Insurance Policies & Regulations Flashcards
7 cards from real CA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Insurance Policies & Regulations flashcards as text
Under a California claims-made liability policy, which date determines whether a claim is covered?
Answer: The date the claim is first made against the insured during the policy period
Claims-made policies are triggered when a claim is first made against the insured during the policy period, regardless of when the underlying act occurred.
What is the primary purpose of a 'tail' (extended reporting period) endorsement on a California claims-made policy?
Answer: To allow claims arising from acts during the policy period to be reported after the policy expires
A tail endorsement extends the time to report claims for acts that occurred during the original policy period, protecting the insured after the policy expires.
California Insurance Code Section 790.03(h) prohibits which of the following claims handling practices?
Answer: Compelling an insured to litigate by offering substantially less than amounts ultimately recovered
Section 790.03(h)(6) specifically prohibits compelling insureds to litigate by offering settlements unreasonably low relative to what is ultimately recovered.
An insured under a California homeowner's policy fails to disclose a prior mold remediation at the time of application. The insurer later discovers this before a new mold claim. What remedy is available to the insurer?
Answer: Rescind the policy for material misrepresentation if within the applicable discovery period
California Insurance Code Section 331 allows an insurer to rescind a policy for material misrepresentation or concealment that would have affected underwriting, subject to applicable time limits.
Under California's Insurance Code, what distinguishes a 'named peril' policy from an 'open peril' (all-risk) policy?
Answer: Open peril policies cover all losses unless specifically excluded; named peril policies only cover specifically listed causes
Open peril (all-risk) policies cover any cause of loss not specifically excluded, while named peril policies only cover the causes of loss explicitly listed in the policy.
A California adjuster discovers that two separate insurers cover the same property loss. Which principle governs how the loss is shared between the insurers?
Answer: The Other Insurance clause provisions determine the method: pro rata, contribution by equal shares, or primary/excess
When multiple policies cover the same loss, the Other Insurance clauses in each policy determine the sharing method — typically pro rata by limits, contribution by equal shares, or primary/excess arrangements.
Under California law, which of the following constitutes 'bad faith' by an insurer in handling a claim?
Answer: Unreasonably delaying or denying a claim without a proper investigation
California recognizes a tort of bad faith (breach of the implied covenant of good faith and fair dealing) when an insurer unreasonably delays or denies a claim without proper basis.