TEXAS PROPERTY & CASUALTY INSURANCE
EXAM WITH 420+ REAL QUESTIONS AND
VERIFIED CORRECT ANSWERS ALREADY
GRADED A+ |GUARANTEED SUCCESS
A condition or situation that presents a possibility of loss is a (an): - CORRECT
ANSWER ✔✔- exposure
The purpose of insurance is to: - CORRECT 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? - CORRECT ANSWER ✔✔-
morale
Which risk is insurable? - CORRECT ANSWER ✔✔- pure
With regard to insurance, risk can be defined as: - CORRECT ANSWER ✔✔-
uncertainty regarding loss
Treating risk by purchasing insurance is an example of what type of risk
management? - CORRECT 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? - CORRECT ANSWER ✔✔- avoidance
1|Page
,Dishonesty on the part of an insured is an example of what? - CORRECT
ANSWER ✔✔- a moral hazard
What is an example of reduction as a method of handling risk? - CORRECT
ANSWER ✔✔- Installing a burglar alarm
Driving too fast and not wearing a seat belt are examples of? - CORRECT
ANSWER ✔✔- morale hazard
The risk that involves the chance of both loss and gain is? - CORRECT ANSWER
✔✔- speculative risk
Self-insurance is an example of what kind of risk treatment? - CORRECT
ANSWER ✔✔- Retention
If John's father transfers ownership of a house to John, can John buy insurance? -
CORRECT ANSWER ✔✔- Yes because he has an insurable interest.
Fire would be an example of a what? - CORRECT ANSWER ✔✔- peril
What is the actual cause of a loss? - CORRECT ANSWER ✔✔- peril
What kind of risk is the stock market? - CORRECT ANSWER ✔✔- speculative
risk
A ____ is a condition that increases the chance of loss. - CORRECT ANSWER
✔✔- hazard
2|Page
,Faulty wiring causes a fire that destroys a building. The faulty wiring is considered
to be a(n): - CORRECT ANSWER ✔✔- hazard
A chance, possibility, or uncertainty of loss is known as? - CORRECT ANSWER
✔✔- risk
Examples of perils are_____? - CORRECT ANSWER ✔✔- fire, wind and
lightning
Indemnity insurance will _____? - CORRECT ANSWER ✔✔- restores insured to
pre-loss condition
The types of hazards are_____? - CORRECT ANSWER ✔✔- moral, morale, and
physical
________ is when people with a greater than average exposure to loss to purchase
insurance. - CORRECT ANSWER ✔✔- Adverse selection
Methods of handling risk are avoidance, reduction, retention, transfer and _____. -
CORRECT ANSWER ✔✔- Sharing (ARRTS)
Elements of insurable risk are calculable, affordable, non-catastrophic,
homogenous, accidental and _____. - CORRECT ANSWER ✔✔- Measurable
(CANHAM)
3|Page
, 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.
Ben bought an automobile four years ago for $15,000. Today it is worth $6,000.
According to the principle of indemnity, how much should Ben receive if the car is
totally demolished? - CORRECT ANSWER ✔✔- $6,000
Harry Arne and his cousin each own 50% of a $160,000 duplex. Suppose Harry
purchases $160,000 of insurance on the home. If it burns to the ground, how much
would Harry collect? - CORRECT ANSWER ✔✔- $80,000
Under a unilateral contract, which parties are legally bound to perform under the
contract? - CORRECT ANSWER ✔✔- Insurer only
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
The insuring agreement section of a policy describes the ____ you are insured
against. - CORRECT ANSWER ✔✔- perils
The elements of a valid contract are legal purpose, consideration, competent
parties, and _____. - CORRECT ANSWER ✔✔- Offer and acceptance
Both parties rely on statements made to each other when writing a contract. This is
known as? - CORRECT ANSWER ✔✔- Utmost good faith
4|Page
EXAM WITH 420+ REAL QUESTIONS AND
VERIFIED CORRECT ANSWERS ALREADY
GRADED A+ |GUARANTEED SUCCESS
A condition or situation that presents a possibility of loss is a (an): - CORRECT
ANSWER ✔✔- exposure
The purpose of insurance is to: - CORRECT 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? - CORRECT ANSWER ✔✔-
morale
Which risk is insurable? - CORRECT ANSWER ✔✔- pure
With regard to insurance, risk can be defined as: - CORRECT ANSWER ✔✔-
uncertainty regarding loss
Treating risk by purchasing insurance is an example of what type of risk
management? - CORRECT 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? - CORRECT ANSWER ✔✔- avoidance
1|Page
,Dishonesty on the part of an insured is an example of what? - CORRECT
ANSWER ✔✔- a moral hazard
What is an example of reduction as a method of handling risk? - CORRECT
ANSWER ✔✔- Installing a burglar alarm
Driving too fast and not wearing a seat belt are examples of? - CORRECT
ANSWER ✔✔- morale hazard
The risk that involves the chance of both loss and gain is? - CORRECT ANSWER
✔✔- speculative risk
Self-insurance is an example of what kind of risk treatment? - CORRECT
ANSWER ✔✔- Retention
If John's father transfers ownership of a house to John, can John buy insurance? -
CORRECT ANSWER ✔✔- Yes because he has an insurable interest.
Fire would be an example of a what? - CORRECT ANSWER ✔✔- peril
What is the actual cause of a loss? - CORRECT ANSWER ✔✔- peril
What kind of risk is the stock market? - CORRECT ANSWER ✔✔- speculative
risk
A ____ is a condition that increases the chance of loss. - CORRECT ANSWER
✔✔- hazard
2|Page
,Faulty wiring causes a fire that destroys a building. The faulty wiring is considered
to be a(n): - CORRECT ANSWER ✔✔- hazard
A chance, possibility, or uncertainty of loss is known as? - CORRECT ANSWER
✔✔- risk
Examples of perils are_____? - CORRECT ANSWER ✔✔- fire, wind and
lightning
Indemnity insurance will _____? - CORRECT ANSWER ✔✔- restores insured to
pre-loss condition
The types of hazards are_____? - CORRECT ANSWER ✔✔- moral, morale, and
physical
________ is when people with a greater than average exposure to loss to purchase
insurance. - CORRECT ANSWER ✔✔- Adverse selection
Methods of handling risk are avoidance, reduction, retention, transfer and _____. -
CORRECT ANSWER ✔✔- Sharing (ARRTS)
Elements of insurable risk are calculable, affordable, non-catastrophic,
homogenous, accidental and _____. - CORRECT ANSWER ✔✔- Measurable
(CANHAM)
3|Page
, 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.
Ben bought an automobile four years ago for $15,000. Today it is worth $6,000.
According to the principle of indemnity, how much should Ben receive if the car is
totally demolished? - CORRECT ANSWER ✔✔- $6,000
Harry Arne and his cousin each own 50% of a $160,000 duplex. Suppose Harry
purchases $160,000 of insurance on the home. If it burns to the ground, how much
would Harry collect? - CORRECT ANSWER ✔✔- $80,000
Under a unilateral contract, which parties are legally bound to perform under the
contract? - CORRECT ANSWER ✔✔- Insurer only
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
The insuring agreement section of a policy describes the ____ you are insured
against. - CORRECT ANSWER ✔✔- perils
The elements of a valid contract are legal purpose, consideration, competent
parties, and _____. - CORRECT ANSWER ✔✔- Offer and acceptance
Both parties rely on statements made to each other when writing a contract. This is
known as? - CORRECT ANSWER ✔✔- Utmost good faith
4|Page
