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Study guide

Texas General Lines - Property and Casualty

The complete syllabus, taught chapter by chapter.

Questions
145
Time
150minutes
Scaled pass
70not a raw %
Edition
2026

Single-user licence. You may print this file and write on it. You may not redistribute, resell or post it. © Sitonce 2026.

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Texas General Lines - Property and Casualty

Study guide, 2026 edition.

Published by
Sitonce. sitonce.com
Edition
2026. Regulations current at this edition
Licence
Single-user. You may print this file and write on it. You may not redistribute, resell or post it.
Not affiliated
Sitonce is not affiliated with, endorsed by or approved by the exam authority named on the cover. Marks belong to their owners.
Corrections
Report anything that looks wrong to [email protected] and it is fixed in the next edition.

Copyright © 2026 Sitonce. All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, without the prior written permission of the publisher, except as permitted by the single-user licence above.

Preface

How to use this guide

The complete syllabus for the Texas General Lines - Property and Casualty. Read all 23 chapters and you have been taught 94 teaching subtopics mapped to the official outline.

Read it against the paper's weights

The 23 teaching chapters build concepts in a useful learning order. The eight official sections below determine exam weighting; they do not assign a separate percentage to each chapter. Use your practice results to decide which chapters need more time.

Practice questions

Once you have read a chapter, drill on it. 725 practice questions live on the Sitonce website (sitonce.com). They adapt to what you keep getting wrong, keep a notebook of your own mistakes, and explain each miss against the option you actually chose. That adaptation is where the website earns its place; a paper file cannot do it.

Then sit the mocks

When you have worked through the chapters and the practice questions, sit the five mock papers that ship alongside this book. Each carries its answer key at the back of the same file. Sit them the way you will sit the real one - a mock done in pieces over three evenings measures your notes, not your recall.

The exam at a glance

Texas Property and Casualty

Everything about the exam itself: what it is, how it runs, what it costs, and how it is scored. Read this before you plan your revision.

AuthorityTexas Department of Insurance
Delivered byPearson VUE
FormatMultiple choice, computer-based, closed book
LanguageEnglish
Questions145, of which 130 are scored and 15 are unscored pretest items you cannot identify
Time150 minutes
SittingsBook an available appointment through Pearson VUE
FeeUSD 49 (exam fee; confirm when booking)
Results -
ValidityApply for the license within one year of passing

The mark and what it means

The passing scaled score is 70 on a 0 - 100 scale. It is not a published raw percentage. Practice results do not predict an official scaled score. 130 of the 145 questions are scored and you cannot tell which, so answer all of them as though they count.

The blueprint

The paper is drawn to fixed weights per topic. This is the arithmetic behind the study plan on the next page:

SectionTopicMarksShare
1G-I. Property policies2217%
2G-II. Property insurance concepts1512%
3G-III. Property provisions and contract law1310%
4G-IV. Casualty policies and bonds2318%
5G-V. Casualty insurance concepts1512%
6G-VI. Casualty policy provisions129%
7TX-I. Texas regulation and producer responsibilities1814%
8TX-II. Texas property and casualty requirements129%
Total130100%

Study plan

Spend time in proportion to the marks

Use the official weighting as a starting point, then spend extra time on the concepts you find difficult. The share column below is what matters; the hours column applies a 40-hour reference total for scale.

SectionOfficial sectionWeightof 40 h
1G-I. Property policies17%7 h
2G-II. Property insurance concepts12%5 h
3G-III. Property provisions and contract law10%4 h
4G-IV. Casualty policies and bonds18%7 h
5G-V. Casualty insurance concepts12%4 h
6G-VI. Casualty policy provisions9%4 h
7TX-I. Texas regulation and producer responsibilities14%5 h
8TX-II. Texas property and casualty requirements9%4 h
Total100%40 h

Whatever total time you decide on for this paper, use these shares as a starting point for each official section. Pick the total from your own baseline: how many marks you dropped the first time you attempted a mock, and how many hours a week you can give it.

