entitled to make a profit from a loss.
B) The insured should be restored to the same financial position as before the loss,
without profit.
C) The insurer must pay the full policy limits regardless of the loss amount.
D) The insured is compensated for emotional distress only.
Answer: B) The insured should be restored to the same financial position as
before the loss, without profit.
,rational,: Indemnity ensures that insurance pays only the actual amount of the
loss, preventing the insured from profiting from a covered event.
2. An insured owns a rental property but does not live there. Which dwelling
policy form would be appropriate?
A) DP-1
B) DP-2
,C) DP-3
D) Any of the above, depending on coverage needs
Answer: D) Any of the above, depending on coverage needs
,rational,: Dwelling policies (DP-1 basic, DP-2 broad, DP-3 special) are designed
for residential property not owner-occupied, such as rental properties. The choice
depends on desired coverage breadth.
3. In a personal auto policy, which coverage pays for damage to the insured's
own car caused by a collision with another vehicle?
A) Part A – Liability
B) Part B – Medical Payments
C) Part C – Uninsured Motorist
D) Part D – Collision
Answer: D) Part D – Collision
,rational,: In the PAP, Collision coverage (Part D) pays for damage to the insured
auto caused by collision with another vehicle or object, regardless of fault.
4. Under the Texas Homeowners Policy (HO-B), what type of coverage applies
to the dwelling and other structures?
A) Basic named perils only
B) Broad named perils
C) Open perils (all-risk)
D) There is no HO-B in Texas
,Answer: B) Broad named perils
,rational,: Texas uses unique forms. HO-B provides broad named perils coverage
for dwelling and other structures. HO-A is basic named perils, HO-C is open perils.
5. The Texas Windstorm Insurance Association (TWIA) provides:
A) Flood insurance for coastal properties
B) Wind and hail coverage for properties in designated catastrophe areas unable to
find coverage in the voluntary market
C) General liability coverage for contractors
D) Workers’ compensation for wind farm employees
Answer: B) Wind and hail coverage for properties in designated catastrophe
areas unable to find coverage in the voluntary market
,rational,: TWIA is the state’s insurer of last resort for wind and hail in certain
coastal counties. Flood insurance is provided by NFIP or private market.
6. Which of the following is NOT a requirement for a legally binding insurance
contract?
A) Offer and acceptance
B) Consideration
C) Written form
D) Competent parties
Answer: C) Written form
,rational,: While most insurance contracts are written, an oral contract can be
binding if all other elements (offer, acceptance, consideration, legal purpose,
, competent parties) are present. However, state laws typically require certain
policies to be written.
7. The Texas personal auto policy minimum liability limits are:
A) 20/40/15
B) 25/50/25
C) 30/60/25
D) 50/100/50
Answer: C) 30/60/25
,rational,: Texas requires minimum bodily injury limits of $30,000 per person,
$60,000 per accident, and $25,000 for property damage (30/60/25).
**8. An insured has a Homeowners policy with a $200,000 dwelling limit and an
80% coinsurance clause. The replacement cost of the home is $300,000. After a
$50,000 covered loss, how much will the insurer pay?**
A) $50,000
B) $41,667
C) $33,333
D) $0, because the insured did not meet coinsurance
*Answer: B) $41,667**
*,rational,: Coinsurance: (Amount Carried / Amount Required) × Loss. Required =
80% × $300,000 = $240,000. Carried = $200,000. (200,000/240,000) = 0.8333.
Payment = 0.8333 × $50,000 = $41,667 (minus deductible).
Insurance Examination Questions And
Correct Answers (Verified Answers) Plus
Rationales 2026 Q&A | Instant Download
1. Which of the following best describes the principle of indemnity?
A) The insured is entitled to make a profit from a loss.
B) The insured should be restored to the same financial position as before the loss,
without profit.
C) The insurer must pay the full policy limits regardless of the loss amount.
D) The insured is compensated for emotional distress only.
Answer: B) The insured should be restored to the same financial position as
before the loss, without profit.
,rational,: Indemnity ensures that insurance pays only the actual amount of the
loss, preventing the insured from profiting from a covered event.
2. An insured owns a rental property but does not live there. Which dwelling
policy form would be appropriate?
A) DP-1
B) DP-2
,C) DP-3
D) Any of the above, depending on coverage needs
Answer: D) Any of the above, depending on coverage needs
,rational,: Dwelling policies (DP-1 basic, DP-2 broad, DP-3 special) are designed
for residential property not owner-occupied, such as rental properties. The choice
depends on desired coverage breadth.
3. In a personal auto policy, which coverage pays for damage to the insured's
own car caused by a collision with another vehicle?
A) Part A – Liability
B) Part B – Medical Payments
C) Part C – Uninsured Motorist
D) Part D – Collision
Answer: D) Part D – Collision
,rational,: In the PAP, Collision coverage (Part D) pays for damage to the insured
auto caused by collision with another vehicle or object, regardless of fault.
4. Under the Texas Homeowners Policy (HO-B), what type of coverage applies
to the dwelling and other structures?
A) Basic named perils only
B) Broad named perils
C) Open perils (all-risk)
D) There is no HO-B in Texas
,Answer: B) Broad named perils
,rational,: Texas uses unique forms. HO-B provides broad named perils coverage
for dwelling and other structures. HO-A is basic named perils, HO-C is open perils.
5. The Texas Windstorm Insurance Association (TWIA) provides:
A) Flood insurance for coastal properties
B) Wind and hail coverage for properties in designated catastrophe areas unable to
find coverage in the voluntary market
C) General liability coverage for contractors
D) Workers’ compensation for wind farm employees
Answer: B) Wind and hail coverage for properties in designated catastrophe
areas unable to find coverage in the voluntary market
,rational,: TWIA is the state’s insurer of last resort for wind and hail in certain
coastal counties. Flood insurance is provided by NFIP or private market.
6. Which of the following is NOT a requirement for a legally binding insurance
contract?
A) Offer and acceptance
B) Consideration
C) Written form
D) Competent parties
Answer: C) Written form
,rational,: While most insurance contracts are written, an oral contract can be
binding if all other elements (offer, acceptance, consideration, legal purpose,
, competent parties) are present. However, state laws typically require certain
policies to be written.
7. The Texas personal auto policy minimum liability limits are:
A) 20/40/15
B) 25/50/25
C) 30/60/25
D) 50/100/50
Answer: C) 30/60/25
,rational,: Texas requires minimum bodily injury limits of $30,000 per person,
$60,000 per accident, and $25,000 for property damage (30/60/25).
**8. An insured has a Homeowners policy with a $200,000 dwelling limit and an
80% coinsurance clause. The replacement cost of the home is $300,000. After a
$50,000 covered loss, how much will the insurer pay?**
A) $50,000
B) $41,667
C) $33,333
D) $0, because the insured did not meet coinsurance
*Answer: B) $41,667**
*,rational,: Coinsurance: (Amount Carried / Amount Required) × Loss. Required =
80% × $300,000 = $240,000. Carried = $200,000. (200,000/240,000) = 0.8333.
Payment = 0.8333 × $50,000 = $41,667 (minus deductible).
