Texas insurance law is in the Texas Insurance Code (TIC) and the Department's rules in Title 28 of the Texas Administrative Code (28 TAC). Workers compensation is in the Labor Code, and auto financial responsibility is in the Transportation Code. Each exam has a "Texas Statutes and Rules" section built from these. This guide covers the rules common to all lines. General concepts are in the national Insurance Regulation guide.

About the exam

Texas exams are delivered by Pearson VUE. They're scored on a scaled score of 70 to pass. The general and Texas questions are mixed together and scored as one exam, so there's no separate cut score for the state section. The current outlines took effect September 1, 2026.

Texas doesn't sell standalone Accident and Health, Property or Casualty exams.

• An agent who writes only A&H still needs the general life, accident and health license (TIC 4054.051).
• Property and casualty are tested together on the P&C exam.

The regulator

• The Texas Department of Insurance (TDI) is headed by the Commissioner of Insurance (TIC 31.002).
• The Governor appoints the Commissioner, with the Senate's consent, to a 2-year term that ends February 1 of odd-numbered years (31.022).
• TDI's Division of Workers' Compensation runs the workers compensation system (Lab. Code 402.001).
• Examinations: carriers are examined at least once every 5 years (401.052). Examiners get free access to the books and may question officers and agents under oath (401.054).
• Answering TDI: a written response to a TDI inquiry is due within 15 days. TDI must grant a 10-day extension if you ask in writing (38.001).
• Complaints: TDI updates the parties on a complaint's status at least quarterly (521.003).

Enforcement

• Administrative penalties up to $25,000 per violation, unless another law sets a different amount (84.022).
• Restitution to harmed Texas residents can be ordered. An authorization can be suspended for up to 1 year (82.052).
• Emergency cease and desist order (83.051 to 83.053):
  • served by certified or registered mail
  • becomes final on the 61st day unless a hearing is requested within 60 days
• Chapter 541 hearings can't be held before the 6th day after notice (541.102).
• Violating a 541 cease and desist order: $1,000 per violation, up to $5,000 total (541.110).
• Contested cases require at least 10 days' notice (Gov't Code 2001.051).

Insurers

• Domestic = organized in Texas. Foreign = another U.S. state. Alien = another country (982.001).
• A certificate of authority lists the kinds of insurance the insurer may write. It stays in effect until suspended or revoked (801.052, 801.053).
• Acts that count as doing insurance business include taking applications, collecting premiums and delivering policies (101.051).
• Insurer forms include stock, mutual, Lloyd's plans, reciprocals, fraternals and HMOs (801.001).
  • A Texas Lloyd's plan needs at least 10 underwriters acting through an attorney in fact (941.051, 941.052).
  • County mutuals may write all lines of auto insurance (912.151).
• Surplus lines:
  • Placed through a licensed surplus lines agent after a diligent effort in the admitted market (981.004).
  • The tax is 4.85% of gross premium (225.004).
  • Eligible insurers need at least $15 million in capital and surplus (981.057).

Agent licensing (TIC Chapters 4001–4005, 4051, 4054)

License types

• Life agent: life, annuities, AD&D and disability income (4054.301).
• General Life, Accident and Health: required for HMO agents and A&H-only agents (4054.051).
• General P&C, which includes personal lines authority (4051.403).
• Personal Lines P&C: individuals and families, mainly for personal or household use (4051.401). It can add individual A&H sold through a P&C insurer (4051.402).
• Limited licenses (4051.101, 4054.101, 4054.151), such as prepaid funeral life.
• Separate licenses for adjusters, MGAs, risk managers and surplus lines agents.
• Emergency license: 90 days, renewable once within 12 months (4051.054).

Qualifications (4001.104, 4001.105)

• You must be at least 18 and apply within 12 months of passing the exam.
• Resident applicants submit fingerprints (4001.103).
• Controlled business is restricted. You must intend to serve the public, with at least 25% of premium from people and property you don't control (4001.104). Part-time work alone isn't a reason for denial.
• Exam exemptions (4002.003):
  • renewing an unexpired license
  • a license expired less than a year
  • CLU designees for life and health
  • CPCU designees for P&C
  • qualifying nonresidents
• Nonresident licenses are reciprocal. They're suspended or revoked automatically if the home-state license is (4056.052).

Business entities (4001.106)

• An agency needs its own license. At least one officer or partner must be individually licensed.
• It carries E&O of at least $250,000 or a $25,000 bond.

Temporary license (4001.152 to 4001.162)

• Valid 180 days, with no exam. It can't be renewed.
• The sponsor gives 40 hours of training within 30 days, at least 10 of them in a classroom.
• No commissions on sales to relatives, or to employers or employees from the past 6 months.
• No replacement sales.
• A sponsor may appoint no more than 500 temporary licensees a year.

