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California Personal Lines Agent License Examination — Information & Free Practice

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California Personal Lines Agent License Examination

Provider
PSI Services LLC for the California Department of Insurance
Format
Multiple-choice computer examination at a test center or by online remote proctoring
Exam questions
90
Time limit
135 minutes (March 2026 bulletin); objectives introduction states two hours
Passing score
60 percent
Examination outline
  • I. General Insurance (includes Section II. Property Insurance) (32%)
    • I.General Insurance A.Basic Insurance Concepts and Principles Be able to identify, recognize, or differentiate between: examples of insurance as defined in California Insurance Code section 22 the definition of risk a pure risk and a speculative risk a definition of peril a definition of hazard moral, morale, physical, and legal hazards the law of large numbers a definition or the correct usage of the terms loss and loss exposure (e.g., property loss exposure, liability loss exposure) risk management techniques the requisites of an ideally insurable risk the definition of insurable events, California Insurance Code section 250 the definitions of insurable interest, and indemnity, and be able to recognize the applicability of these terms to a given situation why insurers underwrite the insurance applications they receive the concepts of adverse selection and spread of risk the benefits and the costs of insurance to society (i.e., loss control, loss payments, securing credit, etc.) a correct explanation of the role of deductibles in insurance a definition of reinsurance, California Insurance Code section 620, and the purposes and benefits of insurers obtaining reinsurance that the insurance code: divides lines of insurance into classes, California Insurance Code section 100 defines these classes, California Insurance Code sections 101 through 120
    • I.General Insurance B.Contract Law 1.Be able to identify and compare contract law and tort law 2.Be able to identify the four major elements of a contract: competent parties, legal purpose, offer and acceptance, and consideration 3.Be able to identify the meaning and effect of the following special characteristics of an insurance contract: aleatory conditional contract contract of adhesion indemnity personal contract unilateral utmost good faith 4.Be able to identify the term insurance policy, California Insurance Code section 380 5.Be able to identify the meaning and effect of each of the following on a contract: a.fraud, California Insurance Code sections 338 and 1871.2 b.concealment, California Insurance Code sections 330 through 339 be able to identify information that does not need to be communicated in a contract, California Insurance Code section 333: 1)Those which the other knows 2)Those which, in the exercise of ordinary care, the other ought to know, and of which the party has no reason to suppose him ignorant 3)Those of which the other waives communication 4)Those which prove or tend to prove the existence of a risk excluded by a warranty and which are not otherwise material 5)Those which relate to a risk excepted from insurance and which are not otherwise material c.materiality, California Insurance Code section 334 i.know that the materiality of concealment is the rule used to determine the importance of a misrepresentation. d.representations, California Insurance Code sections 350 through 361 a representation is false when the facts fail to correspond with its assertions or stipulations, California Insurance Code section 358 a representation cannot qualify an express provision in a contract of insurance but it may qualify an implied warranty, California Insurance Code section 354 know when a representation can be altered or withdrawn, California Insurance Code section 355 e.warranty (express/implied), California Insurance Code sections 440 through 445 and 447 f.waiver and estoppel g.know that intentional or unintentional concealment entitles an injured party to rescission of a contract, California Insurance Code section 331 6.Be able to identify six required elements which must be specified in all insurance policies, California Insurance Code section 381 7.Be able to identify: a.the meaning of the term rescission; b.when an insurer has the right of rescission, California Insurance Code sections 331, 338, 359, and 447 8.Given an insurance situation, be able to identify the following terms correctly: a.application, policy, endorsement b.cancellation, lapse, grace period c.rate, premium, earned and unearned premium 9.Be familiar with the grace period for premiums after a declared emergency, California Insurance Code section 2062
    • I.General Insurance C.The Insurance Marketplace 1.Be able to identify different distribution systems that include, but are not limited to, the following: a.agency independent agent captive agent brokers b.direct response c.online direct sales
    • I.General Insurance C.The Insurance Marketplace 2.Be able to: a.understand the general rules of agency as they apply to an agent, broker, and the insurance company differentiate between agents, California Insurance Code section 31, and brokers, California Insurance Code section 33 the responsibilities and duties of each to insureds and insurers the effect of the types of authority an agent may exercise (express, implied, or apparent) b.with regard to the underwriting of applicants and/or insureds, be able to: identify a producer’s responsibilities (e.g., “field underwriting” understand the insurers’ requirements c.define the following: property, California Insurance Code sections 31, 33, and 1625(a)(b) casualty, California Insurance Code sections 33.5 and 1625(a) and (c) solicitor, California Insurance Code section 34 personal lines licensee, California Insurance Code section 1625.5 surplus lines broker, California Insurance Code sections 47 and 1765 d.define transact and understand why transacting insurance without a license is important, California Insurance Code sections 35, 1631, and 1633, and know the penalties for transacting without a license, California Insurance Code section 1633 e.understand written consent in regard to interstate commerce (prohibited persons in insurance) and be able to: identify what conduct is prohibited by Title 18 United States Code (18 USC) section 1033 identify what civil and criminal penalties apply, 18 USC sections 1033 and 1034 f.recognize the differences between the authority of an agent and a solicitor, California Insurance Code section 1624 g.for insurance agent’s errors & omissions insurance, identify: the types of coverages available the types of losses commonly covered and not covered the need for the coverage how errors & omissions insurance is applied h.recognize prohibited acts involving non-admitted insurers unless licensed as a surplus lines broker, California Insurance Code section 703 i.identify the prohibitions of free insurance, California Insurance Code section 777.1 j.identify the Code requirements for the following: an agency name, use of name, and prohibited words, California Insurance Code sections 1724.5,1729.5, and California Code of Regulations, Title 10, section 2052.4 change of address, California Insurance Code section 1729 filing license renewal application, California Insurance Code section 1720 printing license number on documents, California Insurance Code section 1725.5 internet advertisements, California Insurance Code section 1726(a) k. identify the Code specifications regarding producer application investigation, denial of applications, and suspension or revocation of license, California Insurance Code sections 1666, 1668 through 1669, and 1738 I.identify the importance and the scope of the Code regarding: the filing of a notice of appointment to transact insurance, California Insurance Code sections 1704 and 1705 an inactive license, California Insurance Code section 1704(b) surrender or cancellation of a license by the licensee, California Insurance Code section 1708 m.identify the scope and effect of the Code regarding termination of a (producer) license, including when producers dissolve a partnership, California Insurance Code sections 1708 through 1712.5 n.identify and apply: i.the definition of the term “fiduciary” ii.producer fiduciary duties described in the Code, California Insurance Code sections 1733 through 1735 o.identify the continuing education (CE) requirements for: an individual licensed as a personal lines agent know that all licensees must complete a 3-hour course in ethics as part of the required hours of CE prior to each license renewal p.identify the licensee’s duty for disclosure of the effective date of coverage, California Insurance Code section 1730.5 q.reporting of administrative actions and criminal convictions, California Insurance Code section 1729.2 i.know that an applicant or licensee shall notify the Commissioner when any of the background information set forth in California Insurance Code section 1729.2 changes after the application has been submitted or the license has been issued ii.notice is required within 30 days of any change in background information r.be able to identify, apply the meaning of, and list concrete examples of the following ethical mandates: i.place the customer's interest first ii.know your job and continue to increase your level of competence iii.identify the customer’s needs and recommend products and services that meet those needs iv.accurately and truthfully represent products and services v.avoid jargon; use layperson’s language when possible vi.stay in touch with customers and conduct periodic coverage reviews vii.maintain confidentiality and protect the privacy of customer information using physical and electronic safeguards viii.keep informed of and obey all insurance laws and regulations ix.avoid unfair or inaccurate remarks about the competition s.be able to identify that the California Insurance Code and the Cal. Code of Regs. identify many unethical and/or illegal practices, but they are NOT a complete guide to ethical behavior (for example: California Insurance Code section 785) t.be able to provide examples of different types of ethical dilemmas that licensees might face u.be able to identify special ethical concerns that may occur regarding pretext interviews, California Insurance Code section 791.03
    • I.General Insurance C.The Insurance Marketplace 3.Insurers a.be able to differentiate between: admitted and non-admitted insurers, California Insurance Code sections 24 through 25 domestic, foreign, or alien insurers, California Insurance Code sections 26 through 27 and 1580 mutual and stock insurers, California Insurance Code section 11535.1 regulation of an admitted insurer and non-admitted insurer, and the potential consequences for consumers, California Insurance Code sections 24, 25, and 1760 through 1780 b.be able to identify: the functions of the following major operating divisions of insurers: marketing/sales, underwriting, claims, actuarial market conduct regulations as the state laws that regulate insurer practices regarding underwriting, sales, ratemaking, and claims handling who may be an insurer, California Insurance Code section 150 iv.the penalty for unlawfully acting as an agent for a non-admitted insurer or broker or aiding a non-admitted insurer to transact business in this state for a home state insured, California Insurance Codes sections 703 and 1760.1(f) v.the distinctions between person, association, organization, partnership, business trust, limited liability company, or corporation, California Insurance Code section 19 vi.reciprocals and risk retention groups, and the limitations on state regulation of risk retention groups under the federal Liability Risk Retention Act, and the possible impact on consumers, California Insurance Code sections 125 through 140 and 15 USC sections 1011 through 1015
