18 Free Texas Insurance Law Practice Questions (P&C, 2026)
Why the Texas Law Section Decides Your Exam
Of the 130 scored questions on the Texas General Lines Property & Casualty exam, 30 are on Texas statutes and rules — 18 on the statutes common to property and casualty, 12 on the property-and-casualty-specific ones. That is 23% of your score, and it is the block that national study material covers worst, because it is the only part that cannot be reused in another state.
It is also the most learnable. Product questions ask you to reason about a scenario; statute questions usually ask for a number, a deadline or an authority, and those are memorisable. Candidates who fail rarely fail on homeowners forms. They fail because they guessed on the ten-day notice, the licence renewal cycle and what the Commissioner can and cannot do.
Below are 18 questions drawn from LanePrep's Texas P&C quiz bank, all from the two statute chapters, with the correct answer and a short explanation on each. Work through them without peeking. If you miss more than a third, the statute material is where your remaining study time belongs.
For the underlying rules rather than the drilling, read the Texas insurance statutes guide first, then come back here.
Practice Questions 1-5: Licensing, Continuing Education and Agent Duties
Question 1 (Chapter 7)
Under Texas continuing education requirements, a licensed P&C insurance agent must complete how many hours of continuing education per license renewal period (every two years)?
- A) 20 hours, including 2 hours of ethics
- B) 30 hours, including 2 hours of ethics
- C) 24 hours, including 3 hours of ethics
- D) 15 hours, including 1 hour of ethics
Show answer & explanation
Answer: C
Texas requires licensed insurance agents to complete 24 hours of continuing education every two-year renewal period, which must include at least 3 hours of ethics training. Failure to complete CE requirements can result in license suspension or non-renewal.
Question 2 (Chapter 7)
During a license renewal investigation, TDI discovers that a Texas P&C agent falsified their continuing education completion records on the renewal application. At an administrative hearing, which outcome is MOST likely?
- A) The agent receives a verbal warning with no further consequences
- B) The agent's license may be revoked or suspended, and administrative penalties may be imposed for material misrepresentation
- C) The agent is given 30 days to actually complete the CE hours with no other penalty
- D) The hearing officer has no authority over CE compliance issues
Show answer & explanation
Answer: B
Falsifying continuing education records on a renewal application constitutes material misrepresentation, which is a serious violation under the Texas Insurance Code. At an administrative hearing before SOAH, the Commissioner may revoke, suspend, or refuse to renew the agent's license and impose administrative penalties. The agent has the right to appeal the decision to a Travis County district court.
Question 3 (Chapter 5)
A surplus lines agent in Texas needs to verify that a Lloyd's of London syndicate is eligible to write surplus lines business in the state. The agent should check which resource maintained by the Texas Department of Insurance?
- A) The NAIC company database
- B) The Eligible Surplus Lines Insurer List (white list)
- C) The Texas FAIR Plan member roster
- D) The Federal Insurance Office registry
Show answer & explanation
Answer: B
The Texas Department of Insurance maintains the Eligible Surplus Lines Insurer List (commonly called the white list). Surplus lines agents may only place coverage with nonadmitted insurers — including Lloyd's syndicates — that appear on this list. Insurers on the white list must meet minimum financial standards. Placing coverage with any unlisted nonadmitted insurer constitutes unauthorized insurance.
Question 4 (Chapter 3)
An applicant applies for auto insurance and receives a binder from the agent providing temporary coverage effective immediately. Under Texas law, what is the typical maximum duration of a binder?
- A) 30 days
- B) 60 days
- C) 90 days
- D) 120 days
Show answer & explanation
Answer: B
A binder provides temporary insurance coverage while the formal policy is being processed and issued. In Texas, binders for property and casualty insurance generally cannot exceed 60 days. If the policy has not been issued within that period, the binder expires unless extended by the insurer. The binder should contain the essential terms of coverage including the effective date, perils covered, and policy limits.
Question 5 (Chapter 4)
A Texas auto insurer offers a new Personal Auto Policy. The agent explains that PIP (Personal Injury Protection) coverage is included. The applicant says they do not want PIP. Under Texas law, what must happen?
