CA Property & Casualty cheat sheet

Risk is uncertainty about loss; peril is the cause of loss (fire, wind); hazard is a condition that increases chance or severity (debris, poor wiring).

Insurable interest in property must exist at time of loss; in life insurance it must exist when the policy is applied for.

Indemnity restores the insured to pre-loss financial position, no better and no worse; policy limits, deductibles, and ACV support this principle.

Actual cash value = replacement cost − depreciation; claim payment is subject to deductible and policy limit.

Coinsurance payment = (limit carried ÷ limit required) × loss, then subtract deductible, subject to policy limit; limit required = coinsurance % × replacement cost.

Subrogation lets the insurer recover from a responsible third party after paying a claim; the insured cannot recover twice.

Insurance contracts are adhesive, aleatory, unilateral, and conditional; ambiguities are construed against the insurer.

Utmost good faith requires disclosure of material facts; concealment, misrepresentation, and warranty breach can affect coverage.

Adverse selection is the tendency of higher-risk insureds to seek coverage; underwriting, exclusions, and rating address it.

ACV = replacement cost − depreciation; RCV pays repair/replacement without depreciation, subject to limit and deductible.

Coinsurance penalty: payment = (limit carried ÷ limit required) × loss − deductible, capped at policy limit; required = coinsurance % × replacement cost.

HO-3 covers dwelling open peril and personal property named peril; HO-5 covers both open peril; HO-4 is renters; HO-6 is condo.

Mortgagee clause protects lender: loss payments to mortgagee, notice of cancellation/nonrenewal, and right to pay premium.

ALE pays necessary increased living costs when home is uninhabitable from covered peril; fair rental value covers lost rental income.

Business income = lost net profit + continuing normal operating expenses during period of restoration, subject to limit.

Standard property policies exclude flood and earthquake; separate NFIP/private flood or CEA/earthquake endorsement needed.

Ordinance or law coverage pays code-required demolition, reconstruction, and increased costs after a covered loss.

Deductible applies per occurrence; policy limit caps total payment; coinsurance and deductible both reduce claim payment.

Negligence elements: duty, breach, causation (actual and proximate), and damages.

California uses pure comparative negligence: plaintiff recovery is reduced by plaintiff's percentage of fault.

California minimum private passenger auto liability (effective 1/1/2025): $30,000 BI per person, $60,000 BI per accident, $15,000 PD.

Collision covers impact/upset; comprehensive covers theft, fire, vandalism, weather; UM/UIM covers uninsured/underinsured motorist bodily injury.

CGL occurrence form covers injury/damage during policy period; claims-made form covers claims first made during policy period or ERP.

CGL limits include each occurrence, general aggregate, products-completed operations aggregate, and personal/advertising injury aggregate.

Premises liability duty depends on visitor status: invitee, licensee, or trespasser, with differing duties to warn or make safe.

Workers compensation provides statutory benefits and generally makes employer liability exclusive for work-related injury.

Strict products liability requires defect, causation, and injury; privity and negligence are not required.

CDI licenses producers; a producer may not transact insurance for an unauthorized insurer except under surplus lines rules.

California resident producers generally complete 24 CE hours every 2 years, including 3 hours ethics.

Premiums are held in trust; commingling with personal funds and misappropriation are prohibited.

Private passenger auto cancellation notice: 10 days for nonpayment, 20 days for other reasons.

California FAIR Plan is insurer of last resort for basic property coverage; CEA offers residential earthquake coverage.

Surplus lines broker must document a diligent search of admitted insurers before using an eligible nonadmitted insurer.

Unfair practices include misrepresentation, twisting, rebating, unfair discrimination, boycott, coercion, and intimidation.

Fair Claims Settlement Practices Regulations generally require accepting or denying a claim within 40 days after proof of claim.

CIGA pays covered claims of insolvent admitted P&C insurers, subject to statutory limits and exclusions.