CA Insurance Policies & Regulations 3 — Questions and Answers
Question 1: Which doctrine applies in California when a covered peril and an excluded peril both contribute to a single loss?
- Concurrent causation doctrine
- Efficient proximate cause doctrine (Correct answer)
- Independent intervening cause rule
- Proximate result doctrine
Correct answer: Efficient proximate cause doctrine
California courts apply the efficient proximate cause doctrine: if the predominant cause is covered, the loss is covered even if an excluded peril contributed.
Question 2: Under the California Standard Form Fire Policy, which of the following is NOT a standard covered peril?
- Fire
- Lightning
- Earthquake (Correct answer)
- Explosion
Correct answer: Earthquake
The California Standard Form Fire Policy covers fire, lightning, and explosion, but earthquake is excluded and requires a separate policy or endorsement.
Question 3: An insured under a commercial general liability (CGL) policy is sued for copyright infringement in advertising. Under which coverage part would this typically be addressed?
- Coverage A – Bodily Injury and Property Damage Liability
- Coverage B – Personal and Advertising Injury Liability (Correct answer)
- Coverage C – Medical Payments
- Coverage D – Products and Completed Operations
Correct answer: Coverage B – Personal and Advertising Injury Liability
Coverage B of a CGL policy addresses personal and advertising injury, which includes copyright infringement in the insured's advertisement.
Question 4: What is the purpose of a 'Mortgagee Clause' (also called a 'standard mortgage clause') in a California homeowner's policy?
- It transfers the insured's entire policy interest to the lender
- It protects the lender's interest independently, even if the insured's coverage is voided by misrepresentation (Correct answer)
- It requires the insurer to notify the mortgagee before canceling the insured's coverage for non-payment only
- It makes the lender the sole named insured on the policy
Correct answer: It protects the lender's interest independently, even if the insured's coverage is voided by misrepresentation
The standard mortgage clause gives the lender an independent right to recover, meaning the insurer cannot use the insured's acts or omissions to defeat the lender's claim.
Question 5: In California, what is the minimum notice period an insurer must give before canceling a personal lines policy that has been in force for more than 60 days (for reasons other than non-payment)?
- 10 days
- 20 days
- 30 days (Correct answer)
- 45 days
Correct answer: 30 days
California Insurance Code Section 677 requires at least 30 days' notice for mid-term cancellation of personal lines policies in force over 60 days for reasons other than non-payment.
Question 6: A business owner's policy (BOP) typically combines which two primary coverage elements?
- Workers' compensation and employer's liability
- Commercial property and commercial general liability (Correct answer)
- Professional liability and directors & officers liability
- Inland marine and ocean marine coverage
Correct answer: Commercial property and commercial general liability
A BOP packages commercial property insurance and commercial general liability insurance into a single policy, usually for small to mid-size businesses.
Question 7: Under California Insurance Code Section 2071, after a total loss under a homeowner's policy, how long does an insured have to submit a proof of loss?
- 30 days
- 60 days
- 90 days (Correct answer)
- 180 days
Correct answer: 90 days
California Insurance Code Section 2071 provides the insured 60 days from the insurer's request to submit proof of loss, but after a total loss the insurer must extend this to at least 90 days.
CA Insurance Policies & Regulations 3
Which doctrine applies in California when a covered peril and an excluded peril both contribute to a single loss?