- A) PIP is mandatory in Texas and cannot be rejected under any circumstances
- B) The insurer must offer PIP, but the applicant may reject it in writing; PIP is not mandatory in Texas
- C) PIP is not available in Texas
- D) PIP can only be rejected if the applicant has health insurance
Show answer & explanation
Answer: B
In Texas, insurers are required to offer PIP with every auto policy, but the insured has the right to reject it in writing. PIP is a no-fault coverage that pays medical expenses, lost income (up to 80%), and essential services for the insured and passengers regardless of fault. It is broader than Medical Payments coverage.
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Practice Questions 6-10: TDI, the Commissioner and Unfair Practices
Question 6 (Chapter 7)
A consumer files a formal complaint with TDI alleging unfair claim denial on a homeowner's policy. Under TDI's complaint resolution process, what is the typical timeline for TDI to respond to the consumer's complaint?
- A) TDI has no set timeline and may take as long as needed
- B) TDI acknowledges the complaint promptly, contacts the insurer, and works to resolve the matter typically within 30 to 60 days
- C) TDI must resolve all complaints within 5 business days
- D) TDI forwards all complaints to federal regulators for resolution
Show answer & explanation
Answer: B
When TDI receives a consumer complaint, it acknowledges receipt, opens an investigation, and contacts the insurer to request a response and documentation. TDI typically works to resolve complaints within 30 to 60 days, though complex matters may take longer. If TDI finds a violation, it may require corrective action, impose penalties, or refer the matter for enforcement proceedings.
Question 7 (Chapter 7)
A homeowner files a complaint with TDI claiming that their insurer unreasonably delayed payment on a roof damage claim for 4 months. After reviewing the complaint, TDI contacts the insurer. The insurer responds with documentation showing the claim was legitimately complex and required multiple inspections. What is TDI's MOST likely next step?
- A) TDI automatically revokes the insurer's license for the delay
- B) TDI reviews the insurer's response and documentation, determines whether the delay was reasonable, and either closes the complaint or takes further action if a violation is found
- C) TDI immediately files a lawsuit against the insurer on the homeowner's behalf
- D) TDI ignores the insurer's response and orders immediate payment
Show answer & explanation
Answer: B
TDI's complaint resolution process involves reviewing both the consumer's complaint and the insurer's response, including supporting documentation. TDI evaluates whether the insurer's actions complied with the Texas Prompt Payment of Claims Act and other applicable laws. If the delay was justified, TDI may close the complaint; if a violation is found, TDI may require corrective action or impose penalties.
Question 8 (Chapter 7)
A consumer files a complaint with the Texas Department of Insurance alleging that an insurer unfairly denied a homeowner's claim. What is the FIRST step TDI typically takes?
- A) TDI immediately revokes the insurer's license
- B) TDI reviews the complaint and contacts the insurer to request a response and relevant documentation
- C) TDI files a lawsuit against the insurer on behalf of the consumer
- D) TDI refers the complaint directly to a district court
Show answer & explanation
Answer: B
When TDI receives a consumer complaint, it typically reviews the complaint and contacts the insurer to request a response and relevant policy and claims documentation. TDI acts as an intermediary to resolve disputes and can take enforcement action if violations are found. TDI does not file lawsuits on behalf of consumers or immediately revoke licenses.
Question 9 (Chapter 7)
The Commissioner of Insurance discovers that an insurer operating in Texas is financially impaired. Which of the following actions can the Commissioner take?
- A) The Commissioner can only issue a warning letter
- B) The Commissioner can place the insurer under supervision, conservatorship, or seek a court order for rehabilitation or liquidation
- C) The Commissioner must defer to the federal government for action
- D) The Commissioner can impose fines but has no authority over the insurer's operations
Show answer & explanation
Answer: B
The Texas Commissioner of Insurance has broad authority over financially impaired insurers. The Commissioner may place an insurer under supervision, appoint a conservator, or petition a Travis County district court for rehabilitation or liquidation. These actions protect policyholders from insolvent insurers.
Question 10 (Chapter 8)
Under Texas rate regulation for property and casualty insurance, most lines of insurance use which type of rating system?
