AK Property & Casualty common mistakes
AK Property & Casualty · Understand the traps and how to avoid them.
Substituting the word 'peril' for 'hazard' (or vice versa) when classifying a scenario - e.g., labeling an oily rag pile as a peril and a fire as a hazard.
The two terms are introduced in the same chapter and are used interchangeably in everyday speech, so the first plausible-sounding term gets picked under time pressure.
What to do instead
Anchor both to a one-line definition before answering: a peril is the CAUSE of loss (fire, windstorm, theft, collision); a hazard is a CONDITION that increases the chance or severity of loss (frayed wiring, icy steps, a wood-shingle roof). Re-read the stem and ask 'is this the thing that burns, or the thing that makes burning more likely?'
Assigning careless behavior (leaving a building unlocked, letting the roof rot) to moral hazard, and deliberate dishonesty (arson, staged theft, inflating a claim) to morale hazard.
The words differ by one letter and are visually easy to swap when scanning answer choices quickly.
What to do instead
Use the mnemonic 'morAL = mALice' (intentional, dishonest acts - fraud, arson, claim padding) versus 'morale = cAreless' (indifference and poor upkeep created by the feeling of being insured). Classify the actor's intent first, then name the hazard.
Applying the coinsurance formula with the carried and required limits reversed, or applying it and then forgetting to cap the result at the policy limit and subtract the deductible.
Candidates memorize a ratio without memorizing its order or the sequence of adjustments that follows it.
What to do instead
Write the chain out every time: (limit carried ÷ limit required) × covered loss = coinsurance-adjusted loss; then subtract the deductible; then cap the payment at the limit of insurance. The limit required is always (percentage × replacement value at time of loss). Check the arithmetic direction first - the answer must be less than or equal to the loss, never more.
Defaulting to actual cash value on a loss even when the loss settlement clause specifies replacement cost, or paying full replacement cost without confirming the property was actually repaired or replaced.
ACV is the more familiar concept and gets applied reflexively; the repair/replacement condition is a small clause buried later in the form.
What to do instead
Locate the loss settlement clause before calculating anything. If it says replacement cost, value the loss at today's cost to repair or replace with like kind and quality, with no depreciation - but note that most forms hold back recoverable depreciation until the insured completes the repair or replacement within the stated time period.
Assuming a homeowners form covers personal property on the same open-perils basis as the dwelling, or assuming a named-perils form covers everything not explicitly excluded.
Candidates remember 'HO-3 is special form' and stop there, missing that the open-perils treatment often applies only to Coverages A and B, not Coverage C.
What to do instead
Build a two-column mental grid for each form: Coverage A/B (dwelling and other structures) versus Coverage C (personal property), and mark each as open peril or named peril. Open perils = all risk of direct physical loss except what is excluded. Named perils = only the listed causes of loss, with the burden on the insured to show the cause is listed.
Reading an occurrence-basis liability policy as covering claims reported during the policy period, and reading a claims-made policy as covering injuries that happened during the policy period regardless of when reported.
The two triggers sound like administrative details rather than the core coverage test, and both policies show the same policy period dates on the declarations.
What to do instead
Ask one question first: what date does the policy tie coverage to? Occurrence form - the date the bodily injury or property damage occurred, regardless of when the claim is filed. Claims-made form - the date the claim is made, provided the injury occurred on or after the retroactive date and the policy is still in force or in an extended reporting period.
Treating the general aggregate, the per-occurrence limit, and the products-completed operations aggregate as interchangeable, and paying multiple occurrences out of the wrong bucket.
All three appear on the same declarations page as dollar figures, and the question usually tests which one gets depleted rather than the number itself.
What to do instead
Label each limit by what it caps: the occurrence limit caps any one loss event; the general aggregate caps all covered losses in the policy period other than products-completed operations; the products-completed operations aggregate is a separate pool for injury arising out of the insured's product or completed work away from the premises. Draw the three boxes and drop the loss into one before doing any math.
Confusing additional insured status with loss payee or mortgagee status - particularly who is entitled to notice of cancellation and who receives a claim payment.
All three appear as endorsements attached to a policy and all involve adding a name, so the distinctions blur.
What to do instead
Distinguish by direction of protection: an additional insured gets liability protection for its own potential negligence arising from the named insured's operations; a loss payee has a financial interest in covered property and receives loss payments to the extent of that interest; a mortgagee has similar property rights plus its own notice and claim-handling protections. If the question is about being sued, it is liability and additional insured; if it is about getting paid for damage, it is property and loss payee/mortgagee.
Answering Alaska licensing, appointment, continuing education, and producer-conduct questions using the rules from a home state or from general textbook material rather than the Alaska statute.
Prelicensing courses teach generic insurance regulation, and the state-specific chapter feels like a small appendix, so it gets skimmed and the generic rule wins.
What to do instead
Maintain a one-page Alaska-only sheet built solely from the Alaska statutes and Division of Insurance bulletins - producer licensing and appointment, CE hours and deadlines, notification of administrative actions and criminal prosecutions, continuing-education exemptions, and the specific notice periods for cancellation and nonrenewal. When a number appears in an answer choice, verify it against that sheet rather than against intuition.
Matching a keyword in the stem to a keyword in an answer choice and selecting it without reading the qualifiers - EXCEPT, NOT, LEAST likely, FIRST step, BEST describes - or without finishing a scenario that changes the facts in its last sentence.
Exam time pressure plus the habit of recognizing familiar terms produces a reflex answer before the operative word is read.
What to do instead
Adopt a fixed stem-reading routine: cover the answer choices, read the full stem, underline the operative word, and restate the question in your own words before looking at options. On 'EXCEPT' and 'NOT' items, evaluate each choice against the stem and mark the one that does not belong, rather than hunting for the one that does. On Alaska regulatory items, also check whether the stem asks about the insurer's duty or the producer's duty before choosing.