Texas Personal Lines Insurance License Exam — All Questions

What minimum auto liability limits must a Texas personal auto policy carry to satisfy the state's financial-responsibility law?

• a.$15,000 per person / $30,000 per accident bodily injury and $10,000 property damage
• b.$50,000 per person / $100,000 per accident bodily injury and $50,000 property damage
• c.$30,000 bodily injury per person, $60,000 bodily injury per accident, and $25,000 property damage✓
• d.$20,000 per person / $40,000 per accident bodily injury and $15,000 property damage

Texas sets minimum motor-vehicle liability limits of 30/60/25 - $30,000 bodily injury per person, $60,000 bodily injury per accident, and $25,000 property damage. These are floors; producers should offer higher limits to better protect the insured's assets. Source: Texas Department of Insurance (https://www.tdi.texas.gov).

How does Texas generally handle liability for auto accidents?

• a.It is an at-fault (tort) state - the driver who causes the crash is liable for the other party's injuries and damage✓
• b.It is a no-fault state where each driver's own PIP pays first regardless of fault
• c.Fault is never considered; claims are split evenly
• d.Only a state fund pays auto claims

Texas is a traditional at-fault (tort) state, not a no-fault state: the driver who causes a crash is responsible for the other party's bodily injury and property damage. That makes adequate liability limits and uninsured/underinsured motorist coverage important. Source: Texas Department of Insurance (https://www.tdi.texas.gov).

How is Personal Injury Protection (PIP) treated on a Texas personal auto policy?

• a.It is prohibited in Texas
• b.Insurers must offer PIP, and the insured may reject it in writing✓
• c.It fully replaces the need for liability coverage
• d.It is available only to commercial vehicles

In Texas, insurers must offer Personal Injury Protection (PIP), but the applicant may reject it in writing; if not rejected, a minimum PIP amount applies. PIP is a first-party medical/lost-wages coverage and does not change Texas's underlying at-fault liability system. Verify the current minimum PIP amount and rejection rules with the Texas Department of Insurance (https://www.tdi.texas.gov).

How are cancellation and nonrenewal of a personal auto or homeowners policy regulated in Texas?

• a.Insurers may cancel any policy at any time without notice
• b.Policies can never be cancelled once issued
• c.Only the insured may cancel; the insurer never can
• d.The Texas Insurance Code limits the permissible reasons and requires advance written notice of cancellation or nonrenewal✓

The Texas Insurance Code limits the reasons an insurer may cancel a personal auto or homeowners (residential property) policy mid-term and requires advance written notice of cancellation or nonrenewal. The exact number of days depends on the reason and line - verify current Texas notice periods with the Texas Department of Insurance.

Which best describes the body that writes and enforces Texas's insurance regulations affecting personal lines policies?

• a.The Texas Department of Insurance, under the Commissioner of Insurance✓
• b.A private trade association of insurers
• c.The U.S. Department of the Treasury
• d.County insurance boards

The Texas Department of Insurance, headed by the Commissioner of Insurance, adopts and enforces the administrative rules and market-conduct standards that apply to personal lines insurers and agents in Texas. Source: Texas Department of Insurance (https://www.tdi.texas.gov).