Texas Property and Casualty Licensing Exam
| Updated Questions with Complete Answers |
Verified & A+ Graded | 2026/2027 Edition
PDF
Introduction
This document provides the updated and fully verified questions and answers for the Texas
Property and Casualty Licensing Exam, in full compliance with the 2025/2026 Texas
Department of Insurance (TDI) standards. It covers all critical exam domains including
policy provisions, liability and property coverage, claims processing, underwriting, risk
assessment, coinsurance, deductibles, subrogation, ACV vs replacement cost, business
interruption, and ethical standards.
Each question is 100% accurate with a detailed rationale for the correct answer, and graded
A+, making this study guide an essential resource for candidates preparing for full licensure in
Texas property and casualty insurance.
This comprehensive 200-question practice exam is organized into 4 batches (1–50, 51–100,
101–150, 151–200) and designed to:
Reinforce understanding of key insurance concepts
Provide realistic exam preparation
Build confidence and mastery before the official test
Serve as a professional reference for ongoing insurance practice
Ideal for aspiring insurance agents, exam candidates, and licensed professionals seeking
thorough review and exam readiness.
1. What is the primary function of property insurance?
A. To provide health benefits
B. To safeguard against financial loss from property damage
C. To offer investment opportunities
D. To cover employee wages
Answer: B
Rationale: Property insurance protects policyholders from financial loss due to damage or
,destruction of property, such as from fire, theft, or natural disasters. It is a core principle
of Texas insurance law.
2. What is the minimum age requirement to apply for a Texas property and casualty
license?
A. 17
B. 18
C. 19
D. 21
Answer: B
Rationale: Applicants must be at least 18 years old to demonstrate legal responsibility and
maturity for handling insurance matters.
3. Which coverage is a standard feature of a homeowners insurance policy?
A. Personal injury protection
B. Personal property coverage
C. Business income coverage
D. Workers’ compensation
Answer: B
Rationale: Homeowners insurance typically covers personal belongings, including
furniture, electronics, and clothing, against loss or damage.
4. What does liability insurance protect against?
A. Fire damage
B. Legal responsibility for bodily injury or property damage to others
C. Employee injuries
D. Investment losses
,Answer: B
Rationale: Liability insurance provides financial protection if the policyholder is legally
responsible for harm to others, including legal defense costs.
5. Which of the following is an example of a peril in property insurance?
A. Theft
B. Fire
C. Windstorm
D. All of the above
Answer: D
Rationale: A peril is a cause of loss; property insurance covers losses due to fire, theft,
windstorm, and other insured events.
6. What is the purpose of a deductible in an insurance policy?
A. To increase premiums
B. To require the insured to share part of the loss
C. To reduce coverage
D. To prevent claims
Answer: B
Rationale: Deductibles reduce moral hazard by making the policyholder responsible for a
portion of each loss.
7. In property insurance, replacement cost coverage means:
A. The policy pays the current market value
B. The policy pays the cost to repair or replace without depreciation
C. The policy pays only for cash settlement
D. The policy excludes major perils
, Answer: B
Rationale: Replacement cost coverage allows the insured to replace damaged property
with like-kind materials, regardless of depreciation.
8. Which of the following is considered insurable interest?
A. Your neighbor’s home
B. Your own home
C. Your coworker’s car
D. A celebrity’s property
Answer: B
Rationale: Insurable interest exists when the policyholder would suffer financial loss if the
property is damaged or destroyed.
9. What is the main purpose of underwriting in property and casualty insurance?
A. To sell policies
B. To evaluate risk and determine eligibility and pricing
C. To advertise products
D. To handle claims
Answer: B
Rationale: Underwriting assesses the likelihood and cost of loss to set premiums
appropriately.
10. Which of the following is a common homeowners policy exclusion?
A. Fire damage
B. Theft
C. Flood damage
D. Windstorm
| Updated Questions with Complete Answers |
Verified & A+ Graded | 2026/2027 Edition
Introduction
This document provides the updated and fully verified questions and answers for the Texas
Property and Casualty Licensing Exam, in full compliance with the 2025/2026 Texas
Department of Insurance (TDI) standards. It covers all critical exam domains including
policy provisions, liability and property coverage, claims processing, underwriting, risk
assessment, coinsurance, deductibles, subrogation, ACV vs replacement cost, business
interruption, and ethical standards.
Each question is 100% accurate with a detailed rationale for the correct answer, and graded
A+, making this study guide an essential resource for candidates preparing for full licensure in
Texas property and casualty insurance.
This comprehensive 200-question practice exam is organized into 4 batches (1–50, 51–100,
101–150, 151–200) and designed to:
Reinforce understanding of key insurance concepts
Provide realistic exam preparation
Build confidence and mastery before the official test
Serve as a professional reference for ongoing insurance practice
Ideal for aspiring insurance agents, exam candidates, and licensed professionals seeking
thorough review and exam readiness.
1. What is the primary function of property insurance?
A. To provide health benefits
B. To safeguard against financial loss from property damage
C. To offer investment opportunities
D. To cover employee wages
Answer: B
Rationale: Property insurance protects policyholders from financial loss due to damage or
,destruction of property, such as from fire, theft, or natural disasters. It is a core principle
of Texas insurance law.
2. What is the minimum age requirement to apply for a Texas property and casualty
license?
A. 17
B. 18
C. 19
D. 21
Answer: B
Rationale: Applicants must be at least 18 years old to demonstrate legal responsibility and
maturity for handling insurance matters.
3. Which coverage is a standard feature of a homeowners insurance policy?
A. Personal injury protection
B. Personal property coverage
C. Business income coverage
D. Workers’ compensation
Answer: B
Rationale: Homeowners insurance typically covers personal belongings, including
furniture, electronics, and clothing, against loss or damage.
4. What does liability insurance protect against?
A. Fire damage
B. Legal responsibility for bodily injury or property damage to others
C. Employee injuries
D. Investment losses
,Answer: B
Rationale: Liability insurance provides financial protection if the policyholder is legally
responsible for harm to others, including legal defense costs.
5. Which of the following is an example of a peril in property insurance?
A. Theft
B. Fire
C. Windstorm
D. All of the above
Answer: D
Rationale: A peril is a cause of loss; property insurance covers losses due to fire, theft,
windstorm, and other insured events.
6. What is the purpose of a deductible in an insurance policy?
A. To increase premiums
B. To require the insured to share part of the loss
C. To reduce coverage
D. To prevent claims
Answer: B
Rationale: Deductibles reduce moral hazard by making the policyholder responsible for a
portion of each loss.
7. In property insurance, replacement cost coverage means:
A. The policy pays the current market value
B. The policy pays the cost to repair or replace without depreciation
C. The policy pays only for cash settlement
D. The policy excludes major perils
, Answer: B
Rationale: Replacement cost coverage allows the insured to replace damaged property
with like-kind materials, regardless of depreciation.
8. Which of the following is considered insurable interest?
A. Your neighbor’s home
B. Your own home
C. Your coworker’s car
D. A celebrity’s property
Answer: B
Rationale: Insurable interest exists when the policyholder would suffer financial loss if the
property is damaged or destroyed.
9. What is the main purpose of underwriting in property and casualty insurance?
A. To sell policies
B. To evaluate risk and determine eligibility and pricing
C. To advertise products
D. To handle claims
Answer: B
Rationale: Underwriting assesses the likelihood and cost of loss to set premiums
appropriately.
10. Which of the following is a common homeowners policy exclusion?
A. Fire damage
B. Theft
C. Flood damage
D. Windstorm
