California Property & Casualty: California P&C Law — Cancellation, Unfair Practices, FAIR Plan, CAARP & Ethics

Correct

The answer is A: The producer must hold a valid California property-casualty license and register with the FAIR Plan as a broker.

Submitting business to the FAIR Plan takes two things: a valid, active California property-casualty license and registration with the FAIR Plan as a broker. The plan does not appoint producers, require plan-specific training, or require a set number of declinations by admitted insurers; Insurance Code §10093 asks only that the applicant, after diligent effort, was unable to get basic property insurance through normal channels. Nor must the producer be a surplus lines broker, who places business with nonadmitted insurers in a separate market.

Reviewed in our October 2026 California fact-check.

Correct

The answer is B: The FAIR Plan policy is a named-perils form, and the DIC policy adds coverages it lacks, such as theft and liability.

The FAIR Plan sells named-perils basic property insurance (the §10091(c) definition: perils of the standard fire policy and extended coverage plus vandalism and malicious mischief). Its dwelling policy builds in fire, lightning, internal explosion and smoke and sells some other perils as options, and the plan does not sell liability, theft or water damage coverage. A DIC policy from a private insurer is designed to combine with the FAIR Plan policy and supply those missing coverages, bringing the package closer to a homeowners policy; flood and earthquake are typically bought as separate policies. The FAIR Plan policy is therefore not all-risk, the DIC policy does not take over the fire losses the FAIR Plan policy covers, and no rule requires the DIC policy to come from the same insurer; the FAIR Plan does not sell DIC policies, so it is bought from a different insurer.

Reviewed in our October 2026 California fact-check.

Correct

The answer is B: Any employer in California may tender a workers' compensation risk to SCIF, regardless of size or industry, subject to its accident-prevention and safe-carrying limits.

SCIF was created as a competitive workers' compensation carrier: it competes with private insurers for any employer's business while also serving as a guaranteed market. Under Insurance Code §11784(c), State Fund may decline a risk that fails the accident-prevention requirements or is beyond its safe carrying capacity, but otherwise it may not refuse a workers' compensation risk tendered with the premium, so eligibility is not limited to employers already declined by admitted insurers. Treating SCIF as available only after a decline is wrong, no count of declinations is set by statute, and SCIF serves private as well as public sector employers.

Reviewed in our October 2026 California fact-check.

Correct

The answer is A: It lets the California policy pay the benefits that Arizona's workers' compensation law requires for this employee.

The 'other states' insurance provision of a workers' compensation policy extends the policy to pay the benefits required by the workers' compensation law of the other states listed in the policy when covered employees are injured working there. With Arizona listed, the policy pays the benefits Arizona law requires. It does not require a lawsuit first, impose California benefit levels on Arizona, or bar coverage outside California.

Reviewed in our October 2026 California fact-check.

Correct

The answer is A: Use layperson's language to ensure the client understands the coverage and its limitations.

A producer who explains coverage in plain, layperson's language, including its limits and exclusions, helps the client understand what is being bought. Misrepresenting policy terms or benefits, as in telling a client the policy covers everything, is prohibited (Ins. Code §780 and §790.03(a)), and leaving out exclusions to avoid worrying the client gives a false picture of the coverage. Technical jargon used to show expertise does not help the client understand the coverage.

Reviewed in our October 2026 California fact-check.