Texas Property and Casualty License Practice Exam 2026 – All-in-One Guide to Exam Success!

Termination of a policy can occur when either the insured or the insurer decides to cancel the policy before the designated policy period has concluded. This cancellation can happen for various reasons, such as non-payment of premiums, changes in risk, or mutual consent between the parties involved.

When this occurs, the coverage provided by the policy ends, which is a significant departure from simply amending terms, extending coverage, or adjusting premiums. Each of those actions might alter the nature of the policy or its financial aspects, but they do not lead to the policy being terminated outright. In this sense, cancellation represents a decisive action that effectively concludes the contractual relationship defined by the insurance policy. It is essential for individuals taking the Texas Property and Casualty License examination to understand this concept clearly, as it relates directly to how policies function within the realm of insurance.