California Personal Lines Insurance /Personal Lines-California Insurance
Exam Comprehensive Questions and Answers (Verified Answers) Updated
(Actual Exam) 2026\2027 LATEST VERSION!!
1. Insurance Insurer, entity, principal, underwriter, carrier or company. Uses "we, us,
and our". Insurer is the 2nd party to contract
2. Person receiving bene- Insured, policyholder, owner. Named insured uses "you and your". In-
fits sured is first parry on contract.
3. Claimant Person seeking recovery. In property=insured. In liability=3rd party
4. Falsification provision Warning found on claim forms that those filing a false or fraudulent claim
are subject to fines and imprionment
5. CIC California Insurance Code- state insurance laws proposed, written, en-
acted and changed only by state Legislatures. Commissioner just en-
forces
6. CCR California Code of Regulations- rules and procedures written by the
commissioner to carry out the intent of the code. Commissioner writes
and changes the regulations.
7. Pooling Sharing or spreading the risk
8. Department of In- DOI and CDI
surance/California De-
partment of Insurance
9. Rescind Voiding or revoking a contract back to its inception date (beginning) as
though it never existed (flat cancellation). Can ONLY be done for material
misrepresentation, material concealment, breach of warranty or fraud
10. CIC definition of Insur- Insurance is a contract (written) in which one undertakes to indemnify
ance (restore/whole) another against loss, damage or liability arising from a
contingent or unknown event (may or may not happen)
, California Personal Lines Insurance /Personal Lines-California Insurance
Exam Comprehensive Questions and Answers (Verified Answers) Updated
(Actual Exam) 2026\2027 LATEST VERSION!!
11. Layman definition of Substitution/exchange of a small certain loss (premium) for a large
Insurance uncertain loss (claim)
12. Conceptual definition Social device transferring risk from individuals to a group
of Insurance
13. Insurance Contract Policy, written instrument, indemnity agreement and legal document
14. Benefits of insurance Device that allows individuals and society to recover from unexpected
loss; secure credit; satisfy legal requirements; source of investment in-
come; reduce social burdens; promotes loss control; reduces anxiety,
uncertainty. Cost benefits increases moral and morale hazards (dishon-
esty/lack of care)
15. Loss Any reduction in quantity, quality or value of something. Can mean death,
bodily injury, property damage, incurred expenses, reduction in quality
of life or an obligation to pay for any such loss
16. Property insurance Direct to tangible property or indirect
loss
17. Liability insurance loss Obligation to pay for bodily injury, property damage, personal injury,
advertising injury. Harm caused by the insured to others
18. Loss exposure Possibility of loss. There are 3 dimensions of loss exposure. Type of value
exposed to loss, the peril causing loss, the extent of the potential financial
consequences. Normally written as Property, Liability or Human/Person-
nel
19. Property Loss Expo- Damage to the insureds property
sure
, California Personal Lines Insurance /Personal Lines-California Insurance
Exam Comprehensive Questions and Answers (Verified Answers) Updated
(Actual Exam) 2026\2027 LATEST VERSION!!
20. Liability Loss Exposure Harm caused to others/another
21. Personal Loss Expo- Death, retirement, unemployment, disability
sure
22. Human Loss Exposure Considered personal unless they give work scenario (personnel)
23. Financial Loss IS NOT a loss exposure, it is a consequence of all of the exposures
24. Personnel Loss Expo- Death, resignation, termination, disability
sure
25. Peril Cause of loss or reason for loss
26. Named Peril Fire, lightening, etc. the perils are named/listed/stated in the contract.
Not listed claim is not paid. The burden is on the insured to prove the
damage was caused by listed peril. (Basic form: dp1, ho8 Broad Form:
dp2, ho2, ho4, ho6)
27. Open Peril/All Risk Lists exclusions and does not name/state/list the perils but states it cov-
ers all or any peril except those specifically excluded. This type of policy
shifts the burden of proof to the insurer (company). The insurer must
pay unless they can show the cause of loss was an exclusion under the
policy/contract. (Special: dp3, ho3 Comprehensive: ho5 Inland/Ocean
Marine)
28. Hazard (Key phrases: increases or leads to) Chance/likelihood/severity of loss.
Types of Hazards: Moral, Morale, Physical, and Court
29. Moral Hazard Dishonest, ethics/habits/fraud, liar, exaggerating a loss, felony, alco-
holism, drug addiction, judgements
Exam Comprehensive Questions and Answers (Verified Answers) Updated
(Actual Exam) 2026\2027 LATEST VERSION!!
