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1. 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?

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.

2. Under the Fair Claims Settlement Practices Regulations, after receiving notice of a personal auto claim, an insurer must acknowledge the claim within how many calendar days?

Title 10 CCR §2695.5(b) requires the insurer to acknowledge receipt of a claim within 15 calendar days. The 40-day rule is for accepting or denying the claim, and 30 days is the deadline for issuing payment after agreement is reached.

3. After receiving a complete proof of loss for a residential property claim, an insurer must accept or deny the claim, in whole or in part, within how many calendar days?

Title 10 CCR §2695.7(b) requires the insurer to accept or deny a claim, in whole or in part, within 40 calendar days after receiving proof of claim. The deadline may be extended only for reasons beyond the insurer's control with written notice every 30 days thereafter.

4. Once the insurer and the insured reach written agreement on the amount payable for a homeowners loss, payment must be issued within how many calendar days?

Title 10 CCR §2695.7(h) requires that, no later than 30 calendar days from the date the parties agree in writing on the amount of the claim, the insurer must tender payment. Failure to do so may trigger 10% statutory interest under Civil Code §3287.

5. A California personal lines broker-agent renewing a license for the second time must complete how many hours of continuing education during each two-year license period, including the ethics requirement?

Insurance Code §1749.3 requires 24 hours of continuing education per two-year license term, of which at least 3 hours must be on ethics. New licensees in their first four years have heavier requirements; this rule covers the standard renewal cycle.

6. A personal lines broker-agent collects premium from a homeowner. Under §1733, those funds are held in what capacity?

Insurance Code §1733 provides that all funds received by a licensee acting as an agent or broker on account of any insurance transaction are received and held in a fiduciary capacity. The licensee must remit them to the insurer, insured, or other person entitled to them and may not divert them to personal use.

7. Under §1668, the Commissioner may deny a personal lines broker-agent license application for any of the listed grounds. Which of the following is NOT a statutory ground for denial?

Section 1668 lists 14 grounds for license denial, including dishonesty, fraud, material misstatement, and lack of integrity. Lawful union membership is not among the statutory grounds; the Commissioner may not deny a license based on protected associational activity.

8. An unlicensed assistant in a personal lines office quotes an auto policy premium to a walk-in customer and binds coverage by signing a temporary cover note. Under §1631, this conduct is:

Insurance Code §1631 prohibits any person from soliciting, negotiating, or effecting insurance contracts in California without a license. Quoting premiums and binding coverage are core licensed activities; after-the-fact review by a broker does not cure the violation.

9. Which statement best captures the legal distinction between an 'insurance agent' and an 'insurance broker' under California law?

Insurance Code §31 defines an insurance agent as a person authorized to transact insurance on behalf of an insurer (representing the insurer). Section 33 defines a broker as a person who, for compensation, transacts insurance on behalf of another (representing the insured). The fiduciary relationship therefore differs in important ways.

10. When must an insured have an insurable interest in property covered by a California homeowners policy?

Insurance Code §286 requires that, in property insurance, the insured have an insurable interest in the property at the time of loss. This is the key difference from life insurance, where the interest must exist at inception only.

11. An insurer intends to non-renew a personal auto policy at the end of the term. Under §678, how much advance written notice must be sent to the named insured?

Insurance Code §678 requires the insurer to mail or deliver written notice of intention not to renew at least 30 days but no more than 60 days prior to the policy expiration. The notice must state the specific reason or reasons for non-renewal.

12. Following a Governor-declared wildfire emergency, §675.1 prohibits an insurer from cancelling or non-renewing residential property policies in affected ZIP codes for what period?

Insurance Code §675.1 imposes a one-year moratorium on cancellation and non-renewal of residential property policies in ZIP codes adjacent to or within the perimeter of a declared wildfire disaster. The moratorium runs from the date of the Governor's emergency declaration.

13. Under §10086, an insurer that writes residential property coverage in California must do which of the following with respect to earthquake insurance?

Insurance Code §10086 (with §10081) requires every insurer writing residential property insurance to offer earthquake coverage at policy issuance and again at each renewal. The insured may decline the offer in writing; earthquake coverage is not automatic and is typically written through the California Earthquake Authority.

14. Under Proposition 103, codified at §1861.05, before a personal auto or homeowners insurer can use a new rate it must:

Section 1861.05, enacted by Proposition 103 in 1988, makes California a prior-approval state for property and casualty rates, including personal auto and homeowners. The rate must be neither excessive, inadequate, nor unfairly discriminatory, and the Commissioner must approve it before use.

15. An insurer unreasonably delays paying an undisputed amount on a homeowners claim by several months. Under Civil Code §3287, the insured may be entitled to:

Civil Code §3287 entitles a claimant to prejudgment interest at the legal rate (10% per annum on noncontract obligations) once the amount due is fixed and certain. For an undisputed claim amount, interest accrues from the date the obligation became liquidated. This is in addition to any bad-faith remedies.