    • I. General Insurance C. The Insurance Marketplace 4.Market Regulation – General a.be able to identify: the purpose of insurance regulation and the significance of the McCarran-Ferguson Act, 15 USC sections 1011 through 1015 ii.the California Insurance Code and how it may be changed iii.the California Code of Regulations, Title 10, section , Chapter 5, and how it may be changed iv.how the Insurance Commissioner is elected and the responsibilities of the position, California Insurance Code sections 12900 and 12921 the correct application of the unfair practices article, including its prohibitions and penalties, California Insurance Code sections 790 through 790.10 b.be able to identify the privacy protection provisions of: the California Financial Information Privacy Act, California Financial Code sections 4050 through 4060 Insurance Information and Privacy Protection Act regarding practices, prohibitions, and penalties, California Insurance Code sections 791 through 791.26 Health Insurance Portability and Accountability Act (HIPPA) iv.Privacy of Nonpublic Personal Information, California Code of Regulations, Title 10, section 2689.4 through 2689.22 v.California Consumer Privacy Act of 2018 (effective January 1, 2020) vi.California’s “Shine the Light” Law (California Civil Code section 1798.83) c.be able to define an insolvent insurer, California Insurance Code section 985, and know: the definition of an insolvent insurer includes either: 1)Any impairment of minimum "paid-in capital" or "capital paid in," as defined in California Insurance Code section 36, required in the aggregate of an insurer by the provisions of this code for the class, or classes, of insurance that it transacts anywhere 2)An inability of the insurer to meet its financial obligations when they are due an insurer cannot escape the condition of insolvency by being able to provide for all its liabilities and for reinsurance of all outstanding risks; an insurer must also be possessed of additional assets equivalent to such aggregate "paid-in capital" or "capital paid in" required by this Code after making provision for all such liabilities and for such reinsurance, California Insurance Code sections 985 (a)(1) and (2) the definition of paid-in capital, California Insurance Code sections 36 and 985 it is a misdemeanor to refuse to deliver any books, records, or assets to the Commissioner once a seizure order has been executed in an insolvency proceeding, California Insurance Code section 1013 d.be able to identify: i.the scope and correct application of the conservation proceedings described in California Insurance Code sections 1011, 1013, and 1016 ii. the purpose and scope of the Code with regard to the California Insurance Guarantee Association, California Insurance Code sections 1063(a),(b), (c), and 1063.1(a), (b), (c)(1) and (2) iii. common circumstances that suggest the possibility of fraud know that if an insured signs a claim form for a claim which is fraudulent, the insured may be found guilty of perjury iv. efforts to combat fraud, California Insurance Code sections 1872, 1874.6,1875.8, 1875.14, 1875.20, and 1877.3(b)(1) 1)be able to describe the steps a licensed agent should take when fraud is suspected v.the scope and correct application of the false and fraudulent claims article of California Insurance Code sections 1871.1 through 1872.5 vi.acts and practices prohibited by California Insurance Code sections 679.70 through 679.74 vii.the requirements for rates to be approved or remain in effect, California Insurance Code section 1861.05(a) viii.the types of ratings regulations (prior approval, file & use, use & file, open competition) and the system used by the state of California to regulate rates for most property and casualty insurance written in California, California Insurance Code section 1861.05(c) ix.the distinctions between and uses of “shall” and “may,” California Insurance Code section 16 x.the requirements for notice by mail, California Insurance Code section 38 e.with regard to the fair claims settlement practices regulations, be able to identify: i.the sixteen claim practices that are prohibited by California Insurance Code section 790.03 ii.how the regulations relate to California Insurance Code section 790.03 a)a definition of each of the following: 1)claimant, California Code of Regulations, Title 10, section 2695.2(c) 2)notice of legal action, California Code of Regulations, Title 10, section 2695.2(o) 3)proof of claim, California Code of Regulations, Title 10, section 2695.2(s) b)file and record documentation, California Code of Regulations, Title 10, section 2695.3 c)duties upon receipt of communications, California Code of Regulations, Title 10, section 2695.5 d)standards for prompt, fair, and equitable settlements, California Code of Regulations, Title 10, sections 2695.7(a), (b), (c), (g), and (h) e)additional standards applicable to first party residential and commercial insurance policies, California Code of Regulations, Title 10, section 2695.9
    • I.General Insurance C.The Insurance Marketplace 5. Excess and Surplus (E&S) Lines a.with regard to surplus lines, be able to identify: i.what the term "surplus lines" means ii.the marketplace needs met by surplus lines iii.the requirements to be met before a risk may be placed with a surplus lines insurer iv.how surplus lines and special lines surplus lines brokers interact with agents v.the absence of binding authority when placing business through excess and surplus lines brokers, California Insurance Code section 1764.2 vi.the non-standard nature of the coverages provided and that: An excess and surplus lines insurer writes standard coverages in a state where the insurer in unlicensed A standard market insurer is an admitted insurer who offers rates for insurance coverage to insureds who have an average or better than average loss exposure vii.conditions that must be met before business may be obtained from these carriers, California Insurance Code section 1761 viii.what is the List of Approved Surplus Lines Insurers (LASLI)? The following link will provide access to this list: http://www.insurance.ca.gov/01-consumers/120-company/07-lasli/lasli.cfm ix.what is the Quarterly Listing of Alien Insurers issued by the NAIC's International Insurers Department ("IID List")? The following link will provide access to this list: https://www.naic.org/prod_serv/QLS-AS-230.pdf
    • I.General Insurance D.Legal Concept: Tort Law 1.Be able to identify and/or recognize: a.that torts are forms of civil wrongdoings, including: i. intentional torts ii.negligence iii.absolute/strict liability b.the four essential elements of negligence: i.duty ii.breach iii.proximate cause iv.damages c.the principles of “proximate cause” and “efficient proximate cause” d.legal defenses against “negligence” e.the reasons for the absolute and strict liability doctrines and recognize situations in which they would apply f.examples of intentional torts (e.g., libel, slander, false arrest) g.definitions of gross negligence and vicarious liability h.various types of damages available under tort law: i.compensatory, which includes special and general damages ii.punitive i.the difference between comparative and contributory negligence doctrines, and know which one applies under California tort law i. be able to compute a loss payment applying the doctrines of: a)comparative negligence b)contributory negligence j.the assumption of the risk doctrine and know: i.how it applies to strict liability ii.that it may be asserted as a legal defense
