Texas All-Lines Adjuster Practice Test: Texas law, Part 3

Correct answer: A. $6,000

Sec. 4102.104(a) caps a public adjuster's total commission at 10 percent of the insurance settlement, whatever the contract says: 10 percent of $60,000 is $6,000. If the insurer pays or commits in writing to pay policy limits within 72 hours after the loss is reported, no percentage fee is allowed at all, only reasonable time-based compensation. Every claim payment must also name the insured as a payee.

Reference: Texas Insurance Code Sec. 4102.104

Correct answer: D. He may not adjust roofing-damage losses on behalf of an insurer

Sec. 4101.251(a) bars a licensed adjuster from adjusting a loss related to roofing damage on behalf of an insurer if the adjuster is a roofing contractor, provides roofing services or products for compensation, or is a controlling person in a roofing-related business. Disclosure does not cure the conflict. Separately, subsection (b) bars roofing contractors from acting as adjusters, and Sec. 4102.163 bars contractors from acting as public adjusters, on property they are or may be repairing.

Reference: Texas Insurance Code Secs. 4101.251 and 4102.163

Correct answer: D. August 20, 2027

Under Secs. 2210.573(a) and 2210.205(a)(1), a TWIA claim must be filed not later than the first anniversary of the date the damage occurred, here August 20, 2027. On a showing of good cause, the commissioner may extend the one-year period by up to 180 days under Sec. 2210.205(b). If TWIA needs more information, it may request it in writing within 30 days after the claim is filed.

Reference: Texas Insurance Code Secs. 2210.205 and 2210.573

Correct answer: A. 60 days to decide, then 10 days to pay

Sec. 2210.573(d) requires TWIA to accept, partly accept, or deny coverage in writing by the later of the 60th day after it receives the claim or the 60th day after it receives information it requested, unless the commissioner extends the period. Sec. 2210.5731 requires payment of an accepted claim or portion within 10 days after that notice. The 15 and 5 business day deadlines come from Chapter 542 for other insurers.

Reference: Texas Insurance Code Secs. 2210.573(d) and 2210.5731

Correct answer: B. He has waived his right to contest TWIA's amount of loss

Sec. 2210.574(b) requires a claimant who disputes the amount on an accepted claim to demand appraisal within 60 days after receiving the acceptance notice. A good-cause written request made within 15 days after that period ends may earn 30 more days. A claimant who misses these periods waives the right to contest TWIA's amount of loss. Suit under Sec. 2210.575 is for disputes over denied coverage, not amount.

Reference: Texas Insurance Code Secs. 2210.574 and 2210.575

Correct answer: C. The second anniversary of receiving TWIA's denial notice

Sec. 2210.577 requires an action against TWIA over denied coverage to be brought by the second anniversary of the date the claimant receives the partial or full denial notice, and it is a statute of repose that controls over other limitations periods. Before suing, the claimant must give notice of intent to sue under Sec. 2210.575, and TWIA may require mediation or a moderated settlement conference.

Reference: Texas Insurance Code Secs. 2210.575 and 2210.577

Correct answer: D. It covers wind and hail losses only, in designated coastal areas

TWIA, created in 1971, is a residual insurer of last resort that covers wind and hail losses only. Its designated catastrophe area is the 14 first-tier coastal counties, such as Galveston, Nueces, Cameron, and Aransas, plus parts of Harris County east of Highway 146. Flood and storm surge are not covered, and under Sec. 2210.578 an expert panel advises on separating wind damage from water damage.

Reference: TWIA, About Us: Overview; Texas Insurance Code Sec. 2210.578

Correct answer: A. Residential coverage, without wind or hail on TWIA-eligible risks

Sec. 2211.151 requires the FAIR Plan to make residential property insurance available in underserved areas to applicants whose property is insurable but who cannot get coverage in the voluntary market, as shown by two declinations from authorized residential insurers. Sec. 2211.156 bars the FAIR Plan from providing windstorm and hail coverage for a risk eligible for TWIA. Drivers who cannot get auto coverage use a separate assigned risk plan.

