Overview
This guide explains how to prepare for the Texas Property and Casualty licensing exam, a 130-question multiple-choice test that you must pass with a score of 70 percent or higher within a 150-minute window. The exam blends national property and casualty fundamentals that apply in every state with Texas-specific statutes and rules that exist only in the Texas Insurance Code and the rules of the Texas Department of Insurance. To pass, you need both halves: a working command of how property and casualty products, coverages, policy provisions, and core insurance terms actually behave, and accurate recall of the Texas legal framework that governs how agents are licensed, how insurers are regulated, and how Texas-specific programs such as the FAIR Plan and the Windstorm Insurance Association work. The largest blocks of the exam are the national policy and concept domains, but the two Texas law domains together carry real weight, so do not treat the state-law material as an afterthought. The most reliable path is steady study spread over several weeks, frequent self-testing against practice questions, and honest tracking of which domains you keep missing. This guide breaks the exam into its weighted domains, tells you what each one tests, and gives you a study plan, exam-day tactics, and answers to common questions so you can walk in calm and prepared.
The Texas Property and Casualty exam rewards candidates who pair national coverage and concept knowledge with precise recall of Texas statutes and rules; build the national foundation first, then layer the Texas-specific law on top so you never apply a generic principle where a Texas rule controls.
What is actually on this exam
How this exam thinks
The exam favors the single best answer rather than the merely acceptable one, and it tests whether you can apply a defined rule or coverage trigger to a short fact pattern. Many items give you a scenario and ask which coverage responds, what an insured or agent must do, or how a provision behaves, so read for the controlling rule or coverage part before scanning the options.
What each domain tests, and how to study it
Types of Policies (General Knowledge)
17%Match a stated property need to the correct homeowners, dwelling, commercial, inland marine, or specialty form and explain how that form is triggered.
Know how each form is triggered, what it covers, and which client situation it is designed for.
What it tests. This domain tests the major property and package products in general: homeowners forms HO-2, HO-3, HO-4, HO-5, HO-6, and HO-8; dwelling policies DP-1, DP-2, and DP-3; commercial lines including the commercial package policy, commercial property with its building and business personal property form and causes of loss forms, business income, extra expense, equipment breakdown, the Business Owners Policy, builders risk, and cyber first-party coverage; inland marine floaters; the National Flood Insurance Program; and other policies such as earthquake, mobile home, watercraft, farm owners, and windstorm.
How to study it. Make a homeowners forms table showing which forms are named-peril versus open-peril and which fit a tenant, a condo owner, or an older home. Do the same for the dwelling forms and learn what triggers the National Flood Insurance Program. Practice matching a stated client situation to the single correct form, since the exam often gives a need and asks for the right policy.
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- Which homeowners form covers a tenant's personal property and liability but not the building?
- How does the HO-3 form trigger coverage differently for the dwelling versus personal property?
- Which standard homeowners form insures both the dwelling and personal property on an open-peril basis?
Easy to confuse
- HO-3 versus HO-5. HO-3 insures the dwelling on an open-peril basis but personal property on a named-peril basis, while HO-5 insures both the dwelling and personal property on an open-peril basis, making it the broadest standard form.
- HO-4 versus HO-6. HO-4 is the tenant or renter form covering personal property and liability with no building coverage, while HO-6 is the condominium unit-owner form that adds limited coverage for owner-installed improvements.
Worked example
Insurance Terms and Related Concepts (Property)
12%Apply core property insurance terms and valuation methods to short scenarios and select the term that best fits a described condition.
This domain is the shared vocabulary of property insurance, so precise definitions and the loss valuation methods earn the points.
What it tests. This domain tests the core property insurance terms and concepts: the law of large numbers and insurable interest; pure versus speculative risk and the moral, morale, and physical hazards; peril; direct and indirect loss and the methods of loss valuation including actual cash value, replacement cost, market value, stated or agreed value, and salvage value; proximate cause, deductible, indemnity, limits, coinsurance and insurance to value, and occurrence; cancellation, nonrenewal, vacancy and unoccupancy; and the liability concepts of absolute, strict, and vicarious liability, negligence, binders, endorsements, and blanket versus specific coverage.
How to study it. Learn the definitions cold because this domain is vocabulary-heavy. Build a hazards list with one example each for moral, morale, and physical, and a loss valuation list showing how actual cash value differs from replacement cost. Work coinsurance and insurance-to-value problems by hand so the penalty calculation is automatic, and practice matching a described condition to the correct term.
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- Which principle explains why a larger pool of comparable exposures makes loss predictions more reliable?
- What is the difference between actual cash value and replacement cost?
- How does a moral hazard differ from a morale hazard?
Easy to confuse
- Actual cash value versus replacement cost. Actual cash value is replacement cost minus depreciation, while replacement cost pays to repair or replace with like kind and quality without subtracting depreciation.