How to work through this book

  1. Read. Read every chapter once, in order. Do not attempt any questions yet. Skim rather than memorise on the first read; the second read will do that.
  2. Drill. Sit the practice questions on the Sitonce website (sitonce.com), area by area. Come back to this book for anything you got wrong and re-read the section it belongs to.
  3. Sit the mocks. One mock paper a week for the last five weeks, sat under timed conditions with the answer key put aside. Mark it against the key on the same day and diagnose what you missed against the section it came from.

Contents

  1. iPrefaceHow to use this guide
  2. iiThe exam at a glanceFormat, fee, mark, blueprint
  3. iiiStudy planWeight-hour allocation and a three-step approach
  4. 1 How insurance handles riskWhy insurance pools losses · Which risks can be insured? · Perils and the three kinds of hazard · Damage, financial consequences and indemnity · Who has an insurable interest? 5 sections
  5. 2 Calculating what a policy paysChoosing the right value · Applying deductibles and limits · Insurance to value and coinsurance · Specific and blanket coverage 4 sections
  6. 3 Understanding legal liabilityNegligence and the cause of an injury · When liability comes from a different rule · What the damages are meant to pay for · Recognizing an occurrence 4 sections
  7. 4 Reading the insurance contractFrom an application to an agreement · Finding the rule that controls the claim · Checking the insured and the territory · Statements, promises and withheld information 4 sections
  8. 5 Managing a policy and a claimWhat to do after a loss · Disputes about value and settlement · Sharing a loss and protecting recovery rights · Starting, changing and ending coverage · Vacant buildings and temporary absence · Premium audits and certificates of insurance · Supplementary payments and the liability limit 7 sections
  9. 6 Homeowners coverageHomeowners protection: HO-2 and HO-3 · Renters and condominium owners need different protection · HO-5 and HO-8: broader perils versus modified settlement 3 sections
  10. 7 Dwelling coverageDP-1: start with the coverages actually purchased · DP-2: broader named perils and two kinds of lost use · DP-3: open-perils buildings do not mean all-risk contents 3 sections
  11. 8 Commercial property and business interruptionHow a commercial package fits together · Identify the property before choosing the cause of loss · Lost income and the cost of keeping a business open · Equipment breakdown is more than boiler insurance · Insuring property while it is being built · Cyber losses: your recovery costs and other people’s claims 6 sections
  12. 9 The businessowners policyWhat a businessowners policy combines · Find the exposures a BOP does not automatically solve 2 sections
  13. 10 Property that needs specialist coverageInsure valuable items beyond a general contents limit · Protect business property beyond one fixed address · Separate earthquake, wind and flood losses · Match manufactured-home and farm coverage to actual use · Distinguish boat damage from boating liability 5 sections
  14. 11 Flood insuranceDecide whether water damage meets the flood definition · Choose the form, property coverage and settlement basis · Know when flood coverage starts 3 sections
  15. 12 Commercial general liabilitySeparate ongoing operations from products and completed work · Put the injury, claim and policy dates on a timeline · Distinguish Coverage B, medical payments and defense expenses · Identify the insured and apply the right limits · Analyze property damage without treating CGL as a warranty 5 sections
  16. 13 Personal and business auto coverageApply the injury and property limits separately · Separate medical benefits from claims against another driver · Choose coverage for the vehicle and for substitute transport · Check the person, the vehicle and the coverage selection · Cover garages, dealers and drivers who use other cars · Recognize gaps before promising coverage 6 sections
  17. 14 Workers compensation and employers liabilityDecide whether the injury is connected to employment · Separate benefits from employers-liability damages · Check the states, classifications and final premium 3 sections
  18. 15 Crime insurance and bondsIdentify what was taken and how it happened · Follow the three parties to a surety bond · Use fidelity protection for dishonest handling of property 3 sections
  19. 16 Professional, cyber and excess liabilityRecognize a claim about professional work · Separate management decisions from employment disputes · Distinguish cyber costs and liquor claims · Work through primary, excess and umbrella layers 4 sections
  20. 17 Underwriting information and federal protectionsUse reports without taking away consumer rights · Explain what financial privacy protects · Separate terrorism coverage from the federal backstop 3 sections
  21. 18 How Texas regulates insurersUnderstand the regulator’s job · Distinguish sanctions from emergency orders · Check authority before transacting insurance · Classify an insurer without mixing the labels 4 sections
  22. 19 Getting and maintaining a Texas agent licenseChoose the license for the work · Apply, obtain an appointment and renew · Keep education and business records current · Report changes and understand discipline · Handle commissions, referrals and client fees 5 sections
  23. 20 Selling and underwriting responsibly in TexasExplain coverage honestly and avoid improper inducements · Handle claims fairly and track the right deadline · Separate risk selection, prices and policy forms · Place difficult risks through the surplus-lines market 4 sections
  24. 21 Texas property coverage and market safeguardsKnow when homeowners coverage can end or change · Choose between FAIR Plan and coastal wind coverage · Separate the claim amount from the claim deadlines · Distinguish insolvency protection from medical-liability access 4 sections
  25. 22 Texas auto insurance requirementsRead the minimum limits before calculating a claim · Separate UM and UIM from personal injury protection · Know when auto coverage can end and where to find a policy · Match rideshare coverage to the driver’s activity 4 sections
  26. 23 Texas workers compensation requirementsDecide whether the injury falls within Texas coverage · Match the benefit to the worker’s medical and earning position · Explain benefits after a work-related death 3 sections

