California Property & Casualty Insurance License Exam
What is the purpose of the McCarran-Ferguson Act (1945)? -correct answer-It gave states
the primary authority to regulate the insurance industry.
What does the California Insurance Code (CIC) regulate? -correct answer-It governs
insurance companies, producers, agents, brokers, and consumers in California.
How many main divisions are in the California Insurance Code? -correct answer-Five main
divisions.
What is the process for changing the California Insurance Code? -correct answer-The
legislature proposes a bill, passes it, and the governor signs it or it becomes law if not
returned within 12-30 days.
Who is responsible for enforcing the California Insurance Code? -correct answer-The
California Department of Insurance (CDI) headed by the Insurance Commissioner.
What are the main responsibilities of the Insurance Commissioner? -correct answer-Protect
consumers, license insurance applicants, approve insurance companies, investigate
violations, and conduct hearings.
What is the term length for the Insurance Commissioner? -correct answer-Four years, with a
maximum of two terms.
What does the California Code of Regulations (CCR) explain? -correct answer-It explains how
the Insurance Code is carried out and is issued by the Insurance Commissioner.
What is the purpose of the National Association of Insurance Commissioners (NAIC)? -
correct answer-To develop model laws and encourage consistency among states.
What does 'shall' mean in legal terms? -correct answer-It means must, required, or
mandatory.
What is the definition of insurance according to CIC 22? -correct answer-A contract that
indemnifies another against loss, damage, or liability arising from a contingent or unknown
event.
What are some classes of insurance recognized by California? -correct answer-Life, Fire,
Marine, Title, Surety, Disability, Liability, Workers' Compensation, and more.
What distinguishes an admitted insurer from a non-admitted insurer? -correct answer-An
admitted insurer has complied with California insurance laws and has a Certificate of
Authority; a non-admitted insurer does not.
What is surplus lines insurance? -correct answer-Insurance that cannot be obtained from
admitted insurers and is purchased through non-admitted insurers.
, What must a broker demonstrate to use surplus lines insurance? -correct answer-A diligent
search showing that coverage is unavailable through admitted insurers.
What is the penalty for acting as an unauthorized insurer? -correct answer-Up to 1 year in
jail, up to $10,000 fine, or both.
What is required from an applicant when obtaining surplus lines insurance? -correct answer-
The applicant must sign a disclosure acknowledging that coverage is through a non-admitted
insurer.
What does the term 'person' include in the context of insurance? -correct answer-It includes
individuals, associations, organizations, partnerships, business trusts, LLCs, and corporations.
What is the significance of the 45-day notice in regulation changes? -correct answer-The CDI
must publish notice 45 days before adding, amending, or repealing a regulation.
What does 'may' mean in legal terminology? -correct answer-It means optional or
permissive.
What is the role of the CDI in relation to insurance applicants? -correct answer-The CDI is
responsible for licensing insurance applicants.
What happens if a vacancy occurs in the Insurance Commissioner's position? -correct
answer-Legislative confirmation selects the replacement.
What is the exam memory trick for the NAIC goals? -correct answer-U-E-P-S: Uniformity,
Efficiency, Protect policyholders, State regulation.
What is the maximum fine for willfully transacting insurance without authority? -correct
answer-$10,000.
What is the definition of 'insurance'? -correct answer-A contract protecting against loss,
damage, or liability from a contingent or unknown event.
What is the significance of the Insurance Commissioner being elected? -correct answer-It
ensures accountability and representation in enforcing insurance laws.
What is the role of the CDI in investigating unlicensed insurance activity? -correct answer-
The CDI investigates violations and conducts hearings related to unlicensed activity.
What is the bond requirement for a Surplus Lines Broker in California? -correct answer-
$10,000 bond
What is the penalty for aiding a non-admitted insurer without a Surplus Lines Broker license?