- Moral hazard versus morale hazard. A moral hazard is a dishonest tendency such as faking or padding a claim, while a morale hazard is carelessness or indifference that increases the chance of loss without intent to defraud.
Worked example
Policy Provisions and Contract Law (Property)
10%Apply property policy provisions, the standard policy sections, and contract-law rules to a described claim or underwriting situation.
This domain is where the structure of the policy and basic contract law meet, so know each policy section and the duties it imposes.
What it tests. This domain tests property policy provisions and the contract law behind them: the declarations, insuring agreement, conditions, and exclusions; the definition of the insured, the duties of the insured, the obligations of the insurer, and mortgagee rights; proof of loss, notice of claim, appraisal, the other insurance provision, and subrogation; the elements of a contract and the roles of warranties, representations, and concealment; sources of underwriting information, the Fair Credit Reporting Act, and Gramm-Leach-Bliley privacy protection; the policy application; and the Terrorism Risk Insurance Act and territory.
How to study it. Learn the four standard parts of a policy and what each one contains, since the exam often asks which section holds a given item. Memorize the elements of a valid contract, the difference between a warranty and a representation, and the duties an insured must perform after a loss. Practice questions that ask which provision applies to a described claim dispute such as appraisal or subrogation.
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- Which information is found in the declarations section of a property policy?
- Which policy section contains the insurer's basic promise to pay for covered losses?
- What is a primary duty the insured must perform after a covered loss?
Easy to confuse
- Declarations versus insuring agreement. The declarations state the specific facts such as the named insured, policy period, and limits, while the insuring agreement is the insurer's core promise describing what losses it agrees to pay for.
- Appraisal versus subrogation. Appraisal is a process for resolving a dispute over the amount of a loss, while subrogation is the insurer's right to recover a paid loss from the responsible third party after it has paid the insured.
Worked example
Types of Policies, Bonds, and Related Terms (Casualty)
18%Identify which casualty coverage, bond, or policy responds to a described exposure or loss and explain how its limits and key provisions apply.
This is the largest domain on the exam, and it is mostly about matching a described loss to the correct casualty coverage or policy.
What it tests. This domain tests the major casualty products and related terms: commercial general liability including its exposures, Coverages A, B, and C, supplementary payments, who is an insured, and per-occurrence and aggregate limits; personal and business auto liability, medical payments, physical damage, and uninsured or underinsured motorists; workers compensation and employers liability; crime coverages such as employee dishonesty and forgery; surety and fidelity bonds; professional liability lines; and umbrella, excess, and the Business Owners Policy.
How to study it. Build a coverage map for CGL that separates premises and operations from products and completed operations, and learn which loss each one responds to. Make a personal versus business auto comparison covering BI, PD, split limits, and combined single limit, and a one-line summary of each crime coverage and professional liability line. Practice scenario questions that ask which coverage part or policy responds to a described loss.
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- Which CGL coverage part responds to bodily injury and property damage from the insured's premises and ongoing operations?
- What is the difference between split limits and a combined single limit on an auto policy?
- Name three crime coverages and give a one-line description of each.
Easy to confuse
- Premises and operations versus products and completed operations. Premises and operations responds to injury or damage from the insured's ongoing work or location, while products and completed operations responds after the work is finished and the insured has left the job site.
- Supplementary payments versus the limit of insurance. Supplementary payments such as defense costs and certain expenses are generally paid in addition to the applicable limit, so they do not reduce the limit available to pay the underlying claim.
Worked example
Insurance Terms and Related Concepts (Casualty)
12%Apply core casualty terms, the damages categories, and underwriting-information rules to short scenarios.
This is the casualty twin of the property concepts domain, so master the shared vocabulary once and then add the casualty-only items such as damages and audit.
What it tests. This domain tests the core casualty insurance terms and concepts: risk and the moral, morale, and physical hazards; indemnity and insurable interest; loss valuation methods including actual cash value, replacement cost, market value, stated or agreed value, and salvage value; negligence, liability, occurrence, binders, warranties, representations, and concealment; deposit premium and audit, certificate of insurance, the law of large numbers, pure versus speculative risk, and endorsements; the categories of damages including compensatory general, compensatory special, and punitive; and compliance with the Fair Credit Reporting Act.
How to study it. Because this domain overlaps the property concepts in d2, study them together but flag the casualty-specific items: deposit premium and audit, certificate of insurance, the damages categories, and the Fair Credit Reporting Act. Learn the difference between compensatory and punitive damages and between general and special damages, and practice classifying a described risk or hazard into the correct term.
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- Which type of risk involves only the chance of loss or breaking even, with no chance of gain?
- What is the difference between general damages and special damages?
