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CALIFORNIA PROPERTY AND CASUALTY EXAM
POOL QUESTIONS & ANSWERS
VERIFIED & RATED A+
"What factor supportd the principle of indemnity? - Correct Answer Insurable interest"
"The provision in a property policy which states that the insured has been paid up to their insurable
interest is - Correct Answer Valuation clause"
"The intentional relinquishment of known right is - Correct Answer Waivier"
"A possibility of financially loss resulting from the ownership of property is know as - Correct Answer
insurable interest"
"The part of the policy that states the amout of coverage the insured property policy period is - Correct
Answer Declaration"
"Part of the policy that establishes limits upon the insurer and the insured with the insuance policy -
Correct Answer Conditions"
"Which are the characterics of negligence - Correct Answer Duty,breach,proximate cause, damages"
"Which of the following is not a federal program - Correct Answer Worker' compensation"
"Absolute risk(liability) is imposed - Correct Answer When there is negligence whether proven or not"
"X is in an accident with Y. X suffers $5000 of damage but it is determined that X is 60% responsible for
the accident. How much would X receive under CONTRIBUTORY negligence rules? - Correct Answer
"what is the main purpose of tort law - Correct Answer to determine financial responsibillty for
damage"
"what of the following is not considered an intentional tort? - Correct Answer Auto accident"
"Which of the following statements is true regarding compensatory damages? - Correct Answer There
is usually no direct correlation between the amount of general and special damages awarded to the victim"
"The insurer decides not to renewan insured's personal auto policy. How much notice must the insurer
provide to the insured - Correct Answer 30 days"
"an insured's loss reserve for a claim isan estimate of the amount insurer will pay for present and future
loss, which of the following is an example of loss prevention - Correct Answer a homeowner decides
not to install a pool in the backyard" "which of the following describes the act of making a false entry in any book statement of report of any
insurer with the intent to device any examiner lawfully appointed to examine the insured's - Correct
Answer an unfair practice"
"a person can base his/her claim for liability on the basis of all of the following EXCEPT - Correct
Answer breach of liability"
"the term "assignment"refers to - Correct Answer the transfer of the insured's interest in a policy to
another party"
"the term "subrogation" refers to - Correct Answer the insured's right to recover payment from a
responsible 3rd party" "insur's right to recover the payment of the claim after they paid the insured for their property losses a
negligent 3rd party is know as, - Correct Answer subrogation"
"an insurance deductible is - Correct Answer the amount of covered expense that the insured pays
before the insurer pays,"
"An insurer that has a certificate of authority in California is - Correct Answer amitted"
"An applicant of insurance does not reveal information that the insurer would rely upon to issue the
policy this is/an - Correct Answer consealment"
"Which advisory organization(s) develop forms for the standard market? - Correct Answer Insurane
service office and American association of insurances"
"Which of the following would be considered special dmamges? - Correct Answer Lost wages"
"What do the initials S.tA.R.R reperesent? - Correct Answer Methods of risk mamagement"
"All of the following would be considered benfits of insurance except - Correct Answer Retention of
loss by the insured"
"The commercial property conditions included a condition called " liberalization". The effect of this
condition is - Correct Answer To automatically apply broader coverage to the commercial property
coverage part if a policy form revision would broaden coverage without an addition premium" "In a commercial lines program policycommon policy condition do not include which of the following as
a condition?, - Correct Answer Perils insured"
"laura is driving her own car on behalf of her employer laura's negligent operation of her car injures a
member of public. The employer may be held liable because of what is called., - Correct Answer
Vicarious liability" "Type of exposure can be best defined as a condition or situation where the exposure to financial loss is
presented to a business owner by the injury - Correct Answer disability, death, sickness, of valuable
employee, Personnel loss exposure"
"Which of the following is also know as a human loss exposure - Correct Answer Personal loss
exposure"
"Which of the following best characterize a speculative risk? - Correct Answer A situation that offers
the possibility for a loss or gain"
"In the state of CA no rate will remain in effect if it is considered to be any of the following, EXCEPT, -
Correct Answer Impartial"
"What course of action does a party to a contract have if the other party is found to be breach of that
contract - Correct Answer Damage for breach, reasonable attorney fee and cost"
"Which part of the insurance contract summarize the major promises of the insurer - Correct Answer
Insuring agreement"
"Under tort law a corporation can be subject to a claim for legal liability on the basis, - Correct Answer
Absolute liability"
"Risk management technique that eliminates a loss exposure and reduces the chance of loss to zero is -
Correct Answer Avoidance"
