California does several things differently from most states:

• It elects its Insurance Commissioner.
• It sets the producer exam passing score at 60%.
• It uses Proposition 103's prior-approval rate system.
• It allows property and casualty agents to rebate commissions.
• It has no temporary license for a deceased agent's business; it issues an estate certificate of convenience instead.

This guide covers the California Insurance Code (CIC) and Title 10 of the California Code of Regulations (10 CCR) rules that the state questions draw on. General concepts are in the national Insurance Regulation guide.

About the exam

California's exams are delivered by PSI for the California Department of Insurance (CDI). The passing score is 60% on every producer exam. There are no series numbers; exams are named by license type.

California sells single-line and combined exams for both life/health and property/casualty.

Prelicensing.

• Before a license is issued, every applicant completes a 12-hour course on ethics and the California Insurance Code, including 1 hour on insurance fraud (CIC 1749). An applicant for several license types takes the course only once.
• AB 943 repealed the separate 20-hour line-specific prelicensing course effective January 1, 2026. The 12-hour course is still required.
• Prelicensing certificates expire three years after completion.
• An application not completed within one year is automatically denied, without prejudice to reapplying (CIC 1670).

The regulator

• The California Department of Insurance is headed by the Insurance Commissioner, who is elected statewide in the same manner as the Governor. The Commissioner serves no more than two four-year terms (CIC 12900).
• A person appointed to fill a vacancy needs legislative confirmation.
• The Commissioner may examine admitted insurers as often as advisable (CIC 730). Insurers file an annual statement by March 1 (CIC 900).
• In an insolvency, the court vests title to an insurer's assets in the Commissioner as conservator (CIC 1011) and may order liquidation if conservation would be futile (CIC 1016). Refusing to deliver records after a seizure order is a misdemeanor (CIC 1013).
• Who regulates health plans. HMOs and point-of-service plans are regulated mainly by the Department of Managed Health Care under the Knox-Keene Act. CDI regulates disability insurers and most PPO and indemnity products (CIC 740).

Insurers and definitions

• An admitted insurer holds a certificate of authority (CIC 700).
• Domestic = organized under California law (CIC 26); foreign = organized in another state (CIC 27); alien = organized in another country.
• Insurance is a contract to indemnify against loss, damage, or liability from a contingent or unknown event (CIC 22).
• In the Code, "shall" is mandatory and "may" is permissive (CIC 16).
• Acting for or advertising a nonadmitted insurer is a misdemeanor, except by a surplus line broker (CIC 703).

Licensing

License types (CIC 1626, 1625, 1625.5):

• life-only agent (life and annuities)
• accident and health agent
• property broker-agent
• casualty broker-agent
• personal lines broker-agent (personal auto, residential property including earthquake and flood, personal watercraft, personal inland marine, and personal umbrella, but not workers' compensation)
• life and disability insurance analyst (advises for a fee paid by someone other than an insurer; fees require a signed written agreement)

Agents and brokers.

• An agent acts for an insurer (CIC 31).
• A broker acts for the insured, and only for lines other than life, disability, or health (CIC 33).
• A licensee is presumed to act as a broker if licensed and bonded as a broker and gives the consumer a signed disclosure of its role and fees (CIC 1623).

Solicitors are natural persons employed to help a property or casualty broker-agent (CIC 34, 1624). There is no life or health solicitor license.

Nonresidents are licensed based on their home-state license, reciprocally for property, casualty, and personal lines (CIC 1638.5, 1639).

Denial and discipline.

• The Commissioner may deny a license to an applicant who doesn't intend to do business with the general public in good faith. This covers someone seeking a license mainly to write their own, family, or employer business (controlled business, CIC 1668(c)).
• A felony conviction allows denial without a hearing (CIC 1669).
• Suspension or revocation otherwise requires notice and a hearing (CIC 1738).

Appointments (CIC 1704 to 1708):

• An agent must be appointed by an insurer to act for it and be paid commissions.
• Notices of appointment and termination are filed within 15 days (CIC 1707).
• When all appointments end, the license becomes inactive, not cancelled. An inactive license doesn't allow transacting insurance (CIC 1704(b)).
• A licensee may surrender a license at any time by written notice (CIC 1708).