- When does padding or exaggerating a claim represent a moral hazard?
Easy to confuse
- Pure risk versus speculative risk. Pure risk involves only the chance of loss or no loss and is insurable, while speculative risk includes a chance of gain as well as loss and is generally not insurable.
- Compensatory damages versus punitive damages. Compensatory damages reimburse the injured party for actual harm such as medical bills and lost income, while punitive damages are awarded to punish especially wrongful conduct and deter others.
Worked example
Policy Provisions (Casualty)
9%Apply casualty policy provisions and post-loss duties to a described liability claim or settlement situation.
This is the casualty version of policy provisions, so the same sections apply but watch for the duties unique to liability claims such as forwarding suit papers and consent to settle.
What it tests. This domain tests casualty policy provisions: the declarations, insuring agreement, conditions, exclusions, and limitations; the definition of the insured, the duties of the insured after a loss, cancellation and nonrenewal provisions, and supplementary payments; proof of loss, notice of claim, other insurance, and subrogation; and loss settlement provisions including consent to settle a loss and the Terrorism Risk Insurance Act.
How to study it. Study these as the casualty parallel to the property provisions in d3, then flag the casualty-specific items such as supplementary payments, consent to settle, and the duty to forward suit papers promptly. Learn what each policy section contains and the consequences when an insured fails a post-loss duty, and practice questions about which provision controls a described liability claim.
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- Which part of the policy confirms the named insured, the policy period, and the limits that apply to a loss?
- Which section contains the insurer's core promise of what losses it agrees to pay for?
- Which duty does an insured fail by not forwarding a lawsuit to the insurer until the delay prejudices the defense?
Easy to confuse
- Notice of claim versus proof of loss. Notice of claim is the prompt report that a loss has occurred, while proof of loss is the later sworn statement documenting the details and amount of the claim.
- Consent to settle versus the insurer's duty to defend. Consent to settle is a provision requiring the insured's agreement before certain claims are settled, while the duty to defend is the insurer's obligation to provide a legal defense for covered claims.
Worked example
Texas Statutes and Rules Common to Property and Casualty Insurance (State Law)
14%Apply specific Texas statutes and Department rules to short scenarios about regulation, licensing, discipline, and prohibited conduct.
This is the larger of the two Texas law domains and it is pure Texas regulatory law, so memorize the definitions and rules exactly rather than reasoning from general principles.
What it tests. This domain tests the Texas statutes and rules common to all property and casualty insurance: the general powers and duties of the Commissioner of Insurance including examination of records, investigation, notice and hearing, penalties, and cease and desist orders; insurance definitions such as certificate of authority, transacting insurance, foreign, domestic, and alien insurers, stock and mutual companies, admitted and nonadmitted status, and Texas Lloyds; licensing requirements covering license types, exemptions, appointment, continuing education, records, renewal, and discipline; the required notifications an agent owes the Department; unfair and prohibited trade practices; and agent duties including commission sharing.
How to study it. Build a Texas legal vocabulary list and drill it: certificate of authority, transacting insurance, foreign versus domestic versus alien insurer, and admitted versus nonadmitted. Group the unfair and prohibited trade practices and learn one short example of each, then practice scenario questions about Commissioner powers, the due process a licensee is owed before a sanction, and the notifications an agent must send the Department.
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- Which official heads the Texas Department of Insurance and enforces the Texas Insurance Code?
- What procedural protection must a licensee generally be given before the Commissioner imposes a sanction?
- Name three unfair or prohibited trade practices and give a one-line example of each.
Easy to confuse
- Foreign insurer versus alien insurer. A foreign insurer is organized in another US state, while an alien insurer is organized in another country; both are defined relative to Texas as the home jurisdiction.
- Suspension versus revocation of a license. Suspension pauses a license for a stated period and it can be restored, while revocation cancels the license entirely and requires a new application to be relicensed.
Worked example
Texas Statutes and Rules Pertinent to Property and Casualty Insurance (State Law)
9%Apply Texas property, auto, homeowner, workers compensation, surplus lines, and residual-market program rules to specific Texas scenarios.
This is Texas-specific property and casualty law plus the residual-market programs, so memorize what each Texas program does and when it applies.
What it tests. This domain tests the Texas statutes and rules pertinent to property and casualty insurance: property and casualty definitions, surplus lines, and the approval of rates and forms; homeowner's insurance rules covering declination, cancellation, and nonrenewal, the Texas FAIR Plan Association, the Texas Windstorm Insurance Association, loss settlement, and liquidated demand; automobile insurance covering UM and UIM, personal injury protection, medical payments, financial responsibility and minimum limits, the Texas Automobile Insurance Plan Association, and transportation network company rules; workers compensation definitions, coverage, and benefits; and the Texas Property and Casualty Insurance Guaranty Association and the Texas Medical Liability Joint Underwriting Association.
