AR Property & Casualty common mistakes
AR Property & Casualty · Understand the traps and how to avoid them.
Answers Arkansas licensing, renewal, and continuing-education items using numbers remembered from national study guides or from another state's rules, rather than Arkansas-specific figures.
Prep courses and flashcard sets blend generic 50-state content with Arkansas content, so the candidate's memory holds a blended number instead of the Arkansas one; numbers are also the easiest thing to memorize without anchoring to the source.
What to do instead
Build a single one-page Arkansas-only numbers sheet sourced from the current Arkansas Insurance Department licensing materials and statute, and drill only that sheet in the final week. On every item, first ask 'is this an Arkansas-specific rule?' before recalling any figure.
Treats the producer's license, the insurer's certificate of authority, and the appointment as interchangeable, and misidentifies who is responsible for filing or terminating each.
All three are authorization documents and the exam wording rarely signals the distinction explicitly, so candidates collapse them into a single idea of 'permission to sell.'
What to do instead
Memorize a three-row table: the entity (person vs. insurer vs. agency), the name of the document, who holds it, who files it, and what happens to the producer's authority if it lapses or is terminated. On each item, identify the entity first, then the document.
Swaps unfair trade practice labels, for example calling a misrepresentation used to induce replacement 'twisting' when the stem describes rebating, or labeling a false statement about an insurer's finances as coercion.
The definitions overlap in ordinary English because they all involve lying or inducing, so the candidate matches on the emotional tone of the stem rather than on the specific legal element.
What to do instead
Attach one trigger phrase to each practice: twisting = misrepresentation to induce lapse or replacement; rebating = giving value not stated in the policy; boycott/coercion = concerted refusal to deal or pressure; defamation = false statement about an insurer's financial condition; misrepresentation = false statement about coverage. Match the stem to the trigger phrase, not to the general impression.
States that insurable interest must exist at the time of loss in life insurance, or that it need not exist at the time of loss in property insurance.
The two rules (life insurance at inception, property insurance at time of loss) are taught as a pair, and the pairing gets reversed under time pressure.
What to do instead
Anchor with the phrase 'life locks it in at underwriting; property must be there when it burns,' then re-derive the reason: property indemnity pays only the person who actually loses, so interest must exist at loss; life pays a named beneficiary on a death, so the gate is at policy issue.
Applies contributory negligence where comparative negligence is intended, treats comparative negligence as a total bar, or confuses res ipsa loquitur with strict liability.
These are all defenses or doctrines attached to negligence, so they cluster in memory as one blurred category; stems that describe facts instead of naming the doctrine make the blur decisive.
What to do instead
Build a doctrine table with two columns: what the doctrine asserts (plaintiff's own fault / plaintiff assumed the risk / the thing speaks for itself / liability without fault) and its effect (complete bar, reduction of damages, shift in burden of proof, no fault requirement). Practice classifying a fact pattern before looking at the answer choices.
Computes a coinsurance claim by multiplying the loss by the coinsurance percentage, ignores the coinsurance penalty when the limit clearly exceeds the requirement, or applies the penalty when the limit is adequate.
The correct method has three steps and a cap at the policy limit, but candidates shortcut it into one multiplication and lose track of which number is 'did' and which is 'should.'
What to do instead
Write the same three lines every time: required insurance = coinsurance percentage times the value at risk; ratio = limit divided by required, capped at 1.0; payment = ratio times the loss, then subtract the deductible, then cap at the limit. Never skip the ratio line, even when the answer looks obvious.
Selects HO-3 for a tenant or condo unit owner, assumes HO-5 applies to any homeowner, or chooses HO-8 for an ordinary home that just has a modest deductible.
The form numbers look arbitrary, and candidates study the peril lists (basic, broad, special) instead of the occupancy and eligibility rules, so the peril label gets attached to the wrong form.
What to do instead
Key forms to who lives there and what is owned: HO-3 owner-occupant with open-peril dwelling and named-peril contents; HO-5 owner-occupant with open peril on both; HO-4 tenant, contents only; HO-6 condo unit owner; HO-8 older or high-risk dwelling on functional replacement cost. Work through the problem by occupancy first, then apply the peril structure.
Mixes actual cash value and replacement cost within a single loss calculation, subtracts the deductible before applying a coinsurance ratio, or deducts the deductible once per coverage part when the policy carries one deductible.
Loss settlement items hide the sequencing, so the candidate reaches for whichever formula was drilled most recently and puts the deductible wherever it feels natural.
What to do instead
Fix the order and say it aloud while solving: value each item (ACV = replacement cost minus depreciation), apply the coinsurance ratio if the form has one, total the covered loss, subtract the single deductible, then test against the limit. Label each damaged item ACV or replacement cost in the margin before doing any arithmetic.
Treats the commercial general liability general aggregate as the cap on any single occurrence, or answers a claims-made question without checking the retroactive date and the extended reporting period.
The limits sit adjacent on the declarations page and the occurrence versus claims-made distinction is described only in prose, so the candidate answers from the layout of the declarations rather than from the coverage trigger rule.
What to do instead
Determine the trigger first: occurrence means injury during the policy period; claims-made means injury after the retroactive date and a claim reported during the policy period or reporting period. Then place the limits: each occurrence caps one claim, the general aggregate caps the term, and products-completed operations and damage-to-premises limits sit separately.
Uses PAP Part D (collision or other-than-collision) for a loss that belongs under Part A liability, denies liability coverage to a permissive user, or reads 'other than collision' as covering nothing except a crash.
The personal auto policy separates first-party physical damage from third-party liability, but stems describe one event, such as a crash, that could trigger either part, so the candidate picks a part by the event instead of by whose damage is being paid.
What to do instead
Ask 'whose injury or property is being paid?' before choosing a part: damage to the insured auto is Part D, damage the insured caused to others is Part A, injury to the insured is Part B, uninsured motorist is Part C. Then check insured status, remembering the named insured, resident family members, and permissive users for liability. Treat other-than-collision as the residual category covering fire, theft, vandalism, animal strike, and glass.