AAI cheat sheet

HO-3 structure: Coverage A dwelling and Coverage B other structures on open peril; Coverage C personal property on named peril; Coverage D loss of use; Coverage E personal liability; Coverage F medical payments to others.

ISO HO-3 Coverage C special limits: $200 money, $1,500 securities, $1,500 theft of jewelry and furs, $2,500 theft of firearms, $3,000 theft of silverware - raised only by endorsement.

Coverage D (loss of use) is commonly 20-30% of Coverage A and pays additional living expense or fair rental value for the reasonable time needed to repair or relocate.

Base liability limits are typically $100,000 per occurrence for Coverage E and $1,000 per person for Coverage F; personal liability follows the insured worldwide while property coverage is location-based.

Standard homeowners exclusions include flood and surface water, earth movement, neglect, intentional loss, business pursuits of the insured, and ordinance or law unless endorsed.

PAP structure: Part A liability (split limits or CSL), Part B medical payments, Part C uninsured/underinsured motorists, Part D collision and other-than-collision - each with its own exclusions and deductibles.

PAP exclusions include intentional acts, racing, livery or public hire, and vehicles regularly used in business beyond permitted farming or stated business uses; a named driver exclusion bars coverage for listed drivers.

Umbrella and excess liability sits above required underlying auto and homeowners limits; a self-insured retention, commonly $250-$1,000, applies to losses not covered by the required underlying policies.

Valuation rule: replacement cost pays repair or replace cost with no depreciation deducted; actual cash value equals replacement cost minus depreciation and produces the smaller settlement.

CGL structure: Coverage A bodily injury and property damage, Coverage B personal and advertising injury, Coverage C medical payments; limits include each occurrence, general aggregate, products-completed operations aggregate, and damage to premises rented.

Occurrence trigger: injury or damage must occur during the policy period regardless of when the claim is reported. Claims-made trigger: the claim must first be made during the policy period, limited by the retroactive date and extended reporting period.

Additional insured endorsements: CG 20 10 for ongoing operations and CG 20 37 for completed operations; AI status is typically limited to liability arising out of the named insured's work.

Commercial property causes of loss forms: basic and broad are named-peril forms (broad adds items such as breakage and water damage); special is open peril subject to exclusions.

Coinsurance formula: when the limit carried is below the coinsurance percentage (commonly 80%, 90%, or 100%) times the value at time of loss, payment = (limit carried / required amount) x loss, less deductible.

Business income pays lost net income plus continuing normal operating expenses during the period of restoration; extra expense pays costs incurred to avoid or minimize shutdown.

Workers compensation Part One pays statutory benefits and is the exclusive remedy against the employer; Part Two employers liability responds to suits outside the statute, such as third-party-over actions, with separate limits.

BOP packages property and general liability with built-in business income for eligible small, low-hazard businesses such as offices, retail, and apartments; it does not substitute for workers compensation, commercial auto, or professional liability.

Commercial auto symbols: 1 any auto, 7 specifically described autos, 8 hired autos, 9 non-owned autos; businesses without owned vehicles commonly buy hired and non-owned auto liability.

Three sources of agency authority: express authority written in the agency agreement, implied authority to do acts reasonably necessary to carry out express authority, and apparent authority created by a third party's reasonable belief based on the insurer's conduct.

Fiduciary duty: premiums collected on behalf of an insurer are trust funds; commingling with agency operating funds or late remittance can trigger license discipline and errors and omissions claims.

A binder is temporary oral or written evidence of coverage effective immediately and lasting until the policy is issued or the binder expires; limits, effective date, and exclusions should be confirmed in writing.

A certificate of insurance (ACORD 25) is informational evidence of coverage only and does not amend, extend, or create coverage in the underlying policy.

GLBA requires privacy notices, opt-out rights before certain nonaffiliate sharing, and safeguards for nonpublic personal information; state insurance privacy rules may add requirements.

E&O loss prevention controls: written documentation of client instructions and coverage declinations, coverage checklists, diary systems for renewals and audits, and written binder confirmations.

Cancellation and nonrenewal statutes set notice periods, commonly 10-45 days for cancellation and 30-60 days for nonrenewal or conditional renewal on commercial policies; proof of mailing is the key evidence.

Nonresident licensing through state reciprocity (typically filed via NIPR) requires a resident license in good standing and the applicable fee; the state exam is usually waived.

Agency bill versus direct bill: agency-billed premium flows through the agency and requires trust accounting and reconciliation; direct-billed premium is remitted by the client to the insurer, lowering agency fiduciary exposure.