17 Free California Property & Casualty Practice Questions: Personal Lines Property: Homeowners, Dwelling, Flood and Earthquake (2026)

Question 1 (Chapter 3)

Under an HO-6 (unit-owners) policy, which of the following is true regarding Coverage A (dwelling) and the unit owner's responsibility for insurance?

• A) Coverage A covers the entire building structure, including the foundation and roof.
• B) Coverage A covers improvements and alterations made by the unit owner to the interior of the unit.
• C) Coverage A is not included in an HO-6 policy; the unit owner must purchase a separate dwelling policy.
• D) Coverage A covers personal property owned by the unit owner and stored in the unit.

Question 2 (Chapter 3)

A homeowner in a wildland-urban interface area fails to maintain defensible space around their property as required by California law. If a wildfire spreads to the home due to this neglect, how might this affect a claim under their HO-3 policy?

• A) The claim is automatically denied because failure to maintain defensible space is a policy exclusion.
• B) The insurer must pay the claim in full but can nonrenew the policy due to increased risk.
• C) Coverage is reduced by 50% as a penalty for violating state defensible space requirements.
• D) The efficient proximate cause doctrine may still result in coverage if the wildfire is deemed the predominant cause of the loss.

Question 3 (Chapter 3)

A homeowner has an HO-3 policy and experiences a loss when a tree falls on the roof during a windstorm, damaging the dwelling and breaking a window. Rain enters through the broken window and damages the interior. Under the efficient proximate cause doctrine, how is this loss treated?

• A) Only the roof and window damage is covered; interior water damage is excluded due to the rain.
• B) The loss is not covered because water damage is excluded, and the rain is considered a new and independent cause.
• C) The insurer pays for the roof and window but can subrogate against the tree owner for the interior damage.
• D) The entire loss is covered because windstorm, a covered peril under the HO-3, is the efficient proximate cause.

Question 4 (Chapter 3)

After a fire extensively damages a home insured under an HO-3 Special Form policy, the local building department requires the homeowner to upgrade the electrical system to current code, which significantly increases the cost of rebuilding. The homeowner's policy does not include a specific ordinance or law endorsement. How will the standard HO-3 policy typically respond to the increased costs due to these building code requirements?

• A) The policy will cover the cost to repair or replace the damaged property up to its replacement cost, but will exclude the additional costs incurred solely due to the enforcement of building codes.
• B) The policy will cover the full cost of the electrical system upgrade, as it is a direct consequence of a covered loss.
• C) The policy will cover a percentage of the upgrade costs, typically 10% of Coverage A, as an additional coverage.
• D) The policy will only cover the upgrade costs if the homeowner can prove the original electrical system was up to code at the time the policy was issued.

Question 5 (Chapter 3)

A homeowner in California is considering purchasing an earthquake policy through the California Earthquake Authority (CEA). They have recently completed seismic retrofitting on their home, reinforcing the foundation and bolting the structure. How might this retrofit affect their CEA policy?

• A) The retrofit will automatically eliminate the deductible for earthquake damage.
• B) The homeowner may be eligible for a premium discount on their CEA policy due to the seismic retrofit.
• C) The retrofit will increase the Combined Single Limit (CSL) of coverage available for their home.
• D) The CEA will require an additional inspection fee before issuing the policy due to the structural changes.

Question 6 (Chapter 3)

A landlord owns a single-family home that is rented out. The property is insured with a Dwelling Policy (DP-3 Special Form). A covered peril renders the home uninhabitable for two months while repairs are made. During this time, the landlord loses rental income. How would the DP-3 policy typically respond to the landlord's lost rental income?

• A) The DP-3 policy would not cover lost rental income, as it is an indirect loss.
• B) The DP-3 policy would cover lost rental income only if a specific Loss of Rents endorsement was purchased.
• C) The DP-3 policy would cover the lost rental income under the Fair Rental Value coverage, which is typically included.
• D) The DP-3 policy would cover lost rental income, but only for a maximum of two weeks.

Question 7 (Chapter 3)

A family's home, insured under an HO-3 policy, becomes uninhabitable for two months after a covered fire. During this period, the family incurs expenses for a hotel stay, restaurant meals, and laundry services that exceed their normal living costs. Which part of their HO-3 policy would cover these additional expenses?

• A) Coverage A – Dwelling
• B) Coverage B – Other Structures
• C) Coverage C – Personal Property
• D) Coverage D – Loss of Use

Question 8 (Chapter 3)

A client owns a manufactured home insured under a Manufactured Home Policy. They decide to add a permanently attached, custom-built garage and a large wooden deck to their manufactured home. How would these additions typically be covered under their existing Manufactured Home Policy?

• A) The garage and deck would be covered under Coverage B – Other Structures, subject to its specific limit.
• B) These additions would require a separate, distinct policy, as they are not part of the original manufactured home structure.
• C) They would be covered under Coverage C – Personal Property, as they are not the main structure.
• D) The garage and deck would be considered part of the 'dwelling' and covered under Coverage A, increasing the overall dwelling value.

Question 9 (Chapter 3)

A client owns a valuable collection of rare coins and stamps. These items are frequently transported to various exhibitions, appraisals, and safe deposit boxes. While their HO-3 policy offers some coverage for personal property, the client is concerned about the limited perils and sub-limits. Why would an Inland Marine policy, such as a Personal Articles Floater (PAF), be particularly suitable for insuring this collection?

• A) Inland Marine policies are designed for stationary property and offer lower deductibles.
• B) Inland Marine policies only cover property while it is in transit, not while stored at home.
• C) The primary characteristic of property covered by Inland Marine policies is its mobility, which aligns with the frequent movement of the collection.
• D) These policies provide Actual Cash Value coverage, which is ideal for appreciating collectibles.

