Texas Property and Casualty Insurance
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1. What type of insurance provides coverage for physical damage to a
vehicle and liability for bodily injury or property damage caused by an
accident?
A. Health Insurance
B. Life Insurance
C. Auto Insurance
D. Homeowners Insurance
Rationale: Auto insurance covers both physical damage to a vehicle and
liability for injuries or damages caused in an accident.
2. Which of the following is considered a peril in property insurance?
A. Theft
B. Fire
C. Flood
D. All of the above
Rationale: A peril is any event that can cause a loss; fire, theft, and flood are
all perils in property insurance.
3. Which insurance policy type covers damage to a home and personal
property?
A. Auto Insurance
, B. Homeowners Insurance
C. Health Insurance
D. Life Insurance
Rationale: Homeowners insurance provides coverage for both the dwelling
and personal belongings inside the home.
4. In property insurance, what is the purpose of a deductible?
A. To increase the premium
B. To reduce coverage
C. To share risk between insurer and insured
D. To eliminate liability
Rationale: Deductibles require the insured to pay part of the loss, reducing
the insurer’s risk and often lowering premiums.
5. What type of liability coverage protects a business from claims arising
from injuries to third parties?
A. Auto Insurance
B. General Liability Insurance
C. Workers’ Compensation
D. Professional Liability Insurance
Rationale: General liability insurance protects businesses from claims related
to bodily injury or property damage to third parties.
6. Which of the following is an example of a named-peril policy?
A. All-risk policy
B. Fire and theft policy
C. Comprehensive auto policy
D. Umbrella policy
Rationale: Named-peril policies cover only the specific perils listed, such as
fire and theft.
7. Which type of policy automatically renews at the end of the term unless
canceled?
A. Term Life
B. Continuous Policy
, C. Endowment
D. Universal Life
Rationale: Continuous policies automatically renew, providing uninterrupted
coverage.
8. Which of the following is NOT covered under standard homeowners
insurance?
A. Fire damage
B. Theft
C. Flood damage
D. Windstorm damage
Rationale: Standard homeowners policies generally exclude flood damage,
which requires separate flood insurance.
9. The “replacement cost” in property insurance refers to:
A. Actual cash value minus depreciation
B. The cost to repair or replace property without deduction for
depreciation
C. Market value of the property
D. Salvage value
Rationale: Replacement cost coverage reimburses the insured for the full cost
of repairing or replacing damaged property without depreciation.
10.Which insurance term describes the amount the insurer will pay above
the policy limit of the underlying coverage?
A. Deductible
B. Coinsurance
C. Excess Insurance
D. Reinsurance
Rationale: Excess insurance provides additional coverage above the limits of
a primary policy.
11.In auto insurance, what does liability coverage protect against?
A. Damage to the insured vehicle
B. Theft of the vehicle
Exam With Actual Questions & Verified
Answers,Plus Rationales/Expert
Verified For Guaranteed Pass Graded
A+/2026 /Latest Update/Instant
Download Pdf
1. What type of insurance provides coverage for physical damage to a
vehicle and liability for bodily injury or property damage caused by an
accident?
A. Health Insurance
B. Life Insurance
C. Auto Insurance
D. Homeowners Insurance
Rationale: Auto insurance covers both physical damage to a vehicle and
liability for injuries or damages caused in an accident.
2. Which of the following is considered a peril in property insurance?
A. Theft
B. Fire
C. Flood
D. All of the above
Rationale: A peril is any event that can cause a loss; fire, theft, and flood are
all perils in property insurance.
3. Which insurance policy type covers damage to a home and personal
property?
A. Auto Insurance
, B. Homeowners Insurance
C. Health Insurance
D. Life Insurance
Rationale: Homeowners insurance provides coverage for both the dwelling
and personal belongings inside the home.
4. In property insurance, what is the purpose of a deductible?
A. To increase the premium
B. To reduce coverage
C. To share risk between insurer and insured
D. To eliminate liability
Rationale: Deductibles require the insured to pay part of the loss, reducing
the insurer’s risk and often lowering premiums.
5. What type of liability coverage protects a business from claims arising
from injuries to third parties?
A. Auto Insurance
B. General Liability Insurance
C. Workers’ Compensation
D. Professional Liability Insurance
Rationale: General liability insurance protects businesses from claims related
to bodily injury or property damage to third parties.
6. Which of the following is an example of a named-peril policy?
A. All-risk policy
B. Fire and theft policy
C. Comprehensive auto policy
D. Umbrella policy
Rationale: Named-peril policies cover only the specific perils listed, such as
fire and theft.
7. Which type of policy automatically renews at the end of the term unless
canceled?
A. Term Life
B. Continuous Policy
, C. Endowment
D. Universal Life
Rationale: Continuous policies automatically renew, providing uninterrupted
coverage.
8. Which of the following is NOT covered under standard homeowners
insurance?
A. Fire damage
B. Theft
C. Flood damage
D. Windstorm damage
Rationale: Standard homeowners policies generally exclude flood damage,
which requires separate flood insurance.
9. The “replacement cost” in property insurance refers to:
A. Actual cash value minus depreciation
B. The cost to repair or replace property without deduction for
depreciation
C. Market value of the property
D. Salvage value
Rationale: Replacement cost coverage reimburses the insured for the full cost
of repairing or replacing damaged property without depreciation.
10.Which insurance term describes the amount the insurer will pay above
the policy limit of the underlying coverage?
A. Deductible
B. Coinsurance
C. Excess Insurance
D. Reinsurance
Rationale: Excess insurance provides additional coverage above the limits of
a primary policy.
11.In auto insurance, what does liability coverage protect against?
A. Damage to the insured vehicle
B. Theft of the vehicle
