1. What are California's compulsory minimum personal auto liability split limits?
- a.$50,000 / $100,000 / $25,000
- b.$30,000 / $60,000 / $15,000✓
- c.$25,000 / $50,000 / $25,000
- d.$10,000 / $20,000 / $3,000
Effective January 1, 2025, SB 1107 (the Protect California Drivers Act) set California's compulsory minimum personal auto liability split limits at 30/60/15 — $30,000 per person bodily injury, $60,000 per accident bodily injury, and $15,000 per accident property damage — amending Vehicle Code §16056 and replacing the 15/30/5 limits used from 1967 to 2024. These are floor amounts only; carriers and producers may write higher limits and typically recommend doing so.
Cal. Veh. Code §16056; Cal. Ins. Code §11580.1b2. Under the Personal Auto Policy, which Part provides Uninsured and Underinsured Motorist coverage?
- a.Part C✓
- b.Part D
- c.Part A
- d.Part B
Part C of the Personal Auto Policy is Uninsured Motorist and Underinsured Motorist coverage. Part A is third-party liability, Part B is first-party Medical Payments, and Part D is Damage to Your Auto (collision and comprehensive).
ISO PAP form (industry standard)3. Which homeowners form is the most commonly written policy for an owner-occupied single-family dwelling in California?
- a.HO-4 Tenant Form
- b.HO-2 Broad Form
- c.HO-3 Special Form✓
- d.HO-8 Modified Form
HO-3 is the standard owner-occupied form. It insures the dwelling and other structures on an open-perils basis and covers personal property on a named-perils basis, giving most homeowners the right balance of price and coverage.
ISO HO-3 form4. Which homeowners form provides open-perils coverage on BOTH the dwelling AND personal property?
- a.HO-5 Comprehensive Form✓
- b.HO-3 Special Form
- c.HO-2 Broad Form
- d.HO-6 Condominium Form
HO-5 is the Comprehensive form. It upgrades HO-3 by writing personal property on an open-perils basis as well, making it the broadest standard homeowners coverage available.
ISO HO-5 form5. An auto broker tells a prospect that a competitor's company is 'about to go bankrupt' even though there is no public evidence to support that statement. Under California law, this conduct is best described as which prohibited unfair practice?
- a.Rebating
- b.Twisting
- c.Defamation of an insurer✓
- d.Boycott and intimidation
Section 790.03(b) of the Insurance Code prohibits making, publishing, or circulating any false or maliciously critical statement about an insurer that is intended to injure the company. That conduct is defamation of an insurer. Twisting involves misrepresentations made to induce a replacement; rebating is sharing commission with the insured; boycott/intimidation requires concerted action restraining trade.
Cal. Ins. Code §790.03(b)6. Which statement BEST describes how an open peril (special form) policy treats the burden of proof for a covered loss?
- a.The burden of proof is shared 50/50 between the insured and insurer
- b.The insured must prove the loss was caused by a peril listed in the policy
- c.Neither party has any burden because all losses are presumed covered
- d.The insurer must prove that an exclusion applies in order to deny coverage✓
Open peril (special form) policies cover ALL causes of loss EXCEPT those specifically excluded. The burden therefore shifts to the insurer to identify and prove an applicable exclusion. Named peril policies, by contrast, put the burden on the insured to show the loss came from a listed peril.
ISO HO-3 form structure7. A California Personal Lines broker-agent is asked to write property coverage for a client. Which of the following risks is BEST suited for an ISO Dwelling Policy and within the broker's license scope?
- a.A condominium owners' association common-area structure
- b.A single-family rental house owned in the client's own name✓
- c.A small office building used by the owner's tax-prep business
- d.A six-unit apartment building owned by an individual investor
The Personal Lines license under Cal. Ins. Code §1625.5 covers personal auto and one-to-four-family residential dwellings owned by an individual. A single-family rental house owned in the client's own name fits both the DP eligibility rules (no more than four units) and the Personal Lines license scope, and it is the textbook landlord use of the Dwelling Policy. A six-unit building exceeds the four-unit DP ceiling, an office building is a commercial fire risk outside Personal Lines, and a condo association's common-area structure is a commercial habitational risk that belongs on a separate commercial policy.
Cal. Ins. Code §1625.5; ISO Dwelling Property eligibility8. A homeowner buys a $1,000,000 Personal Umbrella Policy (PUP). Which feature most accurately describes how the PUP responds to a covered liability loss?
- a.It replaces the underlying auto and homeowners liability coverage entirely
- b.It pays first, before the underlying auto or homeowners policy responds
- c.It pays the insured's share of property losses to the dwelling and contents
- d.It pays excess only after the required underlying limits have been exhausted, and may drop down for certain perils not covered below✓
A PUP sits OVER underlying auto and homeowners liability coverage. The insured must keep the required underlying limits (commonly $250,000/$500,000 auto BI and $300,000 HO liability). The umbrella pays excess once those limits are exhausted and may drop down to cover certain perils (such as personal injury) excluded by the underlying policies, subject to a self-insured retention (SIR).
ISO HO 04 90; CIC Personal Umbrella concepts9. Which of the following is a PURE risk and therefore potentially insurable?
- a.The chance that a kitchen grease fire damages a home✓
- b.Opening a new restaurant with uncertain profits
- c.Betting on the outcome of a college basketball game
- d.Buying shares of a technology company hoping the price rises
Pure risk produces either loss or no loss, never gain, and is the only type insurance addresses. A kitchen fire fits that definition. Buying stock, gambling, and opening a business all carry a chance of GAIN, which makes them speculative and uninsurable.
Cal. Ins. Code §2210. A California homeowner buys a new admitted-carrier homeowners policy and is silent about the earthquake offer that accompanies the application. Under the Mandatory Earthquake Insurance Offer Law, what is the result?
- a.The producer becomes personally liable for any earthquake loss
- b.Earthquake coverage is automatically added to the policy at the basic CEA limit
- c.The insurer must phone the insured to obtain a verbal acceptance before the policy can issue
- d.Silence is treated as a decline and no earthquake coverage is in force✓
Under Insurance Code §10081 and §10086, the insurer must make a written offer of earthquake coverage at issuance and at every renewal of a residential property policy. The applicant may accept or decline in writing, and silence is treated as a decline. There is no automatic add-on, no verbal-acceptance requirement, and no personal liability shifted to the producer when the insured does not respond.
Cal. Ins. Code §10081 et seq.; §10086