    • II.Property Insurance .A.Property Basics 1.Know: a.the Insurance Services Office (ISO) is an advisory organization that also develops standard forms for the market b.AM Best, Fitch, Moody’s, and Standard and Poor’s are examples of independent ratings organizations, and know what their ratings indicate c.the principal risk management methods used to identify loss exposures, and the advantages and disadvantages of each method d.the difference between direct and indirect (consequential) property losses e.common indirect loss exposures f.the terms expense ratio, loss ratio, and combined ratio g.the definitions of and distinctions between the following policy forms i.“all-risk” ii.“open peril”/“special form iii.“named peril” (e.g., basic, broad, and special) h.be able to identify the terms and differentiate between: i.short rate/flat rate/pro-rata cancellation ii.cancellation/non-renewal/lapse iii.unearned/earned premium and be able to identify their correct computation iv.“judgment rating,” “merit rating,” and “manual rating” v.first party claimant, third party claimant, subrogation, and arbitration vi“loss reserves” and “statutory reserves” viii.property and liability (casualty) insurance coverages i.be able to identify: i.the requirements to be met to assign a policy from one insured to another ii.a definition of “loss cost rating” and the reason for its use iii.the requirement for an insurable interest to exist, California Insurance Code sections 280 through 287 iv.contingent or expectant interests are not insurable, California Insurance Code section 283 v.apply the term “concurrent cause” to a loss where two perils are involved in the same event, but only one peril is covered under the policy (e.g., fire following earthquake, California Insurance Code section 10088.5, and mudslide following wildfire) vi.the requirements and definitions of the California residential property insurance disclosure statement, California Insurance Code sections 10101 and 10102 be familiar with California Insurance Code section 678(e) as it relates to revisions to the California residential property insurance disclosure statement regarding: The definition of actual cash value The statement must be signed and acknowledged if the policy does not cover the peril of fire and the insurer must provide information on the FAIR plan and the California home insurance finder vii.the residential property insurance disclosure form contains only a general description of coverages and is NOT part of the policy viii.replacement cost and building code upgrade options j.be familiar with the requirements for renewal offers: in relation to a reduction in limits or coverage, Cal. Ins Code section 678(a) in relation to code upgrade coverage, California Insurance Code section 10103
    • II.Property Insurance B.Policies 1.Be able to identify: a.the major components of insurance policies (e.g., declarations, insuring agreements, definitions, conditions, exclusions, endorsements) b.common policy provisions (i.e., insured’s right to cancel, assignment of policy, supplementary payments, severability, liberalization, etc.) c.a valued policy, California Insurance Code sections 2053 and 2054, and be able to identify and compute loss payments according to the different types of valuation commonly used in insurance policies (actual cash value, replacement cost, market value, agreed value, and stated value) d.the protection of a mortgagee’s interest contained in most mortgage clauses e.the difference between concurrent and non-concurrent coverage under two or more policies of insurance issued for the same property f.the Code requirements pertaining to policy cancellation/failure to renew, California Insurance Code sections 481.5, 660 through 669.5, 670, 673, and 675 through 679.6 g.what the “standard fire policy” is, perils insured, and its importance to personal and commercial property contracts, California Insurance Code sections 2070 and 2071 h.the special policy renewal provisions which may apply following a disaster that results in total loss to a property, California Insurance Code section 675.1 i.the extensions of ALE offered due to the declaration by a civil authority while a disaster is ongoing, California Insurance Code section 2060(b)(1) j.for a total loss of a furnished residence related to a declared state of emergency, an insurer must provide a payment for contents of no less than 30% of the policy limit, as specified, without requiring an itemized claim, California Insurance Code section 10103.7(b) k.the provisions for combining payments for losses up to the policy limits for the primary dwelling and other structures in the event of a state of emergency, California Insurance Code section 10103.7(a) l.replacement cost per California Insurance Code section 2051.5 as it pertains to: i.personal property and real property, including code upgrade options ii.the extension of timelines to collect full replacement cost in the event of a “state of emergency” iii.rebuilding at the loss location, rebuilding at a new location, and purchasing an already built home at a new location the effect of the value of land on rebuilding, California Insurance Code section 2051.5(c)(2)
    • II.Property Insurance C.Classes of Insurance, California Insurance Code sections 100 through 124 1.Have basic familiarity with the coverages a property and casualty may be appointed to transact: a.fire b.ocean marine /inland marine c.surety d.plate glass e.liability f.workers’ compensation g.common carrier liability h.boiler and machinery i.burglary j.credit k.sprinkler l.team and vehicle m.automobile n.aircraft
  • III. Personal Lines Insurance (65%)