How to study it. Study these as Texas-specific rules and programs rather than generic concepts. Learn what the FAIR Plan, the Texas Windstorm Insurance Association, the Texas Automobile Insurance Plan Association, and the Guaranty Association each exist to do and when each is used. Drill the surplus lines requirements, the Texas auto minimum limits and UM and UIM rules, and the homeowner cancellation and nonrenewal rules, then practice Texas program scenarios.
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- What must an agent generally establish about coverage before placing a risk with a surplus lines insurer?
- What does the Texas Windstorm Insurance Association exist to do, and for which policyholders?
- What does the Texas Property and Casualty Insurance Guaranty Association protect against?
Easy to confuse
- Texas FAIR Plan Association versus Texas Windstorm Insurance Association. The FAIR Plan provides basic property coverage to applicants who cannot obtain it in the standard market, while the Windstorm Insurance Association provides windstorm and hail coverage in designated Texas coastal areas.
- Admitted insurer versus eligible surplus lines insurer. An admitted insurer holds a Texas certificate of authority and is backed by the guaranty association, while an eligible surplus lines insurer is nonadmitted, is used only when the admitted market declines the risk, and is not backed by the guaranty association.
Worked example
A study plan that works
- 1
Map the exam and set a baseline
Week 1Read this guide end to end and note the domain weights. Take a short diagnostic set of practice questions across all domains so you know your starting strengths and gaps before you invest study time. Write down which domains you scored lowest on.
- 2
Build the casualty coverage foundation
Week 2Study Types of Policies, Bonds, and Related Terms for casualty (d4), the largest domain. Build coverage maps for CGL, auto, workers compensation, crime, bonds, and umbrella, then test yourself until you can match a described loss to the correct coverage or policy quickly.
- 3
Learn the property and package products
Week 3Work through Types of Policies in general knowledge (d1). Make homeowners and dwelling forms tables that show named-peril versus open-peril and which client each form fits, add the commercial, inland marine, flood, and specialty forms, and drill matching a client need to the right form.
- 4
Master the shared insurance concepts
Week 4Study Insurance Terms and Related Concepts for property (d2) and casualty (d5) together, since they overlap heavily. Lock in the hazards, loss valuation methods, coinsurance, negligence, and the damages categories, and flag the casualty-only items such as deposit premium and audit.
- 5
Learn policy provisions and contract law
Week 5Work through Policy Provisions and Contract Law for property (d3) and Policy Provisions for casualty (d6). Memorize the four standard policy sections, the elements of a contract, warranty versus representation, and the post-loss duties of the insured, with daily practice questions.
- 6
Master the Texas statutes, rules, and programs
Week 6Focus on Texas Statutes and Rules Common to Property and Casualty Insurance (d7) and the Texas Statutes and Rules Pertinent to Property and Casualty Insurance (d8). Drill Texas definitions, Commissioner powers, surplus lines, and the FAIR Plan, Windstorm, Auto Plan, and Guaranty Association programs until recall is automatic.
- 7
Take timed full-length practice and target weak spots
Week 7Sit full-length practice tests under the 150-minute clock to build pacing and stamina. After each test, review every missed item, return to the relevant domain, and re-drill that material. Aim to clear 70 percent comfortably on practice before scheduling the real exam.
Knowing when you are ready
You are ready when you can consistently score above the 70 percent passing threshold on full-length timed practice tests across several attempts, not just on one lucky run. Stronger than a single score is steady performance in your two weakest domains and the ability to explain why the right answer is right rather than guessing. If the Texas law and program domains still feel shaky, keep drilling them before you book the exam.
Exam-day tips
- Read each question and all options fully before answering; the exam rewards the single best answer, and a close-but-wrong choice is often placed first.
- Watch for the controlling rule or coverage trigger in the scenario, such as which coverage responds or what an insured must do, and answer to that rather than to general intuition.
- Manage the clock; with 130 questions in 150 minutes you have a little over a minute each, so flag hard items, keep moving, and return to them at the end.
- Eliminate clearly wrong options first to improve your odds on the items you are unsure about, then choose the best of what remains.
- Do not change an answer unless you find a concrete reason; first instincts on well-studied material are usually right.
- Keep Texas-specific rules and programs separate in your mind from national concepts so you do not apply a generic principle where a Texas rule controls.
- Stay calm and answer every question, since there is no penalty for guessing and a blank answer can never be right.
Texas Property & Casualty exam questions, answered
How many questions are on the Texas Property and Casualty exam and how long do I have?
What score do I need to pass?
How much of the exam is Texas-specific law versus national content?
Which domain should I study first?
How much does the exam cost?
Is this an official exam guide?
Do I need insurance experience before I start?
What is the best way to handle questions I am unsure about?
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