-correct answer-Misdemeanor, up to $500 fine plus $100 per month while violation
continues
What defines a Domestic Insurer? -correct answer-An insurer organized in California
What is the purpose of the McCarran-Ferguson Act (1945)? -correct answer-It gave states
the primary authority to regulate the insurance industry.
What does the California Insurance Code (CIC) regulate? -correct answer-It governs
insurance companies, producers, agents, brokers, and consumers in California.
How many main divisions are in the California Insurance Code? -correct answer-Five main
divisions.
What is the process for changing the California Insurance Code? -correct answer-The
legislature proposes a bill, passes it, and the governor signs it or it becomes law if not
returned within 12-30 days.
Who is responsible for enforcing the California Insurance Code? -correct answer-The
California Department of Insurance (CDI) headed by the Insurance Commissioner.
What are the main responsibilities of the Insurance Commissioner? -correct answer-Protect
consumers, license insurance applicants, approve insurance companies, investigate
violations, and conduct hearings.
What is the term length for the Insurance Commissioner? -correct answer-Four years, with a
maximum of two terms.
What does the California Code of Regulations (CCR) explain? -correct answer-It explains how
the Insurance Code is carried out and is issued by the Insurance Commissioner.
What is the purpose of the National Association of Insurance Commissioners (NAIC)? -
correct answer-To develop model laws and encourage consistency among states.
What does 'shall' mean in legal terms? -correct answer-It means must, required, or
mandatory.
What is the definition of insurance according to CIC 22? -correct answer-A contract that
indemnifies another against loss, damage, or liability arising from a contingent or unknown
event.
What are some classes of insurance recognized by California? -correct answer-Life, Fire,
Marine, Title, Surety, Disability, Liability, Workers' Compensation, and more.
What distinguishes an admitted insurer from a non-admitted insurer? -correct answer-An
admitted insurer has complied with California insurance laws and has a Certificate of
Authority; a non-admitted insurer does not.
What is surplus lines insurance? -correct answer-Insurance that cannot be obtained from
admitted insurers and is purchased through non-admitted insurers.
, What must a broker demonstrate to use surplus lines insurance? -correct answer-A diligent
search showing that coverage is unavailable through admitted insurers.
What is the penalty for acting as an unauthorized insurer? -correct answer-Up to 1 year in
jail, up to $10,000 fine, or both.
What is required from an applicant when obtaining surplus lines insurance? -correct answer-
The applicant must sign a disclosure acknowledging that coverage is through a non-admitted
insurer.
What does the term 'person' include in the context of insurance? -correct answer-It includes
individuals, associations, organizations, partnerships, business trusts, LLCs, and corporations.
What is the significance of the 45-day notice in regulation changes? -correct answer-The CDI
must publish notice 45 days before adding, amending, or repealing a regulation.
What does 'may' mean in legal terminology? -correct answer-It means optional or
permissive.
What is the role of the CDI in relation to insurance applicants? -correct answer-The CDI is
responsible for licensing insurance applicants.
What happens if a vacancy occurs in the Insurance Commissioner's position? -correct
answer-Legislative confirmation selects the replacement.
What is the exam memory trick for the NAIC goals? -correct answer-U-E-P-S: Uniformity,
Efficiency, Protect policyholders, State regulation.
What is the maximum fine for willfully transacting insurance without authority? -correct
answer-$10,000.
What is the definition of 'insurance'? -correct answer-A contract protecting against loss,
damage, or liability from a contingent or unknown event.
What is the significance of the Insurance Commissioner being elected? -correct answer-It
ensures accountability and representation in enforcing insurance laws.
What is the role of the CDI in investigating unlicensed insurance activity? -correct answer-
The CDI investigates violations and conducts hearings related to unlicensed activity.
What is the bond requirement for a Surplus Lines Broker in California? -correct answer-
$10,000 bond
What is the penalty for aiding a non-admitted insurer without a Surplus Lines Broker license?
-correct answer-Misdemeanor, up to $500 fine plus $100 per month while violation
continues
What defines a Domestic Insurer? -correct answer-An insurer organized in California
