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California Property Practice Exam

20 exam-style questions drawn from the same bank as our full California Property course (California Property Broker-Agent Exam Prep). Answer all 20, then grade yourself — most state exams require 70% to pass. Explanations for every question are part of the full course.

1. A client's HO 00 03 carries HO 04 61 scheduling a $7,000 necklace. She loses the necklace at the beach; there is no theft. What is the outcome?
Not covered, because Coverage C insures jewelry against theft only and the necklace was lost, not stolenCovered under Coverage C up to the $1,500 special limit for jewelry, watches, furs and precious stonesCovered under HO 04 61 only if the client can prove that a named peril such as theft caused the lossCovered under HO 04 61 for the scheduled amount, because the endorsement insures on an open-perils basis that reaches loss
2. Cal. Ins. Code section 1851(c) excepts insurance of vessels, their cargoes, marine builders' risks and marine protection and indemnity from the rating chapter. What is the practical consequence for a public adjuster handling an ocean marine claim?
The policy must use the ISO commercial inland marine form, so the adjuster can rely on the standard form wordingThe policy is exempt from the Insurance Code entirely, so the adjuster's public adjuster license does not apply to itThe policy's premium must be approved by the Commissioner, so the adjuster should verify the rate filing firstThe policy follows market custom rather than a filed ISO form, so the adjuster must read the actual clauses attached
3. Under Cal. Ins. Code section 106, a policy that pays a monthly benefit while the insured is disabled by sickness belongs to which class of insurance?
Liability insurance, because the insurer becomes liable to pay a monthly benefitCredit insurance, because the benefit replaces income the insured would have earnedLife insurance, because the benefit is paid on account of the insured's healthDisability insurance, which appertains to disablement from accidents and from sickness
4. Which of the following is one of the categories of the Nationwide Marine Definition?
Buildings and their permanent fixtures at a single described premisesInstrumentalities of transportation and communication such as bridges and pipelinesAutomobiles operating under their own power on public highwaysLife and disability insurance covering transportation workers
5. A wildfire on federal forest land above a Ventura County subdivision is contained on October 1. A homeowner below the burn scar buys an NFIP policy on October 20. On November 5 a winter storm sends a river of liquid mud from the burn scar through the subdivision, inundating a dozen homes. Which analysis is correct?
Covered: flowing mud inundating many properties is mudflow within the flood definition, and a post-wildfire purchase within 60 days of containment is excepted from the waiting periodCovered only for the homeowner's foundation and structural elements, because the SFIP limits mudflow losses to Coverage A and pays nothing for contents under Coverage BNot covered: mud that moves down a burned hillside is earth movement, which the flood policy excludes even when the mud is liquid and flowing and inundates many propertiesNot covered: the policy was purchased fewer than 30 days before the loss, and none of the statutory exceptions to the waiting period applies to a purchase made after a wildfire
6. A Modesto restaurant owner carries the day's cash receipts to the bank each night. In the bank parking lot a stranger threatens her and takes the bag. Which insuring agreement of the ISO crime form responds?
Employee theftOutside the premisesInside the premises, theft of money and securitiesForgery or alteration
7. After weeks of rain, a hillside gives way and pushes a Malibu home's foundation downslope; the movement ruptures a gas line, and the resulting fire destroys the garage. Under ISO HO 00 03, which analysis is correct?
The foundation and structural damage are excluded as earth movement; the fire damage to the garage is covered as ensuing fireThe entire loss is excluded, because the earth movement exclusion applies regardless of any other cause, including fireThe foundation damage is covered because rain was the efficient proximate cause; the fire is excluded as an ensuing lossThe entire loss is covered, because the rain that caused the slide is a covered peril on an open-perils form
8. A regional California insurer wants to write homeowners policies in a wildfire-prone county but fears that a single fire season could produce more claims than its surplus could absorb. Which purpose of reinsurance addresses this concern most directly?
Withdrawal from a territory, which lets the insurer reinsure obligations it no longer wantsCatastrophe protection, which pays when total losses from one event exceed an agreed amountUnderwriting expertise, which helps the insurer price an unfamiliar line of businessSurplus relief, which frees surplus so the insurer can write more premium in the county
9. Under the California standard form fire policy in Cal. Ins. Code section 2071, within what time must a suit on the policy be commenced for a loss that is not related to a state of emergency?
Within two years after the date of loss, as the multistate ISO form providesWithin 12 months next after inception of the loss, 24 months for a state of emergencyWithin 60 days after the insurer receives the sworn proof of loss from the insuredWithin 36 months from the first actual cash value payment toward the loss
10. A Stockton insurance agent is asked to place four accounts on a businessowners policy. Under the ISO program's eligibility categories, which one can be written on the BOP?