1. Insurance Insurer, entity, principal, underwriter, carrier or company. Uses "we, us,
and our". Insurer is the 2nd party to contract
2. Person receiving bene- Insured, policyholder, owner. Named insured uses "you and your". In-
fits sured is first parry on contract.
3. Claimant Person seeking recovery. In property=insured. In liability=3rd party
4. Falsification provision Warning found on claim forms that those filing a false or fraudulent claim
are subject to fines and imprionment
5. CIC California Insurance Code- state insurance laws proposed, written, en-
acted and changed only by state Legislatures. Commissioner just en-
forces
6. CCR California Code of Regulations- rules and procedures written by the
commissioner to carry out the intent of the code. Commissioner writes
and changes the regulations.
7. Pooling Sharing or spreading the risk
8. Department of In- DOI and CDI
surance/California De-
partment of Insurance
9. Rescind Voiding or revoking a contract back to its inception date (beginning) as
though it never existed (flat cancellation). Can ONLY be done for material
misrepresentation, material concealment, breach of warranty or fraud
10. CIC definition of Insur- Insurance is a contract (written) in which one undertakes to indemnify
ance (restore/whole) another against loss, damage or liability arising from a
contingent or unknown event (may or may not happen)
, California Personal Lines Insurance /Personal Lines-California Insurance
Exam Comprehensive Questions and Answers (Verified Answers) Updated
(Actual Exam) 2026\2027 LATEST VERSION!!
11. Layman definition of Substitution/exchange of a small certain loss (premium) for a large
Insurance uncertain loss (claim)
12. Conceptual definition Social device transferring risk from individuals to a group
of Insurance
13. Insurance Contract Policy, written instrument, indemnity agreement and legal document
14. Benefits of insurance Device that allows individuals and society to recover from unexpected
loss; secure credit; satisfy legal requirements; source of investment in-
come; reduce social burdens; promotes loss control; reduces anxiety,
uncertainty. Cost benefits increases moral and morale hazards (dishon-
esty/lack of care)
15. Loss Any reduction in quantity, quality or value of something. Can mean death,
bodily injury, property damage, incurred expenses, reduction in quality
of life or an obligation to pay for any such loss
16. Property insurance Direct to tangible property or indirect
loss
17. Liability insurance loss Obligation to pay for bodily injury, property damage, personal injury,
advertising injury. Harm caused by the insured to others
18. Loss exposure Possibility of loss. There are 3 dimensions of loss exposure. Type of value
exposed to loss, the peril causing loss, the extent of the potential financial
consequences. Normally written as Property, Liability or Human/Person-
nel
19. Property Loss Expo- Damage to the insureds property
sure
, California Personal Lines Insurance /Personal Lines-California Insurance
Exam Comprehensive Questions and Answers (Verified Answers) Updated
(Actual Exam) 2026\2027 LATEST VERSION!!
20. Liability Loss Exposure Harm caused to others/another
21. Personal Loss Expo- Death, retirement, unemployment, disability
sure
22. Human Loss Exposure Considered personal unless they give work scenario (personnel)
23. Financial Loss IS NOT a loss exposure, it is a consequence of all of the exposures
24. Personnel Loss Expo- Death, resignation, termination, disability
sure
25. Peril Cause of loss or reason for loss
26. Named Peril Fire, lightening, etc. the perils are named/listed/stated in the contract.
Not listed claim is not paid. The burden is on the insured to prove the
damage was caused by listed peril. (Basic form: dp1, ho8 Broad Form:
dp2, ho2, ho4, ho6)
27. Open Peril/All Risk Lists exclusions and does not name/state/list the perils but states it cov-
ers all or any peril except those specifically excluded. This type of policy
shifts the burden of proof to the insurer (company). The insurer must
pay unless they can show the cause of loss was an exclusion under the
policy/contract. (Special: dp3, ho3 Comprehensive: ho5 Inland/Ocean
Marine)
28. Hazard (Key phrases: increases or leads to) Chance/likelihood/severity of loss.
Types of Hazards: Moral, Morale, Physical, and Court
29. Moral Hazard Dishonest, ethics/habits/fraud, liar, exaggerating a loss, felony, alco-
holism, drug addiction, judgements