Chapter 1

How insurance handles risk

5 sections

Understand the risks insurance can cover, how losses are classified and who has a financial interest in property.

Learning objectives

By the end of this chapter you will be able to explain:

  1. Why insurance pools losses
  2. Which risks can be insured?
  3. Perils and the three kinds of hazard
  4. Damage, financial consequences and indemnity
  5. Who has an insurable interest?

In this chapter

  1. 1.1Why insurance pools losses
  2. 1.2Which risks can be insured?
  3. 1.3Perils and the three kinds of hazard
  4. 1.4Damage, financial consequences and indemnity
  5. 1.5Who has an insurable interest?

1.1Why insurance pools losses

  • Imagine that you own a small bakery. You can budget for flour, rent and wages, but a fire could destroy equipment that would take years of profit to replace. Insurance lets you pay a known premium in exchange for the insurer’s promise to meet covered losses under the policy. You still need to understand the limits, exclusions and any deductible, which is the part of a covered loss you must bear yourself.
  • How the pool helps. An insurer collects premiums from many policyholders. Most will not experience the same serious loss during the same period. Their contributions help finance the claims of those who do. The insurer also needs enough money for expenses and other costs, so the expected cost of claims is not the whole premium.
  • Predicting a group. The law of large numbers helps explain why a larger pool of comparable, sufficiently independent risks produces more reliable estimates of average loss. It cannot tell the bakery owner whether a fire will happen next Tuesday. It also does not promise that the insurer’s actual claims will equal its forecast in any particular year.
  • Suppose a teaching example gives 1,000 comparable shops a 1% annual chance of one $20,000 loss each. The expected number of losses is 1,000 × 0.01 = 10. Expected claims are therefore 10 × $20,000 = $200,000, or $200 per shop. These are averages used for planning. Exactly ten shops need not have a loss, and $200 is not a quoted insurance premium.
  • Why the mix matters. If all those shops are on one flood-prone street, one flood could damage many at once. Adding nearby shops increases the size of the pool without removing that shared exposure. Insurers must consider how risks are related as well as how many they insure. Pooling also does not require equal premiums: a shop with a different risk of loss may contribute a different amount.
  • Comparing experience fairly. A larger portfolio can have more total claims even while its average loss becomes more predictable. Compare similar exposures over comparable periods: 1,000 properties observed for a month do not provide the same time at risk as 1,000 properties observed for a year. Copying records adds no new experience. A meaningful estimate needs information about how often losses occur and how large they are.
  • When a question mentions a larger insurance pool, look for improved predictability across the group. An answer promising that each member becomes safer, or that every member should pay the same premium, is making a different claim.

1.2Which risks can be insured?