    • III.Personal Lines Insurance Insurance on Residential Properties 1.Homeowners policies a.be able to define the following terms as they apply to a homeowners’ policy: named insured, insureds, insured location, residence employee, residence premises b.coverage forms – be able to identify the major differences between the following forms in terms of coverages included and perils insured: i.HO-2 Broad Form ii.HO-3 Special Form iii.HO-4 Contents (Tenant’s) Form iv.HO-5 Comprehensive Form v.HO-6 Unit-Owner’s Form vi.HO-8 Modified Coverage Form c.homeowners’ policy property coverages i.be able to identify for coverages A, B, and C (dwelling, other structures, and personal property) 1)Who is insured 2)The kinds of property insured and excluded 3)The valuation basis: actual cash value vs replacement cost 4)The property with special (sub) limits ii.be able to identify the extent Coverage D – Loss of Use applies to a described loss iii.be able to identify the insured’s duties after a loss d.additional coverages – be able to identify: the coverage and limitations available, such as debris removal and property removal under the property coverages the effect of the exclusions: earth movement and flood, including the coverage provided for ensuing losses Know how a wildfire may alter an earth movement exclusion based on an application of “efficient proximate cause” Know how the actions or negligence of others may be a cause of action following a loss due to earth movement be able to recognize the applicability of the ordinance or law exclusion e.liability coverages identify common liability loss exposures covered or excluded explain when personal liability coverage is payable for a described loss, be able to identify who would be covered under medical payments to others f.homeowners’ endorsements – be able to identify the effect of attaching one or more of the following endorsements to a homeowners policy: i.workers' compensation – residence employees ii.other structures – increased limits endorsement iii.scheduled personal property endorsement iv.inflation guard endorsement v.personal property – replacement cost endorsement vi.personal injury endorsement vii.additional residence rented to others viii.home business coverage endorsements ix.manufactured home endorsement x.extended replacement cost xi.code upgrade 2.Manufactured home policy a.with the addition of different types of structures, informed agents must be able to recognize the coverage that is applicable to the structure being insured 3.Dwelling policy a.for the dwelling policy, be able to identify the major differences between the three forms (basic, broad, and special) in terms of: i.the coverages included ii.perils insured 4Policy coverages a.be able to identify and/or differentiate under Coverages A, B, and C: i.who is or is not an "insured" ii.the types of property insured iii.which types of loss settlement applies to dwelling and other structures vs. personal property coverages (actual cash value vs. replacement cost) iv.the kinds of property excluded v.situations when loss of use/fair rental value and additional living expenses might be available as the result of direct and indirect losses, and the extent to which coverage applies b.other coverages – be able to identify the limit of insurance on the following coverages as they apply under a dwelling policy: i.debris removal ii.property removed iii. ordinance or law
    • III.Personal Lines Insurance BHomeowners’ Insurance Valuation 1.General concepts, California Insurance Code section 2070 a.Know that: i.all property, casualty, and personal lines must complete a continuing education (CE) course on homeowners’ insurance valuation (included in their required CE hours) ii.a producer is responsible for accurately documenting a dwelling’s replacement cost at the time of original application iii.certain unlicensed persons are prohibited from estimating dwelling replacement cost or explaining insurance coverages 2.Insurance on a residence a.valuations and replacement costs i.know how a co-insurance provision affects the limit of liability in a property policy and be able to determine 1)The amount of coverage required to receive full replacement cost coverage 2)The lesser amount that would be paid under a co-insurance provision in the event of: i)total loss ii)partial loss ii.be able to differentiate between actual cash value and replacement cost loss settlements b.endorsements, be able to identify the major effects of the following: i.guaranteed and extended replacement cost ii.ordinance or law coverage c.the relationship between catastrophic loss events and their effect on the increased cost of construction 3.Earthquake coverage a.know that the risk of earthquake/earth movement is excluded from dwelling and homeowners policies b.be able to identify the advantages or disadvantages of: i.obtaining this coverage via the California Earthquake Authority (CEA) (and participating insurers) vs. coverage in the competitive market place, California Insurance Code sections 10089.6, 10089.26, and 10089.28 ii.single limit of coverage vs. multiple limits iii.reduced coverage policies iv.deductible options and their effect on Combined Single Limit (CSL) claims v.increased optional limits for personal property and living expenses vi.CEA premium discounts may apply for retrofits
    • III.Personal Lines Insurance C.Liability Coverage 1.Be able to identify and/or differentiate between: a.property damage liability and bodily injury liability coverages provided in the homeowners’ and dwelling policies b.common liability loss exposures, and know which are typically covered or excluded in residential policies c.who is and is not covered by medical payments to others d.the vehicles most commonly insured and excluded not under a homeowners’ policy form e.an “insured location” and a “residence premises” f.losses covered under the homeowners’ watercraft endorsement
    • III.Personal Lines Insurance C.Marine 2.Personal watercraft – personal insurance. Be able to identify: a.why a boat owner, insured under a homeowners’ policy, might still need boat owners type coverages b.the typical coverages provided: i.liability operations liability, passenger liability, and flotilla liability ii.medical payments iii.physical damage coverage c.the coverage normally afforded by the yacht policy (hull, boat trailers, Protection and Indemnity (P&I))
