Texas Property & Casualty License
UPDATED ACTUAL Exam Questions and
CORRECT Answers
Property vs Casualty: What is considered property? - CORRECT ANSWER -Structure &
Personal Property
Property vs Casualty: What is considered casualty? - CORRECT ANSWER -Non-property
losses. Legal liability to others. 3rd Party
Risk - CORRECT ANSWER -uncertainty of financial loss
Pure Risk - CORRECT ANSWER -Chance of Loss
Speculative Risk - CORRECT ANSWER -Chance of Loss or Gain (Gamble)
Insurance (covers which type of risk?) - CORRECT ANSWER -Pure Risk Only
How does the law of large numbers apply in insurance? - CORRECT ANSWER -
Actuaries use the law of large numbers to estimate claims
What is the law of large numbers? - CORRECT ANSWER -as the number of a similar loss
exposure increases, the more accurate claims can be predicted from the group.
What is a peril? - CORRECT ANSWER -cause of loss
What is a hazard? - CORRECT ANSWER -things that increase the chance of a peril
happening
, Three types of hazards - CORRECT ANSWER -Physical: visible characteristic (dead tree)
Moral: Dishonest tendencies
Morale: Attitude of carelessness
Proximate Cause - CORRECT ANSWER -First cause in an unbroken chain of events
Elements of a legal contract (CALC) - CORRECT ANSWER -C - Competent parties
(18/Right frame of mind)
A - Agreement (Both parties agree)
L - Legal Purpose (The risk is LEGAL)
C - Consideration (It has to be fair)
What is representation? - CORRECT ANSWER -Information believed to be true.
What is misrepresentation? - CORRECT ANSWER -Information that is not true. False
information.
What is material misrepresentation? - CORRECT ANSWER -Information that is not true
but would have caused the insurer not to issue the policy. (4 prev spd tix)
What is fraud? - CORRECT ANSWER -An all out effort by one party to deceive and cheat
the other.
What is warranty? - CORRECT ANSWER -Guarantee that an insured will or will not do
something
What are the four major parts to an insurance policy structure? (DICE) - CORRECT
ANSWER -D - Declarations Page (First Page)
UPDATED ACTUAL Exam Questions and
CORRECT Answers
Property vs Casualty: What is considered property? - CORRECT ANSWER -Structure &
Personal Property
Property vs Casualty: What is considered casualty? - CORRECT ANSWER -Non-property
losses. Legal liability to others. 3rd Party
Risk - CORRECT ANSWER -uncertainty of financial loss
Pure Risk - CORRECT ANSWER -Chance of Loss
Speculative Risk - CORRECT ANSWER -Chance of Loss or Gain (Gamble)
Insurance (covers which type of risk?) - CORRECT ANSWER -Pure Risk Only
How does the law of large numbers apply in insurance? - CORRECT ANSWER -
Actuaries use the law of large numbers to estimate claims
What is the law of large numbers? - CORRECT ANSWER -as the number of a similar loss
exposure increases, the more accurate claims can be predicted from the group.
What is a peril? - CORRECT ANSWER -cause of loss
What is a hazard? - CORRECT ANSWER -things that increase the chance of a peril
happening
, Three types of hazards - CORRECT ANSWER -Physical: visible characteristic (dead tree)
Moral: Dishonest tendencies
Morale: Attitude of carelessness
Proximate Cause - CORRECT ANSWER -First cause in an unbroken chain of events
Elements of a legal contract (CALC) - CORRECT ANSWER -C - Competent parties
(18/Right frame of mind)
A - Agreement (Both parties agree)
L - Legal Purpose (The risk is LEGAL)
C - Consideration (It has to be fair)
What is representation? - CORRECT ANSWER -Information believed to be true.
What is misrepresentation? - CORRECT ANSWER -Information that is not true. False
information.
What is material misrepresentation? - CORRECT ANSWER -Information that is not true
but would have caused the insurer not to issue the policy. (4 prev spd tix)
What is fraud? - CORRECT ANSWER -An all out effort by one party to deceive and cheat
the other.
What is warranty? - CORRECT ANSWER -Guarantee that an insured will or will not do
something
What are the four major parts to an insurance policy structure? (DICE) - CORRECT
ANSWER -D - Declarations Page (First Page)
