California Property & Casualty: Commercial Property Coverages, Inland Marine & Pet Insurance

Correct

The answer is B: $166,667

Coinsurance compares the insurance carried with the insurance required, which is the coinsurance percentage times the value of the covered property at the time of loss. Required: $1,500,000 x 80% = $1,200,000. Carried: $1,000,000, which is less than required, so the insurer pays only the carried-to-required share of the loss: ($1,000,000 / $1,200,000) x $200,000 = (5/6) x $200,000 = $166,667. Paying the full $200,000 ignores the coinsurance penalty. Paying $150,000 uses 75%, the cap in the Value Reporting Form when the first report is missing, which has nothing to do with coinsurance. Paying $120,000 doesn't follow from any correct step; comparing the limit with the full $1,500,000 value, for example, gives 2/3 x $200,000, about $133,333.

Reviewed in our October 2026 California fact-check.

Correct

The answer is A: The insurer pays no more at the loss location than the values last reported for it.

The ISO Value Reporting Form (CP 13 10) treats missed reports in two ways. If the first required report was never submitted, the insurer pays no more than 75% of the amount it would otherwise have paid, and only at locations shown in the Declarations. If a required report after the first one is missing, as here, the insurer will not pay more for loss at any location than the values last reported for that location, and pays only at locations in the last report filed before the loss. The 75% cap therefore does not apply, but the insured still is not paid in full if actual values exceed the last reported values. The first report does not excuse later ones, and a missed report is not a misrepresentation that voids the policy.

Reviewed in our October 2026 California fact-check.

Correct

The answer is A: Producers cannot bind NFIP coverage; it generally starts only after a 30-day waiting period.

NFIP coverage does not start when the producer says so. Under 44 CFR 61.11, a new NFIP policy generally takes effect at 12:01 a.m. on the 30th calendar day after the application date and presentment of the premium, with limited exceptions, such as coverage bought in connection with a loan closing or within 13 months after a revised flood map takes effect. Paying the producer is not payment to the NFIP: the application and full premium must reach the NFIP or the Write Your Own (WYO) insurer. The regulation draws no line between commercial and residential policies, and it has no 72-hour binder, no general binding authority like other commercial lines, and no flood-zone exception. A producer therefore cannot make NFIP coverage effective immediately.

Source: 44 CFR 61.11

Correct

The answer is A: Employee theft, as an employee unlawfully took the money.

The scenario describes employee theft. The ISO Employee Theft insuring agreement covers money, securities and other property lost through theft committed by an employee, and theft is the unlawful taking of property to the deprivation of the insured. Robbery requires taking property from a person's care and custody by causing or threatening bodily harm, or by an obviously unlawful act that person witnesses; burglary involves unlawful entry, and forgery involves false or altered written instruments. None of those describes an employee quietly taking cash.

Reviewed in our October 2026 California fact-check.

Correct

The answer is D: Commercial Inland Marine.

Commercial inland marine insurance is designed to cover movable property, such as goods in transit, and instruments of transportation and communication. It fits the manufacturer's furniture while it is shipped by common carrier. Commercial general liability covers bodily injury and property damage to third parties, not the insured's own property in transit. The Building and Personal Property form covers property mainly at the described premises, with only limited coverage away from it. Commercial auto physical damage covers the vehicle itself, not the cargo it carries.

Reviewed in our October 2026 California fact-check.