Reference: Texas Insurance Code Secs. 2211.151 and 2211.156

Correct answer: B. $30,000/$60,000/$25,000

Since January 1, 2011, Sec. 601.072 has set Texas minimums at $30,000 for bodily injury to or death of one person, $60,000 for bodily injury to or death of two or more people in one collision, and $25,000 for property damage, commonly written 30/60/25. Uninsured motorist limits offered under Insurance Code Sec. 1952.105 may not be lower than these amounts.

Reference: Texas Transportation Code Sec. 601.072

Correct answer: A. $75,000

The per-person limit caps the first injured person at $30,000, and the second person's $20,000 is paid in full, for $50,000, which is within the $60,000 per-accident limit. Property damage is capped at $25,000. Total: $50,000 + $25,000 = $75,000. Diego remains personally exposed for the other $15,000 of bodily injury and $3,000 of property damage. $85,000 wrongly ignores the per-person cap.

Reference: Texas Transportation Code Sec. 601.072

Correct answer: C. PIP applies unless rejected in writing and pays regardless of fault

Sec. 1952.152 requires every Texas auto liability policy to include PIP unless an insured named in the policy rejects it in writing. Sec. 1952.155 makes PIP payable without regard to fault or collateral sources. The required amount need not exceed $2,500 per person (Sec. 1952.153), covering medical, funeral, lost income, and replacement services for expenses incurred within 3 years of the accident.

Reference: Texas Insurance Code Secs. 1952.151-1952.155

Correct answer: C. $3,150

Sec. 1952.105(b) makes uninsured motorist property damage coverage subject to a $250 deductible, so it pays $3,400 - $250 = $3,150. UM coverage must be included in every Texas auto liability policy unless an insured named in the policy rejects it in writing (Sec. 1952.101). UM limits may be chosen up to the policy's liability limits but not below the 30/60/25 minimums.

Reference: Texas Insurance Code Secs. 1952.101 and 1952.105

Correct answer: B. No, because actual physical contact with that vehicle is required

Sec. 1952.104(3) requires that, for an insured to recover under UM when the owner or operator of the vehicle is unknown, actual physical contact must have occurred between that vehicle and the insured or the insured's property. A miss-and-run with no contact does not qualify, even with witnesses. UM does cover hit-and-run drivers when there is contact, and her own collision coverage, if any, could still pay for the car.

Reference: Texas Insurance Code Sec. 1952.104(3)

Correct answer: D. The employee was intoxicated when injured

Most Texas private employers may choose not to carry workers' compensation (Sec. 406.002). A non-subscriber sued by an injured employee loses the defenses of contributory negligence, assumption of risk, and fellow-employee negligence (Sec. 406.033(a)). It may still defend on the ground that the employee intended the injury or was intoxicated. The employee must prove the employer's negligence, and pre-injury waivers are void.

Reference: Texas Labor Code Secs. 406.002 and 406.033

Correct answer: B. February 1 to April 30

Labor Code Sec. 406.004 requires an employer without coverage to notify the division in writing, and DWC Form-005 states that the annual filing is due between February 1 and April 30 each year. Non-subscribers must also give written notice of non-coverage to new employees and post notices at the workplace (Sec. 406.005). Failing to file the notice is an administrative violation.

Reference: DWC Form-005; Texas Labor Code Secs. 406.004 and 406.005

Correct answer: A. Notify the employer within 30 days; file a claim within 1 year

Sec. 409.001 requires an injured employee, or someone acting for the employee, to notify the employer not later than the 30th day after the injury (or, for an occupational disease, after the employee knew or should have known it may be work related). Notice to a supervisor or manager counts. Sec. 409.003 requires a claim for compensation to be filed with the Division of Workers' Compensation within one year.

Reference: Texas Labor Code Secs. 409.001 and 409.003

Correct answer: C. The dispute is timely, but missing the 15-day deadline is a violation

Sec. 409.021(a) requires the carrier, within 15 days after written notice of injury, to begin paying benefits or send a written refusal. Under subsection (a-1), missing that deadline does not waive the right to contest compensability, but it is an administrative violation. Under subsection (c), a carrier that does not contest compensability on or before the 60th day after notice waives that right. June 14 is within 60 days of May 1.

