One card per question you missed, the ones you were sure about first. Cover the answer, say it out loud, then check. Look at each card again on the days listed: 1, 3, 7 and 21 days from Oct 25. If you miss it again, start that card over.
Property and Casualty General Knowledge, IV. Types of Policies, Bonds, and Related Termsmarked sure
A Texas landscaping company has $240,000 of covered payroll in a classification with a rate of $3.20 per $100 of payroll. Ignoring modifications, discounts, and expense constants, what premium results for that classification?
Answer: A. $7,680
A is correct. TDI explains that the total payroll for each classification is multiplied by the rate for that classification, and the rate is stated per $100 of payroll. $240,000 divided by 100 is 2,400, and 2,400 times $3.20 is $7,680. B is a decimal-place error that multiplies by 320.
Source: Texas Department of Insurance, Workers' compensation rate guide (premium calculation)
Property and Casualty Agent State Specific, I. Texas Statutes and Rules Common to Property and Casualty Insurancemarked sure
A corporation holds a Texas agency license. One of its executive officers administers the company's operations in this state. What must the corporation file, and in what form?
Answer: D. Biographical information for that officer, filed under oath on a department form.
D is correct because section 4001.252(b) requires a corporation licensed as an agent to file under oath, on a department form, biographical information for each executive officer, director, or unlicensed partner who administers operations in this state.
Source: Texas Insurance Code ch. 4001 (Agent Licensing in General)
Property and Casualty General Knowledge, II. Insurance Terms and Related Conceptsmarked sure
Four insureds present underwriting concerns. Using the NAIC distinction between moral and morale hazard, which one describes a morale hazard?
Answer: B. A landlord delays fixing known faulty wiring because insurance would pay for a fire
B is correct. NAIC's regulator guide says morale hazard arises when an insured has less incentive to prevent losses but would not gain financially from the loss, such as failing to repair faulty electrical wiring. The landlord is not planning a fire but is neglecting to prevent one.
Source: NAIC, A Regulator's Introduction to the Insurance Industry (Glossary of Terms)
Property and Casualty General Knowledge, V. Insurance Terms and Related Concepts (liability and contract concepts)marked sure
A general contractor asks a Texas agent for a certificate of insurance that also says the subcontractor's policy will cover the contractor for losses the policy does not otherwise cover. How should the agent respond?
Answer: D. Decline, because a certificate may not change the policy or give contractual rights
D is correct. Section 1811.051 prohibits an insurer or agent from issuing a certificate that alters, amends, or extends the coverage or terms of the policy, and it provides that a certificate may not convey a contractual right to the certificate holder. Approved forms state that they are for information only.
Source: Texas Insurance Code ch. 1811 (Certificates of Property and Casualty Insurance)
Property and Casualty Agent State Specific, II. Texas Statutes and Rules Pertinent to Property and Casualty Insurancemarked sure
An injured employee in Texas is covered by a workers compensation claim in another state and elects to pursue the remedy under that state's workers compensation laws, recovering benefits there. Under the Texas rule, what may the employee do?
Answer: B. Pursue no further recovery under the Texas subtitle for that injury
B is correct because section 406.075(a) states that an injured employee who elects the other jurisdiction's remedy and recovers benefits under those laws may not recover under the Texas subtitle. C is wrong because a second recovery under Texas law is barred by the election.
Source: Texas Labor Code ch. 406 (Workers' Compensation Insurance Coverage)
Property and Casualty General Knowledge, I. Types of Policiesmarked sure
On June 3, Carla buys an NFIP flood policy on her paid-off Houston home because she is worried about hurricane season. Her neighbor buys an NFIP policy the same day because his lender requires it at a new mortgage closing. When does each policy typically take effect?
Answer: B. Carla's waits 30 days, and the neighbor's starts without that wait because his lender requires it
B is correct. FEMA states there is typically a 30-day waiting period before an NFIP policy takes effect, unless the coverage is purchased because a government-backed lender requires it, or is related to a community flood map change. A is wrong because lender-required purchases are an exception.
Source: FEMA, Flood Insurance (National Flood Insurance Program)
Property and Casualty General Knowledge, VI. Policy Provisionsmarked sure
A Texas insurer pays Lisa's private passenger auto collision claim, less her $500 deductible, after another driver caused the crash. Under Chapter 542, what must the insurer do about the deductible?
Answer: B. Act against the third party within a year of paying, or pay Lisa the deductible
B is correct. Section 542.204 requires an insurer on a private passenger auto policy to take action to recover the deductible from a responsible third party by the first anniversary of paying the claim, or else pay the deductible to the insured.
Source: Texas Insurance Code ch. 542 (Processing and Settlement of Claims)
Property and Casualty General Knowledge, IV. Types of Policies, Bonds, and Related Terms
Four employees of a Texas company are injured. Which one is most likely in the course and scope of employment under workers compensation?
Answer: A. Tara, hit while driving to a client's site in her own car at her supervisor's direction
A is correct. The Labor Code defines course and scope of employment to exclude transportation to and from work unless the employer furnishes or pays for it, controls the means, or directs the employee to go from one place to another in the job. Tara was directed by her supervisor.