Keeping the license

• Term: individual licenses expire on your birthday every 2 years. Multiple licenses align to the earliest date (4003.001).
• Report to TDI on a monthly basis (4001.252):
  • a change of mailing address
  • a felony conviction
  • an administrative action by a financial or insurance regulator
• Moving out of state: file your new address and proof of authority in the new state within 30 days (4003.009).
• Continuing education (4004.051 to 4004.055; 28 TAC 19.1003, 19.1016):
  • 24 hours every 2 years, including 3 hours of ethics
  • at least 50% in a classroom or classroom-equivalent setting
  • no carryover
  • holding several licenses still means only 24 hours total
  • agents continuously licensed 20 years are exempt from the hour requirement
  • fines are $50 per missing hour, up to $500
  • the license can't be renewed if CE and fines aren't done by the 90th day after the period ends
• Late renewal (4003.007):

Appointments and compensation

• An appointment is the insurer's authorization, filed with TDI (4001.201).
  • Additional appointments are filed within 30 days of the effective date (4001.202).
  • An appointment continues until terminated (4001.203).
  • You may act for the insurer before TDI receives the notice (4001.204).
• Termination for cause: the insurer or agent immediately files a statement of the facts. It's privileged if made without malice (4001.206).
• Commissions go only to properly licensed persons (4005.053).
  • Renewal commissions may continue after you're no longer licensed.
  • Unlicensed people can't get referral fees based on a purchase.
• Fees:
  • Extra fees must be authorized by the code and disclosed (4005.054).
  • MVR fees can't exceed actual cost, with notice and written consent (4005.002, 4005.003).
• P&C agency contracts in effect 2+ years need 6 months' notice to terminate. The insurer renews the agent's business for 6 months after termination (4051.353, 4051.355).

Discipline (4005.101 to 4005.153)

• Grounds include:
  • material misrepresentation on the application
  • misappropriating, converting or illegally withholding money
  • a felony
  • twisting and rebating
  • writing controlled business
• Remedies: denial, suspension, revocation, a probated suspension, a reprimand or a penalty.
• After a revocation, no new application until the 5th anniversary (4005.105).
• Acting as an agent after suspension or revocation is a third-degree felony (4005.151).
• Embezzling premium is punished as theft (4005.153).

Unfair practices (TIC 541, 544, 1702, 1806)

• Misrepresentation (541.051, 541.061). This includes misleading omissions and misleading policy names, and twisting.
• False advertising in any medium, including the Internet (541.052).
• Defamation (541.053).
• Boycott, coercion, intimidation (541.054).
• False financial statements (541.055).
• Rebating:
  • Life and annuity: 1702.102. A&H and HMO: 1702.152. P&C: 1806.104.
  • The insured who accepts a rebate also violates the law.
  • Items worth $25 or less are allowed (1702.104, 1702.154, 4005.053).
• Unfair discrimination (544.002, 544.003):
  • race, color, religion or national origin are never allowed as rating factors
  • age, gender, marital status, location and disability are allowed only on sound actuarial grounds
  • an insurer can't treat widowed people differently from married people
• Private suits under Chapter 541 (541.152, 541.154):
  • three times actual damages for knowing violations
  • filed within 2 years
• Credit scoring (559.052 to 559.101):
  • not the sole basis for an adverse decision
  • disclosed at application
  • adverse-action notice within 30 days
  • medical collections don't count against the consumer
• Advertising (28 TAC 21.111 to 21.122):
  • no unfair comparisons
  • "seminar" ads must add "and insurance sales presentation"
  • agents get the insurer's written approval before using ads that name it
• Fraud (TIC Ch. 701):
  • report suspected fraud within 30 days
  • good-faith reporters are immune from civil liability

Claims: prompt payment (TIC 542)

Unfair settlement practices (541.060, 542.003) include:

• lowball offers that force a lawsuit
• refusing to pay without a reasonable investigation
• demanding tax returns except for fire or lost-income claims

Insurers keep complaint records for 3 years or since the last exam, whichever is shorter (542.005).

Guaranty associations

Common exam traps

• CE: 24 hours with 3 ethics, 50% classroom, no carryover. 20-year agents are exempt from the hours.
• The temporary license lasts 180 days. The old 90-day figure is wrong.
• Address changes, felonies and administrative actions are reported monthly.
• Controlled business: at least 25% of premium must come from outside business.
• Administrative penalties: up to $25,000 per violation.
• Prompt pay runs 15 days / 15 business days / 5 business days, with 18% interest on late payment.