16 Free Texas Auto Insurance Exam Practice Questions (2026)
How to Use This Auto Insurance Question Set
Auto is the single most heavily tested casualty product on the Texas P&C exam, and it is where scenario questions get long: a driver, a passenger, a borrowed car and a question about which of six coverage parts responds. The material is not conceptually hard, but it punishes vagueness. You either know which part of the Personal Auto Policy pays, or you do not.
These 16 questions come from LanePrep's Texas P&C quiz bank and cover the three ways the exam approaches auto: the coverage parts of the PAP, the add-on coverages that Texas treats specially (uninsured motorists and personal injury protection), and the state law around financial responsibility and the assigned risk plan.
Work method: for every scenario, name the coverage part before you look at the options. If you cannot name it, that is the gap — not the answer you eventually picked. For the underlying rules, the Texas auto insurance exam guide walks through each coverage part in order.
Practice Questions 1-6: Personal Auto Policy Coverages
Question 1 (Chapter 4)
A driver with a Personal Auto Policy (PAP) is involved in a hit-and-run accident. The other driver flees the scene. Which PAP coverage would respond to the insured driver's bodily injury?
- A) Part A — Liability Coverage
- B) Part B — Medical Payments Coverage
- C) Part C — Uninsured Motorists Coverage
- D) Part D — Coverage for Damage to Your Auto
Show answer & explanation
Answer: C
Uninsured Motorists (UM) Coverage under Part C of the PAP covers bodily injury caused by a hit-and-run driver, who is treated as an uninsured motorist. Part C is the coverage specifically designed to address this scenario by covering damages the insured is legally entitled to recover. Note that Medical Payments (Part B) could also help cover medical expenses regardless of fault, but the question asks which coverage responds to the hit-and-run situation specifically.
Question 2 (Chapter 4)
A motorcyclist with a Personal Auto Policy is sideswiped by a driver who has no insurance at all. The motorcyclist sustains $40,000 in injuries. Which PAP coverage specifically addresses this situation?
- A) Part A — Liability Coverage
- B) Part D — Coverage for Damage to Your Auto
- C) Part C — Uninsured Motorists Coverage, which covers the insured's bodily injury caused by a driver with no liability insurance
- D) Part B — Medical Payments Coverage
Show answer & explanation
Answer: C
Uninsured Motorists (UM) Coverage under Part C of the PAP covers bodily injury caused by drivers who carry no liability insurance. UM also covers hit-and-run drivers and drivers whose insurers become insolvent. While Medical Payments (Part B) might also help with medical expenses regardless of fault, UM is the coverage specifically designed for this scenario.
Question 3 (Chapter 4)
A PAP insured is rear-ended by a driver who carries only the Texas minimum liability limits of 30/60/25. The insured's medical bills total $75,000. The at-fault driver's policy pays $30,000 (the per-person BI limit). The insured has Underinsured Motorists (UIM) coverage with a $100,000 per-person limit. How much can the insured collect from their own UIM coverage?
- A) $75,000, the full amount of medical bills
- B) $100,000, the full UIM limit
- C) $45,000, the difference between the medical bills and the at-fault driver's payment
- D) Up to $70,000, the difference between the UIM limit and the at-fault driver's liability limit
Show answer & explanation
Answer: D
Underinsured Motorists (UIM) coverage pays when the at-fault driver's liability limits are insufficient to cover the insured's damages. In Texas, the UIM benefit is typically calculated as the difference between the insured's UIM limit and the at-fault driver's liability limit: $100,000 - $30,000 = $70,000 maximum available. The actual payment depends on the total proven damages minus the at-fault payment, up to this $70,000 difference.
Question 4 (Chapter 4)
An insured lends his car to a friend who is not listed on the policy. The friend causes an accident while driving the car. Does the insured's Personal Auto Policy (PAP) cover the friend's liability?
