California Commercial Insurance Exam Questions
and Verified Answers
What is a Modular Policy? Correct Answer: A modular policy is a policy consisting of several different
documents, none of which by itself forms a complete contract.
What is a Commercial Package Policy (CPP)? Correct Answer: A Commercial Package Policy is a
modular policy that combines different forms and more than one line of coverage.
What must a CPP policy consist of? Correct Answer: A Declaration Page (stating premium charges and
coverage limits)
A Policy Conditions (six conditions that apply to the entire contract)
Two or more Coverage Modules/Parts
What is the purpose of an Interline form? Correct Answer: An Interline form is used to eliminate
redundancy and minimize the number of pages.
EXAMPLE: A CPP policy only contains one Declarations page listing all of the separate coverages. In this
case the Declaration page would be considered an interline form.
What is a Monoline form? Correct Answer: A Monoline form only contains one 1 coverage part.
(A single coverage policy)
In a Commercial policy, who can cancel, request changes, is responsible for premium, and will be the
only person named on a refund of premium? Correct Answer: The first named insured.
NOTE: This may be an individual or a company.
What are the 6 common conditions in a Commercial policy? Correct Answer: Cancellation, Changes,
Inspections and Surveys, Premiums,
How many days does the Insurer have to provide written notice to the Insured before cancellation of
their policy? Correct Answer: 10 days prior to the date of cancellation for nonpayment of premium.
30 days prior to the date of cancellation for any other allowable reason.
, NOTE: The insure must be able to prove it has mails the cancellation notice to the address on file,
although no proof of delivery of this notice is required.
When can an insurer cancel a policy? Correct Answer: An insurer can cancel a policy at anytime but
only under certain conditions.
When can Examination of Books and Records be completed? Correct Answer: At anytime during the
policy period and for up to three years after the policy ends/expires. This is done to verify that the insure
has collected the appropriate premium.
What is the Inspections and Surveys condition? Correct Answer: The insurer has the right but is not
obligated to inspect the property and make recommendations. This is done for insurability and rating
only. It does not warrant the place safe or in compliance.
What is the Premium condition? Correct Answer: The Premium condition states that the first named
insured is responsible to make timely payment of premiums and will also be the payee on any refunds
the insurer may send.
What is the Transfer of Rights and Duties Under the Policy condition? Correct Answer: This condition
allows for the transfer of the insured's rights and duties to his or her legal representative, but only at
death. In no other instance is transfer allowed without written consent from the insurer.
What is assignment? Correct Answer: Assignment is the transfer of rights and duties under a policy if the
first named insured dies.
What is a Coverage Part? Correct Answer: A Coverage Part is a component of a CPP or a Monoline
Policy that contains the policy provisions relating to a particular line of business, such as commercial
property or commercial auto.
What are the 7 Coverage Parts? Correct Answer: Commercial Property, Commercial General Liability,
Commercial Automobile Insurance, Commercial Crime, Commercial Inland Marine, Boiler and
Machinery Insurance (Equipment Breakdown), and Farm Coverage.
What are the California Amendatory Endorsements? Correct Answer: It states that if the policy has been
in effect for less than 60 days and is not a renewal, the insurer can cancel for any reason.
If the policy has been in effect for atleast 60 days or is a renewal, then the insurer may only cancel for
one or more of the allowable reasons.
It also states that if the insurer decides to non renew the policy, the insurer must provide notice atleast
60 days in advance, but not more than 120 days before the expiration date.
and Verified Answers
What is a Modular Policy? Correct Answer: A modular policy is a policy consisting of several different
documents, none of which by itself forms a complete contract.
What is a Commercial Package Policy (CPP)? Correct Answer: A Commercial Package Policy is a
modular policy that combines different forms and more than one line of coverage.
What must a CPP policy consist of? Correct Answer: A Declaration Page (stating premium charges and
coverage limits)
A Policy Conditions (six conditions that apply to the entire contract)
Two or more Coverage Modules/Parts
What is the purpose of an Interline form? Correct Answer: An Interline form is used to eliminate
redundancy and minimize the number of pages.
EXAMPLE: A CPP policy only contains one Declarations page listing all of the separate coverages. In this
case the Declaration page would be considered an interline form.
What is a Monoline form? Correct Answer: A Monoline form only contains one 1 coverage part.
(A single coverage policy)
In a Commercial policy, who can cancel, request changes, is responsible for premium, and will be the
only person named on a refund of premium? Correct Answer: The first named insured.
NOTE: This may be an individual or a company.
What are the 6 common conditions in a Commercial policy? Correct Answer: Cancellation, Changes,
Inspections and Surveys, Premiums,
How many days does the Insurer have to provide written notice to the Insured before cancellation of
their policy? Correct Answer: 10 days prior to the date of cancellation for nonpayment of premium.
30 days prior to the date of cancellation for any other allowable reason.
, NOTE: The insure must be able to prove it has mails the cancellation notice to the address on file,
although no proof of delivery of this notice is required.
When can an insurer cancel a policy? Correct Answer: An insurer can cancel a policy at anytime but
only under certain conditions.
When can Examination of Books and Records be completed? Correct Answer: At anytime during the
policy period and for up to three years after the policy ends/expires. This is done to verify that the insure
has collected the appropriate premium.
What is the Inspections and Surveys condition? Correct Answer: The insurer has the right but is not
obligated to inspect the property and make recommendations. This is done for insurability and rating
only. It does not warrant the place safe or in compliance.
What is the Premium condition? Correct Answer: The Premium condition states that the first named
insured is responsible to make timely payment of premiums and will also be the payee on any refunds
the insurer may send.
What is the Transfer of Rights and Duties Under the Policy condition? Correct Answer: This condition
allows for the transfer of the insured's rights and duties to his or her legal representative, but only at
death. In no other instance is transfer allowed without written consent from the insurer.
What is assignment? Correct Answer: Assignment is the transfer of rights and duties under a policy if the
first named insured dies.
What is a Coverage Part? Correct Answer: A Coverage Part is a component of a CPP or a Monoline
Policy that contains the policy provisions relating to a particular line of business, such as commercial
property or commercial auto.
What are the 7 Coverage Parts? Correct Answer: Commercial Property, Commercial General Liability,
Commercial Automobile Insurance, Commercial Crime, Commercial Inland Marine, Boiler and
Machinery Insurance (Equipment Breakdown), and Farm Coverage.
What are the California Amendatory Endorsements? Correct Answer: It states that if the policy has been
in effect for less than 60 days and is not a renewal, the insurer can cancel for any reason.
If the policy has been in effect for atleast 60 days or is a renewal, then the insurer may only cancel for
one or more of the allowable reasons.
It also states that if the insurer decides to non renew the policy, the insurer must provide notice atleast
60 days in advance, but not more than 120 days before the expiration date.