"A situation is which there only the possibility of loss or no loss is considered a - Correct Answer Pure
risk"
"A reduction in value of property that results immediately from damage to the property is know as -
Correct Answer Direct loss"
"Items that are paid on replacement cost is defined as the - Correct Answer Amount to replace the
damage property without a deduction for depreciation"
"A wrongful act other than a crime or breach of contrat is law - Correct Answer Tort law"
"The amount to replace property with like property of the same quality and construction is the -
Correct Answer Replacement cost"
"Whatis the process whereby insurers decides which customers to insure and what coverage to offer -
Correct Answer Underwriting"
"The amount paid for damaged propertywhich is equal to the price for which it could have been sold is
called - Correct Answer Market value"
"A policy may not be transferred to another without - Correct Answer Written consent of the insured"
"An insured's loss reserve for a claim is - Correct Answer An estimate or the amount that the insurer
will pay"
"What is the type of loss exposre that would include land and property attached to it - Correct Answer
Liability loss exposure"
"What type of policy protect against loss from any peril except those that are specifally excluded -
Correct Answer All-risk or open peril"
"Who is considered the first party to an insurance contract - Correct Answer The insured"
"A written provision that modifies the provisions of the original contracts is know as - Correct Answer
An endrorsment" "In a commericial property the insurance claim is deniend because of the insured action's. the mortgage
holder will in most cases., - Correct Answer Still have right to receive the full amount of the loss a
payment" "Named insured on a commercial insurance policy is "sam stone and dan Sullivan DBA S&S bar and grill"
if the insurer cancels the policy, they are required to mail or deliver written notice to - Correct Answer
Only san stone" "Which type of exposure can be best be defined as a condition or situation for any exposure or finanicial
loss is presented to an individual or family by such cause as injurydisability, death or sickness - Correct
Answer Personal loss exposure"
"Which of the followingwould be classified as a property insurance coverage - Correct Answer Other-
than-collision coverage" "Which of the following is the reason that an insured should not be making any kind of profit as the result of an insurance claim/loss being paidbut rather, the payment should restore the insured to the
financial status that existed prior to the loss with no chance of any type of profit., - Correct Answer
Basic principle of insurance" "What is the effect of "concurrent causation" exclusion under the "cause of loss-broad form in a
commercial property policy? - Correct Answer If there is a loss resulting from two or more perils that
occur at the same time to cause a loss then is no coverage is any of the perils are excluded" "What will the mortgage holder do in the event that an insurer does not pay claim as the result of the
actions of the insured - Correct Answer Receive full payment for the loss, if the required premium has
been paid"
"What exactly does a policy know as "open peril" protect against - Correct Answer Perils not specially
named as exclusions in the policy"
"What does a "pure risk" consist of? - Correct Answer The chance of loss only"
"The term "proximate clause " is best defined by which of the following? - Correct Answer A negligent
act that causes bodily injury or property damge that follows a sequence of uninterrupted, but related chains of events" "Why would an employer be held legally liab;e for the negligent operation by employee who is driving a
vehicle on belhalf of the employer and cause an injury to a pedestrian - Correct Answer The principle
of vicarious liability"
"How would a "peril" best be defined? - Correct Answer Reason for the loss event that leads up to
loss" "Which of the following combinations of characteristics should be considered when making a an
insurance recommendation to a propective insured that has just purchased a new office building? -
Correct Answer The structure that is exposed a loss, the perils that may occur, consequently causing a
loss possible financial impact of loss" "What type of insurance company is owned by individuals that are stockholder in the company; and
share in the profits of the company? - Correct Answer Stock insurance companies"
"All of the following explain the characterics that are unique to insurance contracts EXCEPT - Correct
Answer There is an equal exchange of amounts or values within the contract"
"With regards to insurance applicability the word "risk" can be best defined as which of the following? -
Correct Answer The uncertainty associated with a loss occurring"
"All of the following insurance company are private insurers; EXCEPT - Correct Answer Fraternal
insurance company"
"What would be the reason(s) for $100 deductible versus a $1000 deductible - Correct Answer Neither
of these apply"
"all of the following are requirements for a notice by mail to an insured by insurer except - Correct
Answer notice must be sent with return receipt required"
"which of the following is considered special damages - Correct Answer Compensation for time away
from work" "An indivual who loves next to nuclear power plant is exposed to which of the following types of hazard
- Correct Answer Physical"
"Which of these is defined as "exclusive agent' - Correct Answer Sells for one insurance company and
only that company's products."
