- | Page
TEXAS PROPERTY AND CASUALTY EXAM AND
PRACTICE QUESTIONS NEWEST ACTUAL
EXAM MOST TESTED QUESTIO NS AND
CORRECT DETAILED ANSWERS |ALREADY
GRADED A+
What is Risk?
Correct answer: Risk is the uncertainty of loss
What is Insurance?
Correct answer: Insurance is a transfer of risk from the insured
to the insurer
What is Pure risk?
Correct answer: Pure risk means there is no chance of a loss or a
gain. It is not insurable
What is Speculative risk?
Correct answer: Speculative risk means there is a chance of a
loss or a gain. It is uninsurable
What is a Hazard?
Correct answer: A hazard is something that increases the risk
- | Page
What is Indemnity?
Correct answer: The principle of indemnity governs property
and casualty policies. It states that the purpose of the policy is to restore the insured financially to where they were prior to the loss
What is Insurable Interest?
Correct answer: Insurable interest must exist on a casualty
policy at the time of loss in order for the policy to provide coverage
What is the Law of Large Numbers?
Correct answer: The law of large numbers is used to predict the
likelihood of loss
What is Actual Cash Value?
Correct answer: Actual cash value is replacement cost minus
depreciation
What is Negligence?
- | Page
Correct answer: Negligence is a tort, or a civil wrong; it is
grounds for a lawsuit
What is an Occurrence?
Correct answer: An occurrence happens over a period of time
What is a Binder?
Correct answer: A binder may be oral or written
What else is a Binder?
Correct answer: A binder provides coverage until the policy is
issued. It includes all coverages provided by the policy
What is a Warranty?
Correct answer: A warranty is a literal truth
What is a Representation?
Correct answer: A representation is a substantial truth. In
insurance, statements of the applicant/policy owner are representations—true to the best of their knowledge
- | Page
What is Concealment?
Correct answer: Concealment is an omission of a material fact
What is Subrogation?
Correct answer: The insurer has the right to sue a negligent third
party for damages paid to an insured under the concept of subrogation
What are the four parts of a policy (DICE)?
Correct answer: Declarations, Insuring Agreement, Conditions,
and Exclusions
What are Declarations?
Correct answer: The declarations list the named insured, policy
limits, and premium policy period
What are Limits of Liability?
Correct answer: The limits of liability are found on the
declarations page of the policy
What is the Insuring Agreement?