License term and CE.

• A license runs two years, ending on the last day of the month it was issued (CIC 1630).
• A licensee who renews on time with all CE done may keep operating for 60 days after expiration while the renewal is processed (CIC 1720).
• Resident licensees complete 24 hours of CE every two years, including 3 hours of ethics. Since March 1, 2023, the ethics hours include 1 hour on insurance fraud (CIC 1749.3, 1749.33). A dual life and A&H licensee still needs only 24 hours total.
• Licensees first licensed before 2010, who have 30 continuous years in good standing and are 70 or older, are exempt.
• Sales, motivational, and product-promotion training doesn't count.
• Property, casualty, and personal lines licensees must include a homeowners' insurance valuation course in their CE (CIC 1749.85).

Deceased or incapacitated licensee. California issues an estate certificate of convenience to the executor, administrator, surviving spouse or heir, or conservator, so the business can continue temporarily (CIC 1685 to 1687).

Reporting.

• Address and email changes are reported immediately through the CDI's electronic service (CIC 1729, as amended in 2021).
• Background changes (convictions, felony charges, regulatory actions, and similar events) are reported in writing within 30 days (CIC 1729.2).
• Fictitious business names are filed with the Commissioner, who may disapprove misleading ones (CIC 1724.5).

License number display (CIC 1725.5, 1726):

• The license number goes on business cards, written price quotes, and print ads. On business cards, it must be at least as large as the phone number or in 8-point type.
• An agent's website must show the agent's name, domicile and principal place of business, California license number, and the word "insurance."

Unlicensed activity is a misdemeanor punishable by a fine up to $50,000, a year in county jail, or both (CIC 1633).

Fiduciary duties

• Premiums are held in a fiduciary capacity. Diverting them is theft (CIC 1733).
• Fiduciary funds not promptly remitted go in a separate trust account at an FDIC-insured institution (CIC 1734).
• Life and disability agents keep records five years (CIC 10508.5) and deliver them within 30 days of a written demand.

Unfair Practices Act (CIC 790 to 790.15)

• Misrepresentation (CIC 780, 790.03(a)) and twisting (CIC 781) can bring a fine up to $25,000, or three times the loss if it exceeds $10,000 (CIC 782). A knowing violation can lead to a license suspension of up to three years (CIC 783).
• Also prohibited:
  • false advertising (790.03(b))
  • false financial statements (790.03(d))
  • boycott, coercion, and intimidation
  • unfair discrimination between people of the same class (790.03(f))
• Unfair claims practices. Section 790.03(h) lists 16 unfair claims settlement practices.
• Penalties. After an order to show cause and a hearing at least 30 days later, the Commissioner may issue a cease and desist order (790.05). Penalties are up to $5,000 per act, or $10,000 per act if willful (790.035). The Commissioner may also declare unlisted practices unfair after a hearing (790.06).
• Enforcement. The Act is enforced by the Commissioner. It creates no private right of action (Moradi-Shalal v. Fireman's Fund, 1988).
• Rebating.
  • Proposition 103 authorized property and casualty agents and brokers to rebate commissions, and CIC 750(d) confirms it.
  • For life and health, the tested rule is the ban on free insurance: insurance or annuities offered without a separate charge as an inducement to buy goods or services (CIC 777.1).
• Underwriting limits.
  • Life, annuity, and disability insurers may not refuse or rate coverage solely because of blindness (CIC 10145).
  • They may not refuse or rate coverage for a physical or mental impairment without actuarial support (CIC 10144).
  • Race, color, religion, national origin, ancestry, or sexual orientation may not, of itself, raise a rate (CIC 10140).
  • P&C insurers may not refuse, cancel, or surcharge based on Civil Code 51 characteristics (CIC 679.71).
  • Registered domestic partners must be covered equally with spouses (CIC 381.5).

