Free Texas Limited Lines Practice Exam — 20 Questions, No Signup

1. If an applicant is unqualified or unfit, the Commissioner may:

Refer the matter to the ComptrollerAutomatically grant a broader licenseBe required to issue the licenseDeny the license application

2. Once the insurer and insured agree on a covered loss amount, the insurer is generally required to:

Cancel the policy before payingReopen the appraisal every monthPay the claim within the policy's time frameDelay payment indefinitely at will, in most cases

3. A coverage extension in a property policy typically:

Cancels the policy after one claimRaises the deductible the insured owesReduces the limit that applies to a claim, in most casesBroadens coverage to include additional property or perils

4. The Commissioner of Insurance does NOT:

Impose administrative penaltiesAdminister the Insurance CodeWrite new statutes for the Insurance CodeExamine license holders' records, in most cases

5. Under the limited lines CE rules, at least half of the required hours must be completed:

During the final week before the license expiresAfter the agent has already renewed the licenseThrough self-study courses taken entirely onlineIn a classroom or equivalent supervised setting

6. The conditions of a policy are the provisions that:

Name perils the policy never coversState the insurer's basic promise to pay, in most casesShow the premium and named insuredSet the duties each party must meet for coverage

7. A deductible affects small claims by:

Making the insured absorb losses below the deductibleIncreasing the limit for each small loss, in most casesTurning small claims into total lossesRequiring the insurer to pay them twice

8. An adverse-action notice under the FCRA must, at a minimum, tell the consumer:

That a report was used and how to reach the agencyThe agent's personal commission amountThe insurer's confidential profit margin, in most casesThe names of all other applicants

9. Only the insurer makes a legally enforceable promise in the policy, while the insured makes none after paying premium. This makes the contract:

AleatoryUnilateralSpeculativeBilateral

10. An agent who collects premiums holds them in trust for the insurer. This duty is a:

Speculative dutyRebating dutyFiduciary dutyCoinsurance duty

11. The federal Fair Credit Reporting Act (FCRA) primarily regulates:

How the guaranty fund pays insolvency claims, in most casesHow agents split commissions with peersThe premium tax rate on each policy soldHow consumer report information may be collected and used

12. For an insurance policy to be a valid contract, it must include which of the following?

A guaranteed profit for the insured, in most casesA speculative wager on a strangerOffer, acceptance, consideration, and legal purposeA rebate paid to the applicant

13. The main purpose of a coinsurance clause in a property policy is to:

Guarantee the insured a profit on claimsEncourage the insured to carry adequate insurance to valueForce the insurer to share losses with rivals, in most casesEliminate the deductible on partial losses

14. A jeweler insures a display case containing many rings under one limit for the whole case. If three rings are stolen, the limit:

Doubles because several items were takenCaps the total paid regardless of the number of ringsIs waived when more than one item is lost, in most casesApplies separately to each ring stolen

15. Growing crop insurance offered as a limited line covers:

The farmer's home and personal auto, in most casesCrops against covered weather and natural hazardsThe farm's payroll and office rentThe lender's outstanding mortgage

16. An agency contract authorizes an agent to solicit policies; collecting the initial premium for those policies reflects:

Apparent authority from insurer conductImplied authority incidental to solicitingA rebate offered to the applicantA breach of the agency contract

17. An insurer voluntarily gives up its right to enforce a policy provision. This intentional relinquishment is a:

WaiverRebateSubrogationRatification

18. A policy that pays a pre-agreed amount for a total loss of an insured antique, regardless of its later market value, is a:

Deductible policySpeculative policyReimbursement policyValued policy

19. For a property insurance contract, insurable interest must exist:

At no point during the policyOnly after the claim is paidAt the time of the lossOnly when the policy is first issued

20. The key difference between a moral hazard and a morale hazard is that a moral hazard involves:

Dishonesty, such as intending to profit from a lossA sudden and unforeseen accidentA tangible physical defect in property, in most casesCarelessness because insurance exists