"The concept of "pure risk" involves the possibitly of chance of which of the following? - Correct
Answer A loss only"
"An employee is operating their own car for their employer. The individual injures a person in a area as result of negligent drivng. The reson why the employer would be held liable is because of which of the
following? - Correct Answer Vicarious liability"
"Which of the following coverages' does an open peril policy provide? - Correct Answer Perils other
than those specifically named as being excluded"
""risk" is one of the most important terms in the insurance industry. How is it defined - Correct Answer
the uncertainty of a loss"
"what would be the result of a lower(250) deductible vs. the selection of a higher deductible ($1000) -
Correct Answer greater number of smaller claims sent to the insurer"
"of the following which is true characteristic about insurance - Correct Answer it is considered a
method of transferring risk"
"the amount paid for property damage which is equal to price for which it could have sold is - Correct
Answer market value"
"The method that the California DOI uses to approve or disapprove rate filing for various types of
insurance such as homeowners and automobile is know as? - Correct Answer prior approval method"
"An organization will cease too exsit as an entity eliglble to hold a liceense for all of the following
reasons EXCEPT - Correct Answer termination of key employee"
"All of the following are areas that market regulation cover EXCEPT - Correct Answer Employee
training"
"Which of the following statement is true regading insurer with admitted status in California? - Correct
Answer they may not use race color, religion, or national origin as condition to use higher rate"
"All of the following are requirements for a notice by mail to an insured by an insurer EXCEPT - Correct
Answer notice must be sent with return receipt reuired"
"What is one the main factors that the insuruce commissioner uses while detereming whether a rate
excessive or unfairly discriminatory? - Correct Answer wheter the rate mathematically reflects the
insurance company's investment income"
"An agent who divert/comingles premium dollars for the agents's own use is guilty of - Correct Answer
theft" "Every admitted insurer in the state of California is required to maintain a unit or division to investigate
which of the following? - Correct Answer possible fraudulent claims made by insured's"
"What will happen when an agent's appointment to an insurance company is terminated and the agent
has no other appointment with any other insurance company? - Correct Answer The agent's
permanent license becomes inactive"
"The CA insurance code requires property insurance polices specify all of the following EXCEPT - Correct
Answer the insured address"
"What steps need to taken to terminate a licensee's license that is in the possession of an employer? -
Correct Answer the licensee needs to give written notice of intent to the insurance commissioner"
"Under California insurance code a surplus lines broker - Correct Answer transact business only with
non admitted insurers"
"What would the commissioner likely do if an agent induces a client to co sign a loan - Correct Answer
suspend the agent's license"
"Section 770 of the insurance code is true regardging unfair or trade practice? - Correct Answer an
entity cannot demand the insurance be placed with a particurl agency"
"Which of the following describes an insurer who has enough financial resources only to provide for all
of its liability and for all reinsurance of all outstanding risk? - Correct Answer insolvent"
"In California. Excess and surplus lines coverage needs to be placed through - Correct Answer a surplus
lines broker" "What must a life agent travel agent, or fire and casualty insurance agent do in order to act as an agent
of a particular insurer?, - Correct Answer file a notice of appointment with the commissioner"
"In the business of insurance. The act of concealment is defined by all of the following statement EXCEPT
- Correct Answer concealment does not occur if no inquiry is made"
"Which of the following statements is NOT true? A fire and casualty agent - Correct Answer does not
have the authority to collect premiums from producing broker agents." "Where would an insured that is in the business of importing exotic animals from Africa most likey go to
obtain - Correct Answer excess and surplus lines insurer"
"What else must an applicant for a fire and causualty license. life agent license. Or personal lines agent
license complete in addition to pre- classroom study? - Correct Answer a 12 hour course on ethics and
CA code"
"Which rate approval filling system is used in California for most lines of insurance - Correct Answer
prior approval" "When is property and causulty agent required to in form an isured of any conditions which may be
precedent to coverage regarding a personal auto policy? - Correct Answer at time of application"
"The state law that regulates insurer practices regarding underwriting. Sales. rate-making and claims
handling are called - Correct Answer market conduct regulation"
