California Property & Casualty Insurance Practice Exam Free - 2026

• A. Insurance for ocean-view properties
• B. Coverage for marine animals
• C. Coverage for ships, cargo, and related maritime exposures
• D. Flood insurance for coastal areas

Correct answer: C. Coverage for ships, cargo, and related maritime exposures

Explanation: Ocean marine insurance covers ships (hull coverage), cargo being transported by water, freight charges, and liability for damage to others' property or vessels.

• A. Insurance for movie directors
• B. Coverage for corporate headquarters
• C. Coverage protecting corporate directors and officers from personal liability for decisions
• D. Insurance for military officers

Correct answer: C. Coverage protecting corporate directors and officers from personal liability for decisions

Explanation: D&O liability insurance protects directors and officers of a company from personal liability when sued for alleged wrongful acts in managing the company, such as breach of fiduciary duty.

• A. Insurance for employment agencies
• B. Coverage for hiring practices
• C. Protection against claims of wrongful employment practices like harassment or discrimination
• D. Coverage for employee injuries

Correct answer: C. Protection against claims of wrongful employment practices like harassment or discrimination

Explanation: EPL insurance protects employers against claims by employees alleging wrongful employment practices such as discrimination, sexual harassment, wrongful termination, or retaliation.

• A. Insurance for online shopping
• B. Coverage for electronic equipment
• C. Coverage for data breaches, cyberattacks, and related exposures
• D. Insurance for internet companies only

Correct answer: C. Coverage for data breaches, cyberattacks, and related exposures

Explanation: Cyber liability insurance covers losses from data breaches, cyberattacks, network damage, and related liabilities including notification costs, credit monitoring, and legal expenses.

• A. Coverage for residential garages
• B. Insurance for garage door companies
• C. Liability coverage for businesses that service, sell, or store vehicles
• D. Coverage for parking garages only

Correct answer: C. Liability coverage for businesses that service, sell, or store vehicles

Explanation: Garage liability insurance provides liability coverage for auto dealerships, repair shops, service stations, and other businesses that work with vehicles, covering both premises and auto liability exposures.

• A. Coverage for claims arising from injuries or damage caused by products sold or manufactured
• B. Coverage for damaged inventory
• C. Insurance for product testing
• D. Insurance for product recalls

Correct answer: A. Coverage for claims arising from injuries or damage caused by products sold or manufactured

Explanation: Products liability insurance covers claims arising from bodily injury or property damage caused by products that a business manufactures, sells, or distributes.

• A. Coverage for liability arising from work after it has been completed
• B. Coverage for finished buildings
• C. Insurance for completed insurance applications
• D. Coverage for surgical operations

Correct answer: A. Coverage for liability arising from work after it has been completed

Explanation: Completed operations coverage protects contractors and others against liability for bodily injury or property damage arising from work after it has been completed and handed over to the customer.

• A. Insurance for bail bondsmen
• B. Insurance for ballet companies
• C. Coverage for damage to property in someone's care, custody, or control
• D. Coverage for baled hay

Correct answer: C. Coverage for damage to property in someone's care, custody, or control

Explanation: Bailee coverage protects businesses that have temporary possession of others' property (like dry cleaners, repair shops) against liability for damage to that property while in their care.

• A. A type of life insurance policy
• B. A three-party agreement guaranteeing one party will fulfill an obligation to another
• C. A bond between insurance agents
• D. A type of investment bond

Correct answer: B. A three-party agreement guaranteeing one party will fulfill an obligation to another

Explanation: A surety bond is a three-party agreement where the surety (typically an insurer) guarantees to the obligee that the principal will fulfill a contractual or legal obligation.

• A. A bond for faithful employees
• B. Coverage protecting against employee dishonesty and theft
• C. A guarantee of faithful service
• D. A marriage-related insurance product

Correct answer: B. Coverage protecting against employee dishonesty and theft

Explanation: A fidelity bond (employee dishonesty coverage) protects a business against losses caused by dishonest acts of employees, such as theft, forgery, or embezzlement.

• A. A federal program providing flood insurance where private coverage is limited
• B. A state-run flood assistance program
• C. A private flood insurance company
• D. An international flood relief organization

Correct answer: A. A federal program providing flood insurance where private coverage is limited

Explanation: The NFIP is a federal program administered by FEMA that provides flood insurance to property owners in participating communities, where private flood coverage has historically been limited or unavailable.

• A. Yes, floods are always covered
• B. Only in coastal areas
• C. No, flood coverage requires a separate policy
• D. Only for basements

Correct answer: C. No, flood coverage requires a separate policy

Explanation: Standard homeowners and business property policies specifically exclude flood damage. A separate flood insurance policy, typically through the NFIP or private insurers, is required for flood coverage.

No. This page is an independent study resource and is not an official exam from California Department of Insurance, PSI, Pearson VUE, PSI, Prometric, NIPR, NAIC, or any other regulator or exam administrator.

Start with the current candidate handbook or content outline, then review property insurance, casualty insurance, liability, auto, homeowners, commercial coverage, claims basics, ethics, and jurisdiction-specific insurance rules.

No. Practice questions can help you find weak areas, but they do not guarantee passing, licensing eligibility, or application approval.

Verify scheduling, fees, identification, prelicensing, retake, fingerprinting, and application rules through California Department of Insurance and the current exam-vendor resources.

Take a practice set, review missed explanations, compare weak topics against the official California outline, and re-test only after reviewing the relevant rules and concepts.