California P&C Study Guide

California’s property-and-casualty market is the biggest in the nation, and it’s shaped by forces you won’t see anywhere else: a 1988 ballot measure that rewrote how rates are set, a wildfire crisis that’s reshaping the homeowners market in real time, and an auto-minimum law that just changed for the first time since 1967. The federal and uniform rules still apply — but California stacks a lot on top, and that’s where the exam lives. Let’s get the California-only material down.

Licensing — the short version

Good news up front: like every other California line, P&C pre-licensing is just the 12-hour Ethics and California Insurance Code course (CIC § 1749) — among the shortest in the country. Renewal is every 2 years with 24 hours of CE, including 3 hours of ethics. One extra piece for P&C: placing coverage with a non-admitted carrier requires a separate Surplus Lines Broker license and a diligent search of the admitted market first (typically three declinations).

Proposition 103 — the rule that defines California P&C

If you learn one thing about California property-casualty, learn Prop 103. California voters passed it in 1988, and it rewired rate regulation:

• Prior approval: insurers must file a rate with CDI and get it approved before using it.
• Good driver discount: at least 20% off for qualifying drivers.
• Rating-factor order: the three primary auto rating factors, in this order — (1) driving record, (2) miles driven, (3) years of experience. Everything else is secondary.
• No credit scoring: California bans credit score as a rating factor for auto, home, or renters.

Auto minimums — the big 2025 change (SB 1107)

This one catches people who studied old material. Effective January 1, 2025, SB 1107 raised California’s mandatory auto liability minimums to 30/60/15 ($30,000 per person / $60,000 per occurrence bodily injury, $15,000 property damage). The old 15/30/5 limits had been frozen since 1967. They’re scheduled to rise again to 50/100/25 in 2035. California is a fault-based (tort) state with no mandatory PIP, and UM coverage must be offered (the applicant signs a waiver to decline it).

Homeowners, wildfire, and the FAIR Plan

California is living through one of the worst home-insurance crises in the country, driven by wildfire losses and insurers pulling back. Two pieces the exam tests:

• The FAIR Plan is the state’s insurer of last resort — it writes basic fire coverage when the standard market won’t. It’s not a full homeowners policy, so buyers usually pair it with a Difference in Conditions (DIC) policy to approximate an HO-3.
• Cancellation/nonrenewal protections are unusually strong: 75 days advance notice to nonrenew a homeowners policy, and a wildfire moratorium (CIC § 675.1) that freezes cancellation and nonrenewal for a year in or near a declared disaster area.

Workers’ comp — no small-employer exemption

California requires workers’ comp for any employer with one or more employees — no size exception. The State Compensation Insurance Fund (State Fund) competes with private carriers and serves as the market of last resort. And operating without coverage isn’t a slap on the wrist: it’s a misdemeanor, with fines up to $10,000. After a policy’s first 60 days, mid-term cancellation narrows to nonpayment, fraud or material misrepresentation, or a substantial