199+ Free CA Property & Casualty Practice Questions

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Question 1

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Which state agency has primary regulatory authority over property and casualty insurance companies and producers in California?

California Department of Financial Protection and Innovation (DFPI)

California Department of Insurance (CDI)

California Bureau of Real Estate (CalBRE)

California Department of Consumer Affairs (DCA)

to track

2026 Statistics

Key Facts: CA Property & Casualty Exam

43%

First-Time Pass Rate

CA CDI 2024

60%

Passing Score

CDI requirement

40 hrs

Pre-License Education

Required

15/30/5

Auto Minimums

CA Insurance Code

$500K

CIGA Claim Limit

Per claim

$86

Exam Fee

PSI

California's P&C exam has the lowest pass rate in the nation at just 43%. It requires only 60% to pass but with 150 questions in 3 hours. California requires 40 hours of pre-license education. Key unique topics include Proposition 103 (rate regulation), the California FAIR Plan, California Earthquake Authority (CEA), and Proposition 213 (uninsured motorist restrictions). The CA Insurance Guarantee Association (CIGA) provides $500,000 per claim coverage.

Sample CA Property & Casualty Practice Questions

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1Which state agency has primary regulatory authority over property and casualty insurance companies and producers in California?

A.California Department of Financial Protection and Innovation (DFPI)

B.California Department of Insurance (CDI)

C.California Bureau of Real Estate (CalBRE)

D.California Department of Consumer Affairs (DCA)

Explanation: The California Department of Insurance (CDI) is the primary regulator of all insurance companies and insurance producers in California, including property and casualty lines. The CDI is headed by the Insurance Commissioner, who is elected by California voters. The DFPI regulates financial services, CalBRE oversees real estate, and the DCA handles professional licensing in other fields.

2How is the California Insurance Commissioner selected?

A.Appointed by the Governor

B.Appointed by the state legislature

C.Elected by California voters in a statewide election

D.Appointed by the National Association of Insurance Commissioners (NAIC)

Explanation: The California Insurance Commissioner is elected by voters in a statewide election, making California one of only 11 states with an elected Insurance Commissioner. This was established by Proposition 103 in 1988, which also introduced prior approval rate regulation for property and casualty insurance. The elected status makes the Commissioner directly accountable to California residents rather than political appointees.

3What key change did Proposition 103 (1988) bring to California property and casualty insurance regulation?

A.Eliminated all insurance regulation in California

B.Required prior approval of property and casualty insurance rates by the CDI

C.Created the California Earthquake Authority

D.Established the California FAIR Plan

Explanation: Proposition 103, passed by California voters in 1988, established prior approval rate regulation for property and casualty insurance. This means insurers must submit proposed rate changes to the CDI and receive approval before they can be implemented. It also made the Insurance Commissioner an elected position, required a 20% good driver discount for auto insurance, and rolled back rates by 20% initially. The CEA and FAIR Plan were established through separate legislation.

4How many hours of pre-license education does California require before a candidate can take the Property & Casualty insurance license exam?

A.20 hours

B.40 hours

C.52 hours

D.60 hours

Explanation: California requires 40 hours of pre-license education to qualify for the Property & Casualty insurance license exam. This education must be completed through a CDI-approved provider and covers the fundamentals of property insurance, casualty insurance, and California insurance law. This is separate from the Life and Health pre-license requirement of 52 hours.

5In California, what is the distinction between an insurance agent and an insurance broker?

A.There is no distinction; the terms are interchangeable

B.An agent represents the insurer; a broker represents the insured

C.A broker represents the insurer; an agent represents the insured

D.Only brokers can sell property insurance; agents sell casualty insurance

Explanation: Under California Insurance Code, an insurance agent (also called a producer) represents the insurance company and has the authority to bind coverage on behalf of the insurer. An insurance broker, by contrast, represents the insured (the client) and shops among multiple insurers to find the best coverage. This distinction is important because it determines the fiduciary duties and legal obligations of each role.

6What is the continuing education (CE) requirement for California property and casualty insurance producers per renewal period?

A.20 hours every 2 years

B.24 hours every 2 years

C.30 hours every 2 years

D.36 hours every 2 years

Explanation: California requires property and casualty insurance producers to complete 24 hours of continuing education (CE) every 2-year license renewal period. Of the 24 hours, at least 3 hours must be in ethics. CE courses must be taken through CDI-approved providers. Failure to complete CE before the renewal date can result in license suspension or non-renewal.

7How many hours of ethics CE are required as part of California's 24-hour continuing education requirement for P&C producers?

A.2 hours

B.3 hours

C.4 hours

D.6 hours

Explanation: Of the 24 hours of continuing education required every 2 years, California mandates that at least 3 hours must be specifically in ethics. The remaining 21 hours can be in any approved insurance-related topics. The ethics requirement ensures producers maintain current knowledge of ethical standards, unfair practices laws, and professional conduct requirements under the California Insurance Code.