"The CA insurance code - Correct Answer requires agents to keep records of any compensation they
may have received for ther services involved with premium financing"
"It is a violation of CA insurance code to act as a producer for a non- admitted carrier unless - Correct
Answer the producer is a surplus lines broker"
"You meet with a small furniture manufactuer and make a property and liability insurance recommendation. You have insured many risk of this type in the past and have a good idea of what their needs may be. There are several popular ways of determining business loss exposure. Which of the
following ways are the least professional and least likely to correctly identify the loss exposure? -
physical therapy treatments and later finds out that the claim was faudlent the insured may be fined as
much as - Correct Answer $170000"
"It is a violation of the CA insurance code to act as a producer for a non admitted carreier unless -
Correct Answer the producer is a surplus lines broker"
"• Which of the following insurance professionals would be employed to aid an insurance broker -
Correct Answer insurance solicitor"
"• All of the following are characteristic of ideally insurable loss exposure EXCEPT: - Correct Answer
losses that are catastrophic"
"• The types of transactions and insurer that a surplus lines broker is involved with is/are - Correct
Answer non-admitted insurer, property and casualty insurances"
"• How is an admitted insurer defined according to California DOI? - Correct Answer it transact
insurance according to laws of the state of California" "• All licensees must be appointed by the insurance companies they represent in order to sell the lines of insurance that a particular insurer may offer. Assuming that a licensed fire and casualty broker/agent
has received the proper appointment - Correct Answer what type or types of insurance, from the
following list, may this individual sell, auto, property insurance"
"• The insurance code definition of "insurance broker" is - Correct Answer someone paid to transact
insurance on behalf of another person, but not on behalf of the insurer" "• The continuing education requirements that a fire and casualty broker-agent must fulfill as required
by the DOI are which of the following? - Correct Answer 25 hour during each twelve month period for
the first four years the licensee is licensed"
"• In the state of California how is a domestic insurer defined according to the California DOI code? -
Correct Answer organized, chartered, or incorporated under the law of state of California"
"• Which of the following is the only reason that an insurer can cancel an automobile insurance policy? -
Correct Answer the driver's license of the individual who usually operates the vehicle that is insured by
the policy and who is insured by the policy has had license suspended temporarily" "• Under which of the following circumstance can the insurance commissioner deny the application for
an agents license without a hearing? - Correct Answer the applicant has previously has a licenses
application denied for cause within the past five years"
"• It can be very tempting for commission based insurance salespeople to perform unethical activities in order to make a sale. of the following which would not be a reason why and agent might be tempted to
act unethically? - Correct Answer maintaining the best interest of customers first and foremost"
"• It is vital that an insurance agent/broker fully assess analyze and review a particular risk in order to
determine the proper insurance coverage needed. The least likely way to do this is to - Correct Answer
review all coverage in their current insurance contracts as well as the premiums paid"
"• If an insured signs a claim form a claim which is fraudulent the insured may be guilty of - Correct
Answer perjury"
"• Which of the following best defines a binder - Correct Answer a contract of insurance that is
temporary, only in writing, between the insured and the insurer"
"• A fire and casualty managing general agent can do all of the following EXCEPT - Correct Answer
none of these are excluded from the power and authority given to fire and casualty managing general agent" "• An insurance company pays a loss and continues coverage under an auto policy under the following circumstances. An insured honestly thinking that he received his last traffic ticket more than 36 months ago. Applies for an auto policy stating that he has had not ticket or accidents in the past 36 months. Several days after the policy is issued the insured's car is stolen. While the claim is being processed the insurance company discovers that the insured had received his most recent traffic ticket for speeding 32
months ago. Why is the claim paid and the policy - Correct Answer the concealed facts were not
material, they would paid the claims anyways" "• The process of underwing a disability income insurance policy includes analyzing the risk associated with certain act ivies. Hobbies and hazardous sports. Therefore how does the California insurance code define and classify and act of an applicant who doesn't mention when applying for this type of insurance