    • III.Personal Lines Insurance D.Government Risk Pools for Catastrophic Events 1.Earthquake coverage a.be able to identify: i.requirements for insurers to offer earthquake coverage, California Insurance Code sections 10081 and 10084 ii.the CEA as a publicly managed, non-profit organization, California Insurance Code sections 10089.6, 10089.26, and 10089.28 b.the advantages and or disadvantages of earthquake policy deductibles vs. standard dwelling policy and homeowners’ property deductibles 2.California Fair Access to Insurance Requirements (FAIR) Plan. Be able to identify: a.the marketplace needs met by the FAIR Plan, California Insurance Code sections 10090 and 10091 b.the two different types of areas served by the FAIR plan c.who is eligible to submit applications to the FAIR Plan d.the meaning of “basic property insurance” as defined in California Insurance Code section 10091(c) e.the requirement that the FAIR Plan reduces existing policyholders and provides for more of the policies to be insured by admitted insurers, California Insurance Code section 10095(i) f.be able to explain the necessary coordination and the differences between a FAIR Plan and a DIC policy i.FAIR Plan provides limited coverage for specific perils: fire or lightning, explosion, smoke, windstorm or hail, vehicles and vandalism/malicious mischief ii.most DIC policies specifically exclude any peril offered by the FAIR Plan, regardless of whether the coverage was purchased by the insured or not 3.National Flood Insurance Program (NFIP). Be able to identify: a.the coverage that insures against losses caused by flood b.the types of properties eligible for coverage under the program c.the principal coverage provided by the contract and limitations for making claims d.the differences between the emergency program and the regular program and the mandatory coverage requirement for NFIP coverage on affected federally insured mortgages (voluntary or forced-placed coverage) e.how any licensed agent may obtain an NFIP policy for a client f.agents and brokers have no binding authority g.program dollar limits for coverages are specified h.the NFIP CE requirement for property
    • III.Personal Lines Insurance E.Fire Mitigation and How it Affects Insurance Costs 1.Define, recognize, and describe the fire problem in the wildland urban interface 2.Identify those items that affect the risk and hazard such as topography, fuels type and locations, weather, and construction 3.Identify the current state laws and regulations that address mitigation efforts, including defensible space requirements, building constructions, land use, and planning
    • III.Personal Lines Insurance F.Inland Marine Risks 1.General concepts a.be able to identify why certain lines are filed or non-filed and the advantages and/or disadvantages of each b.for inland marine policies, be able to identify: i.that most provide coverage on an open-peril basis ii.the principal exclusions iii.any special valuation provisions iv.why mobility is a common characteristic of many types of property insured v.why an annual transit policy is usually provided on a “named peril” basis 2.Personal Property Coverage I a.be able to compare and contrast a Personal Articles Floater (PAF) and the homeowner's "scheduled personal property endorsement" b.with regard to the scheduled personal property endorsement, know: i.why a HO-3 homeowners’ insured would add this endorsement ii.what effect insuring property under this endorsement has on coverage C of a homeowners’ policy
    • III.Personal Lines Insurance G.Personal Auto 1.General concepts. Be able to identify: a.the Financial Responsibility Law and minimum individual or insurance policy requirements, CVC sections 16020, 16021, 16025, 16056, and 16451, and notice requirements pursuant to California Insurance Code section 11580.1(b)(1) and CVC section 16054 b.how a particular personal auto policy being sold to the consumer may differ from the ISO PAP c.under an ISO PAP, be able to identify: i.the eligibility requirements for coverage ii.who is an insured including the provisions regarding how the policy responds when an insured is no longer a spouse living in the same household 1)Know that any person qualifies as an insured while using a covered auto iii.the policy territorial limits iv.the difference between "share-the-expense car pools" and "for-hire" situations v.the coverage that applies to newly acquired auto and “your covered auto” vi.the coverage that applies to a non-owned private passenger auto rented by an insured while on a short vacation d.situations in which the policy provides: i.primary coverage ii.excess coverage iii.special physical damage e.regarding good driver discounts: i.the eligibility requirements to receive a good driver discount, California Insurance Code section 1861.025 ii.the discount percentage of the good driver discount, California Insurance Code section 1861.02 iii.the three principal rating factors for personal auto policies, California Insurance Code section 1861.02(a) f.be able to understand the provisions of the California amendatory endorsements and be able identify: i.the permitted reasons for an insurer to cancel or non-renew an automobile policy, California Insurance Code sections 661 and 1861.03(c)(1) ii.the number of days of notice required, California Insurance Code sections 662 and 663 g.for newly acquired autos, know that: i.a newly acquired auto will have the broadest coverage provided for any vehicle shown in the declarations, except for collision coverage for damage to your auto ii.if the insured has collision coverage on at least one auto listed on the declarations page, all coverage on a newly acquired auto begins on the date the insured becomes the owner (for example, the ISO policy requires the insured to notify the insurer within 14 days) iii.if the insured does not have collision coverage on at least one auto listed on the declarations page, collision coverage on a newly acquired auto begins on the date the insured becomes the owner, but the insured must request collision coverage within 4 days h.regarding Transportation Network Companies (TNC) (e.g., Uber, Lyft), know that: i.personal auto insurance rarely covers the driver while working for a TNC ii.insurers have products that specifically cover the driver while working for a TNC; a list of available TNC coverage can be found on Department’s webpage at: http://www.insurance.ca.gov/01-consumers/105-type/82-TNC-Ridesharing/upload/1-12-17TNCProductApprovalChartPublic.pdf iii.Public Utilities Code section 5433 requires the TNC to provide specific coverages to the driver regarding personal vehicle sharing, know that: personal vehicle sharing means the use of private passenger vehicles by persons other than the vehicle’s owner in connection with a personal vehicle sharing program as defined by California Insurance Code section 11580.24. the personal vehicle sharing program must provide coverage for the vehicle “during all times that the vehicle is engaged in personal vehicle sharing” as long as the annual revenue received by the vehicle’s owner which was generated by the personal vehicle sharing of the vehicle does not exceed the annual expenses of owning the vehicle, California Insurance Code section 11580.24(a)(2), and as long as the vehicle is not being used for commercial purposes, including but not limited to, ridesharing (TNC), California Insurance Code section 11580.24(a)(3) the vehicle sharing program shall “provide insurance coverage for the vehicle and operator of the vehicle that are equal to or greater than the insurance coverages maintained by the vehicle owner and reported to the personal vehicle sharing program,” California Insurance Code section 115801.24(c)(1)