Source: Texas Labor Code ch. 401 (Workers' Compensation, General Provisions)
Property and Casualty General Knowledge, IV. Types of Policies, Bonds, and Related Terms
A covered collision makes Marcus's car a total loss. Its actual cash value is $14,000, his deductible is $500, and its salvage value is $3,000. He chooses to keep the damaged car. Assuming no other adjustments, what does the insurer pay?
Answer: B. $10,500
B is correct. For a total loss, the insurer pays actual cash value less the deductible. If the owner keeps the vehicle, TDI says the insurer subtracts the salvage value from the amount it planned to pay. $14,000 minus $500 minus $3,000 is $10,500. A ignores the salvage deduction. C ignores the deductible.
Source: Texas Department of Insurance, My car was totaled! Now what?
Property and Casualty General Knowledge, IV. Types of Policies, Bonds, and Related Terms
A driver has a policy with a surcharge after two at-fault accidents. What is the surcharge in this situation?
Answer: A. An extra charge added to the premium
A is correct because the glossary defines a surcharge as an extra charge added to the premium, usually for at-fault accidents in auto insurance. D is wrong because a surcharge raises the cost, it does not reduce limits. B is wrong because that describes a non-owners policy.
Source: Texas Department of Insurance, Auto Insurance Glossary
Property and Casualty Agent State Specific, I. Texas Statutes and Rules Common to Property and Casualty Insurance
Brent, who has no license, solicits and takes applications for a Texas auto insurer for three months. TDI determines he acted as an agent without holding a license. Besides any other penalty, what is the effect on a later license application?
Answer: D. He may not obtain an agent license before the fifth anniversary of the determination
D is correct. Section 4005.106 says that a person the department determines acted as an agent without a license, or without an appointment, may not obtain an agent license before the fifth anniversary of the date of the determination, in addition to other penalties.
Source: Texas Insurance Code ch. 4005 (Conduct, Disciplinary Actions, and Sanctions)
Property and Casualty Agent State Specific, I. Texas Statutes and Rules Common to Property and Casualty Insurance
A licensed agent's license is suspended by the department after a disciplinary hearing. He files a complete renewal application and pays the fee the next week, hoping to keep his license active. What is the result under Texas law?
Answer: B. The renewal is refused because a person may not renew a license that is suspended or revoked.
B is correct because section 4003.004(b) states a person may not renew a license that has been suspended or revoked, regardless of a complete application and fee. C is wrong because payment does not lift a suspension under the cited source. D is wrong because the cited source contains no one-year limited renewal.
Source: Texas Insurance Code § 4003.007
Property and Casualty General Knowledge, II. Insurance Terms and Related Concepts
Luis will leave his Round Rock house empty for several months while he relocates. His homeowners policy excludes losses when the house is vacant beyond a stated number of days. What is the best step for his agent to recommend?
Answer: D. Ask the insurer whether coverage for vacant property can be added
D is correct. TDI notes that homeowners policies commonly exclude losses when a house is vacant for the number of days the policy specifies, and that some companies let owners buy coverage for vacant property. A is wrong because the vacancy exclusion would apply after the stated days.
Source: Texas Department of Insurance, Texas Homeowners Policies (April 12, 2018)
Property and Casualty General Knowledge, II. Insurance Terms and Related Concepts
An insurer declines to offer a policy to an applicant and relies on an incident in the applicant's history. Under Texas Insurance Code Chapter 551, what must the notice of that decision state about the incident?
Answer: C. The precise incident, circumstance, or risk factors that violate the applicable guidelines
C is correct because Section 551.002(c)(1) requires the statement to state the precise incident, circumstance, or risk factors that violate any applicable guidelines. D is wrong because a general statement does not meet the precise-incident requirement in subsection (c)(1).
Source: Texas Insurance Code ch. 551 (Declination, Cancellation, and Nonrenewal)
Property and Casualty General Knowledge, V. Insurance Terms and Related Concepts (liability and contract concepts)
A Texas homeowners insurer places a renewing customer in a higher-priced tier based partly on a credit report. Which notice meets Texas requirements for this adverse action?
Answer: D. A 30-day notice with up to four specific factors, agency contact details, and rights
D is correct. Section 559.054 requires notice within 30 days of the adverse action and the reasons for it, with no more than four primary factors, plus the agency's contact information, a statement that the agency did not make the decision, and the right to a free report within 60 days and to dispute errors.
Source: Texas Insurance Code ch. 559 (Credit Scoring and Credit Information)
Property and Casualty Agent State Specific, II. Texas Statutes and Rules Pertinent to Property and Casualty Insurance
A Texas auto insurer wants to offer a policy that provides benefits broader than the statutory minimum for personal injury protection. Under the provision, what is the insurer allowed to do?
Answer: A. Provide benefits broader than the minimum, subject to rules the commissioner prescribes
A is correct because the cited source allows an insurer to provide benefits broader than the minimum described in the subchapter, subject to the commissioner's rules. D is wrong because the cited source expressly permits broader benefits, so a prohibition is incorrect.
Source: Texas Insurance Code ch. 1952 (Automobile Insurance, UM/UIM and PIP)
Review on: Oct 26, Oct 28, Nov 1, Nov 15.