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Property and Casualty Insurance Producer Exam

Policies and cancellation (CA): practice questions

Our Property & Casualty Insurance bank has 17 questions on this topic. Here are 5 of them with answers; the full mock exam draws from every topic, like the real one.

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Question 1 · California

May a California insurer nonrenew a homeowners policy solely because a claim is pending?

  1. Yes, at any time, as long as 45 days' notice is given
  2. Yes, if the claim exceeds $10,000
  3. No, except for earthquake coverage claims
  4. Only with the commissioner's approval
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C. No, except for earthquake coverage claims — Cal. Ins. Code 675(c): an insurer may not refuse to renew solely because a claim is pending; this does not apply to earthquake coverage claims.

Question 2 · California

California's required earthquake offer may be made before, with, or within how many days after the residential policy is issued or renewed?

  1. 10 days
  2. 30 days
  3. 90 days
  4. 60 days
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D. 60 days — Cal. Ins. Code 10083(a): the offer may be made prior to, concurrent with, or within 60 days following issuance or renewal.

Question 3 · California

If a California commercial insurer gives late nonrenewal notice, the policy:

  1. Ends on its expiration date anyway, with no extension at all
  2. Continues unchanged for 60 days after the notice is given
  3. Renews for a full year
  4. Is cancelled immediately
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B. Continues unchanged for 60 days after the notice is given — Cal. Ins. Code 678.1(d): the policy continues, with no change in terms, for 60 days after the insurer gives the notice.

Question 4 · California

A California residential property insurer must offer the named insured coverage for which peril?

  1. Flood
  2. Sinkhole
  3. Earthquake
  4. Volcanic eruption only
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C. Earthquake — Cal. Ins. Code 10081: no residential property policy may be issued or renewed unless the named insured is offered earthquake coverage.

Question 5 · California

After a California commercial policy has been in effect more than 60 days, which allows cancellation?

  1. A single small claim
  2. A change of agent
  3. An increase in the insurer's reinsurance costs for the region
  4. Failure to implement loss control requirements the insured agreed to
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D. Failure to implement loss control requirements the insured agreed to — Cal. Ins. Code 676.2(b)(5): failure by the named insured to implement reasonable loss control requirements agreed to by the insured.

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