- A) Prior approval — rates must be approved before use
- B) File and use — insurers file rates with TDI and may use them upon filing
- C) Open competition — no filing is required
- D) State-made rates — the Commissioner sets all rates
Show answer & explanation
Answer: B
Texas uses a file-and-use system for most lines of P&C insurance. Under this system, insurers file their rates with the Texas Department of Insurance and may begin using them upon filing. The Commissioner retains the authority to disapprove rates that are excessive, inadequate, or unfairly discriminatory. Some specific lines may have different requirements.
Practice Questions 11-13: Cancellation, Renewal and Claim-Handling Deadlines
Question 11 (Chapter 3)
An insurer cancels a homeowner's policy mid-term. Under Texas law, what is the insurer generally required to provide?
- A) Verbal notice to the insured at least 7 days before cancellation
- B) Written notice to the insured with the required number of days' advance notice as specified by Texas statute, along with the reason for cancellation
- C) No notice is required if the insurer refunds the unearned premium
- D) Notice only to the insurance agent, who must then inform the insured
Show answer & explanation
Answer: B
Under Texas law, an insurer must provide written notice of cancellation to the insured with the statutorily required number of days' advance notice (which varies depending on the reason for cancellation — for example, 10 days for nonpayment of premium, or longer for other reasons). The notice must state the reason for cancellation. These requirements protect consumers from arbitrary or surprise cancellations.
Question 12 (Chapter 3)
A Texas homeowner's policy expires on June 30. The insurer mails a nonrenewal notice on June 20, giving only 10 days' notice. Under Texas law requiring 30 days' advance notice of nonrenewal, what is the effect?
- A) The nonrenewal is valid because any written notice is sufficient
- B) The nonrenewal is defective — because the insurer failed to provide the required 30 days' notice, the policy may continue in force until proper notice is given
- C) The insured must accept the nonrenewal regardless of notice timing
- D) The Texas Department of Insurance must approve all nonrenewals before they take effect
Show answer & explanation
Answer: B
Texas law requires at least 30 days' advance written notice of nonrenewal. If the insurer fails to provide timely notice, the nonrenewal is defective and the policy may continue in force until proper notice is provided. This protects consumers from losing coverage without adequate time to find replacement insurance.
Question 13 (Chapter 3)
Under the Texas Prompt Payment of Claims Act (Texas Insurance Code Chapter 542), an insurer must acknowledge receipt of a claim within how many days, and must accept or deny the claim within how many days after receiving all required information?
- A) Acknowledge within 30 days; accept or deny within 60 days
- B) Acknowledge within 15 business days; accept or deny within 15 business days after receiving all items, statements, and forms required to secure final proof of loss
- C) Acknowledge within 5 days; accept or deny within 90 days
- D) No specific deadlines exist under Texas law
Show answer & explanation
Answer: B
The Texas Prompt Payment of Claims Act requires insurers to: (1) acknowledge receipt of a claim within 15 business days, (2) accept or deny the claim within 15 business days after receiving all items, statements, and forms reasonably required to secure final proof of loss, and (3) pay the claim within 5 business days after notifying the claimant of acceptance. If the insurer fails to meet these deadlines, the insured may recover the claim amount plus 18% annual interest and reasonable attorney's fees.
Practice Questions 14-18: TWIA, TAIPA and Texas Residual Markets
Question 14 (Chapter 8)
After a major hurricane causes $2 billion in insured losses in the TWIA territory, TWIA's available funds are insufficient to pay all claims. Under the TWIA assessment mechanism, how does TWIA fund the shortfall?
- A) TWIA receives direct funding from the federal government
- B) TWIA may assess member insurers writing P&C business in Texas and may also issue public securities (catastrophe bonds)
- C) TWIA simply denies claims exceeding its available funds
- D) TWIA raises premiums retroactively on all existing policyholders
Show answer & explanation
Answer: B
TWIA's funding mechanism for catastrophic losses includes multiple tiers. After exhausting its available reserves and the Catastrophe Reserve Trust Fund, TWIA may assess member insurers (all P&C insurers writing business in Texas participate) and may issue public securities such as catastrophe bonds backed by surcharges on coastal policyholders. This tiered approach spreads the financial burden of catastrophic windstorm losses.
Question 15 (Chapter 8)
After a major hurricane, TWIA's available reserves and the Catastrophe Reserve Trust Fund are exhausted. TWIA must activate its loss funding mechanism. Under Texas law, the funding is structured in tiers. Which of the following BEST describes how TWIA's tiered funding works?
