PSI Property and Casualty Practice Test – California with questions and well
elaborated answers
1. How does an "admitted" person differ from a "non-admitted" person, as it pertains to
insurance? - correct answer-o An "admitted" person has the right to transact insurance
business within the state, while a "non-admitted" person is not entitled to this action.
2. A claimant can be any of the following EXCEPT? - correct answer-o a person who is
conducting an investigation of a claim on behalf of an insurer.
3. When should an insurer provide for the continuous operation of a unit or division to
investigate possible fraudulent claims? - correct answer-o If admitted to do business in
this state, except those otherwise exempted.
According to CIC Section 1711, an organization ceases to exist as an entity eligible to hold
a license EXCEPT? - correct answer-o Upon the termination of all contracts
5. All of the following define insolvency EXCEPT? - correct answer-o revocation of
certificate of authority by the commissioner.
6. As used in the insurance code, the word "shall" is mandatory and the word "may" is
permissive EXCEPT? - correct answer-o unless otherwise apparent from the context.
7. Which of the following terms refers to any evidence or documentation in the possession
of the insurer that provides any evidence of a claim and that reasonably supports the
magnitude or the amount of the claimant loss? - correct answer-o Poof of claim
8. When examination of an insurer shows the insurer to be insolvent and a danger to the
public, which authority is granted to the Commissioner by the CIC? - correct answer-o The
commissioner may take possession of offices, books and property immediately without
court order.
9. An insurance agent is a person who transacts all of the following types of insurance
EXCEPT - correct answer-o Life insurance
10. Which of the following is TRUE regarding continuing education requirements of an
agent or broker? - correct answer-o Any licensee shall satisfactorily complete 24 hours of
instruction prior to license renewal.
11. All of the following are included as definitions of "transact" as applied to insurance
EXCEPT? - correct answer-o Underwriting
12. Which group of people is offered additional protection by the Unfair Practices Act that
regulates trade practices in the business of insurance? - correct answer-o Survivors of the
Holocaust
, 13. Which of the following can the insurer do if the insured intentionally conceals or
misrepresents a material fact concerning any coverage part? - correct answer-o Rescind
the contract
14. While both work with an insurer, how does an "Insurance broker" differ from an
"insurance agent"? - correct answer-o The broker does not transact on behalf of an insurer,
while the agent does.
15. How can a licensee surrender any license for cancellation? - correct answer-o By
submitting written notice or by delivering the license to the commissioner
16. The following are all penalties for unlawfully acting as an insurer without a certificate of
authority EXCEPT? - correct answer-The individual will be banned from practicing
insurance for a period of 5 years
17. Materiality to be solely determined by which of the following? - correct answer-o The
probable and reasonable influence of the facts upon the party to whom the
communication is due
18. What is a solicitor employed to do for a policy other than life? - correct answer-To aid a
property and casualty agent or broker in transacting insurance.
19. ALL of the following are TRUE regarding the process to change the California Code of
Regulations EXCEPT? - correct answer-o the Office of Administrative Law (OAL) may
substitute its own judgment for that of the rulemaking agency.
20. How may a license be surrendered by the insuree, or terminated by the employer? -
correct answer-o Personally, delivering the license to the insurance commissioner, or by
written notice from the employer.
21. All of the following are to be specified in an insurance policy EXCEPT? - correct answer-
o The financial rating of the insured
22. When may a representation be altered or withdrawn? - correct answer-o Before the
insurance is effected.
23. Which of the following provisions of free insurance offered as an incentive to purchase
or rent property is TRUE? - correct answer-o It requires a separate charge or fee.
24. Which circumstances in a pretext interview determine if the questions are permissible?
- correct answer-o When an insured is consulted by a person who hides his true identity on
purpose when fraud for a claim is suspected.
elaborated answers
1. How does an "admitted" person differ from a "non-admitted" person, as it pertains to
insurance? - correct answer-o An "admitted" person has the right to transact insurance
business within the state, while a "non-admitted" person is not entitled to this action.
2. A claimant can be any of the following EXCEPT? - correct answer-o a person who is
conducting an investigation of a claim on behalf of an insurer.
3. When should an insurer provide for the continuous operation of a unit or division to
investigate possible fraudulent claims? - correct answer-o If admitted to do business in
this state, except those otherwise exempted.
According to CIC Section 1711, an organization ceases to exist as an entity eligible to hold
a license EXCEPT? - correct answer-o Upon the termination of all contracts
5. All of the following define insolvency EXCEPT? - correct answer-o revocation of
certificate of authority by the commissioner.
6. As used in the insurance code, the word "shall" is mandatory and the word "may" is
permissive EXCEPT? - correct answer-o unless otherwise apparent from the context.
7. Which of the following terms refers to any evidence or documentation in the possession
of the insurer that provides any evidence of a claim and that reasonably supports the
magnitude or the amount of the claimant loss? - correct answer-o Poof of claim
8. When examination of an insurer shows the insurer to be insolvent and a danger to the
public, which authority is granted to the Commissioner by the CIC? - correct answer-o The
commissioner may take possession of offices, books and property immediately without
court order.
9. An insurance agent is a person who transacts all of the following types of insurance
EXCEPT - correct answer-o Life insurance
10. Which of the following is TRUE regarding continuing education requirements of an
agent or broker? - correct answer-o Any licensee shall satisfactorily complete 24 hours of
instruction prior to license renewal.
11. All of the following are included as definitions of "transact" as applied to insurance
EXCEPT? - correct answer-o Underwriting
12. Which group of people is offered additional protection by the Unfair Practices Act that
regulates trade practices in the business of insurance? - correct answer-o Survivors of the
Holocaust
, 13. Which of the following can the insurer do if the insured intentionally conceals or
misrepresents a material fact concerning any coverage part? - correct answer-o Rescind
the contract
14. While both work with an insurer, how does an "Insurance broker" differ from an
"insurance agent"? - correct answer-o The broker does not transact on behalf of an insurer,
while the agent does.
15. How can a licensee surrender any license for cancellation? - correct answer-o By
submitting written notice or by delivering the license to the commissioner
16. The following are all penalties for unlawfully acting as an insurer without a certificate of
authority EXCEPT? - correct answer-The individual will be banned from practicing
insurance for a period of 5 years
17. Materiality to be solely determined by which of the following? - correct answer-o The
probable and reasonable influence of the facts upon the party to whom the
communication is due
18. What is a solicitor employed to do for a policy other than life? - correct answer-To aid a
property and casualty agent or broker in transacting insurance.
19. ALL of the following are TRUE regarding the process to change the California Code of
Regulations EXCEPT? - correct answer-o the Office of Administrative Law (OAL) may
substitute its own judgment for that of the rulemaking agency.
20. How may a license be surrendered by the insuree, or terminated by the employer? -
correct answer-o Personally, delivering the license to the insurance commissioner, or by
written notice from the employer.
21. All of the following are to be specified in an insurance policy EXCEPT? - correct answer-
o The financial rating of the insured
22. When may a representation be altered or withdrawn? - correct answer-o Before the
insurance is effected.
23. Which of the following provisions of free insurance offered as an incentive to purchase
or rent property is TRUE? - correct answer-o It requires a separate charge or fee.
24. Which circumstances in a pretext interview determine if the questions are permissible?
- correct answer-o When an insured is consulted by a person who hides his true identity on
purpose when fraud for a claim is suspected.