A community bank with two branch offices and a drive-through windowA twelve-unit apartment building with an incidental ground-floor officeA nightclub whose receipts come almost entirely from alcohol salesA bowling alley with a snack bar, an arcade and a small pro shop
11. After a state of emergency total loss, an insurer offers the section 10103.7(b) contents payment but conditions it on the insured signing a form stating that the residence was furnished, that the contents were worth at least the payment, and that the insured waives any further contents claim. How should the public adjuster respond?
Advise the client to demand the full contents limit instead, because an offer with any condition attached is not a valid offerAdvise the client to refuse the payment entirely, because the statute forbids the insurer from using any attestation formAdvise the client to sign, because the statute lets the insurer set any conditions it chooses on an advance paymentAdvise signing the furnished-residence and value acknowledgments but striking the waiver, which the statute does not permit
12. A live-in nanny employed by a Pasadena family falls on a loose stair tread inside the home while carrying the children's laundry and fractures her arm. She lives in the household. Under Coverage F, Medical Payments to Others, the best analysis is:
Her expenses are payable only if she is not a relative of the named insured and was not injured during working hoursHer expenses are excluded, because Coverage F never pays a person who lives in the household, whatever her jobShe is within the residence employee exception, but if she qualifies for California workers' compensation, that exclusion bars Coverage FHer expenses are excluded, because the injury arose out of a condition on the insured location rather than the activities of an insured
13. Under ISO CP 00 90, Commercial Property Conditions, which of the following is the coverage territory?
The United States of America and its territories, but not Puerto Rico or CanadaThe United States of America (including its territories and possessions), Puerto Rico and CanadaThe State of California and the states that share a border with it, plus MexicoAnywhere in the world for covered property temporarily away from the described premises
14. The vacancy provisions of ISO CP 00 10 apply only if the building where the loss occurs has been vacant for more than how many consecutive days before the loss?
30 days45 days60 days90 days
15. Unless a special valuation rule or an optional coverage applies, on what basis does ISO CP 00 10 value covered property at the time of loss?
Agreed valueReplacement costSelling priceActual cash value
16. Which of the following is NOT one of the benefits of insurance to society described in this lesson?
Morale hazard that results from knowing someone else will pay for a lossLoss control encouraged through inspections and premium creditsLoss payments that restore families and businesses after a lossThe ability to secure credit on mortgaged homes and financed cars
17. What is the purpose of the ISO Value Reporting Form, CP 13 10, when it is attached to modify the Building and Personal Property Coverage Form?
To let coverage and premium follow the fluctuating value of business personal property through periodic reports of valuesTo convert the valuation of stock from actual cash value to replacement cost for the whole policy periodTo increase the limit of insurance automatically each year by a stated inflation percentage shown in the declarationsTo lock in an agreed value for the building so that the coinsurance condition is suspended for the policy period
18. A covered fire shuts down a Merced bakery at 2:00 p.m. on Monday. The bakery is insured under ISO CP 00 30 with both business income and extra expense. That same afternoon the owner rents ovens at a nearby commercial kitchen. When does coverage begin for each loss?
Both business income and extra expense coverage begin immediately at 2:00 p.m. on Monday, when the direct physical loss occursBoth business income and extra expense coverage begin at 2:00 p.m. on Thursday, after the 72-hour waiting period has runBusiness income coverage begins immediately; extra expense coverage begins 72 hours later, once the owner shows the suspension was necessaryBusiness income coverage begins at 2:00 p.m. on Thursday, 72 hours after the loss; extra expense coverage begins immediately after the loss
19. What distinguishes a "hereditary disorder" from a "congenital anomaly or disorder" under Cal. Ins. Code section 12880?
A hereditary disorder must be diagnosed within the first year of the pet's life, while a congenital anomaly may be diagnosed at any ageA hereditary disorder is genetically transmitted from parent to offspring; a congenital anomaly is present from birth, inherited or environmentalA hereditary disorder is one that can be cured with treatment, while a congenital anomaly is one that can only be treated or managedA hereditary disorder must always be excluded from a pet insurance policy, while a congenital anomaly must always be covered by it
20. Ninety days after a wildfire in a declared state of emergency, an insurer demands a complete contents inventory as proof of loss and warns that the personal property claim will be closed without it. Reconstruction of the home has not begun. What does Cal. Ins. Code section 2051.5(b)(3) provide?
Proof of loss may not be demanded before 100 days, and an inventory that is premature before construction begins is good cause for three-month extensionsThe client may skip the inventory entirely and collect the full Coverage C limit, because the loss relates to a state of emergencyThe inventory is due when the insurer demands it, because proof of loss deadlines for contents are set by the policy conditions aloneThe client has 36 months to submit the inventory, the same period the statute allows to collect full replacement cost on the dwelling

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