Texas Property & Casualty Insurance Practice Exam Free - 2026

• A. The 60th day
• B. The 90th day
• C. The 120th day
• D. The 180th day

Correct answer: A. The 60th day

Explanation: Texas prohibits cancelling a liability or commercial property policy that is a renewal or continuation, and prohibits cancelling any such policy during its initial term before the 60th day after issuance, unless the reason is fraud in obtaining coverage, failure to pay premium when due, an increase in hazard within the insured's control that would produce a rate increase, or loss of the insurer's reinsurance on the risk. See Tex. Ins. Code 551.052.

• A. 10 days
• B. 30 days
• C. 45 days
• D. 60 days

Correct answer: D. 60 days

Explanation: For personal auto, homeowners and other policies covered by this subchapter, the insurer must mail written notice of nonrenewal, or of renewal with changes in coverage, not later than the 60th day before the policy expires. If it fails to do so, it must renew the policy at the insured's request unless the insured has obtained replacement coverage. See Tex. Ins. Code 551.105.

• A. Two claims in any two-year period
• B. Two claims in any three-year period
• C. Three claims in any three-year period
• D. Three claims in any five-year period

Correct answer: C. Three claims in any three-year period

Explanation: An insurer may refuse to renew a standard fire, homeowners or farm and ranch owners policy when the insured has filed three or more claims under the policy in any three-year period. Claims from natural causes, claims filed but not paid, and certain water-damage claims do not count, and after two claims in three years the insurer must warn the insured that a third claim could trigger nonrenewal. A surcharge, not nonrenewal, is allowed after two claims in the preceding three policy years. See Tex. Ins. Code 551.107.

• A. 30 days
• B. 59 days
• C. 89 days
• D. 120 days

Correct answer: B. 59 days

Explanation: Texas rules provide that after a personal automobile policy has been in effect for 59 days, the insurer may cancel it only for failure to pay premium, suspension or revocation of a driver's license or motor vehicle registration, a violation of law, or a fraudulent claim. The 89-day threshold applies to farm and ranch policies. A nonpayment cancellation notice may not be dated or sent until after the premium due date. See 28 TAC 5.7002; Tex. Ins. Code 551.104.

• A. The owner's personal credit card rewards
• B. Payroll by classification
• C. The number of life insurance beneficiaries
• D. The homeowner's roof age only

Correct answer: B. Payroll by classification

Explanation: Workers compensation premiums commonly consider payroll, job classification, rates, and experience modification factors where applicable.

• A. The employer's total payroll divided by the number of employees
• B. The hazard level assigned to each job classification code
• C. The employer's loss experience compared with similar employers
• D. The years the employer has been continuously insured with the same carrier

Correct answer: C. The employer's loss experience compared with similar employers

Explanation: An experience modification factor adjusts premium based on an employer's loss experience compared with expected losses for similar businesses.

• A. Homeowners liability coverage
• B. A guaranteed retirement annuity
• C. Collision repair for the employee's personal car after any accident
• D. Medical benefits for covered work-related injuries

Correct answer: D. Medical benefits for covered work-related injuries

Explanation: Workers compensation commonly includes medical benefits for covered work-related injuries and may also include disability, rehabilitation, or death benefits depending on the law.

• A. Movable property, property in transit, or specialized property exposures
• B. Cargo carried aboard vessels on the open sea and the vessels themselves
• C. Permanent buildings and fixed structures at a single described premises location
• D. Owned autos, hired autos, and nonowned autos used in the business

Correct answer: A. Movable property, property in transit, or specialized property exposures

Explanation: Inland marine coverage is often used for movable property, property in transit, contractors equipment, fine arts, and other specialized property exposures.

• A. A contractor's liability for faulty completed work
• B. Mobile tools and equipment used by a contractor
• C. Vehicles the contractor drives on public highways
• D. A building under construction until it is completed

Correct answer: B. Mobile tools and equipment used by a contractor

Explanation: A contractors equipment floater can insure mobile equipment and tools used at job sites, in transit, or at temporary locations, subject to policy terms.

• A. A customer of the insured becomes insolvent and cannot pay an outstanding invoice
• B. The insured's bookkeeper embezzles payments received from customers
• C. Covered records of amounts owed to the insured are damaged or destroyed
• D. The insured's records of amounts it owes to suppliers are lost in a fire

Correct answer: C. Covered records of amounts owed to the insured are damaged or destroyed

Explanation: Accounts receivable coverage can help when records of amounts owed to the insured are damaged by a covered loss, making collection difficult or impossible.

• A. The face value of money, securities, and negotiable instruments stolen from the premises
• B. Amounts the insured cannot collect because its customer billing records were destroyed
• C. The insured's liability to clients whose confidential documents were exposed in a data breach
• D. The cost to research, replace, or restore important documents after covered loss

Correct answer: D. The cost to research, replace, or restore important documents after covered loss

Explanation: Valuable papers coverage can pay costs to research, replace, or restore valuable documents and records after covered damage or loss.

• A. Property while being transported
• B. Personal liability for libel
• C. Homeowners medical payments only
• D. Employee retirement income

Correct answer: A. Property while being transported

Explanation: A transportation floater is an inland marine form that can cover property while it is in transit, subject to policy conditions.