8Under California's prior approval system established by Proposition 103, what must a property and casualty insurer do before implementing a rate increase?

A.Notify the CDI within 30 days after implementing the rate change

B.Submit the proposed rate change to the CDI and receive approval before it takes effect

C.File the rate with NAIC and wait 60 days

D.Publish the proposed rate in a newspaper of general circulation

Explanation: Under Proposition 103's prior approval system, California property and casualty insurers must submit proposed rate changes to the CDI and receive explicit approval before those rates can take effect. This is different from 'file and use' states where rates can be implemented upon filing. Consumer groups and interested parties can intervene in the rate review process, making California one of the most regulated states for P&C insurance pricing.

9Under the California Insurance Code, a nonresident producer may be licensed in California if they meet which requirement?

A.They must complete California's 40-hour pre-license course

B.They must hold a valid license in their home state and apply through the CDI

C.They must establish a physical office in California

D.They must pass the California-specific insurance exam

Explanation: California follows the NAIC producer licensing model, which allows nonresident producers to obtain a California license if they hold a valid and active license in their home (resident) state. They must apply through the CDI and may be subject to background checks, but they do not need to complete California's pre-license education or take the California exam. The home state must have reciprocal licensing agreements.

10What authority does the California Insurance Commissioner have regarding an insurer's request to withdraw from the California market?

A.The Commissioner has no authority and the insurer can leave immediately

B.The Commissioner can require the insurer to continue writing policies for up to one year

C.The Commissioner can permanently prevent the insurer from leaving

D.The Commissioner can only ask the insurer to reconsider

Explanation: Under California Insurance Code Section 1071.5, the Insurance Commissioner has the authority to require an insurer that wants to withdraw from the California market to continue writing policies for up to one year. This prevents sudden market disruptions that could leave consumers without coverage. The insurer must provide adequate notice to the CDI, and the Commissioner can mandate a transition period to protect policyholders and ensure market stability.

About the CA Property & Casualty Exam

The California property and casualty insurance exam covers CDI licensing requirements, California Insurance Code, Proposition 103 rate regulation, FAIR Plan, California Earthquake Authority (CEA), auto insurance (including Proposition 213), commercial coverage, workers compensation, and California-specific consumer protections.

Questions

150 scored questions

Time Limit

3 hours

Passing Score

60%

Exam Fee

$86 (California Department of Insurance (CDI) / PSI)

CA Property & Casualty Exam Content Outline

25%

CA CDI & Licensing

CDI licensing, 40 hrs pre-license education, broker vs. agent, appointment, CE (24 hrs/2 yrs)

25%

CA Property Insurance

Homeowners, FAIR Plan, CEA earthquake coverage, Prop 103 rate regulation, wildfire

25%

CA Casualty/Auto Insurance

CA financial responsibility, Prop 213, 15/30/5 minimums, UM/UIM, workers compensation

25%

CA Ethics & Practices

CA Insurance Code, unfair practices, CIGA, producer conduct, surplus lines

How to Pass the CA Property & Casualty Exam

What You Need to Know

Passing score: 60%
Exam length: 150 questions
Time limit: 3 hours
Exam fee: $86

Keys to Passing

Complete 500+ practice questions
Score 80%+ consistently before scheduling
Focus on highest-weighted sections
Use our AI tutor for tough concepts

CA Property & Casualty Study Tips from Top Performers

1Master Proposition 103 — rate regulation, good driver discounts, credit score prohibition

2Know CEA earthquake coverage: deductible tiers, coverage components, participation rules

3Understand CA FAIR Plan for high-risk properties including wildfire zones

4Learn CA 15/30/5 auto minimums and Proposition 213 uninsured motorist rules

5Study CIGA guaranty association $500K per claim coverage limit

Frequently Asked Questions

How hard is the California property and casualty insurance exam?

The CA P&C exam has the lowest pass rate nationally at just 43%. Despite requiring only 60% to pass, the 150-question exam covers extensive California-specific topics including Proposition 103, CEA, FAIR Plan, and unique auto insurance provisions. Thorough preparation is essential.

What is Proposition 103 and how does it affect CA P&C insurance?

Proposition 103 (1988) requires prior approval of all property and casualty insurance rate changes in California. The CDI Insurance Commissioner must approve rate increases before they take effect. It also prohibits using credit scores for auto insurance rating and requires 'good driver' discounts of at least 20%.

What is the California Earthquake Authority (CEA)?

The CEA is a publicly managed, privately funded earthquake insurance authority. It offers residential earthquake coverage with deductibles typically of 5%, 10%, 15%, or 25%. Residential property insurers must offer earthquake coverage or participate in the CEA. Coverage includes dwelling, personal property, and loss of use.

What are California's minimum auto insurance requirements?

California requires 15/30/5 minimum liability coverage ($15,000 per person/$30,000 per accident bodily injury, $5,000 property damage). Under Proposition 213, uninsured drivers cannot recover non-economic damages (pain and suffering) even if the other driver is at fault.