16. Under §11580, an injured third party who has obtained a judgment against an insured tortfeasor in an auto accident may bring a direct action against the insurer when:

Insurance Code §11580(b)(2) authorizes a direct action against an insurer when a judgment in favor of the injured person against the insured remains unsatisfied for at least 30 days after service of notice of entry of judgment. The provision must be included in every California liability policy.

17. After a covered auto collision, an insurer wants to suggest a specific auto body repair shop to the insured. Under the Auto Body Bill of Rights (§758.5), the insurer must:

Insurance Code §758.5 prohibits steering and requires that when an insurer suggests a particular repair shop, it must inform the claimant in writing (and orally when face-to-face or by phone) that the claimant is not required to use that shop and may select any licensed shop of their choice.

18. Under §1871.4, knowingly presenting a false or fraudulent claim for payment of a loss under an insurance contract is:

Insurance Code §1871.4 makes it unlawful to knowingly present any false or fraudulent claim for the payment of a loss; the offense is a wobbler punishable by imprisonment in state prison for two, three, or five years, or by a fine, or both. There is no minimum dollar threshold.

19. Section 1875.20 requires admitted insurers writing personal auto coverage in California to maintain which of the following?

Insurance Code §1875.20 et seq. requires admitted insurers writing private passenger auto and certain other lines to establish a Special Investigative Unit (SIU) to investigate suspected fraudulent claims and refer them to the Department of Insurance Fraud Division and law enforcement.

20. An insurer reports to law enforcement information about a homeowners claim it reasonably believes is fraudulent. Under §1879.5, the insurer is:

Insurance Code §1879.5 grants insurers, their employees, and authorized agents immunity from civil liability for furnishing information about suspected insurance fraud to the Department of Insurance or law enforcement, provided the disclosure is made in good faith and without fraudulent intent or actual malice.

21. Under the California Insurance Information and Privacy Protection Act (§791 et seq.), an insurer obtaining personal information about a homeowners applicant from a third-party investigative consumer report must:

Sections 791.02 and 791.04 require an insurance institution that collects personal information from sources other than the applicant to provide a written notice of its information practices, including the type of information collected, sources, uses, and the applicant's rights of access and correction.

22. Which of the following best describes the California Insurance Commissioner?

Under Insurance Code §12900 and following, the California Insurance Commissioner is elected by statewide vote for a four-year term and is limited to two terms. The Commissioner heads the California Department of Insurance and exercises broad regulatory and enforcement authority over insurers and producers.

23. A producer is asked which California regulator oversees Health Maintenance Organization (HMO) plans, as opposed to traditional indemnity insurers. The correct answer is:

Under the Knox-Keene Act (Health & Safety Code §1340 et seq.), HMOs and other health-care service plans are regulated by the Department of Managed Health Care (DMHC), a separate agency from the California Department of Insurance, which regulates traditional indemnity insurers. Personal lines producers should know the distinction even though it falls outside their direct scope.

24. Which of the following is a violation of the Unfair Claims Settlement Practices statute (§790.03(h)) in a personal lines context?

Section 790.03(h)(1) prohibits misrepresenting to claimants pertinent facts or insurance policy provisions relating to coverages at issue. The other listed activities are normal, lawful claim-handling steps. The 16 enumerated acts in §790.03(h) form the backbone of California unfair-claims-practices law.

25. Under the claims file documentation rule in Title 10 CCR §2695.3, an insurer must maintain claim file documents in a form that:

Title 10 CCR §2695.3 requires every licensee's claim files to contain all documents, notes, and work papers (including communications) which reasonably pertain to the claim, in such detail that pertinent events and the dates of such events can be reconstructed. The retention period is at least five years (or longer where required by law).

26. An auto insurer waits four months without responding to repeated written inquiries from an insured about coverage on a covered collision claim. Under §790.03(h)(5), this constitutes:

Section 790.03(h)(5) defines as an unfair claims practice 'not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear' and the related duty under (h)(2)/(3) to acknowledge and act reasonably promptly on communications. Months of silence without justification violate the statute.

27. After accepting a homeowners claim, an insurer denies coverage based on a policy provision that, on the facts, clearly does not apply. Under §790.03(h)(13), this conduct is best characterized as:

Section 790.03(h)(13) treats as unfair the act of failing to provide promptly a reasonable explanation of the basis relied on in the insurance policy, in relation to the facts or applicable law, for the denial of a claim or for the offer of a compromise settlement. Citing an inapplicable provision is exactly the kind of pretextual denial the statute targets.

28. A newly licensed personal lines broker-agent is in the first license period after passing the exam. Under §1749.33, that licensee's pre-license and early continuing education obligations include:

Personal lines broker-agent applicants must complete 20 hours of pre-licensing education under §1749.33, plus the standard continuing education obligations specific to personal lines. The exam covers law, ethics, and personal lines product knowledge; ongoing CE (including ethics hours) begins immediately and is not waived.