Reference: Texas Labor Code Sec. 409.021

Correct answer: B. From the first day of his disability

Sec. 408.082 allows no income benefits unless disability lasts at least one week. If it lasts longer than one week, benefits begin to accrue on the eighth day after the injury. But if disability continues two weeks or longer, compensation is computed from the date the disability began, so the first week is paid retroactively. Because Ruben was disabled three weeks, he is paid from day one. Medical benefits have no waiting period.

Reference: Texas Labor Code Sec. 408.082

Correct answer: A. $630

Sec. 408.103 sets temporary income benefits at 70 percent of the difference between the average weekly wage and post-injury weekly earnings: 70 percent of ($900 - $0) = $630. The 75 percent rate for the first 26 weeks applies only to workers earning less than $10 an hour, so $675 is wrong here. $630 also falls between TDI's FY2027 minimum ($197) and maximum ($1,314) weekly benefits.

Reference: Texas Labor Code Sec. 408.103; TDI, SAWW and maximum/minimum weekly benefits

Correct answer: A. $1,314

Seventy percent of $2,000 under Labor Code Sec. 408.103 is $1,400, but income benefits are capped at the maximum weekly benefit, which TDI lists as $1,314 for injuries in fiscal year 2027 (October 1, 2026 to September 30, 2027), based on a state average weekly wage of $1,314.32. The $1,271 figure was the FY2026 maximum, which applied to injuries before October 1, 2026.

Reference: TDI, State average weekly wage and maximum/minimum weekly benefits; Texas Labor Code Sec. 408.103

Correct answer: D. Not liable, because horseplay was a producing cause

Workers' compensation pays without regard to fault for injuries in the course and scope of employment (Sec. 406.031), so ordinary carelessness does not reduce benefits. But Sec. 406.032 relieves the carrier of liability when the employee's horseplay was a producing cause, and also for injuries while intoxicated, willful attempts to injure, attacks by third persons for personal reasons, voluntary off-duty recreational activities, and most acts of God.

Reference: Texas Labor Code Secs. 406.031 and 406.032

Correct answer: A. $10,000

Sec. 408.186 requires the carrier to pay the person who incurred the burial costs the lesser of the actual reasonable burial expenses or $10,000, and here $10,000 is less than $12,500. If the employee died away from the usual place of employment, the carrier also pays reasonable transportation of the body. Separately, eligible beneficiaries receive death benefits equal to 75 percent of the employee's average weekly wage (Sec. 408.181).

Reference: Texas Labor Code Secs. 408.181 and 408.186

Correct answer: B. As a liquidated demand for the full $250,000 dwelling amount

Texas's valued policy law, Sec. 862.053, provides that a fire policy on real property, in case of a total loss by fire, is a liquidated demand against the insurer for the full amount of the policy, and the provision must appear verbatim in fire policies on Texas real property. It expressly does not apply to personal property, so the contents claim is adjusted on its own terms rather than paid automatically at $100,000.

Reference: Texas Insurance Code Sec. 862.053

Correct answer: C. A criminal offense (Class B misdemeanor) by the contractor

Sec. 27.02 makes it an offense for a seller paid from property insurance proceeds to advertise, promise, or actually pay, waive, absorb, or rebate the insured's deductible without the insurer's consent. The offense is a Class B misdemeanor; TDI notes penalties of up to a $2,000 fine and six months in jail. Contracts of $1,000 or more must include a notice that Texas law requires insureds to pay their deductible.

Reference: Texas Business and Commerce Code Sec. 27.02; TDI, New state law cracks down on roof scams

Correct answer: A. It does not invalidate the lender's interest under the policy

Sec. 862.055 provides that a mortgagee's or trustee's interest under a fire insurance contract on Texas property may not be invalidated by an act or neglect of the mortgagor or owner, or by a condition beyond the owner's control, and any conflicting contract provision is void. The owner's arson can defeat the owner's own claim, but the lender's protected interest survives.

Reference: Texas Insurance Code Sec. 862.055