State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
In California insurance statutes, the word 'shall' as used in the Insurance Code means:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
CIC Section 16 provides that 'shall' is mandatory and 'may' is permissive. This drafting convention governs the entire Insurance Code: a duty stated with 'shall' is required, while 'may' confers discretion. Understanding the distinction matters because agents and insurers must tell required conduct apart from permitted conduct when reading the Code.
Why the other options are wrong
- B) Optional conduct is expressed by 'may,' not 'shall.'
- C) 'Shall' is not advisory; it creates an enforceable duty.
- D) Discretion is conveyed by 'may'; 'shall' does not depend on the Commissioner's disposition.
Memory hook
Shall = must. May = might. One letter apart, worlds apart.