- A) No, because only named insureds are covered under the PAP
- B) Yes, because the PAP covers permissive users — anyone using the covered auto with the named insured's permission
- C) Only if the friend has their own auto insurance
- D) No, because lending a vehicle voids the policy
Show answer & explanation
Answer: B
The Personal Auto Policy extends liability coverage to permissive users — individuals who use the covered auto with the reasonable belief that they are entitled to do so (i.e., with the named insured's permission). This is known as permissive use. The friend is covered as an insured under the policy while driving the car with permission, though the coverage is typically excess over any other applicable insurance the friend may have.
Question 5 (Chapter 5)
A delivery driver runs a red light and strikes a pedestrian. To establish the driver's negligence, the pedestrian must prove all of the following EXCEPT:
- A) The driver owed a duty of care to the pedestrian
- B) The driver breached that duty of care
- C) The breach was the proximate cause of the pedestrian's injuries
- D) The driver intended to cause harm to the pedestrian
Show answer & explanation
Answer: D
Negligence requires four elements: duty, breach, proximate cause, and damages. Intent to harm is NOT required for negligence — negligence is unintentional. If the driver intended to cause harm, it would be an intentional tort, which is generally excluded from liability insurance coverage.
Question 6 (Chapter 6)
An insured is injured in an auto accident caused by a negligent third party. The insured's health insurer pays $30,000 in medical bills. The insured then settles with the at-fault driver's liability insurer for $50,000. The health insurer asserts its subrogation right. What is the health insurer entitled to recover?
- A) Nothing — health insurers cannot subrogate
- B) Up to $30,000 from the settlement proceeds, subject to any applicable made-whole doctrine
- C) The full $50,000 settlement
- D) Only the deductible amount paid by the insured
Show answer & explanation
Answer: B
When a health insurer pays medical expenses for injuries caused by a negligent third party, the insurer has a subrogation right to recover the amount it paid from the settlement or judgment the insured receives from the at-fault party. The insurer can recover up to $30,000 (what it paid). In some states, the made-whole doctrine requires the insured to be fully compensated before the insurer can exercise subrogation.
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Practice Questions 7-10: Uninsured Motorists, PIP and Physical Damage
Question 7 (Chapter 4)
Sarah's parked car is damaged by a falling tree branch during a windstorm. She has a Personal Auto Policy with both collision and comprehensive (other than collision) coverage. Under which coverage would this loss be paid?
- A) Collision coverage, because the car was damaged by a physical object
- B) Comprehensive (other than collision) coverage, because falling objects are a covered peril under OTC
- C) Part A — Liability coverage
- D) Neither — windstorm damage to vehicles is excluded under the PAP
Show answer & explanation
Answer: B
Under the Personal Auto Policy, comprehensive coverage (also called Other Than Collision or OTC) covers losses from perils other than collision, including falling objects, windstorm, hail, fire, theft, vandalism, and contact with animals. A tree branch falling on a parked car is a classic comprehensive claim. Collision coverage applies when the vehicle collides with another object or overturns.
Question 8 (Chapter 8)
An insured in Texas has an auto policy that includes Uninsured/Underinsured Motorist (UM/UIM) coverage. The insured is hit by a driver with no insurance. Which statement about UM/UIM coverage in Texas is correct?
- A) UM/UIM must be offered by the insurer but the insured can reject it in writing
- B) UM/UIM is completely optional and need not be offered
- C) UM/UIM is automatically included and cannot be rejected
- D) UM/UIM only covers property damage, not bodily injury
Show answer & explanation
Answer: A
Texas law requires auto insurers to offer Uninsured/Underinsured Motorist (UM/UIM) coverage. Like PIP, the coverage is automatically included unless the insured rejects it in writing. UM/UIM coverage pays for bodily injury (and in some cases property damage) when the at-fault driver has no insurance or insufficient insurance to cover the insured's damages.
