State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Under California Insurance Code Section 334, a fact is material if it:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Section 334 defines materiality by the effect on the recipient: a fact is material if it could influence the insurer's decision whether to accept the risk, the premium charged, or the conditions offered — regardless of whether the loss actually turned out to be related to the fact. This 'could influence' test focuses on the insurer's underwriting judgment, not on hindsight or on whether the fact caused the eventual loss.
Why the other options are wrong
- B) The insured's subjective opinion about importance is not the test; materiality is judged from the insurer's perspective.
- C) Whether the loss resulted from the fact is outcome-based hindsight; Section 334 asks about effect on underwriting judgment, not causation of the loss.
- D) Being asked a question can flag importance, but materiality exists independently of whether the question was asked.
Memory hook
Material = would it move the insurer's decision? Not whether it caused the loss, but whether it changed the pricing.