California Insurance Ethics & Unfair Practices — California Insurance Law — Property & Casualty Practice Test

This California Insurance Law — Property & Casualty California Insurance Ethics & Unfair Practices practice set has 40 practice questions based on the official exam materials, each with an instant explanation.

Sample questions

Three questions from the California Insurance Ethics & Unfair Practices bank with the correct answer and an explanation. The practice quiz above draws 30 questions at random from the same bank.

1. California's Unfair Practices Article prohibits a person from engaging in:

   • Any trade practice defined as an unfair method of competition or unfair or deceptive act in the business of insurance — Correct answer
   • Any advertising of insurance
   • Selling more than one line of insurance
   • Charging any commission

   Explanation: No person shall engage in this state in any trade practice defined as an unfair method of competition or an unfair or deceptive act or practice in the business of insurance. (Cal. Ins. Code §790.02)

   Handbook: California Insurance Ethics & Unfair Practices — General Prohibition

2. Under California's Unfair Practices Article, misrepresenting the terms or benefits of a policy is:

   • An unfair and deceptive practice — Correct answer
   • Permitted if the client agrees
   • Only a problem for life insurance
   • Allowed in advertising

   Explanation: Misrepresenting the terms of a policy, its benefits, dividends, or an insurer's financial condition is a defined unfair and deceptive act. (Cal. Ins. Code §790.03(a))

   Handbook: California Insurance Ethics & Unfair Practices — Misrepresentation

3. Inducing a policyholder to lapse, forfeit, or cancel existing insurance through misrepresentation is a defined unfair practice commonly called:

   • Twisting — Correct answer
   • Rebating
   • Sliding
   • Churning of accounts

   Explanation: Making a misrepresentation to a policyholder to induce them to lapse, forfeit, or surrender insurance is a defined unfair practice (twisting). (Cal. Ins. Code §790.03(a))

   Handbook: California Insurance Ethics & Unfair Practices — Twisting