Texas Property & Casualty Insurance
Questions and Answers | Latest
Version | 2025/2026 | Correct & Verified
What is the main purpose of property insurance?
✔✔ To protect against financial loss from damage to or destruction of property.
What does casualty insurance primarily cover?
✔✔ Legal liability for injuries or damage caused to others.
What is an insurable interest?
✔✔ A financial or legal stake in the preservation of property or life.
When must an insurable interest exist for property insurance to be valid?
✔✔ At the time of loss.
What does the principle of indemnity mean?
✔✔ The insured should not profit from a loss.
What is a deductible?
✔✔ The amount the insured must pay before insurance benefits apply.
What does replacement cost coverage pay?
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,✔✔ The cost to replace damaged property without deducting depreciation.
What does actual cash value coverage pay?
✔✔ Replacement cost minus depreciation.
What is a peril in insurance?
✔✔ A cause of loss such as fire or theft.
What is a hazard?
✔✔ A condition that increases the chance or severity of loss.
What is a named-peril policy?
✔✔ A policy that covers only listed causes of loss.
What is an open-peril policy?
✔✔ A policy that covers all losses unless excluded.
What is a policy limit?
✔✔ The maximum amount an insurer will pay for a covered loss.
What is subrogation?
✔✔ The insurer’s right to recover from a responsible third party.
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,What is proximate cause?
✔✔ The dominant cause that sets a loss in motion.
What is a binder?
✔✔ Temporary insurance coverage before a policy is issued.
What is underwriting?
✔✔ The process of evaluating risk to set premium and coverage terms.
What does liability coverage protect against?
✔✔ Claims for bodily injury or property damage to others.
What is a declaration page?
✔✔ The summary of key policy details.
What is an endorsement?
✔✔ A written change to an insurance policy.
What is reinsurance?
✔✔ Insurance purchased by insurers to reduce risk.
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, What is a premium?
✔✔ The price paid for insurance coverage.
What is a policy period?
✔✔ The length of time coverage is in effect.
What is an exclusion?
✔✔ A loss or condition not covered by a policy.
What is coinsurance?
✔✔ A requirement to insure property to a certain percentage of value.
What is a loss settlement provision?
✔✔ A clause explaining how claims are paid.
What is personal property coverage?
✔✔ Insurance for belongings inside a home.
What is dwelling coverage?
✔✔ Insurance for the structure of a home.
What is additional living expense coverage?
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Questions and Answers | Latest
Version | 2025/2026 | Correct & Verified
What is the main purpose of property insurance?
✔✔ To protect against financial loss from damage to or destruction of property.
What does casualty insurance primarily cover?
✔✔ Legal liability for injuries or damage caused to others.
What is an insurable interest?
✔✔ A financial or legal stake in the preservation of property or life.
When must an insurable interest exist for property insurance to be valid?
✔✔ At the time of loss.
What does the principle of indemnity mean?
✔✔ The insured should not profit from a loss.
What is a deductible?
✔✔ The amount the insured must pay before insurance benefits apply.
What does replacement cost coverage pay?
1
,✔✔ The cost to replace damaged property without deducting depreciation.
What does actual cash value coverage pay?
✔✔ Replacement cost minus depreciation.
What is a peril in insurance?
✔✔ A cause of loss such as fire or theft.
What is a hazard?
✔✔ A condition that increases the chance or severity of loss.
What is a named-peril policy?
✔✔ A policy that covers only listed causes of loss.
What is an open-peril policy?
✔✔ A policy that covers all losses unless excluded.
What is a policy limit?
✔✔ The maximum amount an insurer will pay for a covered loss.
What is subrogation?
✔✔ The insurer’s right to recover from a responsible third party.
2
,What is proximate cause?
✔✔ The dominant cause that sets a loss in motion.
What is a binder?
✔✔ Temporary insurance coverage before a policy is issued.
What is underwriting?
✔✔ The process of evaluating risk to set premium and coverage terms.
What does liability coverage protect against?
✔✔ Claims for bodily injury or property damage to others.
What is a declaration page?
✔✔ The summary of key policy details.
What is an endorsement?
✔✔ A written change to an insurance policy.
What is reinsurance?
✔✔ Insurance purchased by insurers to reduce risk.
3
, What is a premium?
✔✔ The price paid for insurance coverage.
What is a policy period?
✔✔ The length of time coverage is in effect.
What is an exclusion?
✔✔ A loss or condition not covered by a policy.
What is coinsurance?
✔✔ A requirement to insure property to a certain percentage of value.
What is a loss settlement provision?
✔✔ A clause explaining how claims are paid.
What is personal property coverage?
✔✔ Insurance for belongings inside a home.
What is dwelling coverage?
✔✔ Insurance for the structure of a home.
What is additional living expense coverage?
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