California Property and Casualty Insurance
Exam Questions and correct Answers (
Verified Answers) 2026
1. Which of the following is NOT a basic type of insurance coverage for property
insurance?
A) Fire insurance
B) Theft insurance
C) Flood insurance
D) Life insurance
Answer: D) Life insurance
Explanation: Life insurance is not a type of property insurance. Property
insurance covers damage to or loss of property due to events like fire, theft, or
flood.
2. In California, which of the following is required to be included in an insurance
policy for the property to be covered?
A) A loss settlement clause
B) A premium adjustment clause
C) An arbitration clause
D) A co-insurance clause
Answer: A) A loss settlement clause
Explanation: A loss settlement clause outlines how claims will be settled and
determines the insurer's obligations in the event of a loss.
,3. What does the term "insured peril" refer to in an insurance policy?
A) A risk that is covered by the policy
B) A risk that is excluded from coverage
C) A type of policy endorsement
D) A type of coverage option available to policyholders
Answer: A) A risk that is covered by the policy
Explanation: An "insured peril" is a risk or cause of loss that is specifically covered
under the terms of an insurance policy.
4. Which of the following is TRUE regarding California’s Consumer Protection
Insurance Code?
A) The insurance code allows insurers to offer life insurance without regulation.
B) The code ensures that claims must be paid promptly and that all
policyholders are treated fairly.
C) Insurers are not required to follow the code in claims processing.
D) It allows insurers to deny claims without explanation.
Answer: B) The code ensures that claims must be paid promptly and that all
policyholders are treated fairly.
Explanation: The California Consumer Protection Insurance Code includes
regulations that require insurers to handle claims promptly and fairly, ensuring
consumer rights are protected.
5. Which of the following is typically NOT covered by a standard homeowners
insurance policy?
A) Damage caused by fire
B) Water damage from a burst pipe
C) Earthquake damage
D) Loss of personal property from theft
, Answer: C) Earthquake damage
Explanation: Standard homeowners policies in California typically exclude
coverage for earthquake damage. Earthquake coverage must be added
separately.
6. An agent represents the insurance company, while a broker represents the:
A) Government
B) Policyholder
C) Insurance carrier
D) State legislature
Answer: B) Policyholder
Explanation: A broker works on behalf of the policyholder, helping them find the
best coverage, while an agent works on behalf of the insurance company.
7. In California, the minimum liability coverage required for automobile
insurance is:
A) $10,000 for bodily injury per person
B) $25,000 for property damage
C) $15,000 for bodily injury per person
D) $30,000 for bodily injury per person
Answer: C) $15,000 for bodily injury per person
Explanation: The minimum liability coverage required in California is $15,000 for
bodily injury per person and $30,000 for total bodily injury per accident.
8. What is the purpose of the California FAIR Plan?
A) To provide affordable life insurance to all residents
B) To provide property insurance for high-risk areas where coverage is not
available from standard insurers
C) To regulate insurance companies operating in California
D) To ensure that all insurance companies offer earthquake coverage
Exam Questions and correct Answers (
Verified Answers) 2026
1. Which of the following is NOT a basic type of insurance coverage for property
insurance?
A) Fire insurance
B) Theft insurance
C) Flood insurance
D) Life insurance
Answer: D) Life insurance
Explanation: Life insurance is not a type of property insurance. Property
insurance covers damage to or loss of property due to events like fire, theft, or
flood.
2. In California, which of the following is required to be included in an insurance
policy for the property to be covered?
A) A loss settlement clause
B) A premium adjustment clause
C) An arbitration clause
D) A co-insurance clause
Answer: A) A loss settlement clause
Explanation: A loss settlement clause outlines how claims will be settled and
determines the insurer's obligations in the event of a loss.
,3. What does the term "insured peril" refer to in an insurance policy?
A) A risk that is covered by the policy
B) A risk that is excluded from coverage
C) A type of policy endorsement
D) A type of coverage option available to policyholders
Answer: A) A risk that is covered by the policy
Explanation: An "insured peril" is a risk or cause of loss that is specifically covered
under the terms of an insurance policy.
4. Which of the following is TRUE regarding California’s Consumer Protection
Insurance Code?
A) The insurance code allows insurers to offer life insurance without regulation.
B) The code ensures that claims must be paid promptly and that all
policyholders are treated fairly.
C) Insurers are not required to follow the code in claims processing.
D) It allows insurers to deny claims without explanation.
Answer: B) The code ensures that claims must be paid promptly and that all
policyholders are treated fairly.
Explanation: The California Consumer Protection Insurance Code includes
regulations that require insurers to handle claims promptly and fairly, ensuring
consumer rights are protected.
5. Which of the following is typically NOT covered by a standard homeowners
insurance policy?
A) Damage caused by fire
B) Water damage from a burst pipe
C) Earthquake damage
D) Loss of personal property from theft
, Answer: C) Earthquake damage
Explanation: Standard homeowners policies in California typically exclude
coverage for earthquake damage. Earthquake coverage must be added
separately.
6. An agent represents the insurance company, while a broker represents the:
A) Government
B) Policyholder
C) Insurance carrier
D) State legislature
Answer: B) Policyholder
Explanation: A broker works on behalf of the policyholder, helping them find the
best coverage, while an agent works on behalf of the insurance company.
7. In California, the minimum liability coverage required for automobile
insurance is:
A) $10,000 for bodily injury per person
B) $25,000 for property damage
C) $15,000 for bodily injury per person
D) $30,000 for bodily injury per person
Answer: C) $15,000 for bodily injury per person
Explanation: The minimum liability coverage required in California is $15,000 for
bodily injury per person and $30,000 for total bodily injury per accident.
8. What is the purpose of the California FAIR Plan?
A) To provide affordable life insurance to all residents
B) To provide property insurance for high-risk areas where coverage is not
available from standard insurers
C) To regulate insurance companies operating in California
D) To ensure that all insurance companies offer earthquake coverage