his recent interest and participation in bungee jumping - Correct Answer this is defined and classified
as concealment"
"• With respect to premium finance compensation service which statement are /is true - Correct
Answer the DOI require agents and brokers to maintain records of the compensation they receive for
providing premium financing service for 3 years"
"• How is an "insurance broker" defined according to the California insurance code? - Correct Answer
an individual who receives compensation for transacting insurance on behalf of another person, but not on behalf of an insurance company" "• What type of insurance company has owners who are stockholder in company and who share in the
profits of the company? - Correct Answer stock insurance companies"
"• When does the license of a fire and casualty broker- agent become inactive? - Correct Answer when
the broker/agent has no appointment with any insurance company, but licensing renewal fee have paid and CE requirement have been met" "• How do insurance regulators view a statement made by an agent to a prospective insured that the
dividends of an insurance contract are guaranteed each year? - Correct Answer this would be
considered a misrepresentation" "• For more serious offenses and conviction an application for a license can be denied without a hearing which of the following circumstances would allow for an application to be denied for an insurance
license WITHOUT A HEARING - Correct Answer the applicant for the insurance has had no previous
license denied for cause with previous 5 years" "• All of the following factors can be used according to the insurance code in California to determine auto insurance policy rates in addition to any other factors the insurance commissioner is allowed to
adopt; and include by regulation - Correct Answer 1and 3 only"
"The collision coverage of the personal auto policy does not cover the following loss situations; EXCEPT -
Correct Answer large limbs and branches of a tree that have fallen into the street as a result of a
windstorm. The insured collides with them" "To be covered for a hit and run accident under the uninsured motorist property damage coverage of a
PAP, what is required to be provided to the insurer - Correct Answer license number of hit and run
vehicle" "Which of the following coverage's may you buy with a NAMED OPERATOR POLICY?(chose the most
complete answer) - Correct Answer liability, uninsured motorist, medical payments, collision and other
than collision" "The PAP collision deductible is $1000 and other than collision deductible is $500. How much would the
insurer pay for an accident involving the overturn of one vehicle resulting in $2000 of damage - Correct
Answer $1000"
"A is an accident with B. A suffer$10000 of damage but it is determined that A is 25% responsible for
accident. how much would a receive under COMPARATIVE negligence rules - Correct Answer $7500"
"Under California financial responsibility law the minimum financial responsibility for accidents that
involve several people injured in one accident, is - Correct Answer $30,000"
"When does a personal auto policy require the insured to notify the police? - Correct Answer for hit
and run and thefts"
"When an automobile insurance policy is canceled at the request of the insured , and the insurance company keeps all earned premiums, in addition to an amount to an pay for overhead expense incurred
by the insurer, it is referred to as what type of cancellation - Correct Answer the short rate type of
cancellation" "Which of the following coverage's may you buy with a named non-owner liability policy?(choose the
most complete answer) - Correct Answer liability and medical"
"What coverage is available under the extended non-owned liability coverage? - Correct Answer
liability and medical payments" "What is the limit per day for a transportation expense in an unendorsed personal auto policy in the
event of theft, after it is reported and automobile is not returned within 48 hours of theft - Correct
Answer $20"
"After a collision loss, the personal auto policy requires the insured to - Correct Answer allow the
company to inspect the damaged property before it is repaired" "An insured has a personal auto policy and did not pay the initial insurance premium when it due. The
insurer cancels the policy for non- payment. How much days' notice must the insure give? - Correct
Answer 10 days"
"If an individual does not own an auto, nor have regular use of an auto, what endorsement to a personal
auto policy could be used to properly protect that individual - Correct Answer named non-owned
liability coverage"
"What coverage is available under the miscellaneous type vehicle endorsement? - Correct Answer all
coverage under the personal auto policy" "If an insured purchased an all- terrain vehicle(ATV), what endorsement can be added to the personal
auto policy to insure the vehicle? - Correct Answer miscellaneous type vehicle endorsement"