- A) TWIA receives a single lump-sum appropriation from the state legislature
- B) TWIA activates successive tiers that include member insurer assessments, public securities backed by policyholder surcharges, and potential additional assessments, with each tier triggered when the previous tier is exhausted
- C) TWIA issues stock to the public on a major exchange
- D) TWIA files for bankruptcy and ceases paying claims
Show answer & explanation
Answer: B
TWIA's loss funding mechanism operates in tiers. After exhausting its available reserves and the CRTF, TWIA activates successive tiers: member insurer assessments, issuance of public securities (bonds) backed by policyholder surcharges and premium surcharges on coastal policies, and additional assessments. Each tier is triggered when the previous tier's capacity is exhausted. This tiered structure distributes catastrophic losses across the insurance industry and policyholders.
Question 16 (Chapter 8)
A property owner obtains coverage through the Texas FAIR Plan. What types of coverage and limits does the FAIR Plan typically provide?
- A) Comprehensive coverage identical to a standard homeowner's policy with unlimited limits
- B) Basic property coverage (primarily fire and extended coverage) with coverage limits that may be lower than standard market policies
- C) Only windstorm and hail coverage
- D) Commercial general liability coverage only
Show answer & explanation
Answer: B
The Texas FAIR Plan provides basic property insurance, primarily fire and extended coverage perils. Coverage limits may be lower than what is available in the standard market, and the coverage is generally more limited than a standard homeowner's policy. The FAIR Plan is designed as a safety net of last resort, not a substitute for standard market coverage. Windstorm and hail in coastal areas are covered by TWIA, not the FAIR Plan.
Question 17 (Chapter 8)
The TAIPA application process requires a Texas driver seeking assigned risk coverage to complete specific steps. Which of the following accurately describes the TAIPA application process?
- A) The applicant applies directly to TAIPA online, and TAIPA issues the policy itself
- B) The applicant applies through a licensed agent, and TAIPA assigns the risk to a participating insurer that issues the policy
- C) The applicant must apply to at least 10 insurers before TAIPA will accept the application
- D) TAIPA coverage is only available through surplus lines brokers
Show answer & explanation
Answer: B
Under the TAIPA process, the applicant works with a licensed insurance agent who submits the application to TAIPA. TAIPA then assigns the risk to a participating insurer (all auto insurers in Texas are required to participate) on a rotational basis. The assigned insurer issues and services the policy. The agent assists the applicant throughout the process but does not select which insurer receives the assignment.
Question 18 (Chapter 8)
A coastal property owner in Galveston obtains windstorm coverage through TWIA for their home insured at $250,000. A hurricane causes $50,000 in wind damage. The TWIA policy applies a percentage-based deductible. What is the standard TWIA deductible the owner must pay before TWIA pays the claim?
- A) A flat $1,000 deductible
- B) 2% of the insured value, which is $5,000
- C) 5% of the insured value, which is $12,500
- D) 10% of the loss amount, which is $5,000
Show answer & explanation
Answer: B
TWIA policies typically apply a percentage-based deductible of 2% of the insured value of the property. For a home insured at $250,000, the deductible would be $5,000 (2% x $250,000). This means the property owner pays the first $5,000 of the $50,000 loss, and TWIA pays the remaining $45,000, subject to policy terms. Higher deductible options may be available at reduced premium rates.
What to Do With Your Score
16 or more correct: your statute knowledge is exam-ready. Spend your remaining time on the product sections, which carry the other 100 scored questions.
11 to 15: typical at two weeks out. The gaps are usually specific numbers rather than whole topics — note which deadlines you missed and drill those.
10 or fewer: do not book the exam yet. The Texas section alone can cost you the pass, and it is the fastest section to fix.
Next step: the free Texas P&C practice exam mixes statute questions in with everything else under real timing, which is a harder and more honest test than a topic set like this one. The full LanePrep course covers both statute chapters as audio lessons, so the deadlines and numbers can be reviewed on a commute — chapter 1 is free, no signup.
Question counts and the content weighting come from the Pearson VUE Texas examination content outline; statute references were verified against the Texas Insurance Code. Read August 2026.
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