Question 9 (Chapter 6)
A driver insured by Company A is rear-ended by a driver insured by Company B. Company A pays $15,000 to repair its insured's vehicle under collision coverage. Company A then seeks reimbursement from Company B's insurer because the Company B driver was at fault. This process is called:
- A) Contribution
- B) Indemnification
- C) Subrogation
- D) Arbitration
Show answer & explanation
Answer: C
Subrogation is the right of an insurer, after paying a claim, to step into the shoes of the insured and recover the amount paid from the responsible third party (or their insurer). This prevents the insured from collecting twice and holds the at-fault party responsible. The insured must cooperate with the subrogation process and cannot do anything to impair the insurer's right to recovery.
Question 10 (Chapter 6)
An auto insurer pays a $50,000 collision claim and pursues subrogation against the at-fault driver. The insured's total damages were $80,000, but only $50,000 was covered under the policy (the insured was underinsured). Under the made-whole doctrine, what must happen before the insurer can collect any subrogation recovery?
- A) The insurer collects its $50,000 first, then the insured receives the remainder
- B) The insured must be fully compensated for all $80,000 in damages before the insurer can recover any subrogation amount
- C) The insurer and insured split any recovery equally
- D) The insurer can recover subrogation regardless of whether the insured is made whole
Show answer & explanation
Answer: B
The made-whole doctrine provides that the insured must be fully compensated for all of their losses before the insurer can exercise any subrogation rights. In this scenario, the insured must recover the full $80,000 in damages before the insurer can claim any subrogation proceeds. This doctrine protects the insured from being left partially uncompensated. Some policies contain subrogation clauses that attempt to override the made-whole doctrine, but courts in many jurisdictions strictly enforce it.
Practice Questions 11-16: Texas Auto Insurance Law and Commercial Auto
Question 11 (Chapter 8)
A young Texas driver with two at-fault accidents and a suspended license reinstatement needs auto liability insurance but cannot find any standard or nonstandard carrier willing to write the policy. Through which mechanism can this driver obtain the legally required minimum liability coverage?
- A) Texas FAIR Plan Association
- B) Texas Automobile Insurance Plan Association (TAIPA), the assigned risk pool
- C) Texas Windstorm Insurance Association (TWIA)
- D) The driver is exempt from insurance requirements due to the accidents
Show answer & explanation
Answer: B
TAIPA is the assigned risk pool that provides auto liability insurance to drivers who cannot obtain coverage in the voluntary market. All auto insurers writing in Texas must participate. TAIPA ensures that even the highest-risk drivers can obtain the state's minimum liability requirements of 30/60/25. The driver applies through a licensed agent, and TAIPA assigns the risk to a participating insurer.
Question 12 (Chapter 4)
In a Texas auto accident, Driver X is found 55% at fault and Driver Y is 45% at fault. Driver X has $80,000 in damages. Under Texas's modified comparative negligence rule, how much can Driver X recover from Driver Y?
- A) $80,000 — fault percentage does not affect recovery in Texas
- B) $36,000 — reduced by Driver X's 55% fault
- C) $0 — Driver X is more than 50% at fault and is completely barred from recovery under Texas's 51% bar rule
- D) $44,000 — Driver Y's 45% share of Driver X's damages
Show answer & explanation
Answer: C
Texas follows a modified comparative negligence rule with a 51% bar. A claimant who is 51% or more at fault is completely barred from recovering any damages. Since Driver X is 55% at fault (above the 51% threshold), they cannot recover anything from Driver Y, regardless of the amount of their damages.
Question 13 (Chapter 8)
A Texas driver with multiple at-fault accidents and a poor credit score is quoted a premium significantly higher than standard rates by an insurer that specializes in high-risk auto coverage. This type of insurer is commonly known as a:
- A) Surplus lines insurer
- B) Nonstandard auto insurer
- C) County mutual farm insurer
- D) Reciprocal exchange
Show answer & explanation
Answer: B
Nonstandard auto insurers specialize in providing coverage to drivers who do not qualify for preferred or standard auto insurance due to poor driving records, credit history, lapse in coverage, or other high-risk factors. These insurers charge higher premiums to reflect the elevated risk. In Texas, many nonstandard auto insurers operate as county mutual insurance companies, which are exempt from rate regulation.