    • III.Personal Lines Insurance G.Personal Auto 2.Liability/medical payments/uninsured motorist. Be able to identify: a.how the policy limits are applied to liability, medical, uninsured motorist in a given loss situation b.for a described loss under Part A – Liability, be able to determine the effect of: i.supplementary payments ii."out of state coverage," including "financial responsibility" and “no-fault” compliance iii.split limits vs. single limits coverage 1) Know the difference between the application of the per-accident limit in a split limit policy and a single limit policy iv.“other insurance” v.limitations and exclusions applicable to covered bodily injury and/or property damage claims c.for a described loss under Part B – Medical Payments, be able to determine the amount of coverage available for each insured i.coverage/limitations/exclusions/applying to Part B – Medical Payments d.for a described loss under Part C – Uninsured Motorists, be able to differentiate between uninsured and underinsured motorist and know the amount of coverage for each insured: i.for bodily injury when the at-fault driver is an uninsured or underinsured motorist ii.for property damage under the uninsured motorist property damage limit of liability iii.for property damage under a collision deductible waiver e.under California law, be able to identify: i.the requirement for offering uninsured motorists coverage in policies providing bodily injury liability, and how an insured may reject the coverage, California Insurance Code section 11580.2(a)(1) ii.driving history report (MVR) issues – Fair Credit Reporting Act 1)Know that a consumer credit report cannot be used as the basis of a decline to insure or as a premium factor in California
    • III.Personal Lines Insurance G.Personal Auto 3.Physical damage/miscellaneous a.In a described loss, be able to identify: i.what constitutes physical damage ii.if the loss is covered and for how much after applying any deductibles iii.the standard basis of valuation for the automobile iv.an insurer’s options in making a loss settlement with the insured v.under what circumstances transportation expenses are reimbursed vi.the coverage for personal effects vii.the relationship between Other Than Collision (OTC) coverage and comprehensive coverage (ISO uses newer “OTC,” many insurers still use “comprehensive”) 1)know that OTC coverage is a type of property insurance coverage viii.insured's duties after a loss b.be able to identify common auto endorsements i.miscellaneous type vehicle endorsement ii.limited Mexico coverage endorsement iii.towing and labor coverage iv.trust endorsement v.joint ownership vi.auto loan/lease endorsement (GAP coverage) vii.impact of shared rides on personal auto insurance named non-owner coverage viii.extended non-owned liability coverage – vehicle furnished or available for regular use ix.optional limits – transportation expenses coverage x.customizing equipment coverage
    • III.Personal Lines Insurance G. Personal Auto 4. California Automobile Assigned Risk Plan (CAARP). Be able to identify: a.the purpose of CAARP i.who is eligible to place business with CAARP ii.the eligibility requirements for applicants iii.how business is placed through CAARP iv.the coverages and limits available and/or required v.when coverage may be bound vi.when commercial risks are also eligible for "assigned risk" coverage b.California’s Low-Cost Automobile Insurance (CLCA); be able to identify: i.what is “low-cost automobile insurance” ii.the coverages and limits available iii.eligibility to purchase low-cost automobile insurance iv.the cancellation and renewal procedures for low-cost automobile insurance v.the costs for this insurance
    • III.Personal Lines Insurance G.Personal Auto 5.Recreational Vehicles (RVs) a.know that endorsements can be added to a Personal Auto Policy (PAP) to provide coverage for RVs b.be able to differentiate between a private passenger vehicle and a commercial vehicle and know that: i.RVs are generally both designed as and used as private passenger vehicles ii.under CVC sections 260 and 362, a three axle RV is not considered a commercial vehicle and meets the definition of “private passenger vehicle” in California Insurance Code section 660(a)(1) iii.once an RV is added to the PAP, the existing coverage of the PAP is extended to this added vehicle
    • III.Personal Lines Insurance G.Personal Auto 6.Motorcycles. Be able to explain: a.why motorcycles generally are not covered by a PAP and generally cannot be added as an endorsement b.how to insure vehicles with less than four wheels c.why specialty motorcycle policies may have limitations in the areas of medical payments and uninsured motorist
    • III.Personal Lines Insurance H.Umbrellas and Excess Liability Insurance. Be able to identify: 1.The difference between umbrella and excess liability insurance 2.The benefits of umbrella and excess liability insurance 3.How uninsured motorist and underinsured motorist coverage is extended under an umbrella or excess liability policy 4.Underlying policy limits that are commonly required to be maintained by the umbrella insurer 5.What a self-insured retention is and how it is applied to a loss 6.Standardized umbrella policies and their availability
  • IV. Pet Insurance (2%)
    • IV.Pet Insurance A.Definitions 1.Know the following definitions, California Insurance Code section 12880: a. chronic condition b. congenital anomaly or disorder c. hereditary disorder d. pet insurance e. preexisting condition f. veterinarian g. veterinary expenses h. waiting or affiliation period
