Ace the California Insurance Law and Ethics Exam

Introducción

All California insurance license applicants must pass the CDI law and ethics exam as part of the 12-hour pre-licensing requirement (effective January 1, 2026, per AB 943). The exam tests your knowledge of the California Insurance Code, ethical duties as a producer, anti-fraud provisions, and CDI licensing requirements. A score of 60% or higher is required. This exam applies to every line of authority — life, health, property, casualty, and personal lines. The law and ethics content makes up a significant portion of the CDI licensing exam and is the area where most candidates who fail are weakest. Mastering CIC unfair practices (Section 790), the Prop 103 rate regulation framework, producer ethical duties, and anti-fraud statutes (CIC Section 1871) before exam day is essential.

Descripción del examen

The California insurance law and ethics content is tested as part of the CDI licensing exam administered by PSI. Candidates must demonstrate knowledge of California Insurance Code requirements alongside general insurance product knowledge. The 12-hour pre-licensing course (Ethics and CA Insurance Code, per AB 943) covers the same content as this exam section. Schedule at psiexams.com or call (833) 518-7456. A passing score of 60% is required. Results are shown on screen immediately after the exam.

Temas que suelen costar más

Three specific areas generate the most missed questions on California law and ethics content. First, unfair trade practices under CIC Section 790 and related sections — candidates must know the precise definitions of twisting, churning, rebating, misrepresentation, and false advertising and be able to distinguish between them in scenario questions. Second, the difference between an agent (represents the insurer) and a broker (represents the insured) — this distinction determines who bears liability when coverage errors occur and is tested with nuanced fact patterns. Third, the anti-fraud provisions — specifically what constitutes a fraudulent act under CIC Section 1871.4, the mandatory reporting obligations for producers who suspect fraud, and the penalties. Many candidates underestimate how frequently and specifically these are tested.

Preguntas frecuentes

• What is the California insurance law and ethics exam?

  All California insurance license candidates must demonstrate knowledge of the California Insurance Code, producer ethics, anti-fraud statutes, and CDI licensing requirements. Under AB 943 (effective January 1, 2026), the required 12-hour pre-licensing course covers Ethics and the California Insurance Code — this content appears on the CDI/PSI licensing exam.

• Does the law and ethics content apply to all insurance lines?

  Yes. California Insurance Code, ethics, and anti-fraud content is tested on every CDI licensing exam — life, health, property, casualty, personal lines, and commercial lines all include California-specific regulatory questions.

• What is the difference between twisting and churning?

  Twisting involves inducing a policyholder to replace an existing policy through misrepresentation. Churning specifically refers to replacing policies unnecessarily to generate additional commissions, often within the same insurer. Both are prohibited unfair trade practices under CIC.

• What does CIC Section 790 prohibit?

  CIC Section 790 (Unfair Practices Act) prohibits unfair claims settlement practices including denying claims without reasonable investigation, failing to acknowledge communications promptly, and making settlement offers that are not reasonably related to the covered loss.

• What are a producer's anti-fraud reporting obligations in California?

  CIC Section 1872.4 requires producers who suspect insurance fraud to report it to CDI's Fraud Division or the insurer's Special Investigations Unit (SIU). Failure to report can result in license discipline.

• How long must I wait to apply for a CA insurance license after passing the exam?

  You do not wait — you apply to CDI as soon as possible after passing. The exam result is valid for 12 months, so you must submit your license application within 12 months of your exam date.