Senior protections (CIC 785 to 789.10)

• Insurers and agents owe prospective insureds 65 or older a duty of honesty, good faith, and fair dealing (CIC 785).
• Disability policies and group life sold to people 65 or older have a 30-day free look (CIC 786).
• Lead-generating ads aimed at seniors must disclose that an agent may contact them. Materials may not imply government or senior-group endorsement (CIC 787).
• In-home meetings.
  • Before an in-home meeting about life or annuities, the agent gives written notice at least 24 hours and no more than 14 days ahead (CIC 789.10).
  • The agent must leave immediately if asked.
• Penalties. At least $1,000 for a first violation, and $5,000 to $50,000 for knowing or repeat violations (CIC 789.3).

Claims (10 CCR 2695, the Fair Claims Settlement Practices Regulations)

• Denials are in writing, state the reasons, and tell the claimant the Department can review the denial.
• Claim files are kept for the current year plus four prior years.
• Unreasonably low settlement offers are prohibited.
• The 40-day rule doesn't apply to health claims, which must be paid or contested within 30 days (CIC 10123.13), or to disability income claims, which are paid within 30 days after the insurer has the information it needs (CIC 10111.2).

Fraud

• Knowingly presenting a false claim is a felony under Penal Code 550: 2, 3, or 5 years, and a fine up to $50,000 or double the fraud.
• Workers' compensation fraud (CIC 1871.4) carries fines up to $150,000 or double the fraud.
• Signing a false claim form can also be perjury.
• Application and claim forms carry a fraud warning (CIC 1871.2).
• Reporting.
  • An insurer's special investigative unit, which every admitted insurer must have (CIC 1875.20), reports suspected fraud to the CDI Fraud Division within 60 days (CIC 1872.4).
  • An agent or broker who suspects a fraudulent application must also report within 60 days (CIC 1872.41).
  • Reporting without malice is immune from liability (CIC 1872.5).

Privacy

Under the Insurance Information and Privacy Protection Act (CIC 791 to 791.26):

• Requests to see personal information are answered within 30 business days.
• After an adverse underwriting decision, the reasons must be given or offered. A written request for them must come within 90 business days.
• Pretext interviews are allowed only in claim investigations with a reasonable basis to suspect fraud.

The California Financial Information Privacy Act (Fin. Code 4052.5) requires opt-in consent before sharing nonpublic personal information with nonaffiliated third parties. That is stricter than federal law.

Rates: Proposition 103

• Most property and casualty rates need the Commissioner's prior approval (CIC 1861.01).
• Rates may not be excessive, inadequate, or unfairly discriminatory (1861.05).
• Consumers may intervene in rate proceedings (1861.10).

Surplus lines

• Nonadmitted placements for a California home-state insured go only through a licensed surplus line broker (CIC 1761).
• A surplus line broker may not represent that coverage exists without the insurer's written authority or an issued policy (CIC 1764.2).
• Surplus lines policyholders have no CIGA protection.

Guarantee associations

California Insurance Guarantee Association (CIGA) (CIC 1063):

• Caps covered claims at $500,000. Dwelling claims under a residential policy can reach $1,000,000 or the policy limit.
• Workers' compensation is uncapped.
• Claims of $100 or less are excluded. There is no separate deductible.
• It doesn't cover surety or fidelity bonds.

California Life and Health Insurance Guarantee Association (CLHIGA) (CIC 1067.02):

• Life and annuity coverage is limited to the lesser of 80% of the contractual obligation or the dollar caps: $300,000 death benefit, $100,000 cash value, $250,000 annuity present value.
• Health benefits are capped at $200,000, indexed to medical inflation since 1991.
• Using the association in sales is prohibited (CIC 1067.17).

Common exam traps

• The Commissioner is elected.
• The pass mark is 60%.
• Address changes are reported immediately. Background changes are reported in 30 days.
• Appointment and termination notices are due in 15 days.
• CE is 24 hours, including 3 of ethics with 1 hour on fraud.
• There's no temporary license; California uses an estate certificate of convenience.
• There's no life or health solicitor.
• P&C commission rebating is legal under Prop 103.
• Claims: 15 / 40 / 30 days. Health claims: 30 days.
• CIGA: $500,000 cap, workers' comp uncapped, claims of $100 or less excluded.