Free CAIA Practice Questions

Question 1

Thirty-eight calendar days after receiving proof of a first-party property claim, the insurer has confirmed that $12,000 is covered and undisputed, but an engineer's report is still needed to evaluate the remaining damage. No facts support suspected fraud. The adjuster's compliant course is to:

Accepted Answer

Accept the $12,000, pay it within 30 days, and issue the required delay and 30-day status notices on the balance

Answer

Deny the entire claim by day 40 because every component has not been resolved

Answer

Withhold all payment until the engineer's report permits one final settlement and release

Answer

Refer the claim to the SIU and use the 80-day period solely because the investigation is incomplete

Question 2

A personal auto policy carries California's minimum 30/60/15 liability limits. One accident causes $45,000 of bodily injury to one person, $40,000 to a second person, and $22,000 of damage to another vehicle. Ignoring defense costs, what is the most the policy can pay for these damages?

Accepted Answer

$75,000, consisting of $60,000 for bodily injury and $15,000 for property damage

Answer

$60,000, because the bodily-injury accident limit also absorbs property damage

Answer

$82,000, because each injury is capped at $30,000 but property damage is paid in full

Answer

$105,000, because the three stated limits are added without applying the loss amounts

Question 3

Under an unmodified HO-3 policy, a supply line suddenly ruptures and damages built-in kitchen cabinets and the insured's furniture. There is no flood, repeated seepage, freezing, neglect, or other applicable exclusion. Which coverage analysis is correct?

Accepted Answer

Both losses are potentially covered under the HO-3 cause-of-loss grants

Answer

Only the cabinets are potentially covered because HO-3 personal property never covers water damage

Answer

Only the furniture is potentially covered because plumbing losses are excluded from dwelling coverage

Answer

Neither loss is covered because any damage involving water requires separate flood insurance

Question 4

At the time of a covered fire, a commercial building is valued at $1,200,000. The policy requires 80% coinsurance, carries a $720,000 building limit, and has a $5,000 deductible. The covered loss is $200,000. Assuming no other limitation, what is the payable amount?

Accepted Answer

$145,000, because the carried limit is 75% of the required amount before the deductible

Answer

$195,000, because only the deductible reduces the covered loss

Answer

$115,000, using the carried limit divided by the full building value, then subtracting the deductible

Answer

$150,000, because the coinsurance calculation replaces the policy deductible

Question 5

Following a declared California wildfire emergency, a licensed adjusting firm deploys a nonlicensed out-of-state adjuster under the emergency process. The adjuster begins handling California claims on August 4. Which action satisfies the emergency requirements?

Accepted Answer

Register the adjuster within 15 calendar days after work begins and ensure the current CDI notice and catastrophe handbook are understood within that period

Answer

Suspend all claim activity until the adjuster obtains a regular California license

Answer

Register within 30 days and defer catastrophe-law training until the annual September certification

Answer

Allow unrestricted work without registration because the adjuster is licensed in another state

Question 6

Two insurers cover the same owner's interest in a warehouse against fire. After Insurer X pays the loss, it seeks a proportional share from Insurer Y and separately pursues the negligent electrician who caused the fire. How are the two recovery rights classified?

Accepted Answer

Contribution from Insurer Y; subrogation against the electrician

Answer

The claim against Insurer Y is subrogation; the claim against the electrician is contribution

Answer

Both recovery actions are contribution because Insurer X already paid the insured

Answer

Both recovery actions are subrogation because each seeks reimbursement after payment

Question 7

A California first-party auto total-loss cash offer is based solely on one vehicle that was available for retail purchase 112 days before the final offer. The insurer also withholds sales tax until the claimant buys a replacement. What correction is required?

Accepted Answer

Revalue under a permitted 90-day method and include all applicable taxes and fees

Answer

Keep the valuation and tax position if the listed vehicle has similar mileage and options

Answer

Add sales tax now, but retain the 112-day-old vehicle as the sole valuation evidence

Answer

Replace the old comparable, but continue withholding tax until the claimant proves a replacement purchase

Question 8

A dinner guest slips on a wet patio at the residence premises and incurs necessary medical expenses. The guest is not an insured or household resident, and no allegation of negligence has been made. Which homeowners coverage is designed to respond without requiring proof of fault?

Accepted Answer

Coverage F - Medical payments to others

Answer

Coverage A - Dwelling property protection

Answer

Coverage D - Additional living expense

Answer

Coverage E - Personal liability and defense

Question 9

On the same day, an insurer receives a claimant's email that reasonably calls for an answer and a California Department of Insurance inquiry concerning that claim. Which response schedule applies?

Accepted Answer

Claimant: 15 calendar days; CDI: 21 calendar days

Answer

Both communications require a complete response within 15 business days

Answer

Respond to CDI within 15 calendar days and to the claimant within 21 calendar days

Answer

Both communications may wait until the 40-day claim-determination deadline

Question 10

Unusual and rapid surface-water runoff temporarily inundates the insured home and two neighboring properties. Water enters through exterior doors, and no plumbing failure or sewer backup is involved. Under the National Flood Insurance Program definition, this event is best classified as:

Accepted Answer

A flood because multiple properties, including the insured's, were inundated

Answer

Nonflood water damage because two acres of the insured parcel were not inundated

Answer

Accidental discharge from a plumbing system under ordinary homeowners coverage

Answer

Earth movement because surface water traveled across the ground before entering

Free CAIA Practice Questions

Domain 1: Insurance Regulation 9% of exam

Question 1

Domain 2: Insurance Basics 8% of exam

Question 2

Domain 3: Automobile Insurance 16% of exam

Question 3

Question 4

Domain 4: Homeowners’ Insurance 16% of exam

Question 5

Question 6

Domain 6: Commercial Policies 15% of exam

Question 7

Domain 11: Other Coverages and Options 2% of exam

Question 8

Domain 12: Fair Claims Settlement Practices Regulations 11% of exam

Question 9

Question 10

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