What is the primary purpose of risk management in insurance?

To identify and minimize potential financial losses

To eliminate financial services

To increase the likelihood of risky behavior

Liability coverage primarily protects the insured against:

Legal responsibility for injury or damage to others

(This section contains 3 topics. We’ll include 8 questions total, with 2–3 questions per topic.) Which of the following components is required in a Commercial Package Policy (CPP)?

Workers’ compensation coverage

Bailee’s Customer Insurance is designed to protect against loss to:

Goods held temporarily in the bailee’s care

A claim is filed in 2025 for an incident that occurred in 2023. Which policy would cover the loss if in effect during 2023?

Occurrence-based policy active in 2023

Claims-made policy active in 2025

(This section contains 3 topics. We’ll provide 8 new questions, 2–3 per topic.) Which coverage form would protect a commercial building and its contents against fire, theft, or vandalism?

Commercial Property Coverage Form

Which of the following is most likely to need Bailee’s Customer Insurance?

A dry cleaner holding customers’ garments for cleaning

A jewelry store selling engagement rings

A supermarket storing frozen goods

A farmer storing livestock feed

(This section contains 3 topics. We’ll provide 8 new questions, 2–3 per topic.) In a surety bond, the principal is:

The party whose performance is guaranteed

The entity guaranteeing the obligation

The person receiving the benefit of the bond

The government agency that licenses agents

Texas Property and Casualty Insurance

Free Texas Property and Casualty Practice Questions

10 sample questions for the Texas Property and Casualty Insurance, with the correct answer and an explanation for each. No account needed. Try each one before you open the answer.

Sections covered on the exam: General Insurance Terms and Concepts, Insurance Regulation, Property and Casualty Policies Overview, Personal Lines Residential Insurance, Auto Insurance, Commercial Insurance Policies, Farm Insurance, Inland Marine Insurance, Ocean Marine Insurance, Workers' Compensation and Employer's Liability Insurance, Surety and Fidelity Bonds, Other Types of Insurance, Texas-Specific Content.

Question 1 · General Insurance Terms and Concepts
What is the primary purpose of risk management in insurance?
- A.To avoid all risks entirely
- B.To eliminate financial services
- C.To identify and minimize potential financial losses
- D.To increase the likelihood of risky behavior
Show answer and explanation
Answer: C. To identify and minimize potential financial losses
Risk management focuses on identifying, analyzing, and minimizing the financial impact of uncertain events. Insurance is a key tool in transferring those risks.
Question 2 · Property and Casualty Policies Overview
Liability coverage primarily protects the insured against:
- A.Damage to personal property
- B.Acts of God
- C.Wear and tear losses
- D.Legal responsibility for injury or damage to others
Show answer and explanation
Answer: D. Legal responsibility for injury or damage to others
Liability insurance covers legal obligations arising from bodily injury or property damage caused to others.
Question 3 · Commercial Insurance Policies
(This section contains 3 topics. We’ll include 8 questions total, with 2–3 questions per topic.)
Which of the following components is required in a Commercial Package Policy (CPP)?
- A.Workers’ compensation coverage
- B.Umbrella liability
- C.Personal auto policy
- D.At least two coverage parts
Show answer and explanation
Answer: D. At least two coverage parts
A CPP must include at least two of the following: commercial property, general liability, crime, inland marine, etc.
Question 4 · Inland Marine Insurance
Bailee’s Customer Insurance is designed to protect against loss to:
- A.The bailee’s own property
- B.Goods held temporarily in the bailee’s care
- C.A tenant’s furniture
- D.Livestock stored on a farm
Show answer and explanation
Answer: B. Goods held temporarily in the bailee’s care
This coverage protects businesses that take possession of others’ property for servicing or storage (e.g., dry cleaners, repair shops).
Question 5 · Surety and Fidelity Bonds
(This section contains 3 topics. We’ll include 8 questions total, with 2–3 questions per topic.)
How many parties are involved in a surety bond?
- A.Three
- B.Two
- C.One
- D.Four
Show answer and explanation
Answer: A. Three
A surety bond involves three parties: the principal (who must perform), the obligee (who receives the benefit), and the surety (who guarantees the performance).
Question 6 · General Insurance Terms and Concepts
(This section includes 3 topics. We’ll provide 8 new questions, 2–3 per topic. All questions are new and non-repetitive.)
Which of the following is the best example of pure risk?
- A.Starting a new business
- B.Gambling at a casino
- C.A house catching fire
- D.Purchasing stocks
Show answer and explanation
Answer: C. A house catching fire
Pure risks involve only the possibility of loss, not gain. A fire damaging a home is a pure risk and is insurable.
Question 7 · Property and Casualty Policies Overview
A claim is filed in 2025 for an incident that occurred in 2023. Which policy would cover the loss if in effect during 2023?
- A.Claims-made policy active in 2025
- B.Occurrence-based policy active in 2023
- C.Any policy with a deductible
- D.Only umbrella policies
Show answer and explanation
Answer: B. Occurrence-based policy active in 2023
An occurrence policy provides coverage for losses that occurred during the policy period, regardless of when the claim is filed.
Question 8 · Commercial Insurance Policies
(This section contains 3 topics. We’ll provide 8 new questions, 2–3 per topic.)
Which coverage form would protect a commercial building and its contents against fire, theft, or vandalism?
- A.Businessowners Policy
- B.Commercial Property Coverage Form
- C.General Liability
- D.Inland Marine Coverage
Show answer and explanation
Answer: B. Commercial Property Coverage Form
The Commercial Property Coverage Form is part of the CPP and insures buildings, business personal property, and fixtures against covered perils.
Question 9 · Inland Marine Insurance
Which of the following is most likely to need Bailee’s Customer Insurance?
- A.A jewelry store selling engagement rings
- B.A dry cleaner holding customers’ garments for cleaning
- C.A supermarket storing frozen goods
- D.A farmer storing livestock feed
Show answer and explanation
Answer: B. A dry cleaner holding customers’ garments for cleaning
Bailee’s coverage protects businesses that temporarily take possession of customer property, such as a dry cleaner or a repair shop.
Question 10 · Surety and Fidelity Bonds
(This section contains 3 topics. We’ll provide 8 new questions, 2–3 per topic.)
In a surety bond, the principal is:
- A.The party whose performance is guaranteed
- B.The entity guaranteeing the obligation
- C.The person receiving the benefit of the bond
- D.The government agency that licenses agents
Show answer and explanation
Answer: A. The party whose performance is guaranteed
The principal is the party required to perform an obligation or fulfill a contract. If the principal fails, the surety compensates the obligee.

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