"Under an unendorsed personal auto policy, transportation expense coverage applies to - Correct
Answer theft only losses"
"Under an unendorsed personal auto policy, what coverage is available for personal effects? - Correct
Answer none"
"What is the minimum discount percentage for the "good driver" discount? - Correct Answer 20%"
"What is one of the principle rating factor under proposition 103 allowed for personal auto polices? -
Correct Answer safety driving record"
"If an insured rents an auto while on vacation, what coverage if any will be available for physical damage
coverage under a personal auto policy - Correct Answer the broadest coverage on any auto shown in
the declarations"
"What is the difference between per accident limit in a split limits policy and single limits - Correct
Answer there is no difference"
"If an insured with a personal auto policy has an accident in a state with personal injury protection, how
does the policy respond? - Correct Answer coverage automatically is broadened to provide PIP"
"Which of the following is a true statement about CAARP - Correct Answer the minimum liability for
CAARP policies are 15000/30000/5000" "Newly acquired motorcycle are not automatically covered under a personal auto policy (PAP) because:
- Correct Answer the unendorsed policy does not cover two wheeled vehicles" "All of the following are principal rating factors under proposition 103 for personal auto policies, EXCEPT - Correct Answer number of listed drivers"
"Steven's(unendorsed) personal auto liability coverage would pay for - Correct Answer the cost of
repairing the neighbor's fence that Steven damage due to the negligent operation of his car" "All of the following expenses are covered in addition to the limits of a liability under coverage a of a
personal auto policy except - Correct Answer pre judgment"
"Jim, your unmarried homeowner's insured does not own his car. He is planning a vacation trip to Florida and will be renting a car. He also drives cars belonging to friends occasionally. To protect Jim in
theses situation, you would recommend a personal auto policy with a - Correct Answer named non-
owner coverage endorsement"
"The limited Mexico endorsement applies to trips to Mexico with duration of - Correct Answer 10 days
or less" "If an insured borrows a neighbor's vehicles to run a personal errand, how do the policies respond in the
event of an auto accident? - Correct Answer the neighbor's policy is primary and the driver's policy is
excess"
"Livery conveyance is best described as a - Correct Answer vehicle for hire to transport people"
"Damage done by an earthquake to an insured auto covered by the auto policy - Correct Answer if the
other than collision coverage is purchased"
"If an insured timely requests coverage for a newly acquired auto under an existing personal auto policy,
what coverage is provided before the request is made? - Correct Answer broadest coverage for any
vehicle shown on the declarations" "If an insured rents vehicle while on vacation in the U.S, what coverage is provided under the personal
auto policy? - Correct Answer all coverage is in force in the personal auto policy"
"A private passenger vehicle is added to an insurance policy. The CA insurance code - Correct Answer
make no mention of vehicle inspection requirement" "A single person does not own or lease an automobile. She occasionally drives her housemate's vehicle on an emergency basis. She is going on vacation and will have to rent a car. To obtain full automobile
insurance coverage when this occurs, what should she purchase? - Correct Answer the named non-
owned coverage endorsement" "Under the liability portion of an unendorsed personal auto policy, what coverage is available if the
named insured is operating a company car a regular basis? - Correct Answer the policy excludes this
usage" "Which of the following events within the last three years would disqualify an individual from receiving a
good driver discount? - Correct Answer .An at fault accident involving minor bodily injury"
"What endorsement can be used to insure a motorcycle under a personal auto policy? - Correct
Answer miscellaneous type vehicle endorsement"
"California has lower financial responsibility limits than most other states. If randy, a California personal auto policy insured, carrying minimum limits on coverage, has an accident in a state that quires higher
limits then, - Correct Answer the policy will automatically provide the higher limits at no extra charge"
"Of the following loss scenarios, identify the one that is excluded from coverage under both the collision
and other than collision coverage of an insured's PAP - Correct Answer a "palm pilot' computer
(owned by the insured) is stolen from the vehicle while parked in the insured's driveway. There are forcible signs of the vehicle" "Which of the following is not an uninsured motor vehicle as defined by personal auto polices uninsured
motorist coverage? - Correct Answer a vehicle owned by state agency which self-insures its auto"
"Under a personal auto policy, who qualifies as an insured while using a covered auto - Correct Answer
any person"
