Free California Casualty practice questions

Answer: D. A farm owner's liability for damage to a neighbor's fence caused by the owner's farm truck

Cal. Ins. Code Sec. 123 allows an insurer admitted for liability insurance to extend it, on noncommercial or farm risks, to the insured's legal liability for damage to property caused by using teams or vehicles, with "vehicles" limited as in Sec. 115. A farm owner's liability for a neighbor's fence damaged by the owner's farm truck fits each element. A commercial delivery fleet is not a noncommercial or farm risk, so the extension does not reach it. Sec. 115 leaves ships and boats out of the vehicles it describes, so a motorboat's damage to a dock is outside the extension. The extension covers the insured's liability to others, not the insured's own loss, so theft of the farm owner's pickup is not part of it.

Answer: C. The degree of competition among auto insurers in the California market

California bars approval of any rate that is excessive, inadequate, unfairly discriminatory or otherwise in violation of the rate chapter, and it states that the degree of competition may be given no weight in judging those questions. The same subdivision directs the commissioner to consider whether the rate mathematically reflects the insurer's investment income, so that factor is required rather than barred. Inadequacy and unfair discrimination are themselves the standards a rate is tested against.

Answer: C. Sprinkler

Sec. 100 lists sprinkler as a separate class, alongside others such as fire, marine, plate glass, liability, and boiler and machinery. Earthquake is not a class by itself: Sec. 102 places loss by earthquake within fire insurance, and Sec. 120 also names it within miscellaneous insurance. Inland marine is not separately numbered either, because Sec. 103 treats it as part of the marine class. Flood does not appear anywhere in the Sec. 100 list.

Answer: C. Its nine member-insurer seats must include at least five domestic insurers

Section 1063(b) has the commissioner appoint nine member insurers to the board and requires that at least five of the nine be domestic insurers. The stock requirement is at least three, balanced by at least three nonstock insurers, so five stock seats overstates it. The two public members are appointed by the President pro Tempore of the Senate and by the Speaker of the Assembly, while the commissioner appoints the business member and the labor member. The member insurers do not elect the governors, and after the initial staggered appointments of one, two or three years the terms run three years.

Answer: D. Boiler and machinery insurance

Cal. Ins. Code Sec. 111 defines boiler and machinery insurance to cover both loss of property and liability for harm to persons or property when boilers, tanks, pipes, pressure vessels, engines, electrical machinery or connected apparatus explode or suffer an accident. One class therefore reaches both the destroyed equipment and the customer's injury. Team and vehicle insurance is wrong: Sec. 115 does name explosion of an engine, tank, boiler, pipe or tire, but of a vehicle in use, and it covers damage to property rather than injury to a person. Sprinkler insurance is wrong because Sec. 114 reaches water damage from leaking fire-extinguishing apparatus or water pipes, not a blast. Common carrier liability insurance is wrong because Sec. 110 covers a common carrier's liability for injury to persons, and a bottling plant is not acting as a carrier.

Answer: B. On day 210, which is 60 days after the hearing record closes

Under Proposition 103, a hearing commenced during the 180-day period is one of the extraordinary circumstances that keep an application from being deemed approved at day 180 alone. In that case the application is deemed approved at the later of two dates, the end of the 180-day period or 60 days after the hearing record closes, unless it is disapproved before then. The record closed on day 150, so 60 days later is day 210, which is later than day 180. The 100-day figure belongs to a different branch, for a hearing that has been continued, and it runs from submission of the case rather than from the close of the record. The 45-day figure is the consumer's window after public notice to request a hearing, and it sets no approval date.

Answer: A. It is excluded from the definition of member insurer to the extent it participates in the federal program

Section 1063.1(a) defines a member insurer by reference to the insurers that Section 1063(a) requires to join the association, and then carves out an exception: an insurer falls outside the definition to the extent it participates in a federal insolvency program. Treating the insurer as a full member ignores that exception. The definition in subdivision (a) does not wait for a liquidation order; that order belongs to the separate definition of an insolvent insurer in subdivision (b). Subdivision (a) contains no domestic-insurer or stock-form condition.

Answer: A. Bound books on the shelves that the store holds for sale

Sec. 102(b) lets fire insurance reach accounts, books, maps, manuscripts, indexes and similar valuable papers and records that are incidental to the insured's business, but it carves out any article that is stock in trade, used as a sample, or held for sale. Books the store sells to customers are stock in trade, so they fall outside this coverage. The ledgers, the manuscripts and indexes, and the maps and records are papers incidental to running the business, kept on the premises rather than with a carrier or in the mail, so they fit the section.

Answer: C. Loss resulting from physical injury to a person aboard a flight

Cal. Ins. Code Sec. 118 covers aircraft owners, users, dealers and others with insurable interests against loss through hazards that come with owning, maintaining, operating and using aircraft, but it excepts loss resulting from accident or physical injury, fatal or nonfatal, to any natural person. Injury to someone aboard a flight is therefore outside this class. Damage during maintenance is a hazard of maintaining the aircraft, and a dealer and a user are both named in Sec. 118 among the persons the class protects.

Answer: B. Lee must first proceed under Lee's own collision coverage, against the carrier that wrote it.

When a claimant holds collision coverage on a loss that the insolvent company's liability policy would cover, California's guarantee association statute requires the claimant to go first to the collision carrier. The same paragraph takes away any right of the claimant, or of a collision carrier that is a member of the association, to sue or keep suing the insolvent company's insured for that collision damage, so suing the at-fault driver personally is the wrong route. Presenting the damage to the association first reverses the order the statute sets, and this paragraph does not send Lee to wait on the liquidator before using Lee's own collision coverage.