  • A restaurant owner faces several kinds of uncertainty. A new menu might attract customers and increase profit, or it might sell badly. A kitchen fire could damage the ovens. These are both risks, but they are different exposures for insurance purposes.
  • Pure risk means the possible outcomes are a loss or no loss. An accidental fire that destroys an oven is an example. If no fire occurs, the owner keeps the oven; the absence of damage does not create a speculative profit. Speculative risk includes the possibility of gain as well as loss. Investing in a new restaurant or buying shares can produce either outcome.
  • Separate the exposure from the person taking it. A business owner does not become uninsurable just because running a business involves speculation. Ordinary property insurance can address accidental damage to business property. It does not guarantee that the owner’s commercial idea will succeed.
  • Risk management also distinguishes how the exposure is handled. Avoidance means discontinuing the activity that creates it. Reduction uses measures such as training or physical safeguards to lower the chance or size of loss. Retention leaves financial responsibility with the business, while insurance transfers defined financial consequences under a contract. A business can combine these methods; safer operations do not by themselves transfer the remaining losses.
  • Setting money aside does not itself transfer risk. A business that saves its own funds to pay small losses still retains those losses. The reserve is a way to finance retention. Insurance or a suitable contract can move specified financial responsibility to another party; moving cash between the business’s own accounts cannot.
  • What makes a risk suitable for insurance? Insurers need a workable way to estimate losses across a pool. Losses should generally be accidental from the relevant insured’s perspective and identifiable in terms of what happened and how much was lost. The price must also be economically workable. An almost certain, predictable expense is usually something to budget for rather than an uncertain loss to transfer.
  • For example, normal wear will eventually make an old oven need replacement. That is different from the chance that a sudden fire damages it tomorrow. Both could cost the owner money, but the predictable deterioration and the accidental event have different characteristics. The actual policy determines whether a particular claim is covered.
  • Calling an exposure pure risk is only the first classification. It does not establish that every insurer will accept it, that the premium will be affordable or that every policy covers it. A coastal property can face a pure risk of storm damage while still presenting difficult concentration and pricing problems for an insurer.
  • To answer a classification question, identify the uncertainty being tested. Is it accidental damage to an asset, or the commercial success of an investment? Then keep that classification separate from the later question of whether a policy covers the loss.

1.3Perils and the three kinds of hazard

  • A fire damages a workshop after a worn electrical cable overheats. The peril is the fire: it is the event causing the damage. The damaged wiring is a hazard because it increases the chance of that event. A hazard can also increase the severity of a loss once it begins.
  • Physical hazards are tangible conditions. Damaged wiring can increase the likelihood of fire, while combustible stock stored beside a heat source can help a fire spread. The question is about the condition of the property or activity, even if a person originally created that condition.
  • Moral hazards involve dishonesty or an intention to profit improperly from insurance. An owner who deliberately destroys unwanted stock to collect a claim presents a moral hazard. So does a claimant who falsely adds undamaged items to a loss inventory. The distinguishing feature is the dishonesty, rather than simply a failure to be careful.
  • Morale hazards involve carelessness or indifference because someone expects insurance to absorb the loss. A shopkeeper who stops taking normal security precautions because “the insurer will pay anyway” presents a morale hazard. There is no stated plan to cause a loss or submit a false claim. Broader economics writing sometimes calls both behaviors moral hazard, but insurance exam questions can test the distinction.
  • One incident can contain more than one feature. A missing handrail is a physical condition. An owner’s decision to ignore it because insurance will handle an injury claim describes an attitude. Repairing the rail addresses the physical condition, but the careless attitude may remain. Conversely, an honest, careful owner can still have a building with combustible construction or an exposed location.
  • Responding to the problem. Physical improvements can reduce the chance or severity of damage. A deductible changes how the cost is shared: because the insured still bears part of a covered loss, it can encourage care. A deductible does not repair a defect, and an inspection does not by itself establish dishonesty. Check the evidence before treating an innocent error or a genuine valuation disagreement as fraud.
  • First identify what the question is asking you to classify: the damaging event, a material condition, a dishonest act or an attitude toward prevention. That sequence is more useful than trying to assign one label to an entire story. Classification alone does not decide whether an insurer owes a particular claim.

The rest of this study guide comes with the course

Texas Property and Casualty: the whole syllabus taught, the questions that test it, 5 timed mocks, and all 6 PDFs to print.