Question 10 (Chapter 3)

A landlord insures a vacant rental property with a Dwelling Policy (DP-1 Basic Form). A fire, caused by a covered peril, damages the dwelling. Additionally, the fire destroys a small amount of cash the landlord had left in a drawer for emergency repairs, and a pet parrot belonging to the landlord that was temporarily housed in the dwelling. Which of these items would typically be covered under the DP-1 policy?

• A) The dwelling damage and the cash.
• B) The dwelling damage and the pet parrot.
• C) Only the dwelling damage.
• D) The dwelling damage, the cash, and the pet parrot.

Question 11 (Chapter 3)

According to California Insurance Code Sections 10081 and 10084, what is the specific requirement for admitted insurers that issue residential property insurance policies in California regarding earthquake coverage?

• A) Insurers must offer earthquake coverage as an endorsement or a separate policy with every offer of residential property insurance.
• B) Insurers must provide earthquake coverage automatically with every new or renewed residential property policy.
• C) Insurers must inform policyholders annually about the availability of earthquake coverage, but are not required to offer it directly.
• D) Insurers are only required to offer earthquake coverage if the property is located in a designated high-risk seismic zone.

Question 12 (Chapter 3)

A new housing development is being planned in a wildland-urban interface (WUI) area in California. The developers are evaluating the fire risk factors for the proposed homes. Which of the following factors would be considered a significant 'fuel type' hazard that could increase the risk and potential cost of fire insurance for future homeowners?

• A) The prevalence of dense, dry chaparral and brush adjacent to the property lines.
• B) The steepness of the terrain (topography) surrounding the development.
• C) The typical wind patterns and seasonal drought conditions (weather) in the area.
• D) The use of fire-resistant roofing materials for the new homes (construction).

Question 13 (Chapter 3)

A homeowner has a National Flood Insurance Program (NFIP) policy. During a severe flood, the basement of their home is inundated with water. Among the items stored in the basement are a washing machine, a dryer, a freezer containing food, and several boxes of personal belongings, including clothing and furniture. Which of these items would typically have limited or no coverage under a standard NFIP policy if located in a basement?

• A) The washing machine, dryer, and freezer are fully covered as essential appliances.
• B) The personal belongings like clothing and furniture would have limited or no coverage, while essential appliances may have some coverage.
• C) All items in the basement, including appliances and personal belongings, are fully covered up to the policy's contents limit.
• D) Only items permanently affixed to the basement walls, such as built-in shelving, would be covered.

Question 14 (Chapter 3)

A homeowner purchases an HO-3 policy with a Coverage A (dwelling) limit of $400,000. To help ensure the coverage keeps pace with rising construction costs, they add an 'Inflation Guard' endorsement to their policy. If the endorsement specifies an annual adjustment of 4%, and no other changes are made, what would be the approximate Coverage A limit at the first renewal?

• A) $400,000, as the endorsement only applies after a loss to adjust the payout.
• B) $416,000, reflecting a 4% increase in the dwelling limit.
• C) $384,000, as the endorsement reduces the limit to account for inflation's impact on actual cash value.
• D) The limit would be manually adjusted by the insurer based on a national construction cost index, not a fixed percentage.

Question 15 (Chapter 3)

After a severe windstorm causes significant damage to his roof, a homeowner with an HO-3 policy promptly notifies his insurer. However, he fails to take any reasonable steps to prevent further damage, such as placing a tarp over the damaged roof, despite being able to do so. A week later, heavy rain causes extensive water damage to the interior of his home. How might the insurer typically respond to the water damage claim?

• A) The insurer would cover all damage, as the initial cause was a covered windstorm, and the homeowner's actions are irrelevant.
• B) The insurer may deny or reduce the claim for the water damage, citing the homeowner's failure to protect the property from further loss after the initial damage.
• C) The insurer would cover the water damage but would charge an additional deductible for the homeowner's negligence.
• D) The insurer would only cover the water damage if the homeowner could prove that the delay in repairs was due to circumstances beyond his control.

Question 16 (Chapter 3)

A homeowner with an HO-3 policy hires a full-time, live-in residence employee to assist with childcare and household duties. While performing her duties, the employee slips on a wet floor and sustains a serious back injury, requiring extensive medical treatment and rehabilitation. The homeowner did not purchase a Workers' Compensation for Residence Employees endorsement. How would the standard HO-3 policy typically respond to the employee's medical expenses and lost wages?

• A) The HO-3 policy's personal liability coverage would pay for the employee's medical expenses and lost wages, as it covers bodily injury to others.
• B) The HO-3 policy's Medical Payments to Others coverage would pay for medical expenses, but not lost wages, up to its limit, and liability coverage may apply.
• C) The HO-3 policy's workers' compensation coverage for residence employees, which California requires in every homeowners policy, pays the employee's medical expenses and lost wages.
• D) The HO-3 policy would cover both medical expenses and lost wages under Coverage F (Medical Payments to Others) as the employee is an 'insured' under the policy.

Question 17 (Chapter 3)

A homeowner owns a duplex and lives in one unit while renting out the other. Both units become uninhabitable for two months due to a covered fire. The homeowner's HO-3 policy covers their primary residence. They also have a Dwelling Policy (DP-2 Broad Form) for the rental unit. Which of the following statements correctly describes how lost income and additional expenses would be covered?

• A) The HO-3 policy would cover the lost rental income from the tenant's unit, and the DP-2 would cover the homeowner's additional living expenses.
• B) The HO-3 policy would cover the homeowner's additional living expenses, and the DP-2 policy would cover the lost rental income from the tenant's unit.
• C) Both policies would cover additional living expenses for the homeowner, but neither would cover lost rental income.
• D) Neither policy would cover lost income or additional living expenses, as these are indirect losses.