California Property & Casualty Exam Overview

Welcome to OpenExamPrep's FREE California Property & Casualty Insurance exam prep guide. This comprehensive resource covers California-specific regulations, licensing requirements, Proposition 103, and state insurance laws you need to know to pass your exam in 2026.

About the California P&C Exam

The California Property & Casualty insurance examination is administered by PSI Services LLC on behalf of the California Department of Insurance (CDI). The exam tests your knowledge of:

• California Insurance Code and regulations
• Property insurance principles (homeowners, fire, commercial property)
• Casualty insurance principles (auto, liability, workers' compensation)
• Proposition 103 rating requirements
• Ethics and professional conduct
• California-specific consumer protections

Exam Structure

Important: California's 60% passing score is lower than most states (typically 70%), but don't let that fool you—the exam is comprehensive and covers both national concepts and California-specific laws.

Exam Options

You can take the California P&C exam in different configurations:

Recommendation: Most candidates take the Combined P&C exam to obtain a full Property & Casualty license in one sitting.

Major Change: Pre-Licensing Education Requirements (Effective January 1, 2026)

Assembly Bill No. 943 (AB 943) significantly changed California's pre-licensing requirements effective January 1, 2026.

Before January 1, 2026

After January 1, 2026 (Current)

Key Points About AB 943

• The 20-hour line-specific requirement was eliminated
• Only 12 hours of Ethics & California Insurance Code training is now required
• Must include 1 hour of insurance fraud education
• Education is required BEFORE license issuance, not before the exam
• The exam itself has NOT changed—still tests comprehensive P&C knowledge

Exam Tip: You can schedule and take the licensing exam WITHOUT completing the 12-hour Ethics course first. However, you must complete it before your license can be issued.

Pre-Licensing Course Requirements

Understanding Proposition 103

Proposition 103 (1988) is one of the most important California-specific topics for the P&C exam. This voter initiative fundamentally changed how P&C insurance rates are regulated in California.

Proposition 103 Key Provisions

Mandatory Auto Insurance Rating Factors

Under Proposition 103, California law mandates these rating factors be considered in this order of importance:

1. Driving Safety Record (most important)
2. Annual Mileage Driven
3. Years of Driving Experience

Exam Tip: Remember these three mandatory rating factors and their order—this is frequently tested on the California P&C exam.

What Insurers CANNOT Use for Primary Rating

• Credit score (prohibited as primary factor)
• Zip code/territory (limited use)
• Gender
• Age (as primary factor)

California Insurance Market Context

Why California Is Unique

California has one of the largest P&C insurance markets in the world, with unique challenges:

1. Market Size

   • Largest state insurance market in the U.S.
   • Population of nearly 40 million
   • Diverse risk exposures (earthquake, wildfire, flood)

2. Natural Disaster Risk

   • Wildfires: Increasing severity and frequency
   • Earthquakes: California Earthquake Authority (CEA)
   • Floods: NFIP and private options
   • FAIR Plan: Market of last resort for fire coverage

3. Regulatory Approach

   • Proposition 103 prior approval system
   • Strong consumer protection laws
   • Elected Insurance Commissioner (one of only 11 states)
   • CDI market conduct examinations

4. Auto Insurance Requirements

   • Minimum liability: 15/30/5
   • Financial responsibility laws
   • Good driver discount mandate
   • Uninsured motorist coverage requirements

License Application Process

Step-by-Step Process

1. Study and Prepare (Recommended first)

   • Complete this FREE study guide
   • Review national P&C concepts
   • Take practice quizzes

2. Schedule and Pass the Exam

   • Register with PSI online at test-takers.psiexams.com/cadi
   • Pay $88 exam fee + $43 convenience fee = $131
   • Choose testing center or remote proctored exam
   • Pass with 60%+ score

3. Complete 12-Hour Ethics Course

   • From California-approved provider
   • Must include 1 hour of fraud education
   • Obtain certificate of completion
   • Certificate valid for 3 years

4. Complete Fingerprinting

   • Required for all unlicensed applicants
   • Use CDI's vendor: Capital Live Scan (CLS)
   • Background check processed by DOJ and FBI
   • Cost approximately $49-75

5. Apply for License

   • Submit application to CDI
   • Pay $189 license application fee
   • Provide all required documentation

6. Receive License

   • CDI review takes 2-4 weeks
   • License issued upon approval
   • Valid for 2 years
   • Begin selling P&C insurance in California

Exam Retake Policy

Warning: If you fail an examination 10 times, you are barred from taking that license examination for a 12-month period from the date of your last failed attempt.

Total Costs Summary

License Maintenance

California Department of Insurance Contact

What This Guide Covers

This FREE study guide focuses on California state-specific content for the P&C exam:

Chapter 1: California Insurance Regulation & Licensing

• California Department of Insurance (CDI) structure
• Insurance Commissioner powers (elected position)
• Proposition 103 requirements and rating factors
• Producer licensing requirements and CE

Chapter 2: California Property Insurance Laws

• Homeowners insurance requirements
• California FAIR Plan (market of last resort)
• California Earthquake Authority (CEA)
• Wildfire disclosure and coverage issues

Chapter 3: California Casualty Insurance Laws

• Auto insurance minimums (15/30/5)
• Good driver discount requirements
• Workers' compensation requirements
• Liability insurance regulations

Chapter 4: Ethics & Consumer Protection

• Unfair trade practices
• Claims handling requirements
• California Insurance Guarantee Association (CIGA)
• Producer conduct standards

national Property & Casualty exam prepFree exam prep with practice questions & AI tutor

Study Tips for Success

Key Numbers to Memorize

Proposition 103 Rating Factors (Memorize!)

1. Driving safety record
2. Annual mileage
3. Years of driving experience

Next Steps

Ready to begin? Here's your action plan:

1. Complete this FREE study guide - Read all 4 chapters
2. Study national P&C concepts - See our Property & Casualty exam prep
3. Take chapter quizzes - Test your knowledge
4. Register with PSI - Schedule your exam
5. Pass exam - With 60%+ score
6. Complete 12-hour Ethics course - Before license issuance
7. Complete fingerprinting - Through Capital Live Scan
8. Apply for license - Pay $189 fee

Remember: This guide focuses on California-specific content. Supplement with national P&C study materials for comprehensive preparation.

Let's get started with Chapter 1: California Insurance Regulation & Licensing!