    • IV.Pet Insurance B.Pet Insurance Basics 1.Know that a policy of pet insurance covers veterinary expenses, which includes the costs associated with medical advice, diagnosis, care, or treatment provided by a veterinarian, including, but not limited to, the cost of drugs prescribed by a veterinarian, California Insurance Code section 12880(g)
    • IV.Pet Insurance C.Disclosures 1.Know that an insurer transacting pet insurance in California shall disclose all of the following to consumers: a.exclusions, California Insurance Code sections 12880.2(1)(A) through (D) a pre-existing condition a hereditary disorder a congenital anomaly or disorder a chronic condition b.if the policy includes any other exclusion, the following statement must be included: “Other exclusions may apply. Please refer to the exclusions section of the policy for more information,” California Insurance Code section 12880.2(a)(2) c.any policy provision that limits coverage through a waiting or affiliation period, a deductible, co-insurance, or an annual or lifetime policy limit, California Insurance Code section 12880.2(a)(3) d.whether the insurer reduces coverage or increases premiums based on the insured’s claim history, California Insurance Code section 12880.2(a)(4) e.a summary description of the basis or formula on which the insurer determines claim payments under a pet insurance policy within the policy and through a link on the main page of the insurer’s internet web site, California Insurance Code section 12880.2(c) f.a pet insurer that uses a benefit schedule to determine claim payment under a pet insurance policy shall do both of the following: i.clearly disclose the applicable benefit schedule in the policy, California Insurance Code section 12880.2(d)(1) ii.disclose all benefit schedules used by the insurer under its pet insurance policies through a link on the main page of the insurer’s internet web site, California Insurance Code section 12880.2(d)(2) g.a pet insurer that determines claim payments under a pet insurance policy based on usual and customary fees, or any other reimbursement limitation based on prevailing veterinary service provider charges, shall do both of the following: i.include a usual and customary fee limitation provision in the policy that clearly describes the insurer’s basis for determining usual and customary fees and how that basis is applied in calculating claim payments, California Insurance Code section 12880.2(e)(1) ii.disclose the insurer’s basis for determining usual and customary fees through a link on the main page of the insurer’s internet web site, California Insurance Code section 12880.2(e)(2) h.the insurer shall create a summary of all policy provisions required in California Insurance Code section 12880.2 subdivisions (a) through (e), inclusive, into a separate document titled “Insurer Disclosure of Important Policy Provisions.”, California Insurance Code section 12880.2(f) i.the insurer shall post the “Insurer Disclosure of Important Policy Provisions” document required in the Code through a link on the main page of the insurer’s internet web site, California Insurance Code section 12880.2(f) ii.in connection with the issuance of a new pet insurance policy, the insurer shall provide the consumer with a copy of the “Insurer Disclosure of Important Policy Provisions” document required pursuant to California Insurance Code section 12880.2 subdivision (f) in at least 12-point type when it delivers the policy, California Insurance Code section 12880.2(h)(1) iii.in addition, the pet insurance policy shall have clearly printed thereon or attached thereto a notice stating that, after receipt of the policy by the owner, the policy may be returned by the insured for cancellation by delivering it or mailing it to the insurer or to the agent through whom it was purchased, California Insurance Code section 12880.2(h)(2) the period of time set forth by the insurer for return of the policy shall be clearly stated on the notice, and this free look period shall be not less than 30 days; the insured may return the policy to the insurer or the agent through whom the policy was purchased, California Insurance Code section 12880.2(h)(2)(A) the delivery or mailing of the policy by the insured pursuant to this paragraph shall void the policy from the beginning, and the parties shall be in the same position as if a policy or contract had not been issued, California Insurance Code section 12880.2(h)(2)(B) all premiums paid and any policy fee paid for the policy shall be refunded to the insured within 30 days from the date that the insurer is notified of the cancellation; however, if the insurer has paid any claim, or has advised the insured in writing that a claim will be paid, the 30-day free look right pursuant to this paragraph is inapplicable and instead the policy provisions relating to cancellation apply to any refund, California Insurance Code section 12880.2(h)(2)(C) i.at the time a pet insurance policy is issued or delivered to a policyholder, the insurer shall include a written disclosure with all of the following information, printed in 12-point boldface type i.the department’s mailing address, toll-free telephone number established pursuant to California Insurance Code section 12921.1, and internet website address, California Insurance Code section 12880.6(a) ii.the address and customer service telephone number of the insurer or the agent or broker of record, California Insurance Code section 12880.6(b) iii.a statement that the department should be contacted only after discussions with the insurer, or its agent or other representative, have failed to produce a satisfactory resolution of the problem, California Insurance Code section 12880.6(c) iv.if the policy was issued or delivered by an agent or broker, a statement advising the policyholder to contact the broker or agent for assistance, California Insurance Code section 12880.6(d)
    • IV.Pet Insurance D.Administrative Proceedings 1.Know that any person suspected of violating any of these sections is subject to an administrative hearing, California Insurance Code section 12880.4 a.if violations are proved, know what the fines are and how they may be imposed, California Insurance Code section 12880.3
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