Question 14 (Chapter 8)
A Texas resident is purchasing auto insurance and asks their agent about the state's minimum liability requirements. Which of the following correctly states the minimum auto liability limits required in Texas?
- A) $25,000 per person / $50,000 per accident bodily injury / $25,000 property damage
- B) $30,000 per person / $60,000 per accident bodily injury / $25,000 property damage
- C) $50,000 per person / $100,000 per accident bodily injury / $50,000 property damage
- D) $15,000 per person / $30,000 per accident bodily injury / $10,000 property damage
Show answer & explanation
Answer: B
Texas requires minimum auto liability coverage of 30/60/25: $30,000 bodily injury per person, $60,000 bodily injury per accident, and $25,000 property damage per accident. These minimum limits apply to all vehicles registered in Texas. Drivers may purchase higher limits for greater protection, but the 30/60/25 minimums are mandatory.
Question 15 (Chapter 3)
A commercial auto insurer sends renewal notices to an insured for three consecutive years, each time including a known excluded driver on the policy without enforcing the exclusion. In year four, the excluded driver causes an accident and the insurer tries to enforce the exclusion. Which doctrine most likely prevents the insurer from enforcing it?
- A) Subrogation
- B) Indemnity
- C) Waiver — by repeatedly including the excluded driver without enforcing the exclusion, the insurer has voluntarily relinquished its right to enforce it
- D) Reformation
Show answer & explanation
Answer: C
Waiver is the voluntary and intentional relinquishment of a known right. By knowingly including the excluded driver on renewal documents for three years without enforcing the exclusion, the insurer demonstrated a pattern of waiving that right. The key element of waiver is knowledge — the insurer knew about the exclusion and chose not to enforce it.
Question 16 (Chapter 8)
A Texas auto insurer uses the following factors to determine premium rates: the driver's age, gender, territory, driving record, and credit score. Under Texas law, which of these rating factors are PERMITTED for personal auto insurance?
- A) Only driving record and territory are permitted; age, gender, and credit are prohibited
- B) All of these factors — age, gender, territory, driving record, and credit score — are permitted rating factors for personal auto insurance in Texas
- C) Credit score is the only prohibited factor; all others are permitted
- D) None of these factors are permitted; Texas uses a flat-rate system
Show answer & explanation
Answer: B
Texas allows auto insurers to use a variety of actuarially justified rating factors including age, gender, territory (where the vehicle is garaged), driving record, and credit-based insurance scores. Texas law specifically permits the use of credit information in personal lines rating, provided the insurer complies with disclosure and adverse action notice requirements. These factors are considered actuarially predictive of loss.
The Three Auto Mistakes That Cost Marks
Confusing collision with other-than-collision. A tree branch falling on a parked car is comprehensive, not collision. Hitting a deer is comprehensive. Hitting a fence is collision. The exam tests this repeatedly because candidates answer on intuition.
Treating UM and PIP as optional afterthoughts. In Texas both must be offered and can only be rejected in writing, and the exam asks about that rejection requirement as often as it asks what the coverages do.
Quoting the financial responsibility limits from another state. Texas is 30/60/25. If a question gives you limits, check them against that before you calculate anything.
Ready for mixed questions under timing? The free Texas P&C practice exam puts auto back among property, liability and statutes, the way the real Pearson VUE exam does. If auto is a persistent weak spot, chapter 4 of the LanePrep course is the casualty products chapter — chapter 1 is free to sample first.
Coverage rules verified against the Texas Insurance Code and the Pearson VUE Texas examination content outline, August 2026.
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