CIC Personal Lines common mistakes
CIC Personal Lines · Understand the traps and how to avoid them.
Treating the homeowners policy's Coverage A (dwelling) limit as the price of the home rather than the cost to rebuild it, and selecting the market value or purchase price when a question asks how much dwelling coverage is needed.
Candidates transfer everyday real estate thinking to insurance questions; market value includes land, which is never insured, and excludes current construction costs, so it systematically understates or misstates the needed limit.
What to do instead
Before answering any Coverage A question, ask 'does this number include land value?' Land is excluded, so rebuild cost is the anchor. Practise classifying a list of items (lot, driveway, foundation, debris removal) as included or excluded from the dwelling limit until it becomes automatic.
Applying the homeowners deductible once per policy period instead of once per occurrence, or assuming a percentage deductible is calculated on the total policy limit rather than on the Coverage A limit.
The per-claim nature of deductibles is counterintuitive for candidates used to annual health or dental deductibles, and percentage deductibles (common for wind/hurricane) are stated as a percent of the dwelling limit, which is easy to confuse with the total premium or total coverage.
What to do instead
Work three or four numeric scenarios: two separate claims in one year, a 2% wind deductible on a stated Coverage A limit, and a flat dollar deductible, computing out-of-pocket each time. Write the rule 'deductible applies per occurrence, percentage deductibles apply to Coverage A' at the top of scratch notes.
Confusing which perils are open perils (all risk) versus named perils across HO-2, HO-3, HO-5 and HO-8, and answering as if the whole policy is open peril when only the dwelling section is.
The forms differ in a way that is not intuitive: on HO-3 the dwelling is open peril but personal property is named peril, while HO-5 is open peril on both. Candidates memorise 'HO-3 is special form' and overgeneralise.
What to do instead
Build a four-row grid (HO-2, HO-3, HO-5, HO-8) with columns for dwelling and personal property, and fill in 'open' or 'named'. Rehearse the exceptions that apply even to open peril forms (earthquake, flood, wear and tear, intentional loss) as a separate list.
Missing the interaction between other insurance, pro rata contribution, and the special limits for property such as jewelry, cash, or silverware when a loss exceeds the sublimit.
Candidates focus on the headline Coverage C limit and forget the internal sublimits, and they treat other insurance as a simple offset rather than a proportional share, so arithmetic and reasoning both go wrong.
What to do instead
Maintain a memorised sublimit list for the homeowners forms and practise a two-policy pro rata problem end to end. When a question mentions a specific item (ring, coin collection, cash), immediately check whether a sublimit applies before touching the main limit.
On personal auto, treating medical payments and personal injury protection as interchangeable, or forgetting that PIP applies regardless of fault while medical payments is fault-neutral but limited to the insured and passengers.
Both cover medical costs arising from an auto accident, and the distinction only matters in no-fault states; candidates who have not worked claims in a no-fault jurisdiction see them as synonyms.
What to do instead
Write a two-column comparison covering who is covered, whether fault matters, what else is paid (lost wages, essential services for PIP), and which states require it. Then answer practice questions by first identifying whether the state is no-fault.
Misapplying the liability coverage trigger on personal auto: assuming the policy covers the vehicle rather than the insured's use of an auto, and therefore missing that a rented or borrowed car may be covered while a vehicle furnished for regular use is excluded.
The policy is written around persons and uses, not just listed vehicles, and the 'regular use' exclusion is buried in the definitions and exclusions rather than the coverage grant.
What to do instead
Learn the four covered auto categories (owned, newly acquired, temporary substitute, non-owned) and the regular-use exclusion as a matched pair. For each practice scenario, name which category the vehicle falls into before deciding coverage.
Assuming an umbrella policy drops down to fill gaps in the underlying auto or homeowners policy, or covers the insured's business pursuits or intentional acts because it is 'excess and broader'.
Umbrella marketing language emphasises breadth, and candidates conflate 'excess over underlying limits' with 'replaces underlying coverage'. The self-insured retention for uncovered claims is easy to overlook.
What to do instead
Memorise the two functions of an umbrella: excess over scheduled underlying policies, and drop-down subject to a self-insured retention when a loss is not covered by underlying. List the standard umbrella exclusions (business pursuits, intentional acts, own property) and test each scenario against them.
Mixing up the liability limits format on personal auto (split limits versus combined single limit) and failing to apply the per-person versus per-accident cap correctly when multiple claimants are involved.
The three-number format is read left to right but applied per person and per accident, and candidates add the numbers or treat the third number as available per person.
What to do instead
Practise with a scenario of three injured parties and a stated split limit, computing what each receives and what the per-accident cap allows. State aloud 'per person, per person, per accident' each time the format appears.
Answering personal lines questions from general insurance intuition instead of the specific policy wording, particularly on exclusions such as business pursuits, intentional loss, and ordinance or law.
These exclusions are counterintuitive (a home office claim, a code-upgrade cost after a fire) and candidates rely on what 'feels' covered rather than the exclusion list.
What to do instead
Keep a one-page exclusion sheet per policy and, for every scenario question, run the facts against that sheet before choosing an answer. Focus on the exclusions that commonly appear in exam scenarios: business pursuits, ordinance or law, earth movement, water damage, and intentional acts.
Skipping the 'which coverage responds first and in what order' step in claims scenarios, jumping straight to the coverage that seems most relevant without checking the deductible, sublimits, and other insurance.
Exam scenarios often involve overlapping coverages (homeowners and auto, or two policies), and candidates answer the first plausible coverage rather than the one that actually responds first.
What to do instead
Adopt a fixed four-step routine for every claims scenario: identify the peril and whether it is covered, identify the responding coverage part, apply deductible and sublimits, then apply other insurance. Write the four steps in the margin and tick them off before selecting an answer.